JULY 25, 2014
PIONEER FUNDS
SUPPLEMENT TO THE PROSPECTUSES AND SUMMARY PROSPECTUSES, AS IN EFFECT AND AS
MAY BE AMENDED FROM TIME TO TIME, FOR
FUND DATE OF PROSPECTUS
Pioneer AMT-Free Municipal Fund May 1, 2014
Pioneer Bond Fund November 1, 2013
Pioneer Classic Balanced Fund December 1, 2013
Pioneer Core Equity Fund May 1, 2014
Pioneer Disciplined Growth Fund December 31, 2013
Pioneer Disciplined Value Fund November 1, 2013
Pioneer Emerging Markets Fund April 1, 2014
Pioneer Equity Income Fund March 1, 2014 (as revised March 12, 2014)
Pioneer Fund May 1, 2014
Pioneer Fundamental Growth Fund August 1, 2013
Pioneer Global Equity Fund December 31, 2013
Pioneer Global High Yield Fund March 1, 2014
Pioneer Government Income Fund December 1, 2013
Pioneer High Yield Fund March 1, 2014
Pioneer Ibbotson Aggressive Allocation Fund December 1, 2013
Pioneer Ibbotson Conservative Allocation Fund December 1, 2013
Pioneer Ibbotson Growth Allocation Fund December 1, 2013
Pioneer Ibbotson Moderate Allocation Fund December 1, 2013
Pioneer International Value Fund April 1, 2014
Pioneer Mid Cap Value Fund March 1, 2014
Pioneer Oak Ridge Large Cap Growth Fund April 1, 2014
Pioneer Oak Ridge Small Cap Growth Fund April 1, 2014
Pioneer Real Estate Shares May 1, 2014
Pioneer Select Mid Cap Growth Fund April 1, 2014
Pioneer Short Term Income Fund December 31, 2013
Pioneer Strategic Income Fund February 1, 2014
IMPORTANT NOTICE TO CLASS B SHAREHOLDERS
As of the close of business on November 10, 2014 (the "Conversion Date"), all
outstanding Class B shares of the Pioneer funds will be converted to Class A
shares. Shareholders may continue to hold their Class B shares until the
Conversion Date. Prior to the Conversion Date, redemptions of Class B shares
are subject to any applicable contingent deferred sales charges (CDSCs). Class
A shares acquired through the conversion will not be subject to CDSCs, nor will
any sales charges be assessed in connection with the conversion. After the
Conversion Date, subsequent purchases of Class A shares will be subject to
sales charges as described in each fund's prospectus.
As of the Conversion Date, each fund's prospectus is revised by eliminating all
references to Class B shares.
27916-00-0714
(Copyright)2014 PIONEER FUNDS DISTRIBUTOR, INC.
UNDERWRITER OF PIONEER MUTUAL FUNDS
MEMBER SIPC
JULY 21, 2014
PIONEER IBBOTSON ASSET ALLOCATION SERIES
PIONEER IBBOTSON CONSERVATIVE ALLOCATION FUND
PIONEER IBBOTSON MODERATE ALLOCATION FUND
PIONEER IBBOTSON GROWTH ALLOCATION FUND
PIONEER IBBOTSON AGGRESSIVE ALLOCATION FUND
SUPPLEMENT TO THE DECEMBER 1, 2013 PROSPECTUS AND SUMMARY PROSPECTUS, AS IN
EFFECT AND AS MAY BE AMENDED FROM TIME TO TIME
The Board of Trustees (the "Board") of Pioneer Ibbotson Allocation Series (the
"Funds") has determined that Pioneer Investment Management, Inc. ("Pioneer")
will assume direct responsibility for the day-to-day management of each Fund's
portfolio in the fourth quarter of 2014. Each Fund's asset allocation
strategies will be modified in connection with Pioneer's assumption of
day-to-day management responsibilities for each Fund.
Currently, Pioneer, the Funds' investment adviser, oversees the Funds'
operations and supervises Ibbotson Associates, Inc. ("Ibbotson") as investment
subadviser to each Fund. Ibbotson will continue to serve as the Funds'
subadviser until Pioneer assumes day-to-day management responsibilities for the
Funds.
MODIFIED APPROACH TO ASSET ALLOCATION STRATEGIES
The Funds will continue to operate as funds of funds after Pioneer assumes
day-to-day management responsibilities for each Fund, and each Fund will
continue to seek to achieve its investment objectives mainly by investing in
other funds. There will be no changes to the Funds' investment objectives.
However, each Fund's asset allocation strategies will change in connection with
Pioneer's assumption of day-to-day management responsibilities. Under Pioneer's
new approach, Pioneer will consider each Fund's risk profile (as measured by
volatility) in selecting investments, without relying on fixed asset class
ranges. The Funds will invest in a broader range of funds, including
non-Pioneer funds and exchange-traded funds. As part of its overall strategy,
each Fund also may use derivatives, including in an attempt to hedge against
adverse changes in the market prices of securities, interest rates or currency
exchange rates or to increase the Fund's return as a non-hedging strategy.
PORTFOLIO MANAGEMENT
The following members of Pioneer's fund-of-funds team will serve as the Funds'
portfolio managers when Pioneer assumes day-to-day management responsibilities
for the Funds:
John O'Toole is the Head of Multi-Asset Fund Solutions at Pioneer. Mr. O'Toole
is responsible for the management of asset allocation portfolios and the full
range of multi-asset products (fund of funds, segregated accounts and
unit-linked). As a member of the Strategy Committee, he formulates top-down,
macro asset allocation positioning. In addition, the Multi-Asset Fund Solutions
team is responsible for strategy selection across all asset classes, as well as
manager appraisal and selection in the construction of multi-asset and
multi-manager portfolios. Mr. O'Toole joined Pioneer in 2005. Mr. O'Toole has
worked in the investment industry since 1995.
Paul Weber leads the Fund Research and Manager Selection team. Prior to joining
the team in 2004, Mr. Weber worked on special projects with the Portfolio
Analytics team. Mr. Weber's primary areas of coverage include equity strategies
in Japan as well as global asset allocation strategies. Mr. Weber has a
secondary focus on global bonds, European and Asian equity strategies. Mr.
Weber joined Pioneer in 2002.
Salvatore Buono is Head of Strategy Alignment and Structured Products within
the Multi-Asset Fund Solutions team. In his role, he has oversight of portfolio
positioning ensuring alignment of investment strategies across a broad range of
products. Mr. Buono also oversees the trade management process, including
liquidity and risk assessments for all proposed investment strategies. Mr.
Buono joined Pioneer in 2008.
REORGANIZATION OF PIONEER IBBOTSON AGGRESSIVE ALLOCATION FUND
The Board has approved the reorganization of Pioneer Ibbotson Aggressive
Allocation Fund into Pioneer Ibbotson Growth Allocation Fund (the
"Reorganization"). The Reorganization does not require shareholder approval.
The Reorganization is expected be completed during the fourth quarter of 2014.
At the time of the Reorganization, Pioneer Ibbotson Growth Allocation Fund's
asset allocation strategies will change as described above. The Reorganization
is expected to qualify as a tax-free reorganization, which generally means that
the Reorganization will result in no income, gain or loss being recognized for
federal income tax purposes by either fund or its shareholders as a direct
result of the Reorganization. Additional information regarding the
Reorganization will be sent to the shareholders of Pioneer Ibbotson Aggressive
Allocation Fund.
27907-00-0714
(Copyright)2014 PIONEER FUNDS DISTRIBUTOR, INC.
UNDERWRITER OF PIONEER MUTUAL FUNDS
MEMBER SIPC
June 1, 2014
Supplement to the Prospectuses, as in effect and as may be amended, for
Fund Date of Prospectus
---- ------------------
Pioneer Absolute Return Bond Fund...................... January 10, 2014 (as revised January 30, 2014)
Pioneer AMT-Free Municipal Fund........................ May 1, 2014
Pioneer Bond Fund...................................... November 1, 2013
Pioneer Cash Reserves Fund............................. May 1, 2014
Pioneer Classic Balanced Fund.......................... December 1, 2013
Pioneer Core Equity Fund............................... May 1, 2014
Pioneer Disciplined Growth Fund........................ December 31, 2013
Pioneer Disciplined Value Fund......................... November 1, 2013
Pioneer Dynamic Credit Fund............................ August 1, 2013
Pioneer Emerging Markets Fund.......................... April 1, 2014
Pioneer Emerging Markets Local Currency Debt Fund...... March 1, 2014
Pioneer Equity Income Fund............................. March 1, 2014 (as revised March 12, 2014)
Pioneer Floating Rate Fund............................. March 1, 2014
Pioneer Fund........................................... May 1, 2014
Pioneer Fundamental Growth Fund........................ August 1, 2013
Pioneer Global Equity Fund............................. December 31, 2013
Pioneer Global High Yield Fund......................... March 1, 2014
Pioneer Global Multisector Income Fund................. March 1, 2014
Pioneer Government Income Fund......................... December 1, 2013
Pioneer High Income Municipal Fund..................... December 31, 2013
Pioneer High Yield Fund................................ March 1, 2014
Pioneer Ibbotson Aggressive Allocation Fund............ December 1, 2013
Pioneer Ibbotson Conservative Allocation Fund.......... December 1, 2013
Pioneer Ibbotson Growth Allocation Fund................ December 1, 2013
Pioneer Ibbotson Moderate Allocation Fund.............. December 1, 2013
Pioneer International Value Fund....................... April 1, 2014
Pioneer Long/Short Global Bond Fund.................... December 6, 2013 (as revised January 8, 2014)
Pioneer Long/Short Opportunistic Credit Fund........... December 6, 2013 (as revised January 8, 2014)
Pioneer Mid Cap Value Fund............................. March 1, 2014
Pioneer Multi-Asset Income Fund........................ December 1, 2013
Pioneer Multi-Asset Real Return Fund................... March 1, 2014
Pioneer Multi-Asset Ultrashort Income Fund............. August 1, 2013
Pioneer Oak Ridge Large Cap Growth Fund................ April 1, 2014
Pioneer Oak Ridge Small Cap Growth Fund................ April 1, 2014
Pioneer Real Estate Shares............................. May 1, 2014
Pioneer Select Mid Cap Growth Fund..................... April 1, 2014
Pioneer Short Term Income Fund......................... December 31, 2013
Pioneer Strategic Income Fund.......................... February 1, 2014
Effective July 1, 2014, the following language supplements the "Buying,
exchanging and selling shares" section of the prospectus under the heading
"Opening your account."
Each fund is generally available for purchase in the United States, Puerto
Rico, Guam, American Samoa and the U.S. Virgin Islands. Except to the extent
otherwise permitted by the funds' distributor, the funds will only accept
accounts from U.S. citizens with a U.S. address (including an APO or FPO
address) or resident aliens with a U.S. address (including an APO or FPO
address) and a U.S. taxpayer identification number.
27789-00-0614
(C) 2014 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds
Member SIPC
PIONEER
--------------------------------------------------------------------------------
IBBOTSON ASSET ALLOCATION SERIES
CONSERVATIVE MODERATE GROWTH AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION ALLOCATION
CLASS FUND FUND FUND FUND
------- -------------- ------------ ------------ -----------
A PIAVX PIALX GRAAX PIAAX
B PIBVX PIBLX GRABX IALBX
C PICVX PIDCX GRACX IALCX
Y IBBCX IMOYX IBGYX IBAYX
Prospectus, December 1, 2013
CONTENTS
--------------------------------------------------------------------------------
Fund Summary
Basic information about the funds
Conservative Allocation Fund.............. 1
Moderate Allocation Fund.................. 18
Growth Allocation Fund.................... 35
Aggressive Allocation Fund................ 52
More on each fund's investment objectives
and strategies............................... 69
More on the risks of investing in a fund........ 79
Management...................................... 96
Pricing of shares............................... 99
Choosing a class of shares...................... 101
Distribution and service arrangements........... 103
Sales charges................................... 105
Buying, exchanging and selling shares........... 114
Account options . 124
Shareholder services and policies............... 128
Dividends, capital gains and taxes.............. 135
Financial highlights............................ 137
Neither the Securities and Exchange Commission nor any state securities agency
has approved or disapproved the fund's shares or determined whether this
prospectus is
[GRAPHIC APPEARS HERE]
accurate or complete. Any representation to the contrary is a crime.
AN INVESTMENT IN A FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
-------------------------------------------------------------------------------
CONTACT YOUR INVESTMENT PROFESSIONAL TO DISCUSS HOW THE FUND MAY FIT
INTO YOUR PORTFOLIO.
-------------------------------------------------------------------------------
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
INVESTMENT OBJECTIVES
Long-term capital growth and current income.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
You may qualify for sales charge discounts if you or your family invest, or
agree to invest in the future, at least $50,000 in Class A shares of the
Pioneer funds. More information about these and other discounts is available
from your investment professional and in the "Sales charges" section of the
prospectus beginning on page 105 and the "Sales charges" section of the
statement of additional information beginning on page 70.
1
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
SHAREOWNER FEES
(fees paid directly from your investment) CLASS A CLASS B CLASS C CLASS Y
---------------------------------------------------------- --------- --------- --------- --------
Maximum sales charge (load) when you buy shares (as a
percentage of offering price) 5.75% None 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 4% 1% None
---------------------------------------------------------- ---- --------- --------- --------
ANNUAL FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the
value of your investment) CLASS A CLASS B CLASS C CLASS Y
-------------------------------------------------------- --------- --------- --------- --------
Management Fees 0.13% 0.13% 0.13% 0.13%
-------------------------------------------------------- ---- ---- ---- ----
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.00%
-------------------------------------------------------- ---- ---- ---- ----
Other Expenses 0.39% 0.48% 0.38% 1.30%
-------------------------------------------------------- ---- ---- ---- ----
Acquired Fund Fees and Expenses/1/ 0.71% 0.71% 0.71% 0.71%
-------------------------------------------------------- ---- ---- ---- ----
Total Annual Fund Operating Expenses Plus Acquired Fund
Fees and Expenses 1.48% 2.32% 2.22% 2.14%
-------------------------------------------------------- ---- ---- ---- ----
1 Total annual fund operating expenses in the table, before and after fee
waiver and expense reimbursement, may be higher than the corresponding
ratio of expenses to average net assets shown in the "Financial
Highlights" section, which does not include acquired fund fees and
expenses.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the fund for the time periods shown and then, except as
indicated, redeem all of your shares at the end of those periods. It also
assumes that (a) your investment has a 5% return each year and (b) the fund's
total annual operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
IF YOU REDEEM YOUR SHARES IF YOU DO NOT REDEEM YOUR SHARES
-------------------------------------- ----------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES
--------------------------------------------------------------------------------
1 3 5 10 1 3 5 10
------- ------- --------- --------- ------- --------- --------- ---------
Class A $717 1,016 $1,336 $2,242 $717 $1,016 $1,336 $2,242
--------- ---- ----- ------ ------ ---- ------ ------ ------
Class B 635 1,024 1,340 2,446 235 724 1,240 2,446
--------- ---- ----- ------ ------ ---- ------ ------ ------
Class C 325 694 1,190 2,554 225 694 1,190 2,554
--------- ---- ----- ------ ------ ---- ------ ------ ------
Class Y 217 670 1,149 2,472 217 670 1,149 2,472
--------- ---- ----- ------ ------ ---- ------ ------ ------
PORTFOLIO TURNOVER
2
The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 17% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a "fund of funds." The fund seeks to achieve its investment
objectives by investing in other funds ("underlying funds" or "acquired funds")
rather than direct positions in securities. The underlying funds have their own
investment objectives and principal investment strategies and invest in a
variety of U.S. and foreign equity, debt and money market securities. Equity
securities in which underlying funds invest include common stocks, preferred
stocks and equity securities with common stock characteristics such as real
estate investment trusts, and exchange-traded funds that invest primarily in
equity securities. Debt securities in which underlying funds may invest include
U.S. government securities, debt securities of corporate and other issuers,
mortgage- and asset-backed securities, debt convertible to equity securities
and short term debt securities. Underlying funds also may use derivatives, such
as credit default swaps.
Because this is a conservative allocation fund, the fund's assets will be
invested in equity and fixed income funds, although a portion of its assets
will be invested in cash, cash equivalents, or in money market funds. Under
normal circumstances, the fund expects to invest its assets among asset classes
in the following ranges. The fund's investment adviser may change these
allocation ranges from time to time without the approval of or notice to
shareholders. The fixed income fund allocation includes the fund's investments
in cash, cash equivalents, and money market funds.
INVESTMENT STRATEGIES/ASSET CLASS TARGETS
EQUITY FUND FIXED INCOME FUND
ALLOCATION ALLOCATION
------------- ------------------
Pioneer Ibbotson Conservative Allocation Fund 20-40% 60-80%
----------------------------------------------- ----- -----
The intended benefit of asset allocation is that the diversification provided
by allocating assets among asset classes, such as equity and debt securities,
reduces volatility over the long-term. The subadviser, subject to the
investment adviser's supervision, allocates the fund's assets among the
underlying
3
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
funds using a two-step process. First, the subadviser seeks to develop an
optimal model allocation among underlying funds in different asset classes
using an analysis that looks at forecast returns, standard deviations in
historical returns and the correlation of the performance of different asset
classes. The subadviser then invests the assets in underlying funds that invest
in those asset classes. The subadviser's analysis in selecting and weighting
the underlying funds is based on quantitative and qualitative measures.
Periodically, the subadviser may recommend the rebalancing of a fund's assets
among asset classes and underlying funds. Decisions to sell shares of the
underlying funds are made for cash flow purposes, as a result of periodic
rebalancing of a fund's portfolio holdings, or as an adjustment to a fund's
target allocation.
As of the date of this prospectus, the fund invests solely in other Pioneer
funds. From time to time the fund's investment adviser may select new or
different underlying funds without prior approval or notice to shareholders.
PRINCIPAL RISKS OF INVESTING IN THE FUND
You could lose money on your investment in the fund. As with any mutual fund,
there is no guarantee that the fund will achieve its objectives. For purposes
of this section, "the fund" means the fund or, where applicable, an underlying
fund.
MARKET RISK. The values of securities held by the fund may go up or down,
sometimes rapidly or unpredictably, due to general market conditions, such as
real or perceived adverse economic, political, or regulatory conditions,
inflation, changes in interest or currency rates or adverse investor sentiment.
Adverse market conditions may be prolonged and may not have the same impact on
all types of securities. The values of securities may fall due to factors
affecting a particular issuer, industry or the securities market as a whole.
High public debt in the U.S. and other countries creates ongoing and systemic
market risks and policymaking uncertainty. The financial crisis that began in
2008 has caused a significant decline in the value and liquidity of many
securities of issuers worldwide. Governmental and non-governmental issuers have
defaulted on, or been forced to restructure, their debts, and many other
issuers have faced difficulties obtaining credit. These market conditions may
continue, worsen or spread, including in the U.S., Europe and beyond. Further
defaults or restructurings by governments and others of their debt could have
additional adverse effects on economies, financial markets and asset valuations
around the world. In response to the crisis, the U.S. and other governments and
the Federal Reserve and certain foreign
4
central banks have taken steps to support financial markets. The withdrawal of
this support, failure of efforts in response to the crisis, or investor
perception that these efforts are not succeeding could negatively affect
financial markets generally as well as the value and liquidity of certain
securities. Whether or not the fund invests in securities of issuers located in
or with significant exposure to countries experiencing economic and financial
difficulties, the value and liquidity of the fund's investments may be
negatively affected. In addition, policy and legislative changes in the U.S.
and in other countries are affecting many aspects of financial regulation. The
impact of these changes on the markets, and the practical implications for
market participants, may not be fully known for some time. The fund may
experience a substantial or complete loss on any individual security or
derivative position.
FUND OF FUNDS STRUCTURE AND LAYERING OF FEES. The fund invests in the
underlying funds, which may themselves invest in other investment companies,
including exchange-traded funds (ETFs). Each underlying fund has its own
investment risks that can affect the value of the underlying funds' shares and
therefore the net asset value of the fund. In addition to the fund's operating
expenses, the fund indirectly pays a portion of the expenses incurred by the
underlying funds. Consequently, an investment in the fund entails more direct
and indirect expenses than a direct investment in the underlying funds. Also,
one underlying fund may buy the same security that another underlying fund is
selling. You would indirectly bear the costs of both trades without achieving
any investment purpose. These transactions may also generate taxable gains. You
may receive taxable distributions consisting of gains from transactions by the
underlying funds as well as gains from the fund's transactions in shares of the
underlying funds.
ALLOCATION RISK. The subadviser's evaluation of asset classes and market
sectors in developing an allocation model, and its selection and weighting of
underlying funds within the allocation model, may prove to be incorrect. To the
extent that the fund invests a significant percentage of its assets in any one
underlying fund, the fund will be subject to a greater degree to the risks
particular to that underlying fund, and may experience greater volatility as a
result.
ASSET CLASS VARIATION RISK. The underlying funds invest principally in the
securities constituting their asset class (i.e., equity or fixed income).
However, under normal market conditions, an underlying fund may vary the
percentage of its assets in these securities (subject to any applicable
regulatory requirements). Depending upon the percentage of securities in a
particular
5
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
asset class held by the underlying funds at any given time, and the percentage
of the fund's assets invested in various underlying funds, the fund's actual
exposure to the securities in a particular asset class may vary substantially
from its target asset allocation for that asset class.
EXPENSE RISK. Your actual costs of investing in the fund may be higher than the
expenses shown in "Annual fund operating expenses" for a variety of reasons.
For example, expense ratios may be higher than those shown if overall net
assets decrease. Net assets are more likely to decrease and fund expense ratios
are more likely to increase when markets are volatile.
PRINCIPAL RISKS OF INVESTING IN THE UNDERLYING FUNDS
RISKS OF EQUITY INVESTMENTS. Equity securities are more volatile and carry more
risks than some other forms of investment. Risks of investing in underlying
equity funds may include:
VALUE STYLE RISK. The prices of securities the adviser believes are
undervalued may not appreciate as expected or may go down. Value stocks may
fall out of favor with investors and underperform the overall equity market.
GROWTH STYLE RISK. The fund's investments may not have the growth potential
originally expected. Growth stocks may fall out of favor with investors and
underperform the overall equity market.
SMALL AND MID-SIZE COMPANIES RISK. Compared to large companies, small- and
mid-size companies, and the market for their equity securities, may be more
sensitive to changes in earnings results and investor expectations, have
more limited product lines and capital resources, experience sharper swings
in market values, have limited liquidity, be harder to value or to sell at
the times and prices the adviser thinks appropriate, and offer greater
potential for gain and loss.
RISKS OF INVESTMENTS IN REITS. Investing in REITs involves unique risks.
They are significantly affected by the market for real estate and are
dependent upon management skills and cash flow. REITs may have lower trading
volumes and may be subject to more abrupt or erratic price movements than
the overall securities markets. In addition to its own expenses, the fund
will indirectly bear its proportionate share of any management and other
expenses paid by REITs in which it invests. Many real estate companies,
including REITs, utilize leverage.
PREFERRED STOCKS RISK. Preferred stocks may pay fixed or adjustable
6
rates of return. Preferred stocks are subject to issuer-specific and market
risks applicable generally to equity securities. In addition, a company's
preferred stocks generally pay dividends only after the company makes
required payments to holders of its bonds and other debt. Thus, the value of
preferred stocks will usually react more strongly than bonds and other debt
to actual or perceived changes in the company's financial condition or
prospects. The market value of preferred stocks generally decreases when
interest rates rise. Preferred stocks of smaller companies may be more
vulnerable to adverse developments than preferred stock of larger companies.
RISKS OF INITIAL PUBLIC OFFERINGS. Companies involved in initial public
offerings (IPOs) generally have limited operating histories, and prospects
for future profitability are uncertain. The market for IPO issuers has been
volatile, and share prices of newly public companies have fluctuated
significantly over short periods of time. Further, stocks of newly-public
companies may decline shortly after the IPO. There is no assurance that the
fund will have access to IPOs. The purchase of IPO shares may involve high
transaction costs.
RISKS OF CONVERTIBLE SECURITIES. The market values of convertible securities
tend to decline as interest rates increase and, conversely, to increase as
interest rates decline. A downturn in equity markets may cause the price of
convertible securities to decrease relative to other fixed income
securities.
RISKS OF FIXED INCOME INVESTMENTS. Risks of investing in underlying fixed
income funds may include:
INTEREST RATE RISK. Interest rates may go up, causing the value of the
fund's investments to decline (this risk generally will be greater for
securities with longer maturities). Interest rates in the U.S. recently have
been historically low and may be expected to go back up.
CREDIT RISK. If an issuer or guarantor of a security held by the fund or a
counterparty to a financial contract with the fund defaults on its
obligation to pay principal and/or interest, has its credit rating
downgraded or is perceived to be less creditworthy, or the credit quality or
value of any underlying assets declines, the value of your investment will
decline. Credit risk is broadly gauged by the credit ratings of the
securities in which the fund invests. However, ratings are only the opinions
of the companies issuing them and are not guarantees as to quality.
7
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
PREPAYMENT OR CALL RISK. Many issuers have a right to prepay their
securities. If interest rates fall, an issuer may exercise this right. If
this happens, the fund will be forced to reinvest prepayment proceeds at a
time when yields on securities available in the market are lower than the
yield on the prepaid security. The fund also may lose any premium it paid on
the security.
EXTENSION 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.
U.S. GOVERNMENT AGENCY OBLIGATIONS RISK. The fund invests in obligations
issued by agencies and instrumentalities of the U.S. government.
Government-sponsored entities such as Federal National Mortgage Association
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the
Federal Home Loan Banks (FHLBs), although chartered or sponsored by
Congress, are not funded by congressional appropriations and the debt and
mortgage-backed securities issued by them are neither guaranteed nor issued
by the U.S. government. Such debt and mortgage-backed securities are subject
to the risk of default on the payment of interest and/or principal, similar
to debt of private issuers. Although the U.S. government has provided
financial support to Fannie Mae and Freddie Mac in the past, there can be no
assurance that it will support these or other government-sponsored entities
in the future.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES RISK. The value of
mortgage-related and asset-backed securities will be influenced by factors
affecting the housing market and the assets underlying such securities. As a
result, during periods of declining asset value, difficult or frozen credit
markets, swings in interest rates, or deteriorating economic conditions,
mortgage-related and asset-backed securities may decline in value, face
valuation difficulties, become more volatile and/or become illiquid.
Additionally, during such periods and also under normal conditions, these
securities are also subject to prepayment and call risk. Some of these
securities may receive little or no collateral protection from the
underlying assets and are thus subject to the risk of default. The risk of
such defaults is generally higher in the case of mortgage-backed investments
that include so-called "sub-prime" mortgages. The structure of some of these
securities may be complex and there may be less available information than
for other types of debt securities. Upon the occurrence of certain
triggering events or defaults, the fund may become the holder of underlying
8
assets at a time when those assets may be difficult to sell or may be sold
only at a loss.
RISKS OF INSTRUMENTS THAT ALLOW FOR BALLOON PAYMENTS OR NEGATIVE
AMORTIZATION PAYMENTS. Certain debt instruments allow for balloon payments
or negative amortization payments. Such instruments permit the borrower to
avoid paying currently a portion of the interest accruing on the instrument.
While these features make the debt instrument more affordable to the
borrower in the near term, they increase the risk that the borrower will be
unable to make the resulting higher payment or payments that become due at
the maturity of the loan.
RISKS OF SUBORDINATED SECURITIES. A holder of securities that are
subordinated or "junior" to more senior securities of an issuer is entitled
to payment after holders of more senior securities of the issuer.
Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer, any loss incurred by the
subordinated securities is likely to be proportionately greater, and any
recovery of interest or principal may take more time. As a result, even a
perceived decline in creditworthiness of the issuer is likely to have a
greater impact on them.
HIGH YIELD OR "JUNK" BOND RISK. Debt securities that are below investment
grade, called "junk bonds," are speculative, have a higher risk of default
or are already in default, tend to be less liquid and are more difficult to
value than higher grade securities. Junk bonds tend to be volatile and more
susceptible to adverse events and negative sentiments. These risks are more
pronounced for securities that are already in default.
RISKS OF INVESTING IN EVENT-LINKED BONDS. The return of principal and the
payment of interest on "event-linked" bonds are contingent on the
non-occurrence of a pre-defined "trigger" event, such as a hurricane or an
earthquake of a specific magnitude. If a trigger event, as defined within
the terms of an event-linked bond, involves losses or other metrics
exceeding a specific magnitude in the geographic region and time period
specified therein, the fund may lose a portion or all of its accrued
interest and/or principal invested in the event-linked bond. In addition to
the specified trigger events, event-linked bonds may expose the fund to
other risks, including but not limited to issuer (credit) default, adverse
regulatory or jurisdictional interpretations and adverse tax consequences.
RISKS OF INVESTING IN FLOATING RATE LOANS. Floating rate loans and similar
investments may be illiquid or less liquid than other investments.
9
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
The value of collateral, if any, securing a floating rate loan can decline
or may be insufficient to meet the issuer's obligations or may be difficult
to liquidate. No active trading market may exist for many floating rate
loans, and many loans are subject to restrictions on resale. Market
quotations for these securities may be volatile and/or subject to large
spreads between bid and ask prices. Any secondary market may be subject to
irregular trading activity and extended trade settlement periods.
RISKS OF INVESTING IN INVERSE FLOATING RATE OBLIGATIONS. The interest rate
on inverse floating rate obligations will generally decrease as short-term
interest rates increase, and increase as short-term rates decrease. Due to
their leveraged structure, the sensitivity of the market value of an inverse
floating rate obligation to changes in interest rates is generally greater
than a comparable long-term bond issued by the same issuer and with similar
credit quality, redemption and maturity provisions. Inverse floating rate
obligations may be volatile and involve leverage risk.
INFLATION-LINKED SECURITY RISK. The principal or interest of
inflation-linked securities such as TIPS is adjusted periodically to a
specified rate of inflation. The inflation index used may not accurately
measure the real rate of inflation. Inflation-linked securities may lose
value in the event that the actual rate of inflation is different than the
rate of the inflation index.
RISKS OF ZERO COUPON BONDS, PAYMENT IN KIND, DEFERRED AND CONTINGENT PAYMENT
SECURITIES. These securities may be more speculative and may fluctuate more
in value than securities which pay income periodically and in cash. In
addition, although the fund receives no periodic cash payments on such
securities the fund is deemed for tax purposes to receive income from such
securities, which applicable tax rules require the fund to distribute to
shareholders. Such distributions may be taxable when distributed to
shareholders.
RISKS OF EQUITY AND FIXED INCOME INVESTMENTS. Risks of investing in underlying
equity and fixed income funds may include:
PORTFOLIO SELECTION RISK. The adviser's judgment about the attractiveness,
relative value or potential appreciation of an equity security, or about the
quality, relative yield or relative value of a fixed income security, or
about a particular sector, region or market segment, or about an investment
strategy, or about interest rates, may prove to be incorrect.
LIQUIDITY RISK. Some securities and derivatives held by the fund may be
impossible or difficult to sell or unwind particularly during times of
market
10
turmoil. Illiquid securities and derivatives also may be difficult to value.
If the fund is forced to sell an illiquid asset or unwind a derivative
position to meet redemption requests or other cash needs, the fund may be
forced to sell at a loss.
MARKET SEGMENT RISK. To the extent the fund emphasizes, from time to time,
investments in a market segment, the fund will be subject to a greater
degree to the risks particular to that segment, and may experience greater
market fluctuation than a fund without the same focus.
RISKS OF NON-U.S. INVESTMENTS. Investing in non-U.S. issuers, or in U.S.
issuers that have significant exposure to foreign markets, may involve
unique risks compared to investing in securities of U.S. issuers. These
risks are more pronounced for issuers in emerging markets or to the extent
that the fund invests significantly in one region or country. These risks
may include different financial reporting practices and regulatory
standards, less liquid trading markets, extreme price volatility, currency
risks, changes in economic, political, regulatory and social conditions,
sustained economic downturns, financial instability, tax burdens, and
investment and repatriation restrictions. Lack of information and less
market regulation also may affect the value of these securities. Withholding
and other non-U.S. taxes may decrease the fund's return. Non-U.S. issuers
may be located in parts of the world that have historically been prone to
natural disasters. Investing in depositary receipts is subject to many of
the same risks as investing directly in non-U.S. issuers.
DERIVATIVES RISK. Using options, swaps, futures and other derivatives can
increase fund losses and reduce opportunities for gains when market prices,
interest rates or the derivative instruments themselves behave in a way not
anticipated by the fund. Using derivatives may increase the volatility of
the fund's net asset value and may not provide the result intended.
Derivatives may have a leveraging effect on the fund. Some derivatives have
the potential for unlimited loss, regardless of the size of the fund's
initial investment. Changes in a derivative's value may not correlate well
with the referenced asset or metric. The fund also may have to sell assets
at inopportune times to satisfy its obligations. Derivatives may be
difficult to sell, unwind or value, and the counterparty may default on its
obligations to the fund. New regulations are changing the derivatives
markets. The regulations may make using derivatives more costly, may limit
their availability, or may otherwise adversely affect their value or
performance. For derivatives that are required to be traded through a
clearinghouse or exchange, the fund also will be exposed to the credit
11
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
risk of the clearinghouse and the broker that submits trades for the fund.
It is possible that certain derivatives that are required to be cleared,
such as certain swap contracts, will not be accepted for clearing. In
addition, regulated trading facilities for swap contracts are relatively
new; they may not function as intended, which could impair the ability to
enter into swap contracts. The extent and impact of the new regulations are
not yet fully known and may not be for some time.
CREDIT DEFAULT SWAP RISK. Credit default swap contracts, a type of
derivative instrument, involve special risks and may result in losses to the
fund. Credit default swaps may in some cases be illiquid, and they increase
credit risk since the fund has exposure to the issuer of the referenced
obligation and either the counterparty to the credit default swap or, if it
is a cleared transaction, the brokerage firm through which the trade was
cleared and the clearing organization that is the counterparty to that
trade. In addition, for cleared trades, the brokerage firm would impose
margin requirements and would be able to require termination of those trades
in certain circumstances. Certain credit default swaps will be required to
be traded on a regulated execution facility or contract market that makes
them available for trading. The transition to trading these swaps on such a
facility or contract market may not result in swaps being easier to trade or
value and may present certain execution risks if such a facility or contract
market does not operate properly. Swaps may be difficult to unwind or
terminate. Certain index-based credit default swaps are structured in
tranches, whereby junior tranches assume greater default risk than senior
tranches. Once fully implemented, new regulations may make swaps more
costly, may limit their availability, or may otherwise adversely affect the
value or performance of these instruments. The extent and impact of these
regulations are not yet fully known and may not be for some time.
LEVERAGING RISK. The value of your investment may be more volatile and other
risks tend to be compounded if the fund borrows or uses derivatives or other
investments, such as ETFs, that have embedded leverage. Leverage generally
magnifies the effect of any increase or decrease in the value of the fund's
underlying assets or creates investment risk with respect to a larger pool
of assets than the fund would otherwise have, potentially resulting in the
loss of all assets. Engaging in such transactions may cause the fund to
liquidate positions when it may not be advantageous to do so to satisfy its
obligations or meet segregation requirements.
FORWARD FOREIGN CURRENCY TRANSACTION RISK. To the extent that the fund
12
enters into forward foreign currency transactions, it may not fully benefit
from or may lose money on the transactions if changes in currency rates do
not occur as anticipated or do not correspond accurately to changes in the
value of the fund's holdings, or if the counterparty defaults. Such
transactions may also prevent the fund from realizing profits on favorable
movements in exchange rates. Risk of counterparty default is greater for
counterparties located in emerging markets. The fund's ability to use
forward foreign currency transactions successfully depends on a number of
factors, including the forward foreign currency transactions being available
at prices that are not too costly, the availability of liquid markets, and
the adviser's judgment regarding the direction of changes in currency
exchange rates.
PORTFOLIO TURNOVER RISK. If the fund does a lot of trading, it may incur
additional operating expenses, which would reduce performance. A higher
level of portfolio turnover may also cause taxable shareowners to incur a
higher level of taxable income or capital gains.
Please note that there are many other factors that could adversely affect
your investment and that could prevent the fund from achieving its goals.
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
THE FUND'S PAST PERFORMANCE
The bar chart and table indicate the risks and volatility of an investment in
the fund by showing how the fund has performed in the past. The bar chart shows
changes in the performance of the fund's Class A shares from calendar year to
calendar year. The table shows the average annual total returns for each class
of the fund over time and compares these returns to the returns of the Standard
and Poor's 500 Index and the Barclays Capital Aggregate Bond Index, each a
broad-based measure of market performance that has characteristics relevant to
the fund's investment strategies. You can obtain updated performance
information by visiting https://us.pioneerinvestments.com/performance or by
calling 1-800-225-6292.
The fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
The bar chart does not reflect any sales charge you may pay when you buy fund
shares. If this amount was reflected, returns would be less than
13
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
those shown.
ANNUAL RETURN CLASS A SHARES (%)
(Year ended December 31)
[GRAPHIC APPEARS HERE]
'06 '07 '08 '09 '10 '11 '12
7.24 5.50 -21.11 24.58 9.69 .06 8.93
For the period covered by the bar chart:
THE HIGHEST CALENDAR QUARTERLY RETURN WAS 12.36% (04/01/2009 TO 06/30/2009).
THE LOWEST CALENDAR QUARTERLY RETURN WAS -12.54% (10/1/2008 TO 12/31/2008).
At September 30, 2013, the year-to-date return was 5.21%.
14
AVERAGE ANNUAL TOTAL RETURN (%)
(for periods ended December 31, 2012)
SINCE INCEPTION
1 YEAR 5 YEAR INCEPTION DATE
-------- -------- ----------- ----------
Class A 5/12/05
----------------------------------------------------- ----- ---- ---- -------
Return before taxes 2.72 2.07 3.59
----------------------------------------------------- ------ ---- ---- -------
Return after taxes on distributions 2.06 1.03 2.64
----------------------------------------------------- ------ ---- ---- -------
Return after taxes on distributions and sale of
shares 1.86 1.17 2.56
----------------------------------------------------- ------ ---- ---- -------
Class B 4.00 2.37 3.49 5/12/05
----------------------------------------------------- ------ ---- ---- -------
Class C 8.10 2.39 3.50 5/12/05
----------------------------------------------------- ------ ---- ---- -------
Class Y 7.52 1.50 2.99 10/5/05
----------------------------------------------------- ------ ---- ---- -------
Standard & Poor's 500 Stock Index
(reflects no deduction for fees, expenses or taxes) 16.00 1.66 4.94 5/12/05
----------------------------------------------------- ------ ---- ---- -------
Barclays Capital Aggregate Bond Index
(reflects no deduction for fees, expenses or taxes) 4.22 5.95 5.55 5/12/05
----------------------------------------------------- ------ ---- ---- -------
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on the investor's tax situation
and may differ from those shown. The after-tax returns shown are not relevant
to investors who hold fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts.
After-tax returns are shown only for Class A shares. After-tax returns for
Class B, Class C and Class Y shares will vary.
15
Fund Summary for
Pioneer Ibbotson Conservative Allocation Fund
MANAGEMENT
INVESTMENT ADVISER Pioneer Investment Management, Inc.
INVESTMENT SUBADVISER Ibbotson Associates, Inc.
PORTFOLIO MANAGEMENT Scott Wentsel, vice president and senior
portfolio manager at Ibbotson (portfolio
manager of the fund since 2005); Brian
Huckstep, portfolio manager at Ibbotson
(portfolio manager of the fund since 2005) and
Paul Arnold, senior consultant at Ibbotson
(portfolio manager of the fund since 2012)
PURCHASE AND SALE OF FUND SHARES
You may purchase, exchange or sell (redeem) shares each day the New York Stock
Exchange is open through your financial intermediary or, for accounts held
directly with the fund, by contacting the fund's transfer agent in writing or
by telephone (Pioneer Investment Management Shareholder Services, Inc., P.O.
Box 55014, Boston, MA 02205-5014, tel. 1-800-225-6292).
Your initial investment for Class A or Class C shares must be at least $1,000.
Additional investments must be at least $100 for Class A shares and $500 for
Class C shares. The initial investment for Class Y shares 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 investment
amount for Class Y shares. Effective December 31, 2009, Class B shares are no
longer offered to new or existing shareholders, except for reinvestment of
dividends and/or capital gains distributions and exchanges for Class B shares
of other Pioneer funds.
TAX INFORMATION
The fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and its related companies may pay the
intermediary for the sale of fund shares and related services. These payments
create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson or investment professional to recommend the
fund
16
over another investment. Ask your salesperson or investment professional or
visit your financial intermediary's website for more information.
17
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
INVESTMENT OBJECTIVES
Long-term capital growth and current income.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
You may qualify for sales charge discounts if you or your family invest, or
agree to invest in the future, at least $50,000 in Class A shares of the
Pioneer funds. More information about these and other discounts is available
from your investment professional and in the "Sales charges" section of the
prospectus beginning on page 105 and the "Sales charges" section of the
statement of additional information beginning on page 70.
SHAREOWNER FEES
(fees paid directly from your investment) CLASS A CLASS B CLASS C CLASS Y
---------------------------------------------------------- --------- --------- --------- --------
Maximum sales charge (load) when you buy shares (as a
percentage of offering price) 5.75% None 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 4% 1% None
---------------------------------------------------------- ---- --------- --------- --------
ANNUAL FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the
value of your investment) CLASS A CLASS B CLASS C CLASS Y
-------------------------------------------------------- --------- --------- --------- --------
Management Fees 0.13% 0.13% 0.13% 0.13%
-------------------------------------------------------- ---- ----- ---- ----
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.00%
-------------------------------------------------------- ---- ----- ---- ----
Other Expenses 0.28% 0.45% 0.21% 0.23%
-------------------------------------------------------- ---- ----- ---- ----
Acquired Fund Fees and Expenses/1/ 0.79% 0.79% 0.79% 0.79%
-------------------------------------------------------- ---- ----- ---- ----
Total Annual Fund Operating Expenses Plus Acquired Fund
Fees and Expenses 1.45% 2.37% 2.13% 1.15%
-------------------------------------------------------- ---- ----- ---- ----
Less: Fee Waiver and Expense Reimbursement/2/ 0.00% -0.06% 0.00% 0.00%
-------------------------------------------------------- ---- ----- ---- ----
Net Expenses Plus Acquired Fund Fees and Expenses/2/ 1.45% 2.31% 2.13% 1.15%
-------------------------------------------------------- ---- ----- ---- ----
1 Total annual fund operating expenses in the table, before and after fee
waiver and expense reimbursement, may be higher than the corresponding
ratio of expenses to average net assets shown in the "Financial
Highlights" section, which does not include acquired fund fees and
expenses.
2 The fund's investment adviser has contractually agreed to limit ordinary
operating expenses to the extent required to reduce fund 1.52% of the
average daily net assets attributable to Class B shares. Acquired fund
fees and expenses are not included in the expense limitation noted above.
This expense limitation is
18
in effect through December 1, 2014. There can be no assurance that the
adviser will extend the expense limitations beyond such time. While in
effect, the arrangement may be terminated for a class only by agreement of
the fund's investment adviser and the Board of Trustees. The expense
limitation does not limit the expenses of the underlying funds indirectly
incurred by a shareholder.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the fund for the time periods shown and then, except as
indicated, redeem all of your shares at the end of those periods. It also
assumes that (a) your investment has a 5% return each year and (b) the fund's
total annual operating expenses remain the same except for year one (which
considers the effect of the expense limitation). Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
IF YOU REDEEM YOUR SHARES IF YOU DO NOT REDEEM YOUR SHARES
---------------------------------------- ----------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES
----------------------------------------------------------------------------------
1 3 5 10 1 3 5 10
------- --------- --------- --------- ------- --------- --------- ---------
Class A $714 $1,007 $1,322 $2,210 $714 $1,007 $1,322 $2,210
--------- ---- ------ ------ ------ ---- ------ ------ ------
Class B 634 1,034 1,360 2,472 234 734 1,260 2,472
--------- ---- ------ ------ ------ ---- ------ ------ ------
Class C 316 667 1,144 2,462 216 667 1,144 2,462
--------- ---- ------ ------ ------ ---- ------ ------ ------
Class Y 117 365 633 1,398 117 365 633 1,398
--------- ---- ------ ------ ------ ---- ------ ------ ------
--------- ---- ------ ------ ------ ---- ------ ------ ------
PORTFOLIO TURNOVER
The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 9% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a "fund of funds." The fund seeks to achieve its investment
objectives by investing in other funds ("underlying funds" or "acquired funds")
rather than direct positions in securities. The underlying funds have their own
investment objectives and principal investment strategies and invest
19
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
in a variety of U.S. and foreign equity, debt and money market securities.
Equity securities in which underlying funds invest include common stocks,
preferred stocks and equity securities with common stock characteristics such
as real estate investment trusts, and exchange-traded funds that invest
primarily in equity securities. Debt securities in which underlying funds may
invest include U.S. government securities, debt securities of corporate and
other issuers, mortgage- and asset-backed securities, debt convertible to
equity securities and short term debt securities. Underlying funds also may use
derivatives, such as credit default swaps.
Because this is a moderate allocation fund, the fund's assets will be invested
in equity and fixed income funds, although a portion of its assets will be
invested in cash, cash equivalents, or in money market funds. Under normal
circumstances, the fund expects to invest its assets among asset classes in the
following ranges. The fund's investment adviser may change these allocation
ranges from time to time without the approval of or notice to shareholders. The
fixed income fund allocation includes the fund's investments in cash, cash
equivalents, and money market funds.
INVESTMENT STRATEGIES/ASSET CLASS TARGETS
EQUITY FUND FIXED INCOME FUND
ALLOCATION ALLOCATION
------------- ------------------
Pioneer Ibbotson Moderate Allocation Fund 50-70% 30-50%
------------------------------------------- ----- -----
The intended benefit of asset allocation is that the diversification provided
by allocating assets among asset classes, such as equity and debt securities,
reduces volatility over the long-term. The subadviser, subject to the
investment adviser's supervision, allocates the fund's assets among the
underlying funds using a two-step process. First, the subadviser seeks to
develop an optimal model allocation among underlying funds in different asset
classes using an analysis that looks at forecast returns, standard deviations
in historical returns and the correlation of the performance of different asset
classes. The subadviser then invests the assets in underlying funds that invest
in those asset classes. The subadviser's analysis in selecting and weighting
the underlying funds is based on quantitative and qualitative measures.
Periodically, the subadviser may recommend the rebalancing of a fund's assets
among asset classes and underlying funds. Decisions to sell shares of the
underlying funds are made for cash flow purposes, as a result of periodic
rebalancing of a fund's portfolio holdings, or as an adjustment to a fund's
target allocation.
20
As of the date of this prospectus, the fund invests solely in other Pioneer
funds. From time to time the fund's investment adviser may select new or
different underlying funds without prior approval or notice to shareholders.
PRINCIPAL RISKS OF INVESTING IN THE FUND
You could lose money on your investment in the fund. As with any mutual fund,
there is no guarantee that the fund will achieve its objectives. For purposes
of this section, "the fund" means the fund or, where applicable, an underlying
fund.
MARKET RISK. The values of securities held by the fund may go up or down,
sometimes rapidly or unpredictably, due to general market conditions, such as
real or perceived adverse economic, political, or regulatory conditions,
inflation, changes in interest or currency rates or adverse investor sentiment.
Adverse market conditions may be prolonged and may not have the same impact on
all types of securities. The values of securities may fall due to factors
affecting a particular issuer, industry or the securities market as a whole.
High public debt in the U.S. and other countries creates ongoing and systemic
market risks and policymaking uncertainty. The financial crisis that began in
2008 has caused a significant decline in the value and liquidity of many
securities of issuers worldwide. Governmental and non-governmental issuers have
defaulted on, or been forced to restructure, their debts, and many other
issuers have faced difficulties obtaining credit. These market conditions may
continue, worsen or spread, including in the U.S., Europe and beyond. Further
defaults or restructurings by governments and others of their debt could have
additional adverse effects on economies, financial markets and asset valuations
around the world. In response to the crisis, the U.S. and other governments and
the Federal Reserve and certain foreign central banks have taken steps to
support financial markets. The withdrawal of this support, failure of efforts
in response to the crisis, or investor perception that these efforts are not
succeeding could negatively affect financial markets generally as well as the
value and liquidity of certain securities. Whether or not the fund invests in
securities of issuers located in or with significant exposure to countries
experiencing economic and financial difficulties, the value and liquidity of
the fund's investments may be negatively affected. In addition, policy and
legislative changes in the U.S. and in other countries are affecting many
aspects of financial regulation. The impact of these changes on the markets,
and the practical implications
21
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
for market participants, may not be fully known for some time. The fund may
experience a substantial or complete loss on any individual security or
derivative position.
FUND OF FUNDS STRUCTURE AND LAYERING OF FEES. The fund invests in the
underlying funds, which may themselves invest in other investment companies,
including exchange-traded funds (ETFs). Each underlying fund has its own
investment risks that can affect the value of the underlying funds' shares and
therefore the net asset value of the fund. In addition to the fund's operating
expenses, the fund indirectly pays a portion of the expenses incurred by the
underlying funds. Consequently, an investment in the fund entails more direct
and indirect expenses than a direct investment in the underlying funds. Also,
one underlying fund may buy the same security that another underlying fund is
selling. You would indirectly bear the costs of both trades without achieving
any investment purpose. These transactions may also generate taxable gains. You
may receive taxable distributions consisting of gains from transactions by the
underlying funds as well as gains from the fund's transactions in shares of the
underlying funds.
ALLOCATION RISK. The subadviser's evaluation of asset classes and market
sectors in developing an allocation model, and its selection and weighting of
underlying funds within the allocation model, may prove to be incorrect. To the
extent that the fund invests a significant percentage of its assets in any one
underlying fund, the fund will be subject to a greater degree to the risks
particular to that underlying fund, and may experience greater volatility as a
result.
ASSET CLASS VARIATION RISK. The underlying funds invest principally in the
securities constituting their asset class (i.e., equity or fixed income).
However, under normal market conditions, an underlying fund may vary the
percentage of its assets in these securities (subject to any applicable
regulatory requirements). Depending upon the percentage of securities in a
particular asset class held by the underlying funds at any given time, and the
percentage of the fund's assets invested in various underlying funds, the
fund's actual exposure to the securities in a particular asset class may vary
substantially from its target asset allocation for that asset class.
EXPENSE RISK. Your actual costs of investing in the fund may be higher than the
expenses shown in "Annual fund operating expenses" for a variety of reasons.
For example, expense ratios may be higher than those shown if overall net
assets decrease. Net assets are more likely to decrease and fund expense ratios
are more likely to increase when markets are volatile.
22
PRINCIPAL RISKS OF INVESTING IN THE UNDERLYING FUNDS
RISKS OF EQUITY INVESTMENTS. Equity securities are more volatile and carry more
risks than some other forms of investment. Risks of investing in underlying
equity funds may include:
VALUE STYLE RISK. The prices of securities the adviser believes are
undervalued may not appreciate as expected or may go down. Value stocks may
fall out of favor with investors and underperform the overall equity market.
GROWTH STYLE RISK. The fund's investments may not have the growth potential
originally expected. Growth stocks may fall out of favor with investors and
underperform the overall equity market.
SMALL AND MID-SIZE COMPANIES RISK. Compared to large companies, small- and
mid-size companies, and the market for their equity securities, may be more
sensitive to changes in earnings results and investor expectations, have
more limited product lines and capital resources, experience sharper swings
in market values, have limited liquidity, be harder to value or to sell at
the times and prices the adviser thinks appropriate, and offer greater
potential for gain and loss.
RISKS OF INVESTMENTS IN REITS. Investing in REITs involves unique risks.
They are significantly affected by the market for real estate and are
dependent upon management skills and cash flow. REITs may have lower trading
volumes and may be subject to more abrupt or erratic price movements than
the overall securities markets. In addition to its own expenses, the fund
will indirectly bear its proportionate share of any management and other
expenses paid by REITs in which it invests. Many real estate companies,
including REITs, utilize leverage.
PREFERRED STOCKS RISK. Preferred stocks may pay fixed or adjustable rates of
return. Preferred stocks are subject to issuer-specific and market risks
applicable generally to equity securities. In addition, a company's
preferred stocks generally pay dividends only after the company makes
required payments to holders of its bonds and other debt. Thus, the value of
preferred stocks will usually react more strongly than bonds and other debt
to actual or perceived changes in the company's financial condition or
prospects. The market value of preferred stocks generally decreases when
interest rates rise. Preferred stocks of smaller companies may be more
vulnerable to adverse developments than preferred stock of larger companies.
23
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
RISKS OF INITIAL PUBLIC OFFERINGS. Companies involved in initial public
offerings (IPOs) generally have limited operating histories, and prospects
for future profitability are uncertain. The market for IPO issuers has been
volatile, and share prices of newly public companies have fluctuated
significantly over short periods of time. Further, stocks of newly-public
companies may decline shortly after the IPO. There is no assurance that the
fund will have access to IPOs. The purchase of IPO shares may involve high
transaction costs.
RISKS OF CONVERTIBLE SECURITIES. The market values of convertible securities
tend to decline as interest rates increase and, conversely, to increase as
interest rates decline. A downturn in equity markets may cause the price of
convertible securities to decrease relative to other fixed income
securities.
RISKS OF FIXED INCOME INVESTMENTS. Risks of investing in underlying fixed
income funds may include:
INTEREST RATE RISK. Interest rates may go up, causing the value of the
fund's investments to decline (this risk generally will be greater for
securities with longer maturities). Interest rates in the U.S. recently have
been historically low and may be expected to go back up.
CREDIT RISK. If an issuer or guarantor of a security held by the fund or a
counterparty to a financial contract with the fund defaults on its
obligation to pay principal and/or interest, has its credit rating
downgraded or is perceived to be less creditworthy, or the credit quality or
value of any underlying assets declines, the value of your investment will
decline. Credit risk is broadly gauged by the credit ratings of the
securities in which the fund invests. However, ratings are only the opinions
of the companies issuing them and are not guarantees as to quality.
PREPAYMENT OR CALL RISK. Many issuers have a right to prepay their
securities. If interest rates fall, an issuer may exercise this right. If
this happens, the fund will be forced to reinvest prepayment proceeds at a
time when yields on securities available in the market are lower than the
yield on the prepaid security. The fund also may lose any premium it paid on
the security.
EXTENSION 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.
24
U.S. GOVERNMENT AGENCY OBLIGATIONS RISK. The fund invests in obligations
issued by agencies and instrumentalities of the U.S. government.
Government-sponsored entities such as Federal National Mortgage Association
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the
Federal Home Loan Banks (FHLBs), although chartered or sponsored by
Congress, are not funded by congressional appropriations and the debt and
mortgage-backed securities issued by them are neither guaranteed nor issued
by the U.S. government. Such debt and mortgage-backed securities are subject
to the risk of default on the payment of interest and/or principal, similar
to debt of private issuers. Although the U.S. government has provided
financial support to Fannie Mae and Freddie Mac in the past, there can be no
assurance that it will support these or other government-sponsored entities
in the future.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES RISK. The value of
mortgage-related and asset-backed securities will be influenced by factors
affecting the housing market and the assets underlying such securities. As a
result, during periods of declining asset value, difficult or frozen credit
markets, swings in interest rates, or deteriorating economic conditions,
mortgage-related and asset-backed securities may decline in value, face
valuation difficulties, become more volatile and/or become illiquid.
Additionally, during such periods and also under normal conditions, these
securities are also subject to prepayment and call risk. Some of these
securities may receive little or no collateral protection from the
underlying assets and are thus subject to the risk of default. The risk of
such defaults is generally higher in the case of mortgage-backed investments
that include so-called "sub-prime" mortgages. The structure of some of these
securities may be complex and there may be less available information than
for other types of debt securities. Upon the occurrence of certain
triggering events or defaults, the fund may become the holder of underlying
assets at a time when those assets may be difficult to sell or may be sold
only at a loss.
RISKS OF INSTRUMENTS THAT ALLOW FOR BALLOON PAYMENTS OR NEGATIVE
AMORTIZATION PAYMENTS. Certain debt instruments allow for balloon payments
or negative amortization payments. Such instruments permit the borrower to
avoid paying currently a portion of the interest accruing on the instrument.
While these features make the debt instrument more affordable to the
borrower in the near term, they increase the risk that the borrower will be
unable to make the resulting higher payment or payments that become due at
the maturity of the loan.
25
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
RISKS OF SUBORDINATED SECURITIES. A holder of securities that are
subordinated or "junior" to more senior securities of an issuer is entitled
to payment after holders of more senior securities of the issuer.
Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer, any loss incurred by the
subordinated securities is likely to be proportionately greater, and any
recovery of interest or principal may take more time. As a result, even a
perceived decline in creditworthiness of the issuer is likely to have a
greater impact on them.
HIGH YIELD OR "JUNK" BOND RISK. Debt securities that are below investment
grade, called "junk bonds," are speculative, have a higher risk of default
or are already in default, tend to be less liquid and are more difficult to
value than higher grade securities. Junk bonds tend to be volatile and more
susceptible to adverse events and negative sentiments. These risks are more
pronounced for securities that are already in default.
RISKS OF INVESTING IN EVENT-LINKED BONDS. The return of principal and the
payment of interest on "event-linked" bonds are contingent on the
non-occurrence of a pre-defined "trigger" event, such as a hurricane or an
earthquake of a specific magnitude. If a trigger event, as defined within
the terms of an event-linked bond, involves losses or other metrics
exceeding a specific magnitude in the geographic region and time period
specified therein, the fund may lose a portion or all of its accrued
interest and/or principal invested in the event-linked bond. In addition to
the specified trigger events, event-linked bonds may expose the fund to
other risks, including but not limited to issuer (credit) default, adverse
regulatory or jurisdictional interpretations and adverse tax consequences.
RISKS OF INVESTING IN FLOATING RATE LOANS. Floating rate loans and similar
investments may be illiquid or less liquid than other investments. The value
of collateral, if any, securing a floating rate loan can decline or may be
insufficient to meet the issuer's obligations or may be difficult to
liquidate. No active trading market may exist for many floating rate loans,
and many loans are subject to restrictions on resale. Market quotations for
these securities may be volatile and/or subject to large spreads between bid
and ask prices. Any secondary market may be subject to irregular trading
activity and extended trade settlement periods.
RISKS OF INVESTING IN INVERSE FLOATING RATE OBLIGATIONS. The interest rate
on inverse floating rate obligations will generally decrease as short-term
interest rates increase, and increase as short-term rates decrease. Due
26
to their leveraged structure, the sensitivity of the market value of an
inverse floating rate obligation to changes in interest rates is generally
greater than a comparable long-term bond issued by the same issuer and with
similar credit quality, redemption and maturity provisions. Inverse floating
rate obligations may be volatile and involve leverage risk.
INFLATION-LINKED SECURITY RISK. The principal or interest of
inflation-linked securities such as TIPS is adjusted periodically to a
specified rate of inflation. The inflation index used may not accurately
measure the real rate of inflation. Inflation-linked securities may lose
value in the event that the actual rate of inflation is different than the
rate of the inflation index.
RISKS OF ZERO COUPON BONDS, PAYMENT IN KIND, DEFERRED AND CONTINGENT PAYMENT
SECURITIES. These securities may be more speculative and may fluctuate more
in value than securities which pay income periodically and in cash. In
addition, although the fund receives no periodic cash payments on such
securities the fund is deemed for tax purposes to receive income from such
securities, which applicable tax rules require the fund to distribute to
shareholders. Such distributions may be taxable when distributed to
shareholders.
RISKS OF EQUITY AND FIXED INCOME INVESTMENTS. Risks of investing in underlying
equity and fixed income funds may include:
PORTFOLIO SELECTION RISK. The adviser's judgment about the attractiveness,
relative value or potential appreciation of an equity security, or about the
quality, relative yield or relative value of a fixed income security, or
about a particular sector, region or market segment, or about an investment
strategy, or about interest rates, may prove to be incorrect.
LIQUIDITY RISK. Some securities and derivatives held by the fund may be
impossible or difficult to sell or unwind particularly during times of
market turmoil. Illiquid securities and derivatives also may be difficult to
value. If the fund is forced to sell an illiquid asset or unwind a
derivative position to meet redemption requests or other cash needs, the
fund may be forced to sell at a loss.
MARKET SEGMENT RISK. To the extent the fund emphasizes, from time to time,
investments in a market segment, the fund will be subject to a greater
degree to the risks particular to that segment, and may experience greater
market fluctuation than a fund without the same focus.
27
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
RISKS OF NON-U.S. INVESTMENTS. Investing in non-U.S. issuers, or in U.S.
issuers that have significant exposure to foreign markets, may involve
unique risks compared to investing in securities of U.S. issuers. These
risks are more pronounced for issuers in emerging markets or to the extent
that the fund invests significantly in one region or country. These risks
may include different financial reporting practices and regulatory
standards, less liquid trading markets, extreme price volatility, currency
risks, changes in economic, political, regulatory and social conditions,
sustained economic downturns, financial instability, tax burdens, and
investment and repatriation restrictions. Lack of information and less
market regulation also may affect the value of these securities. Withholding
and other non-U.S. taxes may decrease the fund's return. Non-U.S. issuers
may be located in parts of the world that have historically been prone to
natural disasters. Investing in depositary receipts is subject to many of
the same risks as investing directly in non-U.S. issuers.
DERIVATIVES RISK. Using options, swaps, futures and other derivatives can
increase fund losses and reduce opportunities for gains when market prices,
interest rates or the derivative instruments themselves behave in a way not
anticipated by the fund. Using derivatives may increase the volatility of
the fund's net asset value and may not provide the result intended.
Derivatives may have a leveraging effect on the fund. Some derivatives have
the potential for unlimited loss, regardless of the size of the fund's
initial investment. Changes in a derivative's value may not correlate well
with the referenced asset or metric. The fund also may have to sell assets
at inopportune times to satisfy its obligations. Derivatives may be
difficult to sell, unwind or value, and the counterparty may default on its
obligations to the fund. New regulations are changing the derivatives
markets. The regulations may make using derivatives more costly, may limit
their availability, or may otherwise adversely affect their value or
performance. For derivatives that are required to be traded through a
clearinghouse or exchange, the fund also will be exposed to the credit risk
of the clearinghouse and the broker that submits trades for the fund. It is
possible that certain derivatives that are required to be cleared, such as
certain swap contracts, will not be accepted for clearing. In addition,
regulated trading facilities for swap contracts are relatively new; they may
not function as intended, which could impair the ability to enter into swap
contracts. The extent and impact of the new regulations are not yet fully
known and may not be for some time.
28
CREDIT DEFAULT SWAP RISK. Credit default swap contracts, a type of
derivative instrument, involve special risks and may result in losses to the
fund. Credit default swaps may in some cases be illiquid, and they increase
credit risk since the fund has exposure to the issuer of the referenced
obligation and either the counterparty to the credit default swap or, if it
is a cleared transaction, the brokerage firm through which the trade was
cleared and the clearing organization that is the counterparty to that
trade. In addition, for cleared trades, the brokerage firm would impose
margin requirements and would be able to require termination of those trades
in certain circumstances. Certain credit default swaps will be required to
be traded on a regulated execution facility or contract market that makes
them available for trading. The transition to trading these swaps on such a
facility or contract market may not result in swaps being easier to trade or
value and may present certain execution risks if such a facility or contract
market does not operate properly. Swaps may be difficult to unwind or
terminate. Certain index-based credit default swaps are structured in
tranches, whereby junior tranches assume greater default risk than senior
tranches. Once fully implemented, new regulations may make swaps more
costly, may limit their availability, or may otherwise adversely affect the
value or performance of these instruments. The extent and impact of these
regulations are not yet fully known and may not be for some time.
LEVERAGING RISK. The value of your investment may be more volatile and other
risks tend to be compounded if the fund borrows or uses derivatives or other
investments, such as ETFs, that have embedded leverage. Leverage generally
magnifies the effect of any increase or decrease in the value of the fund's
underlying assets or creates investment risk with respect to a larger pool
of assets than the fund would otherwise have, potentially resulting in the
loss of all assets. Engaging in such transactions may cause the fund to
liquidate positions when it may not be advantageous to do so to satisfy its
obligations or meet segregation requirements.
FORWARD FOREIGN CURRENCY TRANSACTION RISK. To the extent that the fund
enters into forward foreign currency transactions, it may not fully benefit
from or may lose money on the transactions if changes in currency rates do
not occur as anticipated or do not correspond accurately to changes in the
value of the fund's holdings, or if the counterparty defaults. Such
transactions may also prevent the fund from realizing profits on favorable
movements in exchange rates. Risk of counterparty default is greater for
counterparties located in emerging markets. The fund's ability to use
29
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
forward foreign currency transactions successfully depends on a number of
factors, including the forward foreign currency transactions being available
at prices that are not too costly, the availability of liquid markets, and
the adviser's judgment regarding the direction of changes in currency
exchange rates.
PORTFOLIO TURNOVER RISK. If the fund does a lot of trading, it may incur
additional operating expenses, which would reduce performance. A higher
level of portfolio turnover may also cause taxable shareowners to incur a
higher level of taxable income or capital gains.
Please note that there are many other factors that could adversely affect
your investment and that could prevent the fund from achieving its goals.
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
THE FUND'S PAST PERFORMANCE
The bar chart and table indicate the risks and volatility of an investment in
the fund by showing how the fund has performed in the past. The bar chart shows
changes in the performance of the fund's Class A shares from calendar year to
calendar year. The table shows the average annual total returns for each class
of the fund over time and compares these returns to the returns of the Standard
and Poor's 500 Index and the Barclays Capital Aggregate Bond Index, each a
broad-based measure of market performance that has characteristics relevant to
the fund's investment strategies. You can obtain updated performance
information by visiting https://us.pioneerinvestments.com/performance or by
calling 1-800-225-6292.
The fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
The bar chart does not reflect any sales charge you may pay when you buy fund
shares. If this amount was reflected, returns would be less than those shown.
30
ANNUAL RETURN CLASS A SHARES (%)
(Year ended December 31)
[GRAPHIC APPEARS HERE]
'05 '06 '07 '08 '09 '10 '11 '12
6.48 10.49 5.24 -30.22 28.96 11.96 -2.12 10.21
For the period covered by the bar chart:
THE HIGHEST CALENDAR QUARTERLY RETURN WAS 16.41% (04/01/2009 TO 06/30/2009).
THE LOWEST CALENDAR QUARTERLY RETURN WAS -17.24% (10/01/2008 TO 12/31/2008).
At September 30, 2013, the year-to-date return was 10.49%.
31
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
AVERAGE ANNUAL TOTAL RETURN (%)
(for periods ended December 31, 2012)
SINCE INCEPTION
1 YEAR 5 YEAR INCEPTION DATE
-------- -------- ----------- ----------
Class A 8/9/04
----------------------------------------------------- ----- ----- ---- ------
Return before taxes 3.86 0.48 4.11
----------------------------------------------------- ------ ------ ---- ------
Return after taxes on distributions 3.33 -0.40 3.22
----------------------------------------------------- ------ ------ ---- ------
Return after taxes on distributions and sale of
shares 2.69 -0.03 3.16
----------------------------------------------------- ------ ------ ---- ------
Class B 5.50 0.89 3.62 8/9/04
----------------------------------------------------- ------ ------ ---- ------
Class C 9.43 0.93 3.59 8/9/04
----------------------------------------------------- ------ ------ ---- ------
Class Y 10.54 2.23 4.16 9/26/05
----------------------------------------------------- ------ ------ ---- -------
Standard & Poor's 500 Index
(reflects no deduction for fees, expenses or taxes) 16.00 1.66 5.72 8/9/04
----------------------------------------------------- ------ ------ ---- -------
Barclays Capital Aggregate Bond Index
(reflects no deduction for fees, expenses or taxes) 4.22 5.95 5.42 8/9/04
----------------------------------------------------- ------ ------ ---- -------
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on the investor's tax situation
and may differ from those shown. The after-tax returns shown are not relevant
to investors who hold fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts.
After-tax returns are shown only for Class A shares. After-tax returns for
Class B, Class C and Class Y shares will vary.
32
MANAGEMENT
INVESTMENT ADVISER Pioneer Investment Management, Inc.
INVESTMENT SUBADVISER Ibbotson Associates, Inc.
PORTFOLIO MANAGEMENT Scott Wentsel, vice president and senior
portfolio manager at Ibbotson (portfolio
manager of the fund since 2005); Brian
Huckstep, portfolio manager at Ibbotson
(portfolio manager of the fund since 2005);
Paul Arnold, senior consultant at Ibbotson
(portfolio manager of the fund since 2012)
PURCHASE AND SALE OF FUND SHARES
You may purchase, exchange or sell (redeem) shares each day the New York Stock
Exchange is open through your financial intermediary or, for accounts held
directly with the fund, by contacting the fund's transfer agent in writing or
by telephone (Pioneer Investment Management Shareholder Services, Inc., P.O.
Box 55014, Boston, MA 02205-5014, tel. 1-800-225-6292).
Your initial investment for Class A or Class C shares must be at least $1,000.
Additional investments must be at least $100 for Class A shares and $500 for
Class C shares. The initial investment for Class Y shares 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 investment
amount for Class Y shares. Effective December 31, 2009, Class B shares are no
longer offered to new or existing shareholders, except for reinvestment of
dividends and/or capital gains distributions and exchanges for Class B shares
of other Pioneer funds.
TAX INFORMATION
The fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and its related companies may pay the
intermediary for the sale of fund shares and related services. These payments
create a conflict of interest by influencing the broker-dealer or other
intermediary
33
Fund Summary for
Pioneer Ibbotson Moderate Allocation Fund
and your salesperson or investment professional to recommend the fund over
another investment. Ask your salesperson or investment professional or visit
your financial intermediary's website for more information.
34
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
INVESTMENT OBJECTIVES
Long-term capital growth and current income.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
You may qualify for sales charge discounts if you or your family invest, or
agree to invest in the future, at least $50,000 in Class A shares of the
Pioneer funds. More information about these and other discounts is available
from your investment professional and in the "Sales charges" section of the
prospectus beginning on page 105 and the "Sales charges" section of the
statement of additional information beginning on page 70.
SHAREOWNER FEES
(fees paid directly from your investment) CLASS A CLASS B CLASS C CLASS Y
---------------------------------------------------------- --------- --------- --------- --------
Maximum sales charge (load) when you buy shares (as a
percentage of offering price) 5.75% None 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 4% 1% None
---------------------------------------------------------- ---- --------- --------- --------
ANNUAL FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the
value of your investment) CLASS A CLASS B CLASS C CLASS Y
-------------------------------------------------------- --------- --------- --------- --------
Management Fees 0.13% 0.13% 0.13% 0.13%
-------------------------------------------------------- ---- ----- ---- ----
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.00%
-------------------------------------------------------- ---- ----- ---- ----
Other Expenses 0.31% 0.47% 0.27% 0.31%
-------------------------------------------------------- ---- ----- ---- ----
Acquired Fund Fees and Expenses/1/ 0.84% 0.84% 0.84% 0.84%
-------------------------------------------------------- ---- ----- ---- ----
Total Annual Fund Operating Expenses Plus Acquired Fund
Fees and Expenses 1.53% 2.44% 2.24% 1.28%
-------------------------------------------------------- ---- ----- ---- ----
Less: Fee Waiver and Expense Reimbursement/2/ 0.00% -0.03% 0.00% 0.00%
-------------------------------------------------------- ---- ----- ---- ----
Net Expenses Plus Acquired Fund Fees and Expenses/2/ 1.53% 2.41% 2.24% 1.28%
-------------------------------------------------------- ---- ----- ---- ----
1 Total annual fund operating expenses in the table, before and after fee
waiver and expense reimbursement, may be higher than the corresponding
ratio of expenses to average net assets shown in the "Financial
Highlights" section, which does not include acquired fund fees and
expenses.
2 The fund's investment adviser has contractually agreed to limit ordinary
operating expenses to the extent required to reduce fund expenses to 1.57%
of the average daily net assets attributable to Class B shares. Acquired
fund fees and expenses are not included in the expense limitations noted
above. This
35
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
expense limitation is in effect through December 1, 2014. There can be no
assurance that the adviser will extend the expense limitations beyond such
time. While in effect, the arrangement may be terminated for a class only
by agreement of the fund's investment adviser and the Board of Trustees.
The expense limitation does not limit the expenses of the underlying funds
indirectly incurred by a shareholder.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the fund for the time periods shown and then, except as
indicated, redeem all of your shares at the end of those periods. It also
assumes that (a) your investment has a 5% return each year and (b) the fund's
total annual operating expenses remain the same except for year one (which
considers the effect of the expense limitation). Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
IF YOU REDEEM YOUR SHARES IF YOU DO NOT REDEEM YOUR SHARES
---------------------------------------- ----------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES
----------------------------------------------------------------------------------
1 3 5 10 1 3 5 10
------- --------- --------- --------- ------- --------- --------- ---------
Class A $722 $1,031 $1,361 $2,294 $722 $1,031 $1,361 $2,294
--------- ---- ------ ------ ------ ---- ------ ------ ------
Class B 644 1,058 1,398 2,549 244 758 1,298 2,549
--------- ---- ------ ------ ------ ---- ------ ------ ------
Class C 327 700 1,200 2,575 227 700 1,200 2,575
--------- ---- ------ ------ ------ ---- ------ ------ ------
Class Y 130 406 702 1,545 130 406 702 1,545
--------- ---- ------ ------ ------ ---- ------ ------ ------
PORTFOLIO TURNOVER
The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 6% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a "fund of funds." The fund seeks to achieve its investment
objectives by investing in other funds ("underlying funds" or "acquired funds")
rather than direct positions in securities. The underlying funds have their own
investment objectives and principal investment strategies and invest
36
in a variety of U.S. and foreign equity, debt and money market securities.
Equity securities in which underlying funds invest include common stocks,
preferred stocks and equity securities with common stock characteristics such
as real estate investment trusts, and exchange-traded funds that invest
primarily in equity securities. Debt securities in which underlying funds may
invest include U.S. government securities, debt securities of corporate and
other issuers, mortgage- and asset-backed securities, debt convertible to
equity securities and short term debt securities. Underlying funds also may use
derivatives, such as credit default swaps.
Because this is a growth allocation fund, the fund's assets will be invested in
equity and fixed income funds, although a small portion of its assets will be
invested in cash, cash equivalents, or in money market funds. Under normal
circumstances, the fund expects to invest its assets among asset classes in the
following ranges. The fund's investment adviser may change these allocation
ranges from time to time without the approval of or notice to shareholders. The
fixed income fund allocation includes the fund's investments in cash, cash
equivalents, and money market funds.
INVESTMENT STRATEGIES/ASSET CLASS TARGETS
EQUITY FUND FIXED INCOME FUND
ALLOCATION ALLOCATION
------------- ------------------
Pioneer Ibbotson Growth Allocation Fund 70-100% 0-30%
----------------------------------------- ------ ----
The intended benefit of asset allocation is that the diversification provided
by allocating assets among asset classes, such as equity and debt securities,
reduces volatility over the long-term. The subadviser, subject to the
investment adviser's supervision, allocates the fund's assets among the
underlying funds using a two-step process. First, the subadviser seeks to
develop an optimal model allocation among underlying funds in different asset
classes using an analysis that looks at forecast returns, standard deviations
in historical returns and the correlation of the performance of different asset
classes. The subadviser then invests the assets in underlying funds that invest
in those asset classes. The subadviser's analysis in selecting and weighting
the underlying funds is based on quantitative and qualitative measures.
Periodically, the subadviser may recommend the rebalancing of a fund's assets
among asset classes and underlying funds. Decisions to sell shares of the
underlying funds are made for cash flow purposes, as a result of periodic
rebalancing of a fund's portfolio holdings, or as an adjustment to a fund's
target allocation.
37
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
As of the date of this prospectus, the fund invests solely in other Pioneer
funds. From time to time the fund's investment adviser may select new or
different underlying funds without prior approval or notice to shareholders.
PRINCIPAL RISKS OF INVESTING IN THE FUND
You could lose money on your investment in the fund. As with any mutual fund,
there is no guarantee that the fund will achieve its objectives. For purposes
of this section, "the fund" means the fund or, where applicable, an underlying
fund.
MARKET RISK. The values of securities held by the fund may go up or down,
sometimes rapidly or unpredictably, due to general market conditions, such as
real or perceived adverse economic, political, or regulatory conditions,
inflation, changes in interest or currency rates or adverse investor sentiment.
Adverse market conditions may be prolonged and may not have the same impact on
all types of securities. The values of securities may fall due to factors
affecting a particular issuer, industry or the securities market as a whole.
High public debt in the U.S. and other countries creates ongoing and systemic
market risks and policymaking uncertainty. The financial crisis that began in
2008 has caused a significant decline in the value and liquidity of many
securities of issuers worldwide. Governmental and non-governmental issuers have
defaulted on, or been forced to restructure, their debts, and many other
issuers have faced difficulties obtaining credit. These market conditions may
continue, worsen or spread, including in the U.S., Europe and beyond. Further
defaults or restructurings by governments and others of their debt could have
additional adverse effects on economies, financial markets and asset valuations
around the world. In response to the crisis, the U.S. and other governments and
the Federal Reserve and certain foreign central banks have taken steps to
support financial markets. The withdrawal of this support, failure of efforts
in response to the crisis, or investor perception that these efforts are not
succeeding could negatively affect financial markets generally as well as the
value and liquidity of certain securities. Whether or not the fund invests in
securities of issuers located in or with significant exposure to countries
experiencing economic and financial difficulties, the value and liquidity of
the fund's investments may be negatively affected. In addition, policy and
legislative changes in the U.S. and in other countries are affecting many
aspects of financial regulation. The impact of these changes on the markets,
and the practical implications
38
for market participants, may not be fully known for some time. The fund may
experience a substantial or complete loss on any individual security or
derivative position.
FUND OF FUNDS STRUCTURE AND LAYERING OF FEES. The fund invests in the
underlying funds, which may themselves invest in other investment companies,
including exchange-traded funds (ETFs). Each underlying fund has its own
investment risks that can affect the value of the underlying funds' shares and
therefore the net asset value of the fund. In addition to the fund's operating
expenses, the fund indirectly pays a portion of the expenses incurred by the
underlying funds. Consequently, an investment in the fund entails more direct
and indirect expenses than a direct investment in the underlying funds. Also,
one underlying fund may buy the same security that another underlying fund is
selling. You would indirectly bear the costs of both trades without achieving
any investment purpose. These transactions may also generate taxable gains. You
may receive taxable distributions consisting of gains from transactions by the
underlying funds as well as gains from the fund's transactions in shares of the
underlying funds.
ALLOCATION RISK. The subadviser's evaluation of asset classes and market
sectors in developing an allocation model, and its selection and weighting of
underlying funds within the allocation model, may prove to be incorrect. To the
extent that the fund invests a significant percentage of its assets in any one
underlying fund, the fund will be subject to a greater degree to the risks
particular to that underlying fund, and may experience greater volatility as a
result.
ASSET CLASS VARIATION RISK. The underlying funds invest principally in the
securities constituting their asset class (i.e., equity or fixed income).
However, under normal market conditions, an underlying fund may vary the
percentage of its assets in these securities (subject to any applicable
regulatory requirements). Depending upon the percentage of securities in a
particular asset class held by the underlying funds at any given time, and the
percentage of the fund's assets invested in various underlying funds, the
fund's actual exposure to the securities in a particular asset class may vary
substantially from its target asset allocation for that asset class.
EXPENSE RISK. Your actual costs of investing in the fund may be higher than the
expenses shown in "Annual fund operating expenses" for a variety of reasons.
For example, expense ratios may be higher than those shown if overall net
assets decrease. Net assets are more likely to decrease and fund expense ratios
are more likely to increase when markets are volatile.
39
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
PRINCIPAL RISKS OF INVESTING IN THE UNDERLYING FUNDS
RISKS OF EQUITY INVESTMENTS. Equity securities are more volatile and carry more
risks than some other forms of investment. Risks of investing in underlying
equity funds may include:
VALUE STYLE RISK. The prices of securities the adviser believes are
undervalued may not appreciate as expected or may go down. Value stocks may
fall out of favor with investors and underperform the overall equity market.
GROWTH STYLE RISK. The fund's investments may not have the growth potential
originally expected. Growth stocks may fall out of favor with investors and
underperform the overall equity market.
SMALL AND MID-SIZE COMPANIES RISK. Compared to large companies, small- and
mid-size companies, and the market for their equity securities, may be more
sensitive to changes in earnings results and investor expectations, have
more limited product lines and capital resources, experience sharper swings
in market values, have limited liquidity, be harder to value or to sell at
the times and prices the adviser thinks appropriate, and offer greater
potential for gain and loss.
RISKS OF INVESTMENTS IN REITS. Investing in REITs involves unique risks.
They are significantly affected by the market for real estate and are
dependent upon management skills and cash flow. REITs may have lower trading
volumes and may be subject to more abrupt or erratic price movements than
the overall securities markets. In addition to its own expenses, the fund
will indirectly bear its proportionate share of any management and other
expenses paid by REITs in which it invests. Many real estate companies,
including REITs, utilize leverage.
PREFERRED STOCKS RISK. Preferred stocks may pay fixed or adjustable rates of
return. Preferred stocks are subject to issuer-specific and market risks
applicable generally to equity securities. In addition, a company's
preferred stocks generally pay dividends only after the company makes
required payments to holders of its bonds and other debt. Thus, the value of
preferred stocks will usually react more strongly than bonds and other debt
to actual or perceived changes in the company's financial condition or
prospects. The market value of preferred stocks generally decreases when
interest rates rise. Preferred stocks of smaller companies may be more
vulnerable to adverse developments than preferred stock of larger companies.
40
RISKS OF INITIAL PUBLIC OFFERINGS. Companies involved in initial public
offerings (IPOs) generally have limited operating histories, and prospects
for future profitability are uncertain. The market for IPO issuers has been
volatile, and share prices of newly public companies have fluctuated
significantly over short periods of time. Further, stocks of newly-public
companies may decline shortly after the IPO. There is no assurance that the
fund will have access to IPOs. The purchase of IPO shares may involve high
transaction costs.
RISKS OF CONVERTIBLE SECURITIES. The market values of convertible securities
tend to decline as interest rates increase and, conversely, to increase as
interest rates decline. A downturn in equity markets may cause the price of
convertible securities to decrease relative to other fixed income
securities.
RISKS OF FIXED INCOME INVESTMENTS. Risks of investing in underlying fixed
income funds may include:
INTEREST RATE RISK. Interest rates may go up, causing the value of the
fund's investments to decline (this risk generally will be greater for
securities with longer maturities). Interest rates in the U.S. recently have
been historically low and may be expected to go back up.
CREDIT RISK. If an issuer or guarantor of a security held by the fund or a
counterparty to a financial contract with the fund defaults on its
obligation to pay principal and/or interest, has its credit rating
downgraded or is perceived to be less creditworthy, or the credit quality or
value of any underlying assets declines, the value of your investment will
decline. Credit risk is broadly gauged by the credit ratings of the
securities in which the fund invests. However, ratings are only the opinions
of the companies issuing them and are not guarantees as to quality.
PREPAYMENT OR CALL RISK. Many issuers have a right to prepay their
securities. If interest rates fall, an issuer may exercise this right. If
this happens, the fund will be forced to reinvest prepayment proceeds at a
time when yields on securities available in the market are lower than the
yield on the prepaid security. The fund also may lose any premium it paid on
the security.
EXTENSION 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.
41
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
U.S. GOVERNMENT AGENCY OBLIGATIONS RISK. The fund invests in obligations
issued by agencies and instrumentalities of the U.S. government.
Government-sponsored entities such as Federal National Mortgage Association
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the
Federal Home Loan Banks (FHLBs), although chartered or sponsored by
Congress, are not funded by congressional appropriations and the debt and
mortgage-backed securities issued by them are neither guaranteed nor issued
by the U.S. government. Such debt and mortgage-backed securities are subject
to the risk of default on the payment of interest and/or principal, similar
to debt of private issuers. Although the U.S. government has provided
financial support to Fannie Mae and Freddie Mac in the past, there can be no
assurance that it will support these or other government-sponsored entities
in the future.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES RISK. The value of
mortgage-related and asset-backed securities will be influenced by factors
affecting the housing market and the assets underlying such securities. As a
result, during periods of declining asset value, difficult or frozen credit
markets, swings in interest rates, or deteriorating economic conditions,
mortgage-related and asset-backed securities may decline in value, face
valuation difficulties, become more volatile and/or become illiquid.
Additionally, during such periods and also under normal conditions, these
securities are also subject to prepayment and call risk. Some of these
securities may receive little or no collateral protection from the
underlying assets and are thus subject to the risk of default. The risk of
such defaults is generally higher in the case of mortgage-backed investments
that include so-called "sub-prime" mortgages. The structure of some of these
securities may be complex and there may be less available information than
for other types of debt securities. Upon the occurrence of certain
triggering events or defaults, the fund may become the holder of underlying
assets at a time when those assets may be difficult to sell or may be sold
only at a loss.
RISKS OF INSTRUMENTS THAT ALLOW FOR BALLOON PAYMENTS OR NEGATIVE
AMORTIZATION PAYMENTS. Certain debt instruments allow for balloon payments
or negative amortization payments. Such instruments permit the borrower to
avoid paying currently a portion of the interest accruing on the instrument.
While these features make the debt instrument more affordable to the
borrower in the near term, they increase the risk that the borrower will be
unable to make the resulting higher payment or payments that become due at
the maturity of the loan.
42
RISKS OF SUBORDINATED SECURITIES. A holder of securities that are
subordinated or "junior" to more senior securities of an issuer is entitled
to payment after holders of more senior securities of the issuer.
Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer, any loss incurred by the
subordinated securities is likely to be proportionately greater, and any
recovery of interest or principal may take more time. As a result, even a
perceived decline in creditworthiness of the issuer is likely to have a
greater impact on them.
HIGH YIELD OR "JUNK" BOND RISK. Debt securities that are below investment
grade, called "junk bonds," are speculative, have a higher risk of default
or are already in default, tend to be less liquid and are more difficult to
value than higher grade securities. Junk bonds tend to be volatile and more
susceptible to adverse events and negative sentiments. These risks are more
pronounced for securities that are already in default.
RISKS OF INVESTING IN EVENT-LINKED BONDS. The return of principal and the
payment of interest on "event-linked" bonds are contingent on the
non-occurrence of a pre-defined "trigger" event, such as a hurricane or an
earthquake of a specific magnitude. If a trigger event, as defined within
the terms of an event-linked bond, involves losses or other metrics
exceeding a specific magnitude in the geographic region and time period
specified therein, the fund may lose a portion or all of its accrued
interest and/or principal invested in the event-linked bond. In addition to
the specified trigger events, event-linked bonds may expose the fund to
other risks, including but not limited to issuer (credit) default, adverse
regulatory or jurisdictional interpretations and adverse tax consequences.
RISKS OF INVESTING IN FLOATING RATE LOANS. Floating rate loans and similar
investments may be illiquid or less liquid than other investments. The value
of collateral, if any, securing a floating rate loan can decline or may be
insufficient to meet the issuer's obligations or may be difficult to
liquidate. No active trading market may exist for many floating rate loans,
and many loans are subject to restrictions on resale. Market quotations for
these securities may be volatile and/or subject to large spreads between bid
and ask prices. Any secondary market may be subject to irregular trading
activity and extended trade settlement periods.
RISKS OF INVESTING IN INVERSE FLOATING RATE OBLIGATIONS. The interest rate
on inverse floating rate obligations will generally decrease as short-term
interest rates increase, and increase as short-term rates decrease. Due
43
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
to their leveraged structure, the sensitivity of the market value of an
inverse floating rate obligation to changes in interest rates is generally
greater than a comparable long-term bond issued by the same issuer and with
similar credit quality, redemption and maturity provisions. Inverse floating
rate obligations may be volatile and involve leverage risk.
INFLATION-LINKED SECURITY RISK. The principal or interest of
inflation-linked securities such as TIPS is adjusted periodically to a
specified rate of inflation. The inflation index used may not accurately
measure the real rate of inflation. Inflation-linked securities may lose
value in the event that the actual rate of inflation is different than the
rate of the inflation index.
RISKS OF ZERO COUPON BONDS, PAYMENT IN KIND, DEFERRED AND CONTINGENT PAYMENT
SECURITIES. These securities may be more speculative and may fluctuate more
in value than securities which pay income periodically and in cash. In
addition, although the fund receives no periodic cash payments on such
securities the fund is deemed for tax purposes to receive income from such
securities, which applicable tax rules require the fund to distribute to
shareholders. Such distributions may be taxable when distributed to
shareholders.
RISKS OF EQUITY AND FIXED INCOME INVESTMENTS. Risks of investing in underlying
equity and fixed income funds may include:
PORTFOLIO SELECTION RISK. The adviser's judgment about the attractiveness,
relative value or potential appreciation of an equity security, or about the
quality, relative yield or relative value of a fixed income security, or
about a particular sector, region or market segment, or about an investment
strategy, or about interest rates, may prove to be incorrect.
LIQUIDITY RISK. Some securities and derivatives held by the fund may be
impossible or difficult to sell or unwind particularly during times of
market turmoil. Illiquid securities and derivatives also may be difficult to
value. If the fund is forced to sell an illiquid asset or unwind a
derivative position to meet redemption requests or other cash needs, the
fund may be forced to sell at a loss.
MARKET SEGMENT RISK. To the extent the fund emphasizes, from time to time,
investments in a market segment, the fund will be subject to a greater
degree to the risks particular to that segment, and may experience greater
market fluctuation than a fund without the same focus.
44
RISKS OF NON-U.S. INVESTMENTS. Investing in non-U.S. issuers, or in U.S.
issuers that have significant exposure to foreign markets, may involve
unique risks compared to investing in securities of U.S. issuers. These
risks are more pronounced for issuers in emerging markets or to the extent
that the fund invests significantly in one region or country. These risks
may include different financial reporting practices and regulatory
standards, less liquid trading markets, extreme price volatility, currency
risks, changes in economic, political, regulatory and social conditions,
sustained economic downturns, financial instability, tax burdens, and
investment and repatriation restrictions. Lack of information and less
market regulation also may affect the value of these securities. Withholding
and other non-U.S. taxes may decrease the fund's return. Non-U.S. issuers
may be located in parts of the world that have historically been prone to
natural disasters. Investing in depositary receipts is subject to many of
the same risks as investing directly in non-U.S. issuers.
DERIVATIVES RISK. Using options, swaps, futures and other derivatives can
increase fund losses and reduce opportunities for gains when market prices,
interest rates or the derivative instruments themselves behave in a way not
anticipated by the fund. Using derivatives may increase the volatility of
the fund's net asset value and may not provide the result intended.
Derivatives may have a leveraging effect on the fund. Some derivatives have
the potential for unlimited loss, regardless of the size of the fund's
initial investment. Changes in a derivative's value may not correlate well
with the referenced asset or metric. The fund also may have to sell assets
at inopportune times to satisfy its obligations. Derivatives may be
difficult to sell, unwind or value, and the counterparty may default on its
obligations to the fund. New regulations are changing the derivatives
markets. The regulations may make using derivatives more costly, may limit
their availability, or may otherwise adversely affect their value or
performance. For derivatives that are required to be traded through a
clearinghouse or exchange, the fund also will be exposed to the credit risk
of the clearinghouse and the broker that submits trades for the fund. It is
possible that certain derivatives that are required to be cleared, such as
certain swap contracts, will not be accepted for clearing. In addition,
regulated trading facilities for swap contracts are relatively new; they may
not function as intended, which could impair the ability to enter into swap
contracts. The extent and impact of the new regulations are not yet fully
known and may not be for some time.
45
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
CREDIT DEFAULT SWAP RISK. Credit default swap contracts, a type of
derivative instrument, involve special risks and may result in losses to the
fund. Credit default swaps may in some cases be illiquid, and they increase
credit risk since the fund has exposure to the issuer of the referenced
obligation and either the counterparty to the credit default swap or, if it
is a cleared transaction, the brokerage firm through which the trade was
cleared and the clearing organization that is the counterparty to that
trade. In addition, for cleared trades, the brokerage firm would impose
margin requirements and would be able to require termination of those trades
in certain circumstances. Certain credit default swaps will be required to
be traded on a regulated execution facility or contract market that makes
them available for trading. The transition to trading these swaps on such a
facility or contract market may not result in swaps being easier to trade or
value and may present certain execution risks if such a facility or contract
market does not operate properly. Swaps may be difficult to unwind or
terminate. Certain index-based credit default swaps are structured in
tranches, whereby junior tranches assume greater default risk than senior
tranches. Once fully implemented, new regulations may make swaps more
costly, may limit their availability, or may otherwise adversely affect the
value or performance of these instruments. The extent and impact of these
regulations are not yet fully known and may not be for some time.
LEVERAGING RISK. The value of your investment may be more volatile and other
risks tend to be compounded if the fund borrows or uses derivatives or other
investments, such as ETFs, that have embedded leverage. Leverage generally
magnifies the effect of any increase or decrease in the value of the fund's
underlying assets or creates investment risk with respect to a larger pool
of assets than the fund would otherwise have, potentially resulting in the
loss of all assets. Engaging in such transactions may cause the fund to
liquidate positions when it may not be advantageous to do so to satisfy its
obligations or meet segregation requirements.
FORWARD FOREIGN CURRENCY TRANSACTION RISK. To the extent that the fund
enters into forward foreign currency transactions, it may not fully benefit
from or may lose money on the transactions if changes in currency rates do
not occur as anticipated or do not correspond accurately to changes in the
value of the fund's holdings, or if the counterparty defaults. Such
transactions may also prevent the fund from realizing profits on favorable
movements in exchange rates. Risk of counterparty default is greater for
counterparties located in emerging markets. The fund's ability to use
46
forward foreign currency transactions successfully depends on a number of
factors, including the forward foreign currency transactions being available
at prices that are not too costly, the availability of liquid markets, and
the adviser's judgment regarding the direction of changes in currency
exchange rates.
PORTFOLIO TURNOVER RISK. If the fund does a lot of trading, it may incur
additional operating expenses, which would reduce performance. A higher
level of portfolio turnover may also cause taxable shareowners to incur a
higher level of taxable income or capital gains.
Please note that there are many other factors that could adversely affect
your investment and that could prevent the fund from achieving its goals.
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
THE FUND'S PAST PERFORMANCE
The bar chart and table indicate the risks and volatility of an investment in
the fund by showing how the fund has performed in the past. The bar chart shows
changes in the performance of the fund's Class A shares from calendar year to
calendar year. The table shows the average annual total returns for each class
of the fund over time and compares these returns to the returns of the Standard
and Poor's 500 Index and the Barclays Capital Aggregate Bond Index, each a
broad-based measure of market performance that has characteristics relevant to
the fund's investment strategies. You can obtain updated performance
information by visiting https://us.pioneerinvestments.com/performance or by
calling 1-800-225-6292.
The fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
The bar chart does not reflect any sales charge you may pay when you buy fund
shares. If this amount was reflected, returns would be less than those shown.
47
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
ANNUAL RETURN CLASS A SHARES (%)
(Year ended December 31)
[GRAPHIC APPEARS HERE]
'05 '06 '07 '08 '09 '10 '11 '12
8.24 12.49 5.47 -35.25 30.69 13.17 -3.30 11.00
For the period covered by the bar chart:
THE HIGHEST CALENDAR QUARTERLY RETURN WAS 18.16% (04/01/2009 TO 06/30/2009).
THE LOWEST CALENDAR QUARTERLY RETURN WAS -20.04% (10/01/2008 TO 12/31/2008).
At September 30, 2013, the year-to-date return was 12.18%.
48
AVERAGE ANNUAL TOTAL RETURN (%)
(for periods ended December 31, 2012)
SINCE INCEPTION
1 YEAR 5 YEAR INCEPTION DATE
-------- -------- ----------- ----------
Class A 8/9/04
----------------------------------------------------- ----- ----- ---- ------
Return before taxes 4.56 -0.64 4.15
----------------------------------------------------- ------ ------ ---- ------
Return after taxes on distributions 4.24 -1.31 3.46
----------------------------------------------------- ------ ------ ---- ------
Return after taxes on distributions and sale of
shares 3.20 -0.83 3.34
----------------------------------------------------- ------ ------ ---- ------
Class B 6.19 -0.20 3.03 8/9/04
----------------------------------------------------- ------ ------ ---- ------
Class C 10.14 -0.12 3.77 8/9/04
----------------------------------------------------- ------ ------ ---- ------
Class Y 11.02 1.03 3.77 9/26/05
----------------------------------------------------- ------ ------ ---- -------
Standard & Poor's 500 Index
(reflects no deduction for fees, expenses or taxes) 16.00 1.66 5.72 8/9/04
----------------------------------------------------- ------ ------ ---- -------
Barclays Capital Aggregate Bond Index
(reflects no deduction for fees, expenses or taxes) 4.22 5.95 5.42 8/9/04
----------------------------------------------------- ------ ------ ---- -------
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on the investor's tax situation
and may differ from those shown. The after-tax returns shown are not relevant
to investors who hold fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts.
After-tax returns are shown only for Class A shares. After-tax returns for
Class B, Class C and Class Y shares will vary.
49
Fund Summary for
Pioneer Ibbotson Growth Allocation Fund
MANAGEMENT
INVESTMENT ADVISER Pioneer Investment Management, Inc.
INVESTMENT SUBADVISER Ibbotson Associates, Inc.
PORTFOLIO MANAGEMENT Scott Wentsel, vice president and senior
portfolio manager at Ibbotson (portfolio
manager of the fund since 2005); Brian
Huckstep, portfolio manager at Ibbotson
(portfolio manager of the fund since 2005);
Paul Arnold, senior consultant at Ibbotson
(portfolio manager of the fund since 2012)
PURCHASE AND SALE OF FUND SHARES
You may purchase, exchange or sell (redeem) shares each day the New York Stock
Exchange is open through your financial intermediary or, for accounts held
directly with the fund, by contacting the fund's transfer agent in writing or
by telephone (Pioneer Investment Management Shareholder Services, Inc., P.O.
Box 55014, Boston, MA 02205-5014, tel. 1-800-225-6292).
Your initial investment for Class A or Class C shares must be at least $1,000.
Additional investments must be at least $100 for Class A shares and $500 for
Class C shares. The initial investment for Class Y shares 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 investment
amount for Class Y shares. Effective December 31, 2009, Class B shares are no
longer offered to new or existing shareholders, except for reinvestment of
dividends and/or capital gains distributions and exchanges for Class B shares
of other Pioneer funds.
TAX INFORMATION
The fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and its related companies may pay the
intermediary for the sale of fund shares and related services. These payments
create a conflict of interest by influencing the broker-dealer or other
intermediary
50
and your salesperson or investment professional to recommend the fund over
another investment. Ask your salesperson or investment professional or visit
your financial intermediary's website for more information.
51
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
INVESTMENT OBJECTIVES
Long-term capital growth.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
You may qualify for sales charge discounts if you or your family invest, or
agree to invest in the future, at least $50,000 in Class A shares of the
Pioneer funds. More information about these and other discounts is available
from your investment professional and in the "Sales charges" section of the
prospectus beginning on page 105 and the "Sales charges" section of the
statement of additional information beginning on page 70.
SHAREOWNER FEES
(fees paid directly from your investment) CLASS A CLASS B CLASS C CLASS Y
---------------------------------------------------------- --------- --------- --------- --------
Maximum sales charge (load) when you buy shares (as a
percentage of offering price) 5.75% None 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 4% 1% None
---------------------------------------------------------- ---- --------- --------- --------
ANNUAL FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the
value of your investment) CLASS A CLASS B CLASS C CLASS Y
-------------------------------------------------------- --------- --------- --------- --------
Management Fees 0.13% 0.13% 0.13% 0.13%
-------------------------------------------------------- ---- ----- ---- ----
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.00%
-------------------------------------------------------- ---- ----- ---- ----
Other Expenses 0.44% 0.60% 0.38% 0.54%
-------------------------------------------------------- ---- ----- ---- ----
Acquired Fund Fees and Expenses/1/ 0.88% 0.88% 0.88% 0.88%
-------------------------------------------------------- ---- ----- ---- ----
Total Annual Fund Operating Expenses Plus Acquired Fund
Fees and Expenses 1.70% 2.61% 2.39% 1.55%
-------------------------------------------------------- ---- ----- ---- ----
Less: Fee Waiver and Expense Reimbursement/2/ 0.00% -0.09% 0.00% 0.00%
-------------------------------------------------------- ---- ----- ---- ----
Net Expenses Plus Acquired Fund Fees and Expenses/2/ 1.70% 2.52% 2.39% 1.55%
-------------------------------------------------------- ---- ----- ---- ----
1 Total annual fund operating expenses in the table, before and after fee
waiver and expense reimbursement, may be higher than the corresponding
ratio of expenses to average net assets shown in the "Financial
Highlights" section, which does not include acquired fund fees and
expenses.
2 The fund's investment adviser has contractually agreed to limit ordinary
operating expenses to the extent required to reduce fund expenses to 1.64%
of the average daily net assets attributable to Class B shares. Acquired
Fund Fees and Expenses are not included in the expense limitations noted
above. This
52
expense limitation is in effect through December 1, 2014. There can be no
assurance that the adviser will extend the expense limitation beyond such
time. While in effect, the arrangement may be terminated for a class only
by agreement of the fund's investment adviser and the Board of Trustees.
The expense limitation does not limit the expenses of the underlying funds
indirectly incurred by a shareholder.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the fund for the time periods shown and then, except as
indicated, redeem all of your shares at the end of those periods. It also
assumes that (a) your investment has a 5% return each year and (b) the fund's
total annual operating expenses remain the same except for year one (which
considers the effect of the expense limitation). Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
IF YOU REDEEM YOUR SHARES IF YOU DO NOT REDEEM YOUR SHARES
---------------------------------------- --------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES
--------------------------------------------------------------------------------
1 3 5 10 1 3 5 10
------- --------- --------- --------- ------- ------- --------- ---------
Class A $738 $1,080 $1,445 $2,468 $738 1,080 $1,445 $2,468
--------- ---- ------ ------ ------ ---- ----- ------ ------
Class B 655 1,103 1,477 2,716 255 803 1,377 2,716
--------- ---- ------ ------ ------ ---- ----- ------ ------
Class C 342 745 1,275 2,726 242 745 1,275 2,726
--------- ---- ------ ------ ------ ---- ----- ------ ------
Class Y 158 490 845 1,845 158 490 845 1,845
--------- ---- ------ ------ ------ ---- ----- ------ ------
PORTFOLIO TURNOVER
The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 6% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a "fund of funds." The fund seeks to achieve its investment
objectives by investing in other funds ("underlying funds" or "acquired funds")
rather than direct positions in securities. The underlying funds have their own
investment objectives and principal investment strategies and invest
53
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
in a variety of U.S. and foreign equity, debt and money market securities.
Equity securities in which underlying funds invest include common stocks,
preferred stocks and equity securities with common stock characteristics such
as real estate investment trusts, and exchange-traded funds that invest
primarily in equity securities. Debt securities in which underlying funds may
invest include U.S. government securities, debt securities of corporate and
other issuers, mortgage- and asset-backed securities, debt convertible to
equity securities and short term debt securities. Underlying funds also may use
derivatives, such as credit default swaps.
Because this is an aggressive allocation fund, the majority of the fund's
assets will be invested in equity funds, although a portion of its assets will
be invested in fixed income funds, cash, cash equivalents, or in money market
funds. Under normal circumstances, the fund expects to invest its assets among
asset classes in the following ranges. The fund's investment adviser may change
these allocation ranges from time to time without the approval of or notice to
shareholders. The fixed income fund allocation includes the fund's investments
in cash, cash equivalents, and money market funds.
INVESTMENT STRATEGIES/ASSET CLASS TARGETS
EQUITY FUND FIXED INCOME FUND
ALLOCATION ALLOCATION
------------- ------------------
Pioneer Ibbotson Aggressive Allocation Fund 85-100% 0-15%
--------------------------------------------- ------ ----
The intended benefit of asset allocation is that the diversification provided
by allocating assets among asset classes, such as equity and debt securities,
reduces volatility over the long-term. The subadviser, subject to the
investment adviser's supervision, allocates the fund's assets among the
underlying funds using a two-step process. First, the subadviser seeks to
develop an optimal model allocation among underlying funds in different asset
classes using an analysis that looks at forecast returns, standard deviations
in historical returns and the correlation of the performance of different asset
classes. The subadviser then invests the assets in underlying funds that invest
in those asset classes. The subadviser's analysis in selecting and weighting
the underlying funds is based on quantitative and qualitative measures.
Periodically, the subadviser may recommend the rebalancing of a fund's assets
among asset classes and underlying funds. Decisions to sell shares of the
underlying funds are made for cash flow purposes, as a result of periodic
rebalancing of a fund's portfolio holdings, or as an adjustment to a fund's
target allocation.
54
As of the date of this prospectus, the fund invests solely in other Pioneer
funds. From time to time the fund's investment adviser may select new or
different underlying funds without prior approval or notice to shareholders.
PRINCIPAL RISKS OF INVESTING IN THE FUND
You could lose money on your investment in the fund. As with any mutual fund,
there is no guarantee that the fund will achieve its objectives. For purposes
of this section, "the fund" means the fund or, where applicable, an underlying
fund.
MARKET RISK. The values of securities held by the fund may go up or down,
sometimes rapidly or unpredictably, due to general market conditions, such as
real or perceived adverse economic, political, or regulatory conditions,
inflation, changes in interest or currency rates or adverse investor sentiment.
Adverse market conditions may be prolonged and may not have the same impact on
all types of securities. The values of securities may fall due to factors
affecting a particular issuer, industry or the securities market as a whole.
High public debt in the U.S. and other countries creates ongoing and systemic
market risks and policymaking uncertainty. The financial crisis that began in
2008 has caused a significant decline in the value and liquidity of many
securities of issuers worldwide. Governmental and non-governmental issuers have
defaulted on, or been forced to restructure, their debts, and many other
issuers have faced difficulties obtaining credit. These market conditions may
continue, worsen or spread, including in the U.S., Europe and beyond. Further
defaults or restructurings by governments and others of their debt could have
additional adverse effects on economies, financial markets and asset valuations
around the world. In response to the crisis, the U.S. and other governments and
the Federal Reserve and certain foreign central banks have taken steps to
support financial markets. The withdrawal of this support, failure of efforts
in response to the crisis, or investor perception that these efforts are not
succeeding could negatively affect financial markets generally as well as the
value and liquidity of certain securities. Whether or not the fund invests in
securities of issuers located in or with significant exposure to countries
experiencing economic and financial difficulties, the value and liquidity of
the fund's investments may be negatively affected. In addition, policy and
legislative changes in the U.S. and in other countries are affecting many
aspects of financial regulation. The impact of these changes on the markets,
and the practical implications
55
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
for market participants, may not be fully known for some time. The fund may
experience a substantial or complete loss on any individual security or
derivative position.
FUND OF FUNDS STRUCTURE AND LAYERING OF FEES. The fund invests in the
underlying funds, which may themselves invest in other investment companies,
including exchange-traded funds (ETFs). Each underlying fund has its own
investment risks that can affect the value of the underlying funds' shares and
therefore the net asset value of the fund. In addition to the fund's operating
expenses, the fund indirectly pays a portion of the expenses incurred by the
underlying funds. Consequently, an investment in the fund entails more direct
and indirect expenses than a direct investment in the underlying funds. Also,
one underlying fund may buy the same security that another underlying fund is
selling. You would indirectly bear the costs of both trades without achieving
any investment purpose. These transactions may also generate taxable gains. You
may receive taxable distributions consisting of gains from transactions by the
underlying funds as well as gains from the fund's transactions in shares of the
underlying funds.
ALLOCATION RISK. The subadviser's evaluation of asset classes and market
sectors in developing an allocation model, and its selection and weighting of
underlying funds within the allocation model, may prove to be incorrect. To the
extent that the fund invests a significant percentage of its assets in any one
underlying fund, the fund will be subject to a greater degree to the risks
particular to that underlying fund, and may experience greater volatility as a
result.
ASSET CLASS VARIATION RISK. The underlying funds invest principally in the
securities constituting their asset class (i.e., equity or fixed income).
However, under normal market conditions, an underlying fund may vary the
percentage of its assets in these securities (subject to any applicable
regulatory requirements). Depending upon the percentage of securities in a
particular asset class held by the underlying funds at any given time, and the
percentage of the fund's assets invested in various underlying funds, the
fund's actual exposure to the securities in a particular asset class may vary
substantially from its target asset allocation for that asset class.
EXPENSE RISK. Your actual costs of investing in the fund may be higher than the
expenses shown in "Annual fund operating expenses" for a variety of reasons.
For example, expense ratios may be higher than those shown if overall net
assets decrease. Net assets are more likely to decrease and fund expense ratios
are more likely to increase when markets are volatile.
56
PRINCIPAL RISKS OF INVESTING IN THE UNDERLYING FUNDS
RISKS OF EQUITY INVESTMENTS. Equity securities are more volatile and carry more
risks than some other forms of investment. Risks of investing in underlying
equity funds may include:
VALUE STYLE RISK. The prices of securities the adviser believes are
undervalued may not appreciate as expected or may go down. Value stocks may
fall out of favor with investors and underperform the overall equity market.
GROWTH STYLE RISK. The fund's investments may not have the growth potential
originally expected. Growth stocks may fall out of favor with investors and
underperform the overall equity market.
SMALL AND MID-SIZE COMPANIES RISK. Compared to large companies, small- and
mid-size companies, and the market for their equity securities, may be more
sensitive to changes in earnings results and investor expectations, have
more limited product lines and capital resources, experience sharper swings
in market values, have limited liquidity, be harder to value or to sell at
the times and prices the adviser thinks appropriate, and offer greater
potential for gain and loss.
RISKS OF INVESTMENTS IN REITS. Investing in REITs involves unique risks.
They are significantly affected by the market for real estate and are
dependent upon management skills and cash flow. REITs may have lower trading
volumes and may be subject to more abrupt or erratic price movements than
the overall securities markets. In addition to its own expenses, the fund
will indirectly bear its proportionate share of any management and other
expenses paid by REITs in which it invests. Many real estate companies,
including REITs, utilize leverage.
PREFERRED STOCKS RISK. Preferred stocks may pay fixed or adjustable rates of
return. Preferred stocks are subject to issuer-specific and market risks
applicable generally to equity securities. In addition, a company's
preferred stocks generally pay dividends only after the company makes
required payments to holders of its bonds and other debt. Thus, the value of
preferred stocks will usually react more strongly than bonds and other debt
to actual or perceived changes in the company's financial condition or
prospects. The market value of preferred stocks generally decreases when
interest rates rise. Preferred stocks of smaller companies may be more
vulnerable to adverse developments than preferred stock of larger companies.
57
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
RISKS OF INITIAL PUBLIC OFFERINGS. Companies involved in initial public
offerings (IPOs) generally have limited operating histories, and prospects
for future profitability are uncertain. The market for IPO issuers has been
volatile, and share prices of newly public companies have fluctuated
significantly over short periods of time. Further, stocks of newly-public
companies may decline shortly after the IPO. There is no assurance that the
fund will have access to IPOs. The purchase of IPO shares may involve high
transaction costs.
RISKS OF CONVERTIBLE SECURITIES. The market values of convertible securities
tend to decline as interest rates increase and, conversely, to increase as
interest rates decline. A downturn in equity markets may cause the price of
convertible securities to decrease relative to other fixed income
securities.
RISKS OF FIXED INCOME INVESTMENTS. Risks of investing in underlying fixed
income funds may include:
INTEREST RATE RISK. Interest rates may go up, causing the value of the
fund's investments to decline (this risk generally will be greater for
securities with longer maturities). Interest rates in the U.S. recently have
been historically low and may be expected to go back up.
CREDIT RISK. If an issuer or guarantor of a security held by the fund or a
counterparty to a financial contract with the fund defaults on its
obligation to pay principal and/or interest, has its credit rating
downgraded or is perceived to be less creditworthy, or the credit quality or
value of any underlying assets declines, the value of your investment will
decline. Credit risk is broadly gauged by the credit ratings of the
securities in which the fund invests. However, ratings are only the opinions
of the companies issuing them and are not guarantees as to quality.
PREPAYMENT OR CALL RISK. Many issuers have a right to prepay their
securities. If interest rates fall, an issuer may exercise this right. If
this happens, the fund will be forced to reinvest prepayment proceeds at a
time when yields on securities available in the market are lower than the
yield on the prepaid security. The fund also may lose any premium it paid on
the security.
EXTENSION 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.
58
U.S. GOVERNMENT AGENCY OBLIGATIONS RISK. The fund invests in obligations
issued by agencies and instrumentalities of the U.S. government.
Government-sponsored entities such as Federal National Mortgage Association
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the
Federal Home Loan Banks (FHLBs), although chartered or sponsored by
Congress, are not funded by congressional appropriations and the debt and
mortgage-backed securities issued by them are neither guaranteed nor issued
by the U.S. government. Such debt and mortgage-backed securities are subject
to the risk of default on the payment of interest and/or principal, similar
to debt of private issuers. Although the U.S. government has provided
financial support to Fannie Mae and Freddie Mac in the past, there can be no
assurance that it will support these or other government-sponsored entities
in the future.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES RISK. The value of
mortgage-related and asset-backed securities will be influenced by factors
affecting the housing market and the assets underlying such securities. As a
result, during periods of declining asset value, difficult or frozen credit
markets, swings in interest rates, or deteriorating economic conditions,
mortgage-related and asset-backed securities may decline in value, face
valuation difficulties, become more volatile and/or become illiquid.
Additionally, during such periods and also under normal conditions, these
securities are also subject to prepayment and call risk. Some of these
securities may receive little or no collateral protection from the
underlying assets and are thus subject to the risk of default. The risk of
such defaults is generally higher in the case of mortgage-backed investments
that include so-called "sub-prime" mortgages. The structure of some of these
securities may be complex and there may be less available information than
for other types of debt securities. Upon the occurrence of certain
triggering events or defaults, the fund may become the holder of underlying
assets at a time when those assets may be difficult to sell or may be sold
only at a loss.
RISKS OF INSTRUMENTS THAT ALLOW FOR BALLOON PAYMENTS OR NEGATIVE
AMORTIZATION PAYMENTS. Certain debt instruments allow for balloon payments
or negative amortization payments. Such instruments permit the borrower to
avoid paying currently a portion of the interest accruing on the instrument.
While these features make the debt instrument more affordable to the
borrower in the near term, they increase the risk that the borrower will be
unable to make the resulting higher payment or payments that become due at
the maturity of the loan.
59
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
RISKS OF SUBORDINATED SECURITIES. A holder of securities that are
subordinated or "junior" to more senior securities of an issuer is entitled
to payment after holders of more senior securities of the issuer.
Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer, any loss incurred by the
subordinated securities is likely to be proportionately greater, and any
recovery of interest or principal may take more time. As a result, even a
perceived decline in creditworthiness of the issuer is likely to have a
greater impact on them.
HIGH YIELD OR "JUNK" BOND RISK. Debt securities that are below investment
grade, called "junk bonds," are speculative, have a higher risk of default
or are already in default, tend to be less liquid and are more difficult to
value than higher grade securities. Junk bonds tend to be volatile and more
susceptible to adverse events and negative sentiments. These risks are more
pronounced for securities that are already in default.
RISKS OF INVESTING IN EVENT-LINKED BONDS. The return of principal and the
payment of interest on "event-linked" bonds are contingent on the
non-occurrence of a pre-defined "trigger" event, such as a hurricane or an
earthquake of a specific magnitude. If a trigger event, as defined within
the terms of an event-linked bond, involves losses or other metrics
exceeding a specific magnitude in the geographic region and time period
specified therein, the fund may lose a portion or all of its accrued
interest and/or principal invested in the event-linked bond. In addition to
the specified trigger events, event-linked bonds may expose the fund to
other risks, including but not limited to issuer (credit) default, adverse
regulatory or jurisdictional interpretations and adverse tax consequences.
RISKS OF INVESTING IN FLOATING RATE LOANS. Floating rate loans and similar
investments may be illiquid or less liquid than other investments. The value
of collateral, if any, securing a floating rate loan can decline or may be
insufficient to meet the issuer's obligations or may be difficult to
liquidate. No active trading market may exist for many floating rate loans,
and many loans are subject to restrictions on resale. Market quotations for
these securities may be volatile and/or subject to large spreads between bid
and ask prices. Any secondary market may be subject to irregular trading
activity and extended trade settlement periods.
RISKS OF INVESTING IN INVERSE FLOATING RATE OBLIGATIONS. The interest rate
on inverse floating rate obligations will generally decrease as short-term
interest rates increase, and increase as short-term rates decrease. Due
60
to their leveraged structure, the sensitivity of the market value of an
inverse floating rate obligation to changes in interest rates is generally
greater than a comparable long-term bond issued by the same issuer and with
similar credit quality, redemption and maturity provisions. Inverse floating
rate obligations may be volatile and involve leverage risk.
INFLATION-LINKED SECURITY RISK. The principal or interest of
inflation-linked securities such as TIPS is adjusted periodically to a
specified rate of inflation. The inflation index used may not accurately
measure the real rate of inflation. Inflation-linked securities may lose
value in the event that the actual rate of inflation is different than the
rate of the inflation index.
RISKS OF ZERO COUPON BONDS, PAYMENT IN KIND, DEFERRED AND CONTINGENT PAYMENT
SECURITIES. These securities may be more speculative and may fluctuate more
in value than securities which pay income periodically and in cash. In
addition, although the fund receives no periodic cash payments on such
securities the fund is deemed for tax purposes to receive income from such
securities, which applicable tax rules require the fund to distribute to
shareholders. Such distributions may be taxable when distributed to
shareholders.
RISKS OF EQUITY AND FIXED INCOME INVESTMENTS. Risks of investing in underlying
equity and fixed income funds may include:
PORTFOLIO SELECTION RISK. The adviser's judgment about the attractiveness,
relative value or potential appreciation of an equity security, or about the
quality, relative yield or relative value of a fixed income security, or
about a particular sector, region or market segment, or about an investment
strategy, or about interest rates, may prove to be incorrect.
LIQUIDITY RISK. Some securities and derivatives held by the fund may be
impossible or difficult to sell or unwind particularly during times of
market turmoil. Illiquid securities and derivatives also may be difficult to
value. If the fund is forced to sell an illiquid asset or unwind a
derivative position to meet redemption requests or other cash needs, the
fund may be forced to sell at a loss.
MARKET SEGMENT RISK. To the extent the fund emphasizes, from time to time,
investments in a market segment, the fund will be subject to a greater
degree to the risks particular to that segment, and may experience greater
market fluctuation than a fund without the same focus.
61
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
RISKS OF NON-U.S. INVESTMENTS. Investing in non-U.S. issuers, or in U.S.
issuers that have significant exposure to foreign markets, may involve
unique risks compared to investing in securities of U.S. issuers. These
risks are more pronounced for issuers in emerging markets or to the extent
that the fund invests significantly in one region or country. These risks
may include different financial reporting practices and regulatory
standards, less liquid trading markets, extreme price volatility, currency
risks, changes in economic, political, regulatory and social conditions,
sustained economic downturns, financial instability, tax burdens, and
investment and repatriation restrictions. Lack of information and less
market regulation also may affect the value of these securities. Withholding
and other non-U.S. taxes may decrease the fund's return. Non-U.S. issuers
may be located in parts of the world that have historically been prone to
natural disasters. Investing in depositary receipts is subject to many of
the same risks as investing directly in non-U.S. issuers.
DERIVATIVES RISK. Using options, swaps, futures and other derivatives can
increase fund losses and reduce opportunities for gains when market prices,
interest rates or the derivative instruments themselves behave in a way not
anticipated by the fund. Using derivatives may increase the volatility of
the fund's net asset value and may not provide the result intended.
Derivatives may have a leveraging effect on the fund. Some derivatives have
the potential for unlimited loss, regardless of the size of the fund's
initial investment. Changes in a derivative's value may not correlate well
with the referenced asset or metric. The fund also may have to sell assets
at inopportune times to satisfy its obligations. Derivatives may be
difficult to sell, unwind or value, and the counterparty may default on its
obligations to the fund. New regulations are changing the derivatives
markets. The regulations may make using derivatives more costly, may limit
their availability, or may otherwise adversely affect their value or
performance. For derivatives that are required to be traded through a
clearinghouse or exchange, the fund also will be exposed to the credit risk
of the clearinghouse and the broker that submits trades for the fund. It is
possible that certain derivatives that are required to be cleared, such as
certain swap contracts, will not be accepted for clearing. In addition,
regulated trading facilities for swap contracts are relatively new; they may
not function as intended, which could impair the ability to enter into swap
contracts. The extent and impact of the new regulations are not yet fully
known and may not be for some time.
62
CREDIT DEFAULT SWAP RISK. Credit default swap contracts, a type of
derivative instrument, involve special risks and may result in losses to the
fund. Credit default swaps may in some cases be illiquid, and they increase
credit risk since the fund has exposure to the issuer of the referenced
obligation and either the counterparty to the credit default swap or, if it
is a cleared transaction, the brokerage firm through which the trade was
cleared and the clearing organization that is the counterparty to that
trade. In addition, for cleared trades, the brokerage firm would impose
margin requirements and would be able to require termination of those trades
in certain circumstances. Certain credit default swaps will be required to
be traded on a regulated execution facility or contract market that makes
them available for trading. The transition to trading these swaps on such a
facility or contract market may not result in swaps being easier to trade or
value and may present certain execution risks if such a facility or contract
market does not operate properly. Swaps may be difficult to unwind or
terminate. Certain index-based credit default swaps are structured in
tranches, whereby junior tranches assume greater default risk than senior
tranches. Once fully implemented, new regulations may make swaps more
costly, may limit their availability, or may otherwise adversely affect the
value or performance of these instruments. The extent and impact of these
regulations are not yet fully known and may not be for some time.
LEVERAGING RISK. The value of your investment may be more volatile and other
risks tend to be compounded if the fund borrows or uses derivatives or other
investments, such as ETFs, that have embedded leverage. Leverage generally
magnifies the effect of any increase or decrease in the value of the fund's
underlying assets or creates investment risk with respect to a larger pool
of assets than the fund would otherwise have, potentially resulting in the
loss of all assets. Engaging in such transactions may cause the fund to
liquidate positions when it may not be advantageous to do so to satisfy its
obligations or meet segregation requirements.
FORWARD FOREIGN CURRENCY TRANSACTION RISK. To the extent that the fund
enters into forward foreign currency transactions, it may not fully benefit
from or may lose money on the transactions if changes in currency rates do
not occur as anticipated or do not correspond accurately to changes in the
value of the fund's holdings, or if the counterparty defaults. Such
transactions may also prevent the fund from realizing profits on favorable
movements in exchange rates. Risk of counterparty default is greater for
counterparties located in emerging markets. The fund's ability to use
63
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
forward foreign currency transactions successfully depends on a number of
factors, including the forward foreign currency transactions being available
at prices that are not too costly, the availability of liquid markets, and
the adviser's judgment regarding the direction of changes in currency
exchange rates.
PORTFOLIO TURNOVER RISK. If the fund does a lot of trading, it may incur
additional operating expenses, which would reduce performance. A higher
level of portfolio turnover may also cause taxable shareowners to incur a
higher level of taxable income or capital gains.
Please note that there are many other factors that could adversely affect
your investment and that could prevent the fund from achieving its goals.
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
THE FUND'S PAST PERFORMANCE
The bar chart and table indicate the risks and volatility of an investment in
the fund by showing how the fund has performed in the past. The bar chart shows
changes in the performance of the fund's Class A shares from calendar year to
calendar year. The table shows the average annual total returns for each class
of the fund over time and compares these returns to the returns of the Standard
and Poor's 500 Index and the Barclays Capital Aggregate Bond Index, each a
broad-based measure of market performance that has characteristics relevant to
the fund's investment strategies. You can obtain updated performance
information by visiting https://us.pioneerinvestments.com/performance or by
calling 1-800-225-6292.
The fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
The bar chart does not reflect any sales charge you may pay when you buy fund
shares. If this amount was reflected, returns would be less than those shown.
64
ANNUAL RETURN CLASS A SHARES (%)
(Year ended December 31)
[GRAPHIC APPEARS HERE]
'05 '06 '07 '08 '09 '10 '11 '12
9.64 14.20 5.33 -39.01 31.26 13.92 -4.61 11.43
For the period covered by the bar chart:
THE HIGHEST CALENDAR QUARTERLY RETURN WAS 20.12% (04/01/2009 TO 06/30/2009).
THE LOWEST CALENDAR QUARTERLY RETURN WAS -22.11% (10/1/2008 TO 12/31/2008).
At September 30, 2013, the year-to-date return was 14.17%.
65
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
AVERAGE ANNUAL TOTAL RETURN (%)
(for periods ended December 31, 2012)
SINCE INCEPTION
1 YEAR 5 YEAR INCEPTION DATE
-------- -------- ----------- ----------
Class A 8/9/04
----------------------------------------------------- ----- ----- ---- ------
Return before taxes 4.99 -1.80 4.05
----------------------------------------------------- ------ ------ ---- ------
Return after taxes on distributions 4.83 -2.33 3.48
----------------------------------------------------- ------ ------ ---- ------
Return after taxes on distributions and sale of
shares 3.45 -1.71 3.36
----------------------------------------------------- ------ ------ ---- ------
Class B 6.60 -1.39 3.58 8/9/04
----------------------------------------------------- ------ ------ ---- ------
Class C 10.63 -1.35 3.80 8/9/04
----------------------------------------------------- ------ ------ ---- ------
Class Y 11.65 -0.50 2.97 9/26/05
----------------------------------------------------- ------ ------ ---- -------
Standard & Poor's 500 Stock Index
(reflects no deduction for fees, expenses or taxes) 16.00 1.66 5.72 8/9/04
----------------------------------------------------- ------ ------ ---- -------
Barclays Capital Aggregate Bond Index
(reflects no deduction for fees, expenses or taxes) 4.22 5.95 5.42 8/9/04
----------------------------------------------------- ------ ------ ---- -------
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on the investor's tax situation
and may differ from those shown. The after-tax returns shown are not relevant
to investors who hold fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts.
After-tax returns are shown only for Class A shares. After-tax returns for
Class B, Class C and Class Y shares will vary.
66
MANAGEMENT
INVESTMENT ADVISER Pioneer Investment Management, Inc.
INVESTMENT SUBADVISER Ibbotson Associates, Inc.
PORTFOLIO MANAGEMENT Scott Wentsel, vice president and senior
portfolio manager at Ibbotson (portfolio
manager of the fund since 2005); Brian
Huckstep, portfolio manager at Ibbotson
(portfolio manager of the fund since 2005);
Paul Arnold, senior consultant at Ibbotson
(portfolio manager of the fund since 2012)
PURCHASE AND SALE OF FUND SHARES
You may purchase, exchange or sell (redeem) shares each day the New York Stock
Exchange is open through your financial intermediary or, for accounts held
directly with the fund, by contacting the fund's transfer agent in writing or
by telephone (Pioneer Investment Management Shareholder Services, Inc., P.O.
Box 55014, Boston, MA 02205-5014, tel. 1-800-225-6292).
Your initial investment for Class A or Class C shares must be at least $1,000.
Additional investments must be at least $100 for Class A shares and $500 for
Class C shares. The initial investment for Class Y shares 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 investment
amount for Class Y shares. Effective December 31, 2009, Class B shares are no
longer offered to new or existing shareholders, except for reinvestment of
dividends and/or capital gains distributions and exchanges for Class B shares
of other Pioneer funds.
TAX INFORMATION
The fund intends to make distributions that may be taxed as ordinary income,
qualified dividend income, or capital gains.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and its related companies may pay the
intermediary for the sale of fund shares and related services. These payments
create a conflict of interest by influencing the broker-dealer or other
intermediary
67
Fund Summary for
Pioneer Ibbotson Aggressive Allocation Fund
and your salesperson or investment professional to recommend the fund over
another investment. Ask your salesperson or investment professional or visit
your financial intermediary's website for more information.
68
More on each fund's investment objectives
and strategies
INVESTMENT OBJECTIVES
The investment objective of each of Pioneer Ibbotson Conservative Allocation
Fund, Pioneer Ibbotson Moderate Allocation Fund, and Pioneer Ibbotson Growth
Allocation Fund is to seek long-term capital growth and current income. The
investment objective of Pioneer Ibbotson Aggressive Allocation Fund is to seek
long-term capital growth. Each fund's investment objective may be changed
without shareholder approval. A fund will provide notice prior to implementing
any change to its investment objective.
PRINCIPAL INVESTMENT STRATEGIES
Each fund seeks to achieve its investment objectives by investing in other
funds ("underlying funds") and using asset allocation strategies to allocate
its assets among the underlying funds rather than direct positions in
securities.
ASSET ALLOCATION PROCESS
Pioneer, the funds' investment adviser, allocates each fund's assets among the
broad asset classes of equity, fixed income and short-term (money market)
investments by investing in a distinctly weighted combination of underlying
funds. These underlying funds, in turn, invest in a variety of U.S. and foreign
equity, fixed income and money market securities. The intended benefit of asset
allocation is that the diversification provided by allocating assets among
asset classes, such as equity and debt securities, reduces volatility over the
long-term.
Pioneer has engaged Ibbotson to act as subadviser to each fund and allocate,
subject to Pioneer's supervision, each fund's assets among the underlying
funds. Ibbotson uses a two-step asset allocation process:
First, Ibbotson seeks to develop an optimal model allocation among underlying
funds in different asset classes using an analysis that looks at forecast
returns, standard deviations in historical returns and the correlation of the
performance of different asset classes. The goal of this process is to identify
a combination of investments in different asset classes that is expected to
maximize return for a given level of risk or minimize risk for a given level of
return.
Having determined the allocation of the fund's assets among the asset classes,
Ibbotson then invests the assets in underlying funds that invest in those asset
classes. Pioneer and Ibbotson agree from time to time upon the universe of
mutual funds that Ibbotson may consider when making
69
More on each fund's investment objectives
and strategies
allocation decisions. Ibbotson's analysis in selecting and weighting the
underlying funds from that universe includes historical returns-based style
analysis, asset performance, regression and attribution analyses, manager
interviews, relative and absolute performance, including correlations with
other underlying funds as well as corresponding benchmarks, and historical
volatility (the variability of returns from one period to the next). Ibbotson
seeks a combination of underlying funds that it believes will optimize returns,
given each fund's risk profile. When considering equity funds, Ibbotson focuses
on the underlying funds' foreign and domestic exposure, market capitalization
ranges, and investment style (growth vs. value). When considering bond funds,
Ibbotson's primary focus is the overall level of risk in the type of fixed
income securities in which the underlying funds invest and on maximizing
current income and long-term capital growth.
Based on the target allocations, a fund will invest the proceeds from the sale
of its shares, reinvested dividends from the underlying funds and other income,
and redeem investments in the underlying funds to provide the cash necessary to
satisfy redemption requests for fund shares. However, the portion of each
fund's net assets represented by an underlying fund or asset class could differ
substantially over time from the target allocation as the underlying funds'
asset values change due to market movements and portfolio management decisions.
Periodically, Ibbotson will re-evaluate each fund's target asset allocation and
may recommend the rebalancing of a fund's assets among asset classes and
underlying funds to reflect changes in the target allocations or to reallocate
the fund's holdings to match the target allocation. Each fund may change its
target allocation to each asset class, the underlying funds in each asset class
(including adding or deleting funds) or target allocations to each underlying
fund without prior approval from or notice to shareholders.
Decisions to sell shares of the underlying funds are made for cash flow
purposes, such as redemptions or expenses, as a result of periodic rebalancing
of a fund's portfolio holdings, or as an adjustment to an underlying fund's
target allocation based on Ibbotson's view of the fund's characteristics and
other allocation criteria.
The following is a general guide regarding the anticipated allocation of assets
of each of the funds among broad asset classes. Pioneer may change these
allocation ranges from time to time without the approval of or notice to
shareholders.
70
The fixed income allocation includes each fund's investments in cash, cash
equivalents, or money market funds.
INVESTMENT STRATEGIES/ASSET CLASS TARGETS
EQUITY FIXED INCOME
INVESTMENT FUND FUND
FUND OBJECTIVE(S) ALLOCATION ALLOCATION
------------------------------- ------------------------------ ------------ -------------
Pioneer Ibbotson Conservative Long-term capital growth and 20-40% 60-80%
------ -----
Allocation Fund current income.
------------------------------- ------------------------------
Pioneer Ibbotson Moderate Long-term capital growth and 50-70% 30-50%
------ -----
Allocation Fund current income.
------------------------------- ------------------------------
Pioneer Ibbotson Growth Long-term capital growth and 70-100% 0-30%
------ -----
Allocation Fund current income.
------------------------------- ------------------------------
Pioneer Ibbotson Aggressive Long-term capital growth. 85-100% 0-15%
------------------------------ ------ -----
Allocation Fund
-------------------------------
Based upon the analysis described above under "Asset allocation process," each
fund expects to invest its assets in underlying mutual funds within the ranges
set forth below. The underlying funds in which the funds intend to invest may
change from time to time and the funds may invest in underlying funds in
addition to those described in this prospectus at the discretion of Pioneer
without prior notice to or approval of shareholders. The investment policies of
the various underlying funds are described in the section called "Information
about the underlying funds," which is attached as Appendix A at the end of, and
is considered part of, this prospectus.
As of the date of this prospectus, the funds invest solely in other Pioneer
funds. Under an exemptive order issued to Pioneer by the Securities and
Exchange Commission and recently adopted rules, the funds may invest in
underlying funds that are either managed by Pioneer or managed by an adviser
not associated with Pioneer. Accordingly, Pioneer and Ibbotson may add funds
that are not managed by Pioneer to the list of potential underlying funds in
the future, although there is no current intent to do so. It is anticipated
that underlying funds managed by Pioneer will at all times represent a
significant portion of a fund's investments.
71
More on each fund's investment objectives
and strategies
PIONEER PIONEER PIONEER PIONEER
IBBOTSON IBBOTSON IBBOTSON IBBOTSON
CONSERVATIVE MODERATE GROWTH AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND FUND
-------------- ------------ ------------ -----------
UNDERLYING FUND NAME PERCENTAGE OF UNDERLYING FUND HOLDINGS
----------------------------------------- ----------------------------------------------------
Pioneer Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Oak Ridge Large Cap Growth Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Fundamental Growth Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Disciplined Growth Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Disciplined Value Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Core Equity Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Select Mid Cap Growth Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Mid Cap Value Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Oak Ridge Small Cap Growth Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Global Equity Fund 0-30% 0-30% 0-30% 0-30%
Pioneer International Value Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Emerging Markets Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Real Estate Shares 0-30% 0-30% 0-30% 0-30%
Pioneer Equity Income Fund 0-30% 0-30% 0-30% 0-30%
Pioneer Government Income Fund 0-30% 0-30% 0-30% 0-15%
Pioneer High Yield Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Global Multisector Income Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Global High Yield Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Bond Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Strategic Income Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Dynamic Credit Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Multi-Asset Ultrashort Income
Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Floating Rate Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Short Term Income Fund 0-30% 0-30% 0-30% 0-15%
Pioneer Cash Reserves Fund 0-30% 0-30% 0-30% 0-15%
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENTS BY UNDERLYING FUNDS
The underlying funds may invest in some or all of the following securities.
Certain equity underlying funds may invest a limited portion of their assets in
fixed income securities. Fixed income underlying funds primarily invest in debt
securities. For purposes of this section, "the fund" means a fund and, where
applicable, an underlying fund.
72
INVESTMENTS IN EQUITY SECURITIES
EQUITY SECURITIES
The fund may invest in equity securities. Equity securities in which the
fund invests include common stocks and securities with common stock
characteristics, such as exchange-traded funds (ETFs) that invest primarily
in equity securities, depositary receipts, warrants, rights, equity
interests in real estate investment trusts (REITs) and preferred stocks.
INVESTMENTS IN REITS
REITs are companies that invest primarily in income producing real estate or
real estate related loans or interests. Some REITs invest directly in real
estate and derive their income from the collection of rents and capital
gains on the sale of properties. Other REITs invest primarily in mortgages,
including "sub-prime" mortgages, secured by real estate and derive their
income from collection of interest.
INVESTMENTS IN FIXED INCOME SECURITIES
DEBT SECURITIES
The fund may invest in debt securities. Debt securities in which the fund
invests include U.S. government securities, debt securities of corporate and
other issuers, mortgage- and asset-backed securities and short-term debt
securities. The fund may acquire debt securities that are investment grade
and may invest in below investment grade debt securities (known as "junk
bonds") including below investment grade convertible debt securities. A debt
security is investment grade if it is rated in one of the top four
categories by a nationally recognized statistical rating organization or
determined to be of equivalent credit quality by the adviser.
U.S. GOVERNMENT AGENCY SECURITIES
The fund may invest in U.S. government securities. U.S. government
securities include obligations: directly issued by or supported by the full
faith and credit of the U.S. government, like Treasury bills, notes and
bonds and Government National Mortgage Association certificates; supported
by the right of the issuer to borrow from the U.S. Treasury, like those of
the Federal Home Loan Banks; supported by the discretionary authority of the
U.S. government to purchase the agency's securities like those of the
Federal National Mortgage Association; or supported only by the credit of
the issuer itself, like the Tennessee Valley Authority.
73
More on each fund's investment objectives
and strategies
MORTGAGE-BACKED SECURITIES
The fund may invest in mortgage-backed securities. Mortgage-backed
securities may be issued by private issuers, by government-sponsored
entities such as the Federal National Mortgage Association (Fannie Mae) or
Federal Home Loan Mortgage Corporation (Freddie Mac) or by agencies of the
U.S. government, such as the Government National Mortgage Association
(Ginnie Mae). Mortgage-backed securities represent direct or indirect
participation in, or are collateralized by and payable from, mortgage loans
secured by real property. The fund's investments in mortgage-related
securities may include mortgage derivatives and structured securities.
The fund may invest in collateralized mortgage obligations (CMOs). A CMO is
a mortgage-backed bond that is issued in multiple classes, each with a
specified fixed or floating interest rate and a final scheduled distribution
date. The holder of an interest in a CMO is entitled to receive specified
cash flows from a pool of underlying mortgages or other mortgage-backed
securities. Depending upon the class of CMO purchased, the holder may be
entitled to payment before the cash flow from the pool is used to pay
holders of other classes of the CMO or, alternatively, the holder may be
paid only to the extent that there is cash remaining after the cash flow has
been used to pay other classes. A subordinated interest may serve as a
credit support for the senior securities purchased by other investors.
ASSET-BACKED SECURITIES
The fund may invest in asset-backed securities. Asset-backed securities
represent participations in, or are secured by and payable from, assets such
as installment sales or loan contracts, leases, credit card receivables and
other categories of receivables. The fund's investments in asset-backed
securities may include derivative and structured securities.
The fund may invest in asset-backed securities issued by special entities,
such as trusts, that are backed by a pool of financial assets. The fund may
invest in collateralized debt obligations (CDOs), which include
collateralized bond obligations (CBOs), collateralized loan obligations
(CLOs) and other similarly structured securities. A CDO is a trust backed by
a pool of fixed income securities. The trust typically is split into two or
more portions, called tranches, which vary in credit quality, yield, credit
support and right to repayment of principal and interest. Lower tranches pay
higher interest rates but represent lower degrees of credit quality
74
and are more sensitive to the rate of defaults in the pool of obligations.
Certain CDOs may use derivatives, such as credit default swaps, to create
synthetic exposure to assets rather than holding such assets directly.
SUBORDINATED SECURITIES
The fund may invest in securities that are subordinated or "junior" to more
senior securities of the issuer. The investor in a subordinated security of
an issuer is entitled to payment after other holders of debt in that issuer.
BELOW INVESTMENT GRADE SECURITIES ("JUNK BONDS")
The fund may invest in debt securities rated below investment grade or, if
unrated, of equivalent quality as determined by Pioneer. A debt security is
below investment grade if it is rated BB or lower by Standard & Poor's
Financial Services LLC or the equivalent rating by another nationally
recognized statistical rating organization or determined to be of equivalent
credit quality by Pioneer. Debt securities rated below investment grade are
commonly referred to 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 less liquid, especially during periods
of economic uncertainty or change, than higher quality debt securities.
Below investment grade securities also may be more difficult to value.
FLOATING RATE LOANS
Floating rate loans are provided by banks and other financial institutions
to large corporate customers. These loans are rated below investment grade,
but typically are secured with specific collateral and have a senior
position in the capital structure of the borrower. These loans typically
have rates of interest that are reset periodically by reference to a base
lending rate, such as the London Interbank Offered Rate (LIBOR), plus a
premium.
INVERSE FLOATING RATE OBLIGATIONS
The fund may invest in inverse floating rate obligations (a type of
derivative instrument). The interest rate on inverse floating rate
obligations will generally decrease as short-term interest rates increase,
and increase as short-term rates decrease. Due to their leveraged structure,
the sensitivity of the market value of an inverse floating rate obligation
to changes in interest rates is generally greater than a comparable
long-term bond issued by the same issuer and with similar credit quality,
redemption and maturity provisions. Inverse floating rate obligations may be
volatile and involve leverage risk.
75
More on each fund's investment objectives
and strategies
DEBT RATING CONSIDERATIONS
For purposes of the fund's credit quality policies, if a security receives
different ratings from nationally recognized statistical rating
organizations, the fund will use the rating chosen by the portfolio manager
as most representative of the security's credit quality. The ratings of
nationally recognized statistical rating organizations represent their
opinions as to the quality of the securities that they undertake to rate and
may not accurately describe the risks of the securities. A rating
organization may have a conflict of interest with respect to a security for
which it assigns a quality rating. In addition, there may be a delay between
a change in the credit quality of a security or other asset and a change in
the quality rating assigned to the security or other asset by a rating
organization. If a rating organization changes the quality rating assigned
to one or more of the fund's portfolio securities, Pioneer will consider if
any action is appropriate in light of the fund's investment objectives and
policies. An investor can still lose significant amounts when investing in
investment grade securities.
EVENT-LINKED BONDS
The fund may invest in "event-linked" bonds, which sometimes are referred to
as "insurance-linked" or "catastrophe" bonds. Event-linked bonds are debt
obligations for which the return of principal and the payment of interest
are contingent on the non-occurrence of a pre-defined "trigger" event, such
as a hurricane or an earthquake of a specific magnitude. For some
event-linked bonds, the trigger event's magnitude may be based on losses to
a company or industry, industry indexes or readings of scientific
instruments rather than specified actual losses. The fund is entitled to
receive principal and interest payments so long as no trigger event occurs
of the description and magnitude specified by the instrument.
Event-linked bonds may be issued by government agencies, insurance
companies, reinsurers, special purpose corporations or other on-shore or
off-shore entities.
Event-linked bonds are typically rated by at least one nationally recognized
statistical rating agency, but also may be unrated. The rating for an
event-linked bond primarily reflects the rating agency's calculated
probability that a pre-defined trigger event will occur. This rating also
assesses the event-linked bond's credit risk and the model used to calculate
the probability of a trigger event.
76
EQUITY AND FIXED INCOME INVESTMENTS
NON-U.S. INVESTMENTS
The fund may invest in securities of non-U.S. issuers, including securities
of emerging markets issuers. Non-U.S. issuers are issuers that are organized
and have their principal offices outside of the United States. Non-U.S.
securities may be issued by non-U.S. governments, banks or corporations, or
private issuers, and certain supranational organizations, such as the World
Bank and the European Union. The fund considers emerging market issuers to
include issuers organized under the laws of an emerging market country,
issuers with a principal office in an emerging market country, issuers that
derive at least 50% of their gross revenues or profits from goods or
services produced in emerging markets, and emerging market governmental
issuers.
DERIVATIVES
The fund may, but is not required to, use futures and options on securities,
indices and currencies, forward foreign currency exchange contracts, swaps
and other derivatives. The fund also may enter into credit default swaps,
which can be used to acquire or to transfer the credit risk of a security or
index of securities without buying or selling the security or securities
comprising the relevant index. 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. The fund may use derivatives for a variety of purposes,
including:
- In an attempt to hedge against adverse changes in the market prices of
securities, interest rates or currency exchange rates
- As a substitute for purchasing or selling securities
- To attempt to increase the fund's return as a non-hedging strategy that
may be considered speculative
- To manage portfolio characteristics (for example, exposure to various
market segments)
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations.
CASH MANAGEMENT AND TEMPORARY INVESTMENTS
Normally, the fund invests substantially all of its assets to meet its
investment objectives. The fund may invest the remainder of its assets in
securities with remaining maturities of less than one year or cash equivalents,
or may hold cash. For temporary defensive purposes, including during periods of
77
More on each fund's investment objectives
and strategies
unusual cash flows, the fund may depart from its principal investment
strategies and invest part or all of its assets in these securities or may hold
cash. The fund may adopt a defensive strategy when the adviser believes
securities in which the fund normally invests have special or unusual risks or
are less attractive due to adverse market, economic, political or other
conditions. During such periods, it may be more difficult for the fund to
achieve its investment objective.
ADDITIONAL INVESTMENT STRATEGIES
In addition to the principal investment strategies discussed above, the fund
and each underlying fund may also use other techniques, including the following
non-principal investment strategies.
REVERSE REPURCHASE AGREEMENTS AND BORROWING
The fund may enter into reverse repurchase agreements pursuant to which the
fund transfers securities to a counterparty in return for cash, and the fund
agrees to repurchase the securities at a later date and for a higher price.
Reverse repurchase agreements are treated as borrowings by the fund, are a form
of leverage and may make the value of an investment in the fund more volatile
and increase the risks of investing in the fund. The fund also may borrow money
from banks or other lenders for temporary purposes. The fund may borrow up to
33 1/3% of its total assets. Entering into reverse repurchase agreements and
other borrowing transactions may cause the fund to liquidate positions when it
may not be advantageous to do so in order to satisfy its obligations or meet
segregation requirements.
SHORT-TERM TRADING
The fund usually does not trade for short-term profits. The 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 the fund does a lot of trading,
it may incur additional operating expenses, which would reduce performance. A
higher level of portfolio turnover may also cause taxable shareowners to incur
a higher level of taxable income or capital gains.
78
More on the risks of investing in a fund
PRINCIPAL INVESTMENT RISKS
You could lose money on your investment in a fund. As with any mutual fund,
there is no guarantee that a fund will achieve its objectives. Following is a
description of principal risks of investing in a fund.
For purposes of this section, "the fund" means the fund or, where applicable,
an underlying fund.
MARKET RISK. The values of securities held by the fund may go up or down,
sometimes rapidly or unpredictably, due to general market conditions, such as
real or perceived adverse economic, political, or regulatory conditions,
inflation, changes in interest or currency rates or adverse investor sentiment.
Adverse market conditions may be prolonged and may not have the same impact on
all types of securities. The values of securities may fall due to factors
affecting a particular issuer, industry or the securities market as a whole.
The equity and debt capital markets in the United States and internationally
have experienced unprecedented volatility in recent years. The stock market may
perform poorly relative to other investments (this risk may be greater in the
short term). High public debt in the U.S. and other countries creates ongoing
systemic and market risks and policymaking uncertainty. The financial crisis
that began in 2008 has caused a significant decline in the value and liquidity
of many securities; in particular, the values of some sovereign debt and of
securities of issuers that invest in sovereign debt and related investments
have fallen, credit has become more scarce worldwide and there has been
significant uncertainty in the markets. Some governmental and non-governmental
issuers (notably in Europe) have defaulted on, or been forced to restructure,
their debts; and many other issuers have faced difficulties refinancing
existing obligations. These market conditions may continue, worsen or spread,
including in the U.S., Europe and beyond. Further defaults or restructurings by
governments and others of their debt could have additional adverse effects on
economies, financial markets and asset valuations around the world. In response
to the crisis, the U.S. and other governments and the Federal Reserve and
certain foreign central banks have taken steps to support financial markets.
The withdrawal of this support, failure of efforts in response to the crisis,
or investor perception that such efforts are not succeeding could negatively
affect financial markets generally as well as the value and liquidity of
certain securities. This environment could make identifying investment risks
and opportunities especially difficult for the adviser, and whether or not the
fund invests in securities of issuers located in or with significant exposure
to countries experiencing economic and financial difficulties, the value and
liquidity of the fund's investments
79
More on the risks of investing in a fund
may be negatively affected. In addition, policy and legislative changes in the
U.S. and in other countries are affecting many aspects of financial regulation.
The impact of these changes on the markets, and the practical implications for
market participants, may not be fully known for some time. The fund may
experience a substantial or complete loss on any individual security.
FUND OF FUNDS STRUCTURE AND LAYERING OF FEES. The fund is structured as a fund
of funds. The fund's investments are focused in the underlying funds, so the
fund's investment performance is directly related to the performance of the
underlying funds. The fund's net asset value will be affected by the
performance of the equity and bond markets and the value of the mutual funds in
which the fund invests. In addition, the underlying funds may invest in other
investment companies, including exchange-traded funds (ETFs). Since the fund
mainly invests in the underlying funds, as opposed to other types of
securities, the fund does not have the same flexibility in its portfolio
holdings as many mutual funds. In addition, the fund indirectly pays a portion
of the expenses incurred by the underlying funds. Consequently, an investment
in the fund entails more direct and indirect expenses than a direct investment
in the underlying funds. For instance, you will pay management fees and
operating expenses of both the fund and the underlying funds. The management
fees paid by some underlying funds to Pioneer are higher than the management
fees paid by other underlying funds.
The underlying funds will not necessarily make consistent investment decisions,
which may also increase your costs. One underlying fund may buy the same
security that another underlying fund is selling. You would indirectly bear the
costs of both trades without achieving any investment purpose. These
transactions may also generate taxable gains. You may receive taxable
distributions consisting of gains from transactions by the underlying funds as
well as gains from the fund's transactions in shares of the underlying funds.
Currently, Pioneer manages many of the underlying funds. Because the portfolio
management teams of each of the underlying Pioneer funds may draw upon the
resources of the same equity and fixed income analyst team or may share common
investment management styles or approaches, the underlying funds may hold many
common portfolio positions, reducing the diversification benefits of an asset
allocation style.
80
ALLOCATION RISK. The subadviser's evaluation of asset classes and market
sectors in developing an allocation model, and its selection and weighting of
underlying funds within the allocation model, may prove to be incorrect. To the
extent that the fund invests a significant percentage of its assets in any one
underlying fund, the fund will be subject to a greater degree to the risks
particular to that underlying fund, and may experience greater volatility as a
result.
ASSET CLASS VARIATION RISK. The underlying funds invest principally in the
securities constituting their asset class (i.e., equity or fixed income).
However, under normal market conditions, an underlying fund may vary the
percentage of its assets in these securities (subject to any applicable
regulatory requirements). Depending upon the percentage of securities in a
particular asset class held by the underlying funds at any given time, and the
percentage of the fund's assets invested in various underlying funds, the
fund's actual exposure to the securities in a particular asset class may vary
substantially from its target asset allocation for that asset class.
EXPENSE RISK. Your actual costs of investing in the fund may be higher than the
expenses shown in "Annual fund operating expenses" for a variety of reasons.
For example, expense ratios may be higher than those shown if overall net
assets decrease. Net assets are more likely to decrease and fund expense ratios
are more likely to increase when markets are volatile.
PRINCIPAL RISKS OF INVESTING IN THE UNDERLYING FUNDS
RISKS OF EQUITY INVESTMENTS
Equity funds invest primarily in equity securities (such as stocks), which are
more volatile and carry more risks than some other forms of investment. Risks
of investing in underlying equity funds may include:
VALUE STYLE RISK. The prices of securities the adviser believes are
undervalued may not appreciate as expected or may go down. Value stocks may
fall out of favor with investors and underperform the overall equity market.
GROWTH STYLE RISK. The fund's investments may not have the growth potential
originally expected. Growth stocks may fall out of favor with investors and
underperform the overall equity market.
SMALL AND MID-SIZE COMPANIES RISK. Compared to large companies, small- and
mid-size companies, and the market for their equity securities, may be more
sensitive to changes in earnings results and investor
81
More on the risks of investing in a fund
expectations, have more limited product lines and capital resources,
experience sharper swings in market values, have limited liquidity, be
harder to value or to sell at the times and prices the adviser thinks
appropriate, and offer greater potential for gain and loss.
RISKS OF INVESTMENTS IN REITS. The fund has risks associated with the real
estate industry. Although the fund does not invest directly in real estate,
it may invest in REITs and other equity securities of real estate industry
issuers. These risks may include:
- The U.S. or a local real estate market declines due to adverse economic
conditions, foreclosures, overbuilding and high vacancy rates, reduced or
regulated rents or other causes
- Interest rates go up. Rising interest rates can adversely affect the
availability and cost of financing for property acquisitions and other
purposes and reduce the value of a REIT's fixed income investments
- The values of properties owned by a REIT or the prospects of other real
estate industry issuers may be hurt by property tax increases, zoning
changes, other governmental actions, environmental liabilities, natural
disasters or increased operating expenses
- A REIT in the fund's portfolio is, or is perceived by the market to be,
poorly managed
Investing in REITs involves certain unique risks. REITs are dependent on
management skills, are not diversified and are subject to the risks of
financing projects. REITs are typically invested in a limited number of
projects or in a particular market segment or geographic region, and
therefore are more susceptible to adverse developments affecting a single
project, market segment or geographic region than more broadly diversified
investments. REITs are subject to heavy cash flow dependency, defaults by
mortgagors or other borrowers and tenants, self-liquidation and the
possibility of failing to qualify for certain tax and regulatory exemptions.
REITs may have limited financial resources and may experience sharper swings
in market values and trade less frequently and in a more limited volume than
securities of larger issuers. In addition to its own expenses, the fund will
indirectly bear its proportionate share of any management and other expenses
paid by REITs in which it invests.
Many real estate companies, including REITs, utilize leverage (and some may
be highly leveraged), which increases investment risk and could adversely
affect a real estate company's operations and market value. In
82
addition, capital to pay or refinance a REIT's debt may not be available or
reasonably priced. Financial covenants related to real estate company
leveraging may affect the company's ability to operate effectively.
PREFERRED STOCKS RISK. Preferred stocks may pay fixed or adjustable rates of
return. Preferred stocks are subject to issuer-specific and market risks
applicable generally to equity securities. In addition, a company's
preferred stocks generally pay dividends only after the company makes
required payments to holders of its bonds and other debt. Thus, the value of
preferred stocks will usually react more strongly than bonds and other debt
to actual or perceived changes in the company's financial condition or
prospects. The market value of preferred stocks generally decreases when
interest rates rise. Preferred stocks of smaller companies may be more
vulnerable to adverse developments than preferred stock of larger companies.
RISKS OF INITIAL PUBLIC OFFERINGS. Companies involved in initial public
offerings (IPOs) generally have limited operating histories, and prospects
for future profitability are uncertain. The market for IPO issuers has been
volatile, and share prices of newly public companies have fluctuated
significantly over short periods of time. Further, stocks of newly-public
companies may decline shortly after the IPO. There is no assurance that the
fund will have access to IPOs. The purchase of IPO shares may involve high
transaction costs. Because of the price volatility of IPO shares, the fund
may choose to hold IPO shares for a very short period of time. This may
increase the turnover of the fund's portfolio and may lead to increased
expenses to the fund, such as commissions and transaction costs. The market
for IPO shares can be speculative and/or inactive for extended periods of
time. There may be only a limited number of shares available for trading.
The limited number of shares available for trading in some IPOs may also
make it more difficult for the fund to buy or sell significant amounts of
shares without an unfavorable impact on prevailing prices.
RISKS OF CONVERTIBLE SECURITIES. Convertible securities generally offer
lower interest or dividend yields than non-convertible securities of similar
quality. As with all fixed income securities, the market values of
convertible securities tend to decline as interest rates increase and,
conversely, to increase as interest rates decline. However, when the market
price of the common stock underlying a convertible security exceeds the
conversion price, the convertible security tends to reflect the market price
of the underlying common stock. As the market price of the underlying common
83
More on the risks of investing in a fund
stock declines, the convertible security tends to trade increasingly on a
yield basis and thus may not decline in price to the same extent as the
underlying common stock. Convertible securities rank senior to common stocks
in an issuer's capital structure and consequently entail less risk than the
issuer's common stock.
RISKS OF FIXED INCOME INVESTMENTS
Fixed income funds primarily invest in debt securities, such as government
securities, investment grade corporate securities, junk bonds, mortgage-backed
securities, asset-backed securities, and money market securities. The value of
your investment in the fund will change as the value of investments of the
underlying funds increases and decreases. Risks of investing in underlying
fixed income funds may include:
INTEREST RATE RISK. When interest rates rise, the value of fixed income
securities generally falls. A change in interest rates will not have the
same impact on all fixed income securities. Generally, the longer the
maturity or duration of a fixed income security, the greater the impact of a
rise in interest rates on the security's value. Calculations of duration and
maturity may be based on estimates and may not reliably predict a security's
price sensitivity to changes in interest rates. Moreover, securities can
change in value in response to other factors, such as credit risk. In
addition, different interest rate measures (such as short- and long-term
interest rates and U.S. and foreign interest rates), or interest rates on
different types of securities or securities of different issuers, may not
necessarily change in the same amount or in the same direction. When
interest rates go down, the income received by the fund, and the fund's
yield, may decline. Interest rates in the U.S. recently have been
historically low, and may be expected to go back up.
Certain fixed income securities pay interest at variable or floating rates.
Variable rate securities tend to reset at specified intervals, while
floating rate securities may reset whenever there is a change in a specified
index rate. In most cases, these reset provisions reduce the impact of
changes in market interest rates on the value of the security. However, some
securities do not track the underlying index directly, but reset based on
formulas that may produce a leveraging effect; others may also provide for
interest payments that vary inversely with market rates. The market prices
of these securities may fluctuate significantly when interest rates change.
Yield generated by the fund may decline due to a decrease in market interest
rates.
84
CREDIT RISK. If an obligor (such as the issuer itself or a party offering
credit enhancement) for a security held by the fund fails to pay, otherwise
defaults, is perceived to be less creditworthy, becomes insolvent or files
for bankruptcy, a security's credit rating is downgraded or the credit
quality or value of an underlying asset declines, the value of your
investment could decline. In addition, the fund may incur expenses to
protect the fund's interest in securities experiencing these events. Credit
risk is broadly gauged by the credit ratings of the securities in which the
fund invests. However, ratings are only the opinions of the companies
issuing them and are not guarantees as to quality.
PREPAYMENT OR CALL RISK. Many fixed income securities give the issuer the
option to prepay or call the security prior to its maturity date. Issuers
often exercise this right when interest rates fall. Accordingly, if the fund
holds a fixed income security that can be prepaid or called prior to its
maturity date, it will not benefit fully from the increase in value that
other fixed income securities generally experience when interest rates fall.
Upon prepayment of the security, the fund also would be forced to reinvest
the proceeds at then current yields, which would be lower than the yield of
the security that was prepaid or called. In addition, if the fund purchases
a fixed income security at a premium (at a price that exceeds its stated par
or principal value), the fund may lose the amount of the premium paid in the
event of prepayment.
EXTENSION 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 (the estimated period until the security is paid in
full) and reduce the value of the security. To the extent the fund invests
significantly in mortgage-related and asset-backed securities, its exposure
to extension risks may be greater than if it invested in other fixed income
securities.
U.S. GOVERNMENT AGENCY OBLIGATIONS RISK. The fund invests in obligations
issued by agencies and instrumentalities of the U.S. government.
Government-sponsored entities such as Fannie Mae, Freddie Mac and the
Federal Home Loan Banks (FHLBs), although chartered or sponsored by
Congress, are not funded by congressional appropriations and the debt and
mortgage-backed securities issued by them are neither guaranteed nor issued
by the U.S. government. Such debt and mortgage-backed securities are subject
to the risk of default on the payment of interest
85
More on the risks of investing in a fund
and/or principal, similar to debt of private issuers. Although the U.S.
government has provided financial support to Fannie Mae and Freddie Mac in
the past, there can be no assurance that it will support these or other
government-sponsored entities in the future.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES RISK. The repayment of certain
mortgage-backed and asset-backed securities depends primarily on the cash
collections received from the issuer's underlying asset portfolio and, in
certain cases, the issuer's ability to issue replacement securities. As a
result, there could be losses to the fund in the event of credit or market
value deterioration in the issuer's underlying portfolio, mismatches in the
timing of the cash flows of the underlying asset interests and the repayment
obligations of maturing securities, or the issuer's inability to issue new
or replacement securities. Upon the occurrence of certain triggering events
or defaults, the fund may become the holder of underlying assets at a time
when those assets may be difficult to sell or may be sold only at a loss. In
the event of a default, the value of the underlying collateral may be
insufficient to pay certain expenses, such as litigation and foreclosure
expenses, and inadequate to pay any principal or unpaid interest. Privately
issued mortgage-backed and asset-backed securities are not traded on an
exchange and may have a limited market. Without an active trading market,
these securities may be particularly difficult to value given the
complexities in valuing the underlying collateral.
Certain mortgage-backed and asset-backed securities may pay principal only
at maturity or may represent only the right to receive payments of principal
or interest on the underlying obligations, but not both. The value of these
types of instruments may change more drastically than debt securities that
pay both principal and interest during periods of changing interest rates.
Principal only instruments generally increase in value if interest rates
decline, but are also subject to the risk of prepayment. Interest only
instruments generally increase in value in a rising interest rate
environment when fewer of the underlying obligations are prepaid. Interest
only instruments could lose their entire value in a declining interest rate
environment if the underlying obligations are prepaid.
Unlike mortgage-related securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities, mortgage-related
securities issued by private issuers do not have a government or
government-sponsored entity guarantee (but may have other credit
enhancement), and may, and frequently do, have less favorable collateral,
credit risk or other characteristics.
86
The fund may invest in other mortgage-related securities, including mortgage
derivatives and structured securities. These securities typically are not
secured by real property. Because these securities have embedded leverage
features, small changes in interest or prepayment rates may cause large and
sudden price movements. These securities also can become illiquid and
difficult to value in volatile or declining markets.
Mortgage-backed securities are particularly susceptible to prepayment and
extension risk, because prepayments on the underlying mortgages tend to
increase when interest rates fall and decrease when interest rates rise.
The value of mortgage-backed and asset-backed securities may be affected by
changes in credit quality or value of the mortgage loans or other assets
that support the securities. In addition, for mortgage-backed securities,
when market conditions result in an increase in the default rates on the
underlying mortgages and the foreclosure values of the underlying real
estate are below the outstanding amount of the underlying mortgages,
collection of the full amount of accrued interest and principal on these
investments may be less likely.
The fund may invest in CMOs. Principal prepayments on the underlying
mortgage loans may cause a CMO to be retired substantially earlier than its
stated maturity or final distribution date. If there are defaults on the
underlying mortgage loans, the fund will be less likely to receive payments
of principal and interest, and will be more likely to suffer a loss. This
risk may be increased to the extent the underlying mortgages include
sub-prime mortgages. As market conditions change, and particularly during
periods of rapid or unanticipated changes in market interest rates, the
attractiveness of a CMO class and the ability of the structure to provide
the anticipated investment characteristics may be significantly reduced.
Such changes can result in volatility in the market value, and in some
instances reduced liquidity, of a CMO class.
The fund may invest in CDOs. The risks of an investment in a CDO depend
largely on the type of the underlying obligations (e.g., an underlying
obligation may decline in quality or default) and the tranche of the CDO in
which the fund invests (e.g., the fund may invest in a tranche of CDO that
is subordinate to other tranches). Investments in CDOs may be characterized
by the fund as illiquid securities, which may be hard to value and difficult
to sell at an advantageous time or price. Although certain CDOs may receive
credit enhancement in the form of a senior-subordinate structure,
87
More on the risks of investing in a fund
over-collateralization or bond insurance, such enhancement may not always be
present, and may fail to protect a fund against the risk of loss on default
of the collateral.
RISKS OF INSTRUMENTS THAT ALLOW FOR BALLOON PAYMENTS OR NEGATIVE
AMORTIZATION PAYMENTS. Certain debt instruments allow for balloon payments
or negative amortization payments. Such instruments permit the borrower to
avoid paying currently a portion of the interest accruing on the instrument.
While these features make the debt instrument more affordable to the
borrower in the near term, they increase the risk that the borrower will be
unable to make the resulting higher payment or payments that become due at
the maturity of the loan.
RISKS OF SUBORDINATED SECURITIES. A holder of securities that are
subordinated or "junior" to more senior securities of an issuer is entitled
to payment after holders of more senior securities of the issuer.
Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer, any loss incurred by the
subordinated securities is likely to be proportionately greater, and any
recovery of interest or principal may take more time. As a result, even a
perceived decline in creditworthiness of the issuer is likely to have a
greater impact on them.
HIGH YIELD OR "JUNK" BOND RISK. Debt securities that are below investment
grade, called "junk bonds," are speculative, have a higher risk of default
or are already in default, tend to be less liquid and are more difficult to
value than higher grade securities. Junk bonds tend to be volatile and more
susceptible to adverse events and negative sentiments. These risks are more
pronounced for securities that are already in default.
RISKS OF INVESTING IN EVENT-LINKED BONDS. The return of principal and the
payment of interest on "event-linked" bonds are contingent on the
non-occurrence of a pre-defined "trigger" event, such as a hurricane or an
earthquake of a specific magnitude. If a trigger event, as defined within
the terms of an event-linked bond, involves losses or other metrics
exceeding a specific magnitude in the geographic region and time period
specified, the fund may lose a portion or all of its accrued interest and/or
principal invested in the event-linked bond. In addition to the specified
trigger events, event-linked bonds may expose the fund to other risks,
including but not limited to issuer (credit) default, adverse regulatory or
jurisdictional interpretations and adverse tax consequences. Event-linked
bonds are also subject to the risk that the model used to calculate the
88
probability of a trigger event was not accurate and underestimated the
likelihood of a trigger event. Upon the occurrence or possible occurrence of
a trigger event, and until the completion of the processing and auditing of
applicable loss claims, the fund's investment in an event-linked bond may be
priced using fair value methods. As a relatively new type of financial
instrument, there is limited trading history for these securities, and there
can be no assurance that a liquid market in these instruments will develop.
RISKS OF INVESTING IN FLOATING RATE LOANS. Floating rate loans and similar
investments may be illiquid or less liquid than other investments. The value
of collateral, if any, securing a floating rate loan can decline or may be
insufficient to meet the issuer's obligations or may be difficult to
liquidate. No active trading market may exist for many floating rate loans,
and many loans are subject to restrictions on resale. Market quotations for
these securities may be volatile and/or subject to large spreads between bid
and ask prices. Any secondary market may be subject to irregular trading
activity and extended trade settlement periods.
RISKS OF INVESTING IN INVERSE FLOATING RATE OBLIGATIONS. The interest rate
on inverse floating rate obligations will generally decrease as short-term
interest rates increase, and increase as short-term rates decrease. Due to
their leveraged structure, the sensitivity of the market value of an inverse
floating rate obligation to changes in interest rates is generally greater
than a comparable long-term bond issued by the same issuer and with similar
credit quality, redemption and maturity provisions. Inverse floating rate
obligations may be volatile and involve leverage risk.
INFLATION-LINKED SECURITY RISK. Unlike a conventional bond, whose issuer
makes regular fixed interest payments and repays the face value of the bond
at maturity, an inflation-indexed security provides principal payments and
interest payments, both of which are adjusted over time to reflect a rise
(inflation) or a drop (deflation) in the general price level. The inflation
index generally used is the non-seasonally adjusted index, which is not
statistically smoothed to overcome highs and lows observed at different
points each year. The use of the non-seasonally adjusted index can cause the
fund's income level to fluctuate. As inflationary expectations increase,
inflation-linked securities will become more attractive, because they
protect future interest payments against inflation. Conversely, as
inflationary concerns decrease, inflation-linked securities will become less
attractive and less valuable. The non-seasonally adjusted index used may not
accurately measure the real rate of inflation. Inflation-linked securities
89
More on the risks of investing in a fund
may lose value or interest payments on such securities may decline in the
event that the actual rate of inflation is different than the rate of the
non-seasonally adjusted index.
RISKS OF ZERO COUPON BONDS, PAYMENT IN KIND, DEFERRED AND CONTINGENT PAYMENT
SECURITIES. Zero coupon bonds (which do not pay interest until maturity) and
payment in kind securities (which pay interest in the form of additional
securities) may be more speculative and may fluctuate more in value than
securities which pay income periodically and in cash. These securities are
more likely to respond to changes in interest rates than interest-bearing
securities having similar maturities and credit quality. These securities
are more sensitive to the credit quality of the underlying issuer. Deferred
interest securities are obligations that generally provide for a period of
delay before the regular payment of interest begins and are issued at a
significant discount from face value. The interest rate on contingent
payment securities is determined by the outcome of an event, such as the
performance of a financial index. If the financial index does not increase
by a prescribed amount, the fund may receive no interest.
Unlike bonds that pay interest throughout the period to maturity, the fund
generally will realize no cash until maturity and, if the issuer defaults,
the fund may obtain no return at all on its investment. In addition,
although the fund receives no periodic cash payments on such securities, the
fund is deemed for tax purposes to receive income from such securities,
which applicable tax rules require the fund to distribute to shareholders.
Such distributions may be taxable when distributed to shareholders and, in
addition, could reduce the fund's reserve position and require the fund to
sell securities and incur a gain or loss at a time it may not otherwise want
in order to provide the cash necessary for these distributions.
RISKS OF EQUITY AND FIXED INCOME INVESTMENTS
Risks of investing in underlying equity and fixed income funds may include:
PORTFOLIO SELECTION RISK. The adviser's judgment about the attractiveness,
relative value or potential appreciation of an equity security, or about the
quality, relative yield or relative value of a fixed income security, or
about a particular sector, region or market segment, or about an investment
strategy, or about interest rates, may prove to be incorrect.
LIQUIDITY RISK. Liquidity risk exists when particular investments are
impossible or difficult to sell. Although most of the fund's securities and
other investments must be liquid at the time of investment, securities
90
and other investments may become illiquid after purchase by the fund,
particularly during periods of market turmoil. When the fund holds illiquid
investments, its portfolio may be harder to value, especially in changing
markets. If the fund is forced to sell or unwind these investments to meet
redemptions or for other cash needs, the fund may suffer a loss. In
addition, when there is illiquidity in the market for certain securities or
other investments, the fund, due to limitations on investments in illiquid
securities, may be unable to achieve its desired level of exposure to a
certain sector. If an auction fails for an auction rate security, there may
be no secondary market for the security and the fund may be forced to hold
the security until the security is refinanced by the issuer or a secondary
market develops. To the extent the fund holds a material percentage of the
outstanding debt securities of an issuer, this practice may impact adversely
the liquidity and market value of those investments.
MARKET SEGMENT RISK. To the extent the fund emphasizes, from time to time,
investments in a market segment, the fund will be subject to a greater
degree to the risks particular to that segment, and may experience greater
market fluctuation, than a fund without the same focus. For example,
industries in the financial segment, such as banks, insurance companies,
broker-dealers and real estate investment trusts (REITs), may be sensitive
to changes in interest rates and general economic activity and are generally
subject to extensive government regulation.
RISKS OF NON-U.S. INVESTMENTS. Investing in non-U.S. issuers, or in U.S.
issuers that have significant exposure to foreign markets may involve unique
risks compared to investing in securities of U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
fund invests significantly in one region or country. 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. In a
changing market, the adviser may not be able to sell the fund's
securities at times, in amounts and at prices it considers reasonable
- Adverse effect of currency exchange rates or controls on the value of
the fund's investments, or its ability to convert non-U.S. currencies to
U.S. dollars
- The economies of non-U.S. countries may grow at slower rates than
expected or may experience a downturn or recession
91
More on the risks of investing in a fund
- Economic, political, regulatory and social developments may adversely
affect the securities markets
- It may be difficult for the fund to pursue claims against a foreign
issuer in the courts of a foreign country
- Withholding and other non-U.S. taxes may decrease the fund's return
- Some markets in which the fund may invest are located in parts of the
world that have historically been prone to natural disasters that could
result in a significant adverse impact on the economies of those
countries and investments made in those countries
- A governmental entity may delay, or refuse or be unable to pay,
interest or principal on its sovereign debt due to cash flow problems,
insufficient foreign currency reserves, political considerations, the
relative size of the governmental entity's debt position in relation to
the economy or the failure to put in place economic reforms
- Investing in depository receipts is subject to many of the same risks
as investing directly in non-U.S. issuers
Additional risks of investing in emerging markets include:
- The extent of economic development, political stability, market depth,
infrastructure, capitalization and regulatory oversight can be less than
in more developed markets
- Emerging market countries may experience rising interest rates, or,
more significantly, rapid inflation or hyperinflation
- The fund could experience a loss from settlement and custody practices
in some emerging markets
- The possibility that a counterparty may not complete a currency or
securities transaction
- Low trading volumes may result in a lack of liquidity, and in extreme
price volatility
DERIVATIVES RISK. Using options, swaps, futures and other derivatives
exposes the fund to additional risks, may increase the volatility of the
fund's net asset value and may not provide the expected result. Derivatives
may have a leveraging effect on the fund, and they can disproportionately
increase losses and reduce opportunities for gain when market prices,
interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the fund, especially in abnormal market
conditions. Some derivatives have the potential for unlimited loss,
regardless of the size of the fund's initial investment. If changes in a
derivative's value do not correspond to changes in the value of the fund's
other investments or do not correlate well with the underlying assets, rate
or
92
index, the fund may not fully benefit from, or could lose money on, or could
experience unusually high expenses as a result of, the derivative position.
Derivatives involve the risk of loss if the counterparty defaults on its
obligation or if the clearing firm through which the derivative has been
traded becomes insolvent. Certain derivatives may be less liquid, which may
reduce the returns of the fund if it cannot sell or terminate the derivative
at an advantageous time or price. The fund also may have to sell assets at
inopportune times to satisfy its obligations. The fund may be unable to
terminate or sell its derivative positions. In fact, many over-the-counter
derivative instruments will not have liquidity beyond the counterparty to
the instrument. Some derivatives may involve the risk of improper valuation.
The fund's use of derivatives may also increase the amount of taxes payable
by shareholders. Suitable derivatives may not be available in all
circumstances or at reasonable prices and may not be used by the fund for a
variety of reasons. Risks associated with the use of derivatives are
magnified to the extent that a large portion of the fund's assets are
committed to derivatives in general or are invested in just one or a few
types of derivatives. New regulations are changing the derivatives markets.
The regulations may make using derivatives more costly, may limit their
availability, or may otherwise adversely affect their value or performance.
For derivatives that are required to be traded through a clearinghouse or
exchange, the fund also will be exposed to the credit risk of the
clearinghouse and the broker that submits trades for the fund. It is
possible that certain derivatives that are required to be cleared, such as
certain swap contracts, will not be accepted for clearing. In addition,
regulated trading facilities for swap contracts are relatively new; they may
not function as intended, which could impair the ability to enter into swap
contracts. The extent and impact of the regulations are not yet fully known
and may not be for some time.
CREDIT DEFAULT SWAP RISK. Credit default swap contracts, a type of
derivative instrument, involve special risks and may result in losses to the
fund. Credit default swaps may in some cases be illiquid, and they increase
credit risk since the fund has exposure to both the issuer of the referenced
obligation and the counterparty to the credit default swap. Swaps may be
difficult to unwind or terminate. Certain index-based credit default swaps
are structured in tranches, whereby junior tranches assume greater default
risk than senior tranches. The absence of a central exchange or market for
swap transactions has led, in some instances, to difficulties in trading and
valuation, especially in the event of market disruptions.
93
More on the risks of investing in a fund
New regulations require many kinds of swaps to be executed through a
regulated exchange or market facility and cleared through a regulated
clearinghouse. The establishment of a centralized exchange or market for
swap transactions may disrupt or limit the swap market and may not result in
swaps being easier to trade or value. Market-traded swaps may become more
standardized, and the fund may not be able to enter into swaps that meet its
investment needs. The fund also may not be able to find a clearinghouse
willing to accept the swaps for clearing. The new regulations may make using
swaps more costly, may limit their availability, or may otherwise adversely
affect their value or performance. The fund will be required to trade many
swaps through a broker who is a member of the clearinghouse. The broker may
require the fund to post margin to the broker as a down payment on the
fund's obligations and may change the amount of margin required from time to
time. The fund may not be able to recover margin amounts if the broker has
financial difficulties. Also, the broker may require the fund to terminate a
derivatives position under certain circumstances. This may cause the fund to
lose money. The clearinghouse will be the fund's counterparty for the
derivatives trades. The fund will take the risk that the counterparty
defaults. The fund also may be exposed to additional risks as a result of
the new regulations. The extent and impact of the new regulations are not
yet fully known and may not be for some time.
VALUATION RISK. The sales price the fund could receive for any particular
portfolio investment may differ from the fund's valuation of the investment,
particularly for securities that trade in thin or volatile markets. If
markets make it difficult to value some investments, the fund may value
these investments using more subjective methods, such as fair value
methodologies. Investors who purchase or redeem fund shares on days when the
fund is holding fair-valued securities may receive fewer or more shares or
lower or higher redemption proceeds than they would have received if the
fund had not fair-valued the security or had used a different valuation
methodology. The value of foreign securities, certain fixed income
securities and currencies, as applicable, may be materially affected by
events after the close of the market on which they are valued, but before
the fund determines its net asset value.
LEVERAGING RISK. The value of your investment may be more volatile and other
risks tend to be compounded if the fund borrows or uses derivatives or other
investments, such as ETFs, that have embedded leverage. Leverage generally
magnifies the effect of any increase or decrease in the value of
94
the fund's underlying assets or creates investment risk with respect to a
larger pool of assets than the fund would otherwise have, potentially
resulting in the loss of all assets. Engaging in such transactions may cause
the fund to liquidate positions when it may not be advantageous to do so to
satisfy its obligations or meet segregation requirements.
CASH MANAGEMENT RISK. The value of the investments held by the fund for cash
management or temporary defensive purposes may be affected by market risks,
changing interest rates and by changes in credit ratings of the investments.
To the extent that the fund has any uninvested cash, the fund would be
subject to credit risk with respect to the depository institution holding
the cash. If the fund holds cash uninvested, the fund will not earn income
on the cash and the fund's yield will go down. During such periods, it may
be more difficult for the fund to achieve its investment objectives.
FORWARD FOREIGN CURRENCY TRANSACTIONS RISK. To the extent that the fund
enters into forward foreign currency transactions, it may not fully benefit
from or may lose money on the transactions if changes in currency rates do
not occur as anticipated or do not correspond accurately to changes in the
value of the fund's holdings, or if the counterparty defaults. Such
transactions may also prevent the fund from realizing profits on favorable
movements in exchange rates. Risk of counterparty default is greater for
counterparties located in emerging markets. The fund's ability to use
forward foreign currency transactions successfully depends on a number of
factors, including the forward foreign currency transactions being available
at prices that are not too costly, the availability of liquid markets, and
Pioneer's judgment regarding the direction of changes in currency exchange
rates.
PORTFOLIO TURNOVER RISK. If the fund does a lot of trading, it may incur
additional operating expenses, which would reduce performance. A higher
level of portfolio turnover may also cause taxable shareowners to incur a
higher level of taxable income or capital gains.
To learn more about the fund's investments and risks, you should obtain and
read the statement of additional information. Please note that there are many
other factors that could adversely affect your investment and that could
prevent the fund from achieving its goals.
95
Management
INVESTMENT ADVISER
Pioneer, the fund's investment adviser, oversees the fund's operations and
supervises the fund's subadviser, which is responsible for the day-to-day
management of the fund's portfolio.
Pioneer is an indirect, wholly owned subsidiary of UniCredit S.p.A., one of the
largest banking groups in Italy. Pioneer is part of the global asset management
group providing investment management and financial services to mutual funds,
institutional and other clients. As of September 30, 2013, assets under
management were approximately $225 billion worldwide, including over $67
billion in assets under management by Pioneer (and its U.S. affiliates).
Pioneer's main office is at 60 State Street, Boston, Massachusetts 02109.
The firm's U.S. mutual fund investment history includes creating in 1928 one of
the first mutual funds.
Pioneer has received an order from the Securities and Exchange Commission that
permits Pioneer, subject to the approval of the fund's Board of Trustees, to
hire and terminate a subadviser that is not affiliated with Pioneer (an
"unaffiliated subadviser") or to materially modify an existing subadvisory
contract with an unaffiliated subadviser for the fund without shareholder
approval. Pioneer retains the ultimate responsibility to oversee and recommend
the hiring, termination and replacement of any unaffiliated subadviser.
INVESTMENT SUBADVISER
Ibbotson Associates, Inc. is the subadviser to each fund and allocates, subject
to Pioneer's supervision, each fund's assets among asset classes and among the
underlying funds. Ibbotson Associates, Inc., is a registered investment adviser
and wholly owned subsidiary of Morningstar, Inc. As of September 30, 2013,
Ibbotson Associates, Inc. had approximately $29.68 billion in assets under
management. Ibbotson is located at 22 West Washington Street, Chicago, Illinois
60602.
PORTFOLIO MANAGEMENT
Day-to-day management of each fund is the responsibility of a team of portfolio
managers. Scott Wentsel, vice president and senior portfolio manager, manages
the investment management team and has served as a portfolio manager of each
fund since 2005. Mr. Wentsel is also responsible for directing the firm's
investment management services which includes
96
oversight of its consulting, fund-of-funds, and plan sponsor consulting
business lines. Prior to joining Ibbotson in 2005, Mr. Wentsel was an executive
director with Morgan Stanley where he worked primarily on Van Kampen
Investments' asset management business. Mr. Wentsel has over 20 years of
investment industry experience. Brian Huckstep, portfolio manager, is
responsible for managing the delivery of fund-of-funds programs for
institutional and retail clients, which includes asset allocation modeling,
portfolio construction, fund classification, and manager due diligence. Prior
to joining Ibbotson in 2005, Mr. Huckstep was Director of Data Acquisition at
Morningstar for two years. Mr. Huckstep also spent nine years at Northern Trust
in product manager and analyst roles for institutional custody clients. Mr.
Huckstep has served as a portfolio manager of each fund since 2005. Paul
Arnold, senior consultant, is responsible for developing and implementing asset
class models in addition to fund-of-funds portfolio construction, manager due
diligence and fund classification. Prior to joining Ibbotson in 2007, Mr.
Arnold worked for two years at Bank of America in its Principal Investing
Group. Mr. Arnold has served as a portfolio manager of each fund since 2012.
MANAGEMENT FEE
Each fund pays Pioneer a fee for managing the fund and to cover the cost of
providing certain services to the fund.
Pioneer's annual fee is equal to
ANNUAL FEE NET ASSETS
---------------------------------------------------------------- ----------------------
0.13% of the fund's average daily net assets on investments in Up to $2.5 billion
----------------------
underlying funds managed by Pioneer
(and cash); and 0.17% of the fund's average daily net assets on
other investments
----------------------------------------------------------------
0.11% of the fund's average daily net assets on investments in Over $2.5 billion and
underlying funds managed by Pioneer up to $4 billion
----------------------
(and cash); and 0.14% of the fund's average daily net assets on
other investments
----------------------------------------------------------------
0.10% of the fund's average daily net assets on investments in Over $4 billion and
underlying funds managed by Pioneer up to $5.5 billion
----------------------
(and cash); and 0.12% of the fund's average daily net assets on
other investments
----------------------------------------------------------------
0.08% of the fund's average daily net assets on investments in Over $5.5 billion and
underlying funds managed by Pioneer up to $7 billion
----------------------
(and cash); and 0.10% of the fund's average daily net assets on
other investments
----------------------------------------------------------------
97
Management
ANNUAL FEE NET ASSETS
---------------------------------------------------------------- ----------------
0.08% of the fund's average daily net assets on investments in Over $7 billion
----------------
underlying funds managed by Pioneer
(and cash); and 0.09% of the fund's average daily net assets on
other investments
----------------------------------------------------------------
Since all of the underlying funds are currently managed by Pioneer, the
management fee is currently equal to 0.13% of the fund's average daily net
assets. The fee is accrued daily and paid monthly. Pioneer, and not the funds,
pays a portion of the fee it receives from the funds to Ibbotson as
compensation for Ibbotson's services to the funds.
For the fiscal year ended July 31, 2013, each fund paid management fees equal
to 0.13% of the fund's average daily net assets, after fee waivers and/or
reimbursements.
Discussions regarding the basis for the Board of Trustees' approval of each of
the management contract and the subadvisory agreement with Ibbotson are
available in the funds' semiannual report to shareholders for the period ended
January 31, 2013.
DISTRIBUTOR AND TRANSFER AGENT
Pioneer Funds Distributor, Inc. is the fund's distributor. Pioneer Investment
Management Shareholder Services, Inc. is the fund's transfer agent. The fund
compensates the distributor and transfer agent for their services. The
distributor and the transfer agent are affiliates of Pioneer.
98
Pricing of shares
NET ASSET VALUE
Each fund's net asset value is the value of its securities plus any other
assets minus its accrued operating expenses and 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). If the New York Stock Exchange closes at another time, each fund will
calculate a net asset value for each class of shares as of the actual closing
time. On days when the New York Stock Exchange is closed for trading, including
certain holidays listed in the statement of additional information, a net asset
value is not calculated.
Each fund generally values its equity securities and certain derivative
instruments that are traded on an exchange using the last sale price on the
principal exchange on which they are traded. Equity securities that are not
traded on the date of valuation, or securities for which no last sale prices
are available, are valued at the mean between the last bid and asked prices or,
if both last bid and asked prices are not available, at the last quoted bid
price. Last sale, bid and asked prices are provided by independent third party
pricing services. In the case of equity securities not traded on an exchange,
prices are typically determined by independent third party pricing services
using a variety of techniques and methods.
Each fund may use a fair value model developed by an independent pricing
service to value non-U.S. equity securities.
To the extent that each fund invests in shares of other mutual funds that are
not traded on an exchange, such shares of other mutual funds are valued at
their net asset values as provided by those funds. The prospectuses for those
funds explain the circumstances under which those funds will use fair value
pricing methods and the effects of using fair value pricing methods.
Each fund generally values debt securities and certain derivative instruments
by using the prices supplied by independent third party pricing services. A
pricing service may use market prices or quotations from one or more brokers or
other sources, or may use a pricing matrix or other fair value methods or
techniques to provide an estimated value of the security or instrument. A
pricing matrix is a means of valuing a debt security on the basis of current
market prices for other debt securities, historical trading patterns in the
market for fixed income securities and/or other factors. Non-U.S. debt
securities that are listed on an exchange will be valued at the bid price
obtained from an independent third party pricing service.
99
Pricing of shares
Each fund values short-term fixed income securities with remaining maturities
of 60 days or less at amortized cost, unless circumstances indicate that using
this method would not reflect an investment's value.
The valuations of securities traded in non-U.S. markets and certain fixed
income securities will generally be determined as of the earlier closing time
of the markets on which they primarily trade. When a fund holds securities or
other assets that are denominated in a foreign currency, the fund will normally
use the currency exchange rates as of 3:00 p.m. (Eastern time). Non-U.S.
markets are open for trading on weekends and other days when the fund does not
price its shares. Therefore, the value of each fund's shares may change on days
when you will not be able to purchase or redeem fund shares.
When independent third party pricing services are unable to supply prices for
an investment, or when prices or market quotations are considered by Pioneer to
be unreliable, the value of that security may be determined using quotations
from one or more broker-dealers. When such prices or quotations are not
available, or when they are considered by Pioneer to be unreliable, each fund
uses fair value methods to value its securities pursuant to procedures adopted
by the Board of Trustees. Each fund also may use fair value methods if it is
determined that a significant event has occurred between the time at which a
price is determined and the time at which each fund's net asset value is
calculated. Because each fund may invest in securities rated below investment
grade - some of which may be thinly traded and for which prices may not be
readily available or may be unreliable - each fund may use fair value methods
more frequently than funds that primarily invest in securities that are more
widely traded. Valuing securities using fair value methods may cause the net
asset value of the fund's shares to differ from the net asset value that would
be calculated only using market prices.
The prices used by each fund to value its securities may differ from the
amounts that would be realized if these securities were sold and these
differences may be significant, particularly for securities that trade in
relatively thin markets and/or markets that experience extreme volatility.
100
Choosing a class of shares
Each fund offers four classes of shares through this prospectus. Each class has
different eligibility requirements, sales charges and expenses, allowing you to
choose the class that best meets your needs.
Factors you should consider include:
o The eligibility requirements that apply to purchases of a particular share
class
o The expenses paid by each class
o The initial sales charges and contingent deferred sales charges (CDSCs), if
any, applicable to each class
o Whether you qualify for any reduction or waiver of sales charges
o How long you expect to own the shares
o Any services you may receive from a financial intermediary
Your investment professional can help you determine which class meets your
goals. Your investment professional or financial intermediary 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.
For information on the fund's expenses, please see "Fund Summary."
CLASS A SHARES
o You pay a sales charge of up to 5.75% of the offering price, which is reduced
or waived for large purchases and certain types of investors. At time of
your purchase, your investment firm may receive a commission from the
distributor of up to 5%, declining as the size of your investment increases.
o There is no contingent deferred sales charge, except in certain circumstances
when no initial sales charge is charged.
o Distribution and service fees of 0.25% of average daily net assets.
CLASS B SHARES
o A contingent deferred sales charge of up to 4% is assessed if you sell your
shares. The charge is reduced over time and not charged after five years.
Your investment firm may receive a commission from the distributor at the
time of your purchase of up to 4%.
o Distribution and service fees of 1.00% of average daily net assets.
o Converts to Class A shares after eight years.
o Effective December 31, 2009, Class B shares are no longer offered to new or
existing shareholders, except that dividends and/or capital gains
distributions may continue to be reinvested in Class B shares according
101
Choosing a class of shares
to a shareholder's election, and shareholders may exchange their Class B
shares for Class B shares of other Pioneer funds, as permitted by existing
exchange privileges. Shareholders who owned Class B shares as of December
31, 2009 may continue to hold such shares until they convert to Class A
shares eight years after the date of purchase.
CLASS C SHARES
o A 1% contingent deferred sales charge is assessed if you sell your shares
within one year of purchase. Your investment firm may receive a commission
from the distributor at the time of your purchase of up to 1%.
o Distribution and service fees of 1.00% of average daily net assets.
o Does not convert to another share class.
o Maximum purchase amount (per transaction) of $499,999.
CLASS Y SHARES
o No initial or contingent deferred sales charge.
o Initial investments are subject to a $5 million investment minimum, which may
be waived in some circumstances.
102
Distribution and service arrangements
DISTRIBUTION PLAN
Each fund has adopted a distribution plan for Class A, Class B and Class C
shares in accordance with Rule 12b-1 under the Investment Company Act of 1940.
Under the plan, each fund pays distribution and service fees to the
distributor. Because these fees are an ongoing expense of the fund, 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.
ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES
Your financial intermediary may receive compensation from a fund, Pioneer and
its affiliates for the sale of fund shares and related services. Compensation
may include sales commissions and distribution and service (Rule 12b-1) fees,
as well as compensation for administrative services and transaction processing.
Pioneer and its affiliates may make additional payments to your financial
intermediary. These payments may provide your financial intermediary with an
incentive to favor the Pioneer funds over other mutual funds or assist the
distributor in its efforts to promote the sale of a fund's shares. Financial
intermediaries include broker-dealers, banks (including bank trust
departments), registered investment advisers, financial planners, retirement
plan administrators and other types of intermediaries.
Pioneer makes these additional payments (sometimes referred to as "revenue
sharing") to financial intermediaries out of its own assets, which may include
profits derived from services provided to a fund, or from the retention of a
portion of sales charges or distribution and service fees. Pioneer may base
these payments on a variety of criteria, including the amount of sales or
assets of the Pioneer funds attributable to the financial intermediary or as a
per transaction fee.
Not all financial intermediaries receive additional compensation and the amount
of compensation paid varies for each financial intermediary. In certain cases,
these payments may be significant. Pioneer determines which firms to support
and the extent of the payments it is willing to make, generally choosing firms
that have a strong capability to effectively distribute shares of the Pioneer
funds and that are willing to cooperate with Pioneer's promotional efforts.
Pioneer also may compensate financial intermediaries (in addition to amounts
that may be paid by a fund) for providing certain administrative services and
transaction processing services.
103
Distribution and service arrangements
Pioneer may benefit from revenue sharing if the intermediary features the
Pioneer funds in its sales system (such as by placing certain Pioneer funds on
its preferred fund list or giving access on a preferential basis to members of
the financial intermediary's sales force or management). In addition, the
financial intermediary may agree to participate in the distributor's marketing
efforts (such as by helping to facilitate or provide financial assistance for
conferences, seminars or other programs at which Pioneer personnel may make
presentations on the Pioneer funds to the intermediary's sales force). To the
extent intermediaries sell more shares of the Pioneer funds or retain shares of
the Pioneer funds in their clients' accounts, Pioneer receives greater
management and other fees due to the increase in the Pioneer funds' assets. The
intermediary may earn a profit on these payments if the amount of the payment
to the intermediary exceeds the intermediary's costs.
The compensation that Pioneer pays to financial intermediaries is discussed in
more detail in the fund's statement of additional information. Your
intermediary may charge you additional fees or commissions other than those
disclosed in this prospectus. Intermediaries may categorize and disclose these
arrangements differently than in the discussion above and in the statement of
additional information. You can ask your financial intermediary about any
payments it receives from Pioneer or the Pioneer funds, as well as about fees
and/or commissions it charges.
Pioneer and its affiliates may have other relationships with your financial
intermediary relating to the provision of services to the Pioneer funds, such
as providing omnibus account services or effecting portfolio transactions for
the Pioneer funds. If your intermediary provides these services, Pioneer or the
Pioneer funds may compensate the intermediary for these services. In addition,
your intermediary may have other relationships with Pioneer or its affiliates
that are not related to the Pioneer funds.
104
Sales charges
INITIAL SALES CHARGES (CLASS A SHARES ONLY)
You pay the offering price (the net asset value per share plus any initial
sales charge) 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 capital
gain distributions paid by the fund.
SALES CHARGES FOR CLASS A SHARES
SALES CHARGE AS % OF
----------------------
OFFERING NET AMOUNT
AMOUNT OF PURCHASE PRICE INVESTED
--------------------------------- ---------- -----------
Less than $50,000 5.75 6.10
--------------------------------- ---- ----
$50,000 but 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 or more -0- -0-
--------------------------------- ---- ----
The dollar amount of the sales charge is the difference between the offering
price of the shares purchased (based on the applicable sales charge in the
table) and the net asset value of those shares. Since the offering price is
calculated to two decimal places using standard rounding methodology, the
dollar amount of the sales charge as a percentage of the offering price and of
the net amount invested for any particular purchase of fund shares may be
higher or lower due to rounding.
REDUCED SALES CHARGES
You may qualify for a reduced Class A sales charge if you own or are purchasing
shares of Pioneer mutual funds. The investment levels required to obtain a
reduced sales charge are commonly referred to as "breakpoints." Pioneer offers
two principal means of taking advantage of breakpoints in sales charges for
aggregate purchases of Class A shares of the Pioneer funds over time if:
o The amount of shares you own of the Pioneer funds plus the amount you are
investing now is at least $50,000 (Rights of accumulation)
o You plan to invest at least $50,000 over the next 13 months (Letter of
intent)
105
Sales charges
RIGHTS OF ACCUMULATION
If you qualify for rights of accumulation, your sales charge will be based on
the combined value (at the current offering price) of all your Pioneer mutual
fund shares, the shares of your spouse and the shares of any children under the
age of 21.
LETTER OF INTENT
You can use a letter of intent to qualify for reduced sales charges in
two situations:
o If you plan to invest at least $50,000 (excluding any reinvestment of
dividends and capital gain distributions) in the fund's Class A shares
during the next 13 months
o If you include in your letter of intent the value (at the current offering
price) of all of your Class A shares of the fund and Class A, Class B or
Class C shares of all other Pioneer mutual fund shares held of record in the
amount used to determine the applicable sales charge for the fund shares you
plan to buy
Completing a letter of intent does not obligate you to purchase additional
shares, but if you do not buy enough shares to qualify for the projected level
of sales charges by the end of the 13-month period (or when you sell your
shares, if earlier), the distributor will recalculate your sales charge. You
must pay the additional sales charge within 20 days after you are notified of
the recalculation or it will be deducted from your account (or your sale
proceeds). Any share class for which no sales charge is paid cannot be included
under the letter of intent. For more information regarding letters of intent,
please contact your investment professional or obtain and read the statement of
additional information.
QUALIFYING FOR A REDUCED CLASS A SALES CHARGE
In calculating your total account value in order to determine whether you have
met sales charge breakpoints, you can include your Pioneer mutual fund shares,
those of your spouse and the shares of any children under the age of 21.
Pioneer will use each fund's current offering price to calculate your total
account value. Certain trustees and fiduciaries may also qualify for a reduced
sales charge.
To receive a reduced sales charge, you or your investment professional must, at
the time of purchase, notify the distributor of your eligibility. In order to
verify your eligibility for a discount, you may need to provide your investment
professional or the fund with information or records, such as
106
account numbers or statements, regarding shares of the fund or other Pioneer
mutual funds held in all accounts by you, your spouse or children under the age
of 21 with that investment professional or with any other financial
intermediary. Eligible accounts may include joint accounts, retirement plan
accounts, such as IRA and 401k accounts, and custodial accounts, such as ESA,
UGMA and UTMA accounts.
It is your responsibility to confirm that your investment professional has
notified the distributor of your eligibility for a reduced sales charge at the
time of sale. If you or your investment professional do not notify the
distributor of your eligibility, you will risk losing the benefits of 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.
You can locate information regarding the reduction or waiver of sales charges,
in a clear and prominent format and free of charge, on Pioneer's website at
www.pioneerinvestments.com. The website includes hyperlinks that facilitate
access to this information.
CLASS A PURCHASES AT A REDUCED INITIAL SALES CHARGE OR NET ASSET VALUE ARE ALSO
AVAILABLE TO:
Group plans if the sponsoring organization:
o recommends purchases of Pioneer mutual funds to,
o permits solicitation of, or
o facilitates purchases by its employees, members or participants.
CLASS A PURCHASES AT NET ASSET VALUE
You may purchase Class A shares at net asset value (without a sales charge) as
follows. If you believe you qualify for any of the Class A sales charge waivers
discussed below, contact your investment professional or the distributor. You
are required to provide written confirmation of your eligibility. You may not
resell these shares except to or on behalf of the fund.
INVESTMENTS OF $500,000 OR MORE AND CERTAIN RETIREMENT PLANS
You do not pay a sales charge when you purchase Class A shares if you are
investing $500,000 or more, are a participant in an employer-sponsored
retirement plan with at least $500,000 in total plan assets or are a
participant in certain employer-sponsored retirement plans with accounts
established with Pioneer on or before March 31, 2004 with 100 or more eligible
employees or at least $500,000 in total plan assets. However, you may pay a
contingent
107
Sales charges
deferred sales charge if you sell your Class A shares within 12 months of
purchase. The sales charge is equal to 1% of your investment or your sale
proceeds, whichever is less.
CLASS A PURCHASES AT NET ASSET VALUE ARE AVAILABLE TO:
o Current or former trustees and officers of the fund;
o Partners and employees of legal counsel to the fund (at the time of initial
share purchase);
o Directors, officers, employees or sales representatives of Pioneer and its
affiliates (at the time of initial share purchase);
o Directors, officers, employees or sales representatives of any subadviser or
a predecessor adviser (or their affiliates) to any investment company for
which Pioneer serves as investment adviser (at the time of initial share
purchase);
o Officers, partners, employees or registered representatives of broker-dealers
(at the time of initial share purchase) which have entered into sales
agreements with the distributor;
o Employees of Regions Financial Corporation and its affiliates (at the time of
initial share purchase);
o Members of the immediate families of any of the persons above;
o Any trust, custodian, pension, profit sharing or other benefit plan of the
foregoing persons;
o Insurance company separate accounts;
o Certain wrap accounts for the benefit of clients of investment professionals
or other financial intermediaries adhering to standards established by the
distributor;
o Other funds and accounts for which Pioneer or any of its affiliates serves as
investment adviser or manager;
o Investors in connection with certain reorganization, liquidation or
acquisition transactions involving other investment companies or personal
holding companies;
o Certain unit investment trusts;
o Participants in employer-sponsored retirement plans with at least $500,000 in
total plan assets;
o Participants in employer-sponsored retirement plans with accounts established
with Pioneer on or before March 31, 2004 with 100 or more eligible employees
or at least $500,000 in total plan assets;
o Participants in Optional Retirement Programs if (i) your employer has
authorized a limited number of mutual funds to participate in the program,
(ii) all participating mutual funds sell shares to program participants at
108
net asset value, (iii) your employer has agreed in writing to facilitate
investment in Pioneer mutual funds by program participants and (iv) the
program provides for a matching contribution for each participant
contribution;
o Participants in an employer-sponsored 403(b) plan or employer-sponsored 457
plan if (i) your employer has made special arrangements for your plan to
operate as a group through a single broker, dealer or financial intermediary
and (ii) all participants in the plan who purchase shares of a Pioneer
mutual fund do so through a single broker, dealer or other financial
intermediary designated by your employer;
o Individuals receiving a distribution consisting of Class Y shares of a
Pioneer fund from a trust, fiduciary, custodial or other similar account who
purchase Class A shares of the same Pioneer fund within 90 days of the date
of the distribution;
o Investors purchasing shares pursuant to the reinstatement privilege
applicable to Class A and Class B shares; and
o Shareholders of record (i.e., shareholders whose shares are not held in the
name of a broker or an omnibus account) on the date of the reorganization of
a predecessor Safeco fund into a corresponding Pioneer fund, shareholders
who owned shares in the name of an omnibus account provider on that date
that agrees with the fund to distinguish beneficial holders in the same
manner, and retirement plans with assets invested in the predecessor Safeco
fund on that date.
In addition, Class A shares may be purchased at net asset value through certain
mutual fund programs sponsored by qualified intermediaries, such as
broker-dealers and investment advisers. In each case, the intermediary has
entered into an agreement with Pioneer to include the Pioneer funds in their
program without the imposition of a sales charge. The intermediary provides
investors participating in the program with additional services, including
advisory, asset allocation, recordkeeping or other services. You should ask
your investment firm if it offers and you are eligible to participate in such a
mutual fund program and whether participation in the program is consistent with
your investment goals. The intermediaries sponsoring or participating in these
mutual fund programs also may offer their clients other classes of shares of
the funds and investors may receive different levels of services or pay
different fees depending upon the class of shares included in the program.
Investors should consider carefully any separate transaction and other fees
charged by these programs in connection with investing in each available share
class before selecting a share class. Such
109
Sales charges
mutual fund programs include certain self-directed brokerage services accounts
held through qualified intermediaries that may or may not charge participating
investors transaction fees.
CONTINGENT DEFERRED SALES CHARGES (CDSCS)
CLASS A SHARES
Purchases of Class A shares of $500,000 or more, or by participants in a group
plan which were not subject to an initial sales charge, may be subject to a
contingent deferred sales charge upon redemption. A contingent deferred sales
charge is payable to the distributor in the event of a share redemption within
12 months following the share purchase at the rate of 1% of the lesser of the
value of the shares redeemed (exclusive of reinvested dividend and capital gain
distributions) or the total cost of such shares. However, the contingent
deferred sales charge is waived for redemptions of Class A shares purchased by
an employer-sponsored retirement plan that has at least $500,000 in total plan
assets (or that has 1,000 or more eligible employees for plans with accounts
established with Pioneer on or before March 31, 2004).
CLASS B SHARES
You buy Class B shares at net asset value per share without paying an initial
sales charge. However, if you sell your Class B shares within five years of
purchase, you will pay the distributor a contingent deferred sales charge upon
redemption. The contingent deferred sales charge decreases as the number of
years since your purchase increases. Effective December 31, 2009, Class B
shares are no longer offered to new or existing shareholders, except for
reinvestment of dividends and/or capital gains distributions and exchanges for
Class B shares of other Pioneer funds.
CONTINGENT DEFERRED SALES CHARGE
----------------------------------
ON SHARES SOLD AS A % OF DOLLAR
BEFORE THE AMOUNT SUBJECT
END OF YEAR TO THE SALES CHARGE
---------------------------------- --------------------
1 4
---------------------------------- --------------------
2 4
---------------------------------- --------------------
3 3
---------------------------------- --------------------
4 2
---------------------------------- --------------------
5 1
---------------------------------- --------------------
6+ 0
---------------------------------- --------------------
110
Shares purchased prior to December 1, 2004 remain subject to the contingent
deferred sales charges in effect at the time you purchased those shares. Shares
purchased as part of an exchange or acquired as a result of a reorganization of
another fund into the fund remain subject to any contingent deferred sales
charge that applied to the shares you originally purchased.
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 eight years after the date
of purchase except that:
o Shares purchased by reinvesting dividends and capital gain distributions will
convert to Class A shares over time in the same proportion as other shares
held in the account
o 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.
CLASS C SHARES
You buy Class C shares at net asset value per share without paying an initial
sales charge. However, if you sell your Class C shares within one year of
purchase, upon redemption you will pay the distributor a contingent deferred
sales charge of 1% of the current market value or the original cost of the
shares you are selling, whichever is less.
PAYING THE CONTINGENT DEFERRED SALES CHARGE (CDSC)
Several rules apply for calculating CDSCs so that you pay the lowest possible
CDSC.
o The CDSC is calculated on the current market value or the original cost of
the shares you are selling, whichever is less
o You do not pay a CDSC on reinvested dividends or distributions
o 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
o You may qualify for a waiver of the CDSC normally charged. See "Waiver or
reduction of contingent deferred sales charges"
111
Sales charges
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGES
It is your responsibility to confirm that your investment professional has
notified the distributor of your eligibility for a reduced sales charge at the
time of sale. If you or your investment professional do not notify the
distributor of your eligibility, you will risk losing the benefits of a reduced
sales charge.
The distributor may waive or reduce the CDSC for Class A shares that are
subject to a CDSC or for Class B or Class C shares if:
o The distribution results from the death of all registered account owners or a
participant in an employer-sponsored plan. For UGMAs, UTMAs and trust
accounts, the waiver applies only upon the death of all beneficial owners;
o You become disabled (within the meaning of Section 72 of the Internal Revenue
Code) after the purchase of the shares being sold. For UGMAs, UTMAs and
trust accounts, the waiver only applies upon the disability of all
beneficial owners;
o The distribution is made in connection with limited automatic redemptions as
described in "Systematic withdrawal plans" (limited in any year to 10% of
the value of the account in the fund at the time the withdrawal plan is
established);
o The distribution is from any type of IRA, 403(b) or employer-sponsored plan
described under Section 401(a) or 457 of the Internal Revenue Code and, in
connection with the distribution, one of the following applies:
- It is part of a series of substantially equal periodic payments made over
the life expectancy of the participant or the joint life expectancy of the
participant and his or her beneficiary (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established);
- It is a required minimum distribution due to the attainment of age 70 1/2,
in which case the distribution amount may exceed 10% (based solely on
total plan assets held in Pioneer mutual funds);
- It is rolled over to or reinvested in another Pioneer mutual fund in the
same class of shares, which will be subject to the CDSC of the shares
originally held; or
- It is in the form of a loan to a participant in a plan that permits loans
(each repayment applied to the purchase of shares will be subject to a
CDSC as though a new purchase);
o The distribution is to a participant in an employer-sponsored retirement plan
described under Section 401(a) of the Internal Revenue Code or to a
participant in an employer-sponsored 403(b) plan or employer-sponsored 457
plan if (i) your employer has made special arrangements for your
112
plan to operate as a group through a single broker, dealer or financial
intermediary and (ii) all participants in the plan who purchase shares of a
Pioneer mutual fund do so through a single broker, dealer or other financial
intermediary designated by your employer and is or is in connection with:
- A return of excess employee deferrals or contributions;
- A qualifying hardship distribution as described in the Internal Revenue
Code; For Class B shares, waiver is granted only on payments of up to 10%
of total plan assets held by Pioneer for all participants, reduced by the
total of any prior distributions made in that calendar year;
- Due to retirement or termination of employment; For Class B shares, waiver
is granted only on payments of up to 10% of total plan assets held in a
Pioneer mutual fund for all participants, reduced by the total of any
prior distributions made in that calendar year;
- From a qualified defined contribution plan and represents a participant's
directed transfer, provided that this privilege has been preauthorized
through a prior agreement with the distributor regarding participant
directed transfers (not available to Class B shares);
o The distribution is made pursuant to the fund's right to liquidate or
involuntarily redeem shares in a shareholder's account;
o The distribution is made to pay an account's advisory or custodial fees; or
o The distributor does not pay the selling broker a commission normally paid at
the time of the sale.
Please see the fund's statement of additional information for more information
regarding reduced sales charges and breakpoints.
113
Buying, exchanging and selling shares
OPENING YOUR ACCOUNT
You may open an account by completing an account application and sending it to
the transfer agent by mail or by fax. Please call the transfer agent to obtain
an account application. Certain types of accounts, such as retirement accounts,
have separate applications.
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 transfer agent for account applications, account options
forms and other account information:
PIONEER INVESTMENT MANAGEMENT
SHAREHOLDER SERVICES, INC.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Telephone 1-800-225-6292
Please note that there may be a delay in receipt by the transfer agent of
applications submitted by regular mail to a post office address.
IDENTITY VERIFICATION
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. When
you open an account, you will need to supply your name, address, date of birth,
and other information that will allow the fund to identify you.
The fund may close your account if we cannot adequately verify your identity.
The redemption price will be the net asset value on the date of redemption.
INVESTING THROUGH FINANCIAL INTERMEDIARIES AND RETIREMENT PLANS
If you invest in the fund through your financial intermediary or through a
retirement plan, the options and services available to you may be different
from those discussed in this prospectus. Shareholders investing through
financial intermediaries, programs sponsored by financial intermediaries and
retirement plans may only purchase funds and classes of shares that are
available. When you invest through an account that is not in your name, you
generally may buy and sell shares and complete other transactions only through
the account. Ask your investment professional or financial intermediary for
more information.
114
Additional conditions may apply to your investment in the fund, and the
investment professional or intermediary may charge you a transaction-based,
administrative 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.
SHARE PRICES FOR TRANSACTIONS
If you place an order to purchase, exchange or sell shares that is received in
good order by the transfer agent or an authorized agent by the close of regular
trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time), the
share price for your transaction will be based on the net asset value
determined as of the close of regular trading on the New York Stock Exchange on
that day (plus or minus any applicable sales charges). If your order is
received by the transfer agent or an authorized agent after the close of
regular trading on the New York Stock Exchange, or your order is not in good
order, the share price will be based on the net asset value next determined
after your order is received in good order by the fund or authorized agent. The
authorized agent is responsible for transmitting your order to the fund in a
timely manner.
GOOD ORDER MEANS THAT:
o You have provided adequate instructions
o There are no outstanding claims against your account
o There are no transaction limitations on your account
o If you have any fund share certificates, you submit them and they are signed
by each record owner exactly as the shares are registered
o 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's record owner(s)
- Are transferring the sale proceeds to a Pioneer mutual fund account with a
different registration
TRANSACTION LIMITATIONS
Your transactions are subject to certain limitations, including the limitation
on the purchase of the fund's shares within 30 calendar days of a redemption.
See "Excessive trading."
115
Buying, exchanging and selling shares
BUYING
You may buy fund shares from any financial intermediary that has a sales
agreement or other arrangement with the distributor.
You can buy shares at net asset value per share plus any applicable sales
charge. The distributor may reject any order until it has confirmed the order
in writing and received payment. Normally, your financial intermediary will
send your purchase request to the fund's transfer agent. CONSULT YOUR
INVESTMENT PROFESSIONAL FOR MORE INFORMATION. Your investment firm receives a
commission from the distributor, and may receive additional compensation from
Pioneer, for your purchase of fund shares.
MINIMUM INVESTMENT AMOUNTS
CLASS A, CLASS B AND CLASS C 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 C 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. Each fund may waive the
initial or subsequent investment minimums. Minimum investment amounts may be
waived for, among other things, share purchases made through certain mutual
fund programs (e.g., asset based fee program accounts) sponsored by qualified
intermediaries, such as broker-dealers and investment advisers, that have
entered into an agreement with Pioneer.
CLASS Y SHARES
Your initial investment in Class Y shares 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 investment
amount. Each fund may waive the initial investment amount.
WAIVERS OF THE MINIMUM INVESTMENT AMOUNT FOR CLASS Y
Each fund will accept an initial investment of less than $5 million if:
(a) The investment is made by a trust company or bank trust department
which is initially investing at least $1 million in any of the
Pioneer mutual funds and, at the time of the purchase, such assets
are held in a fiduciary, advisory, custodial or similar capacity
over which the trust company or bank trust department has full or
shared investment discretion; or
116
(b) The investment is at least $1 million in any of the Pioneer mutual
funds and the purchaser is an insurance company separate account; or
(c) The account is not represented by a broker-dealer and the investment
is made by (1) an ERISA-qualified retirement plan that meets the
requirements of Section 401 of the Internal Revenue Code, (2) an
employer-sponsored retirement plan that meets the requirements of
Sections 403 or 457 of the Internal Revenue Code, (3) a private
foundation that meets the requirements of Section 501(c)(3) of the
Internal Revenue Code or (4) an endowment or other organization that
meets the requirements of Section 509(a)(1) of the Internal Revenue
Code; or
(d) The investment is made by an employer-sponsored retirement plan
established for the benefit of (1) employees of Pioneer or its
affiliates, or (2) employees or the affiliates of broker-dealers who
have a Class Y shares sales agreement with the distributor; or
(e) The investment is made through certain mutual fund programs
sponsored by qualified intermediaries, such as broker-dealers and
investment advisers. In each case, the intermediary has entered into
an agreement with Pioneer to include Class Y shares of the Pioneer
mutual funds in their program. The intermediary provides investors
participating in the program with additional services, including
advisory, asset allocation, recordkeeping or other services. You
should ask your investment firm if it offers and you are eligible to
participate in such a mutual fund program and whether participation
in the program is consistent with your investment goals. The
intermediaries sponsoring or participating in these mutual fund
programs may also offer their clients other classes of shares of the
funds and investors may receive different levels of services or pay
different fees depending upon the class of shares included in the
program. Investors should consider carefully any separate
transaction and other fees charged by these programs in connection
with investing in each available share class before selecting a
share class; or
(f) The investment is made by another Pioneer fund
Each fund reserves the right to waive the initial investment minimum in other
circumstances.
117
Buying, exchanging and selling shares
MAXIMUM PURCHASE AMOUNTS
Purchases of fund shares are limited to $499,999 for Class C shares. This limit
is applied on a per transaction basis. Class A and Class Y shares are not
subject to a maximum purchase amount.
RETIREMENT PLAN ACCOUNTS
You can purchase fund shares through tax-deferred retirement plans for
individuals, businesses and tax-exempt organizations.
Your initial investment for most types of retirement plan accounts must be at
least $250. Additional investments for most types of retirement plans must be
at least $100.
You may not use the account application accompanying this prospectus to
establish a Pioneer retirement plan. You can obtain retirement plan
applications from your investment firm or by calling the Retirement Plans
Department at 1-800-622-0176.
HOW TO BUY SHARES
THROUGH YOUR INVESTMENT FIRM
Normally, your investment firm will send your purchase request to the fund's
distributor and/or transfer agent. CONSULT YOUR INVESTMENT PROFESSIONAL FOR
MORE INFORMATION. Your investment firm receives a commission from the
distributor, and may receive additional compensation from Pioneer, for your
purchase of fund shares.
BY PHONE OR ONLINE
YOU CAN USE THE TELEPHONE OR ONLINE PURCHASE PRIVILEGE IF you have an existing
non-retirement account. Certain IRAs can use the telephone purchase privilege.
If your account is eligible, you can purchase additional fund shares by phone
or online if:
o You established your bank account of record at least 30 days ago
o Your bank information has not changed for at least 30 days
o You are not purchasing more than $100,000 worth of shares per account per day
o You can provide the proper account identification information
When you request a telephone or online 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
118
debit at the offering price determined after the transfer agent receives your
telephone or online 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, BY MAIL
You can purchase fund shares for an existing fund account by MAILING A CHECK TO
THE TRANSFER AGENT. Make your check payable to the fund. Neither initial nor
subsequent investments should be made by third party check, travelers check, or
credit card 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. Please note that there may be a
delay in receipt by the transfer agent of purchase orders submitted by regular
mail to a post office address.
BY WIRE (CLASS Y SHARES ONLY)
If you have an existing (Class Y shares only) account, you may wire funds to
purchase shares. Note, however, that:
o 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
o 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
o Wire transfers normally take two or more hours to complete and a fee may be
charged by the sending bank
o 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.
Ibbotson Asset Allocation Series
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.
119
Buying, exchanging and selling shares
EXCHANGING
You may, under certain circumstances, exchange your shares for shares of the
same class of another Pioneer mutual fund.
Your exchange request must be for at least $1,000. Each 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. You generally will have to pay
income taxes on an exchange.
SAME-FUND EXCHANGE PRIVILEGE
Certain shareholders may be eligible to exchange their shares for a fund's
Class Y shares. If eligible, no sales charges or other charges will apply to
any such exchange. Generally, shareholders will not recognize a gain or loss
for federal income tax purposes upon such an exchange. Investors should contact
their financial intermediary to learn more about the details of this privilege.
HOW TO EXCHANGE SHARES
THROUGH YOUR INVESTMENT FIRM
Normally, your investment firm will send your exchange request to the fund's
transfer agent. CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE INFORMATION ABOUT
EXCHANGING YOUR SHARES.
BY PHONE OR ONLINE
After you establish an eligible fund account, YOU CAN EXCHANGE FUND SHARES BY
PHONE OR ONLINE IF:
o You are exchanging into an existing account or using the exchange to
establish a new account, provided the new account has a registration
identical to the original account
o The fund into which you are exchanging offers the same class of shares
o You are not exchanging more than $500,000 worth of shares per account per day
o You can provide the proper account identification information
120
IN WRITING, BY MAIL OR BY FAX
You can exchange fund shares by MAILING OR FAXING A LETTER OF INSTRUCTION TO
THE TRANSFER AGENT. You 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 $500,000. Include in your letter:
o The name and signature of all registered owners
o A signature guarantee for each registered owner if the amount of the exchange
is more than $500,000
o The name of the fund out of which you are exchanging and the name of the fund
into which you are exchanging
o The class of shares you are exchanging
o The dollar amount or number of shares you are exchanging
Please note that there may be a delay in receipt by the transfer agent of
exchange requests submitted by regular mail to a post office address.
SELLING
Your shares will be sold at the share price (net asset value less any
applicable sales charge) next calculated after the fund or its authorized
agent, such as a broker-dealer, receives your request in good order. If a
signature guarantee is required, you must submit your request in writing.
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 10 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 generally will have to pay income taxes on a sale.
If you must use a written request to exchange or sell your 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.
121
Buying, exchanging and selling shares
HOW TO SELL SHARES
THROUGH YOUR INVESTMENT FIRM
Normally, your investment firm will send your request to sell shares to the
fund's transfer agent. CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE
INFORMATION. Each 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.
BY PHONE OR ONLINE
IF YOU HAVE AN ELIGIBLE NON-RETIREMENT ACCOUNT, YOU MAY SELL UP TO $100,000 PER
ACCOUNT PER DAY BY PHONE OR ONLINE. You may sell fund shares held in a
retirement plan account by phone only if your account is an eligible IRA (tax
penalties may apply). You may not sell your shares by phone or online 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:
o By check, provided the check is made payable exactly as your account is
registered
o By bank wire or by electronic funds transfer, provided the sale proceeds are
being sent to your bank address of record
For Class Y shares, shareholders may sell up to $5 million per account per day
if the proceeds are directed to your bank account of record ($100,000 per
account per day if the proceeds are not directed to your bank account of
record).
IN WRITING, BY MAIL OR BY FAX
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, 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.
122
Please note that there may be a delay in receipt by the transfer agent of
redemption requests submitted by regular mail to a post office address.
HOW TO CONTACT US
BY PHONE
For information or to request a telephone transaction between 8:00 a.m. and
7:00 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
BY MAIL
Send your written instructions to:
PIONEER INVESTMENT MANAGEMENT
SHAREHOLDER SERVICES, INC.
P.O. Box 55014
Boston, Massachusetts 02205-5014
PIONEER WEBSITE
www.pioneerinvestments.com
BY FAX
Fax your exchange and sale requests to:
1-800-225-4240
123
Account options
See the account application form for more details on each of the following
services or call the transfer agent for details and availability.
TELEPHONE TRANSACTION PRIVILEGES
If your account is registered in your name, you can buy, 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 validating information 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. If the fund's confirmation procedures are followed, neither
the fund nor its agents will bear any liability for these transactions.
ONLINE TRANSACTION PRIVILEGES
If your account is registered in your name, you may be able to buy, exchange or
sell fund shares online. Your investment firm may also be able to buy, exchange
or sell your fund shares online.
To establish online transaction privileges:
o For new accounts, complete the online section of the account application
o For existing accounts, complete an account options form, write to the
transfer agent or complete the online authorization screen at
www.pioneerinvestments.com
To use online transactions, you must read and agree to the terms of an online
transaction agreement available on the Pioneer website. When you or your
investment firm requests an online transaction the transfer agent
electronically records the transaction, requires an authorizing password and
sends a written confirmation. The fund may implement other 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. You may not be able to use the online transaction privilege
for certain types of accounts, including most retirement accounts.
124
AUTOMATIC INVESTMENT PLANS
You can make regular periodic investments in the fund by setting up monthly
bank drafts, government allotments, payroll deductions, a Pioneer Investomatic
Plan and other similar automatic investment plans. Automatic investments may be
made only through U.S. banks. You may use an automatic investment plan to
establish a Class A share account with a small initial investment. If you have
a Class C share account and your balance is at least $1,000, you may establish
an automatic investment plan.
PIONEER INVESTOMATIC PLAN
If you establish a Pioneer Investomatic Plan, the transfer agent will make a
periodic investment in fund shares by means of a preauthorized electronic funds
transfer from your bank account. Your plan investments are voluntary. You may
discontinue your plan at any time or change the plan's dollar amount, frequency
or investment date by calling or writing to the transfer agent. You should
allow up to 30 days for the transfer agent to establish your plan.
AUTOMATIC EXCHANGES
You can automatically exchange your fund shares for shares of the same class of
another Pioneer mutual fund. The automatic exchange will begin on the day you
select when you complete the appropriate section of your account application or
an account options form. In order to establish automatic exchange:
o You must select exchanges on a monthly or quarterly basis
o Both the originating and receiving accounts must have identical registrations
o The originating account must have a minimum balance of $5,000
You may have to pay income taxes on an exchange.
DISTRIBUTION OPTIONS
Each fund offers three distribution options. Any fund shares you buy by
reinvesting distributions will be priced at the applicable net asset value per
share.
(1) Unless you indicate another option on your account application, any
dividends and capital gain distributions paid to you by the fund will
automatically be invested in additional fund shares.
(2) You may elect to have the amount of any dividends paid to you in cash and
any capital gain distributions reinvested in additional shares.
125
Account options
(3) You may elect to have the full amount of any dividends and/or capital
gain distributions paid to you in cash.
Options (2) and (3) are not available to retirement plan accounts or accounts
with a current value of less than $500.
If you are under 59 1/2, taxes and tax penalties may apply.
If your distribution check is returned to the transfer agent or you do not cash
the check for six months or more, the transfer agent may reinvest the amount of
the check in your account and automatically change the distribution option on
your account to option (1) until you request a different option in writing. If
the amount of a distribution check would be less than $10, the fund may
reinvest the amount in additional shares of the fund instead of sending a
check. Additional shares of the fund will be purchased at the then-current net
asset value.
DIRECTED DIVIDENDS
You can invest the dividends paid by one of your Pioneer mutual fund accounts
in a second Pioneer mutual fund account. The value of your second account must
be at least $1,000. You may direct the investment of any amount of dividends.
There are no fees or charges for directed dividends. If you have a retirement
plan account, you may only direct dividends to accounts with identical
registrations.
SYSTEMATIC WITHDRAWAL PLANS
When you establish a systematic withdrawal plan for your account, the transfer
agent will sell the number of fund shares you specify on a periodic basis and
the proceeds will be paid to you or to any person you select. You must obtain a
signature guarantee to direct payments to another person after you have
established your systematic withdrawal plan. Payments can be made either by
check or by electronic transfer to a U.S. bank account you designate.
To establish a systematic withdrawal plan:
o Your account must have a total value of at least $10,000 when you establish
your plan
o You must request a periodic withdrawal of at least $50
o You may not request a periodic withdrawal of more than 10% of the value of
any Class B or Class C share account (valued at the time the plan is
implemented)
126
These requirements do not apply to scheduled (Internal Revenue Code Section
72(t) election) or mandatory (required minimum distribution) withdrawals from
IRAs and certain retirement plans.
Systematic sales of fund shares may be taxable transactions for you. While you
are making systematic withdrawals from your account, you may pay unnecessary
initial sales charges on additional purchases of Class A shares or contingent
deferred sales charges.
DIRECT DEPOSIT
If you elect to take dividends or dividends and capital gain distributions in
cash, or if you establish a systematic withdrawal plan, you may choose to have
those cash payments deposited directly into your savings, checking or NOW bank
account.
VOLUNTARY TAX WITHHOLDING
You may have the transfer agent withhold 28% of the dividends and capital gain
distributions paid from your fund account (before any reinvestment) and forward
the amount withheld to the Internal Revenue Service as a credit against your
federal income taxes. Voluntary tax withholding is not available for retirement
plan accounts or for accounts subject to backup withholding.
127
Shareholder services and policies
EXCESSIVE TRADING
Frequent trading into and out of a fund can disrupt portfolio management
strategies, harm fund performance by forcing the fund to hold excess cash or to
liquidate certain portfolio securities prematurely and increase expenses for
all investors, including long-term investors who do not generate these costs.
An investor may use short-term trading as a strategy, for example, if the
investor believes that the valuation of the fund's portfolio securities for
purposes of calculating its net asset value does not fully reflect the
then-current fair market value of those holdings. Each fund discourages, and
does not take any intentional action to accommodate, excessive and short-term
trading practices, such as market timing. Although there is no generally
applied standard in the marketplace as to what level of trading activity is
excessive, we may consider trading in the fund's shares to be excessive for a
variety of reasons, such as if:
o You sell shares within a short period of time after the shares were
purchased;
o You make two or more purchases and redemptions within a short period of time;
o You enter into a series of transactions that indicate a timing pattern or
strategy; or
o We reasonably believe that you have engaged in such practices in connection
with other mutual funds.
Each fund's Board of Trustees has adopted policies and procedures with respect
to frequent purchases and redemptions of fund shares by fund investors.
Pursuant to these policies and procedures, we monitor selected trades on a
daily basis in an effort to detect excessive short-term trading. If we
determine that an investor or a client of a broker or other intermediary has
engaged in excessive short-term trading that we believe may be harmful to the
fund, we will ask the investor, broker or other intermediary to cease such
activity and we will refuse to process purchase orders (including purchases by
exchange) of such investor, broker, other intermediary or accounts that we
believe are under their control. In determining whether to take such actions,
we seek to act in a manner that is consistent with the best interests of the
fund's shareholders.
While we use our reasonable efforts to detect excessive trading activity, there
can be no assurance that our efforts will be successful or that market timers
will not employ tactics designed to evade detection. If we are not successful,
your return from an investment in the fund may be adversely affected.
Frequently, fund shares are held through omnibus accounts maintained by
financial intermediaries such as brokers and retirement plan administrators,
128
where the holdings of multiple shareholders, such as all the clients of a
particular broker or other intermediary, are aggregated. Our ability to monitor
trading practices by investors purchasing shares through omnibus accounts may
be limited and dependent upon the cooperation of the broker or other
intermediary in taking steps to limit this type of activity.
Each fund may reject a purchase or exchange order before its acceptance or the
issuance of shares. Each fund may also restrict additional purchases or
exchanges in an account. Each of these steps may be taken for any transaction,
for any reason, without prior notice, including transactions that a fund
believes are requested on behalf of market timers. Each fund reserves the right
to reject any purchase or exchange request by any investor or financial
institution if the fund believes that any combination of trading activity in
the account or related accounts is potentially disruptive to the fund. A
prospective investor whose purchase or exchange order is rejected will not
achieve the investment results, whether gain or loss, that would have been
realized if the order had been accepted and an investment made in the fund. A
fund and its shareholders do not incur any gain or loss as a result of a
rejected order. Each fund may impose further restrictions on trading activities
by market timers in the future.
To limit the negative effects of excessive trading on a fund, each fund has
adopted the following restriction on investor transactions. If an investor
redeems $5,000 or more (including redemptions that are a part of an exchange
transaction) from a fund, that investor shall be prevented (or "blocked") from
purchasing shares of the fund (including purchases that are a part of an
exchange transaction) for 30 calendar days after the redemption. This policy
does not apply to systematic purchase or withdrawal plan transactions,
transactions made through employer-sponsored retirement plans described under
Section 401(a), 403(b) or 457 of the Internal Revenue Code or employee benefit
plans, scheduled (Internal Revenue Code Section 72(t) election) or mandatory
(required minimum distribution) withdrawals from IRAs, rebalancing transactions
made through certain asset allocation or "wrap" programs, transactions by
insurance company separate accounts or transactions by other funds that invest
in a fund. This policy does not apply to purchase or redemption transactions of
less than $5,000 or to a Pioneer money market fund.
129
Shareholder services and policies
We rely on financial intermediaries that maintain omnibus accounts to apply to
their customers either the fund's policy described above or their own policies
or restrictions designed to limit excessive trading of fund shares. However, we
do not impose this policy at the omnibus account level.
Purchases pursuant to the reinstatement privilege (for Class A and Class B
shares) are subject to this policy.
PURCHASES IN KIND
You may use securities you own to purchase shares of a fund provided that
Pioneer, in its sole discretion, determines that the securities are consistent
with the fund's objectives and policies and their acquisition is in the best
interests of the fund. If the fund accepts your securities, they will be valued
for purposes of determining the number of fund shares to be issued to you in
the same way the fund will value the securities for purposes of determining its
net asset value. For federal income tax purposes, you may be taxed in the same
manner as if you sold the securities that you use to purchase fund shares for
cash in an amount equal to the value of the fund shares that you purchase. Your
broker may also impose a fee in connection with processing your purchase of
fund shares with securities.
REINSTATEMENT PRIVILEGE (CLASS A AND CLASS B SHARES)
If you recently sold all or part of your Class A or Class B shares, you may be
able to reinvest all or part of your sale proceeds without a sales charge in
Class A shares of any Pioneer mutual fund. To qualify for reinstatement:
o You must send a written request to the transfer agent no more than 90 days
after selling your shares and
o The registration of the account in which you reinvest your sale proceeds must
be identical to the registration of the account from which you sold your
shares.
Purchases pursuant to the reinstatement privilege are subject to limitations on
investor transactions, including the limitation on the purchase of the fund's
shares within 30 calendar days of redemption. See "Excessive trading."
When you elect reinstatement, you are subject to the provisions outlined in the
selected fund's prospectus, including the fund's minimum investment
requirement. Your sale proceeds will be reinvested in shares of the fund at the
Class A net asset value per share determined after the transfer agent receives
your written request for reinstatement. You may realize a gain or
130
loss for federal income tax purposes as a result of your sale of fund shares,
and special tax rules may apply if you elect reinstatement. Consult your tax
adviser for more information.
PIONEER WEBSITE
WWW.PIONEERINVESTMENTS.COM
The website includes a full selection of information on mutual fund investing.
You can also use the website to get:
o Your current account information
o Prices, returns and yields of all publicly available Pioneer mutual funds
o Prospectuses, statements of additional information and shareowner reports for
all the Pioneer mutual funds
o A copy of Pioneer's privacy notice
If you or your investment firm authorized your account for the online
transaction privilege, you may buy, exchange and sell shares online.
FACTFONE/SM/ 1-800-225-4321
You can use FactFone/SM/ to:
o Obtain current information on your Pioneer mutual fund accounts
o Inquire about the prices and yields of all publicly available Pioneer mutual
funds
o Make computer-assisted telephone purchases, exchanges and redemptions for
your fund accounts
o Request account statements
If you plan to use FactFone/SM/ to make telephone purchases and redemptions,
first you must activate your personal identification number and establish your
bank account of record. If your account is registered in the name of a
broker-dealer or other third party, you may not be able to use FactFone/SM/.
If your account is registered in the name of a broker-dealer or other third
party, you may not be able to use FactFone/SM/ to obtain account information.
HOUSEHOLD DELIVERY OF FUND DOCUMENTS
With your consent, Pioneer may send a single proxy statement, prospectus and
shareowner report to your residence for you and any other member of your
household who has an account with the fund. If you wish to revoke your consent
to this practice, you may do so by notifying Pioneer, by phone
131
Shareholder services and policies
or in writing (see "How to contact us"). Pioneer will begin mailing separate
proxy statements, prospectuses and shareowner reports to you within 30 days
after receiving your notice.
CONFIRMATION STATEMENTS
The transfer agent maintains an account for each investment firm or individual
shareowner and records all account transactions. You will be sent confirmation
statements showing the details of your transactions as they occur, except
automatic investment plan transactions, which are confirmed quarterly. If you
have more than one Pioneer mutual fund account registered in your name, the
Pioneer combined account statement will be mailed to you each quarter.
TAX INFORMATION
Early each year, the fund will mail you information about the tax status of the
dividends and distributions paid to you by the fund.
TAX INFORMATION FOR IRA ROLLOVERS
In January (or by the applicable Internal Revenue Service deadline) following
the year in which you take a reportable distribution, the transfer agent will
mail you a tax form reflecting the total amount(s) of distribution(s) received
by the end of January.
PRIVACY
Each fund has a policy designed to protect the privacy of your personal
information. A copy of Pioneer's privacy notice was given to you at the time
you opened your account. The fund will send you a copy of the privacy notice
each year. You may also obtain the privacy notice by calling the transfer agent
or through Pioneer's website.
SIGNATURE GUARANTEES AND OTHER REQUIREMENTS
You are required to obtain a signature guarantee when:
o Requesting certain types of exchanges or sales of fund shares
o Redeeming shares for which you hold a share certificate
o 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.
132
The Pioneer funds generally accept only medallion signature guarantees. A
medallion signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency, savings association, or other
financial institution that is participating in a medallion program recognized
by the Securities Transfer Association. Signature guarantees from financial
institutions that are not participating in one of these programs are not
accepted as medallion signature guarantees. The fund may accept other forms of
guarantee from financial intermediaries in limited circumstances.
Fiduciaries and corporations are required to submit additional documents to
sell fund shares.
MINIMUM ACCOUNT SIZE
Each fund requires that you maintain a minimum account value of $500. If you
hold less than $500 in your account, each fund reserves the right to notify you
that it intends to sell your shares and close your account. You will be given
60 days from the date of the notice to make additional investments to avoid
having your shares sold. This policy does not apply to certain qualified
retirement plan accounts.
TELEPHONE AND WEBSITE ACCESS
You may have difficulty contacting the fund by telephone or accessing
www.pioneerinvestments.com during times of market volatility or disruption in
telephone or Internet service. On New York Stock Exchange holidays or on days
when the exchange closes early, Pioneer will adjust the hours for the telephone
center and for online transaction processing accordingly. If you are unable to
access www.pioneerinvestments.com or reach the fund by telephone, you should
communicate with the fund in writing.
SHARE CERTIFICATES
The fund does not offer share certificates. Shares are electronically recorded.
Any existing certificated shares can only be sold by returning your certificate
to the transfer agent, along with a letter of instruction or a stock power (a
separate written authority transferring ownership) and a signature guarantee.
OTHER POLICIES
Each fund and the distributor reserve the right to:
o reject any purchase or exchange order for any reason, without prior notice
133
Shareholder services and policies
o charge a fee for exchanges or to modify, limit or suspend the exchange
privilege at any time without notice. The fund will provide 60 days' notice
of material amendments to or termination of the exchange privilege
o revise, suspend, limit or terminate the account options or services available
to shareowners at any time, except as required by the rules of the
Securities and Exchange Commission
Each fund reserves the right to:
o suspend transactions in shares when trading on the New York Stock Exchange is
closed or restricted, or when the Securities and Exchange Commission
determines an emergency or other circumstances exist that make it
impracticable for the fund to sell or value its portfolio securities, or
otherwise as permitted by the rules of or by the order of the Securities and
Exchange Commission
o redeem in kind by delivering to you portfolio securities owned by the fund
rather than cash. Securities you receive this way may increase or decrease
in value while you hold them and you may incur brokerage and transaction
charges and tax liability when you convert the securities to cash
o charge transfer, shareholder servicing or similar agent fees, such as an
account maintenance fee for small balance accounts, directly to accounts
upon at least 30 days' notice. The fund may do this by deducting the fee
from your distribution of dividends and/or by redeeming fund shares to the
extent necessary to cover the fee
o close your account after a period of inactivity, as determined by state law,
and transfer your shares to the appropriate state
134
Dividends, capital gains and taxes
DIVIDENDS AND CAPITAL GAINS
Each fund generally pays any distributions of net short- and long-term capital
gains in December.
Each fund generally pays dividends from any net investment income in December.
Each fund may also pay dividends and capital gain distributions at other times
if necessary for the fund to avoid U.S. federal income or excise tax. If you
invest in a fund shortly before a dividend or other distribution, generally you
will pay a higher price per share and, unless you are exempt from tax, you will
pay taxes on the amount of the distribution whether you reinvest the
distribution in additional shares or receive it as cash.
TAXES
You will normally have to pay federal income taxes, and any state or local
taxes, on the dividends and other distributions you receive from each fund,
whether you take the distributions in cash or reinvest them in additional
shares. For U.S. federal income tax purposes, distributions from each fund's
net capital gains (if any) are considered long-term capital gains and may be
taxable to noncorporate shareholders at rates of up to 20%. Distributions from
the fund's net short-term capital gains are taxable as ordinary income. Other
dividends are taxable either as ordinary income or, in general, if paid from
the fund's "qualified dividend income" and if certain conditions, including
holding period requirements, are met by the fund and the shareholder, as
qualified dividend income taxable to noncorporate shareholders at U.S. federal
income tax rates of up to 20%.
"Qualified dividend income" generally is income derived from dividends paid to
underlying funds by U.S. corporations or certain foreign corporations that are
either incorporated in a U.S. possession or eligible for tax benefits under
certain U.S. income tax treaties. In addition, dividends that an underlying
fund receives in respect of stock of certain foreign corporations may be
qualified dividend income if that stock is readily tradable on an established
U.S. securities market.
A portion of dividends received from the funds (but none of the funds' capital
gain distributions) may qualify for the dividends-received deduction for
corporations. To the extent that a fund pays dividends attributable to income
received by it from underlying fixed income funds, these dividends
135
Dividends, capital gains and taxes
generally will not qualify for the dividends-received deduction for
corporations or for any favorable U.S. federal income tax rate available to
noncorporate shareholders on qualified dividend income.
The fund will report to shareholders annually the U.S. federal income tax
status of all fund distributions.
If the fund declares a dividend in October, November or December, payable to
shareholders of record in such a month, and pays it in January of the following
year, you will be taxed on the dividend as if you received it in the year in
which it was declared.
Sales and exchanges generally will be taxable transactions to shareowners. 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.
A 3.8% Medicare contribution tax generally applies to all or a portion of the
net investment income of a shareholder who is an individual and not a
nonresident alien for federal income tax purposes and who has adjusted gross
income (subject to certain adjustments) that exceeds a threshold amount. This
3.8% tax also applies to all or a portion of the undistributed net investment
income of certain shareholders that are estates and trusts. For these purposes,
dividends, interest and certain capital gains are generally taken into account
in computing a shareholder's net investment income.
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 apply "backup withholding" tax on your
dividends and other distributions, sale proceeds and any other payments to you
that are subject to backup withholding. The backup withholding rate is 28%.
You should ask your tax adviser about any federal, state, local and foreign tax
considerations relating to an investment in the fund. You may also consult the
fund's statement of additional information for a more detailed discussion of
the U.S. federal income tax considerations that may affect the fund and its
shareowners.
136
Financial highlights
The financial highlights table helps you understand each fund's financial
performance for the past five years.
Certain information reflects financial results for a single fund share. The
total returns in the table represent the rate that you would have earned or
lost on an investment in Class A, Class B, Class C and Class Y shares of each
fund (assuming reinvestment of all dividends and distributions).
The information below has been audited by Ernst & Young LLP, the funds'
independent registered public accounting firm, whose report is included in the
funds' annual report along with the funds' financial statements. The annual
report is available upon request.
137
Financial highlights
PIONEER CONSERVATIVE ALLOCATION FUND
CLASS A SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- ------------
Net asset value, beginning of period $ 10.73 $ 10.85 $ 10.19 $ 9.40 $ 10.48
------- ------- ------- ------- -------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.28 $ 0.28 $ 0.26 $ 0.25 $ 0.39
Net realized and unrealized gain (loss) on
investments 0.64 (0.09) 0.65 0.86 (0.94)
------- ------- ------- ------- -------
Net increase (decrease) from investment
operations $ 0.92 $ 0.19 $ 0.91 $ 1.11 $ (0.55)
Distributions to shareowners:
Net investment income $ (0.23) $ (0.31) $ (0.25) $ (0.32) $ (0.31)
Net realized gain - - - - (0.22)
------- ------- ------- ------- -------
Total distributions to shareowners $ (0.23) $ (0.31) $ (0.25) $ (0.32) $ (0.53)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.69 $ (0.12) $ 0.66 $ 0.79 $ (1.08)
------- ------- ------- ------- -------
Net asset value, end of period $ 11.42 $ 10.73 $ 10.85 $ 10.19 $ 9.40
------- ------- ------- ------- -------
Total return* 8.72% 1.85% 9.04% 11.88% (4.44)%
Ratio of net expenses to average net assets+# 0.77% 0.78% 0.78% 0.78% 0.78%
Ratio of net investment income to average net
assets+# 2.51% 2.69% 2.47% 2.55% 4.43%
Portfolio turnover rate 17% 20% 15% 13% 53%
Net assets, end of period (in thousands) $44,239 $42,613 $42,882 $35,986 $25,992
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 0.77% 0.82% 0.80% 0.84% 1.09%
Net investment income 2.51% 2.65% 2.45% 2.49% 4.12%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.77% 0.78% 0.78% 0.78% 0.78%
Net investment income 2.51% 2.69% 2.47% 2.55% 4.43%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
138
PIONEER CONSERVATIVE ALLOCATION FUND
CLASS B SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- ------------
Net asset value, beginning of period $10.51 $10.61 $ 9.99 $ 9.24 $ 10.31
------ ------ ------ ------ -------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.18 $ 0.19 $ 0.17 $ 0.16 $ 0.31
Net realized and unrealized gain (loss) on
investments 0.62 (0.09) 0.64 0.83 (0.93)
------ ------ ------ ------ -------
Net increase (decrease) from investment
operations $ 0.80 $ 0.10 $ 0.81 $ 0.99 $ (0.62)
Distributions to shareowners:
Net investment income $(0.13) $(0.20) $(0.19) $(0.24) $ (0.23)
Net realized gain - - - - (0.22)
------ ------ ------ ------ -------
Total distributions to shareowners $(0.13) $(0.20) $(0.19) $(0.24) $ (0.45)
------ ------ ------ ------ -------
Net increase (decrease) in net asset value $ 0.67 $(0.10) $ 0.62 $ 0.75 $ (1.07)
------ ------ ------ ------ -------
Net asset value, end of period $11.18 $10.51 $10.61 $ 9.99 $ 9.24
------ ------ ------ ------ -------
Total return* 7.63% 1.04% 8.15% 10.80% (5.31)%
Ratio of net expenses to average net assets+# 1.61% 1.68% 1.64% 1.68% 1.68%
Ratio of net investment income to average net
assets+# 1.67% 1.82% 1.62% 1.67% 3.58%
Portfolio turnover rate 17% 20% 15% 13% 53%
Net assets, end of period (in thousands) $3,340 $4,429 $5,285 $6,214 $ 5,957
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.61% 1.71% 1.64% 1.70% 1.90%
Net investment income 1.67% 1.79% 1.62% 1.64% 3.36%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.61% 1.68% 1.64% 1.68% 1.68%
Net investment income 1.67% 1.82% 1.62% 1.67% 3.58%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
139
Financial highlights
PIONEER CONSERVATIVE ALLOCATION FUND
CLASS C SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- ------------
Net asset value, beginning of period $ 10.44 $ 10.56 $ 9.96 $ 9.21 $ 10.30
------- ------- ------- ------- -------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.18 $ 0.20 $ 0.18 $ 0.17 $ 0.31
Net realized and unrealized gain (loss) on
investments 0.63 (0.09) 0.63 0.83 (0.95)
------- ------- ------- ------- -------
Net increase (decrease) from investment
operations $ 0.81 $ 0.11 $ 0.81 $ 1.00 $ (0.64)
Distributions to shareowners:
Net investment income $ (0.16) $ (0.23) $ (0.21) $ (0.25) $ (0.23)
Net realized gain - - - - (0.22)
------- ------- ------- ------- -------
Total distributions to shareowners $ (0.16) $ (0.23) $ (0.21) $ (0.25) $ (0.45)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.65 $ (0.12) $ 0.60 $ 0.75 $ (1.09)
------- ------- ------- ------- -------
Net asset value, end of period $ 11.09 $ 10.44 $ 10.56 $ 9.96 $ 9.21
------- ------- ------- ------- -------
Total return* 7.83% 1.16% 8.18% 10.91% (5.53)%
Ratio of net expenses to average net assets+# 1.51% 1.56% 1.55% 1.59% 1.68%
Ratio of net investment income to average net
assets+# 1.70% 1.91% 1.71% 1.73% 3.54%
Portfolio turnover rate 17% 20% 15% 13% 53%
Net assets, end of period (in thousands) $20,542 $16,257 $15,068 $14,063 $11,184
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.51% 1.56% 1.55% 1.59% 1.80%
Net investment income 1.70% 1.91% 1.71% 1.73% 3.43%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.51% 1.56% 1.55% 1.59% 1.68%
Net investment income 1.70% 1.91% 1.71% 1.73% 3.54%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
140
PIONEER CONSERVATIVE ALLOCATION FUND
CLASS Y SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $10.21 $10.41 $ 9.79 $ 9.02 $ 10.50
------ ------ ------ ------ --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.20 $ 0.13 $ 0.24 $ 0.28 $ (0.18)
Net realized and unrealized gain (loss) on
investments 0.61 (0.10) 0.65 0.78 (0.97)
------ ------ ------ ------ --------
Net increase (decrease) from investment
operations $ 0.81 $ 0.03 $ 0.89 $ 1.06 $ (1.15)
Distributions to shareowners:
Net investment income $(0.16) $(0.23) $(0.27) $(0.29) $ (0.11)
Net realized gain - - - - (0.22)
------ ------ ------ ------ --------
Total distributions to shareowners $(0.16) $(0.23) $(0.27) $(0.29) $ (0.33)
------ ------ ------ ------ --------
Net increase (decrease) in net asset value $ 0.65 $(0.20) $ 0.62 $ 0.77 $ (1.48)
------ ------ ------ ------ --------
Net asset value, end of period $10.86 $10.21 $10.41 $ 9.79 $ 9.02
------ ------ ------ ------ --------
Total return* 8.00% 0.34% 9.18% 11.89% (10.66)%
Ratio of net expenses to average net assets+# 1.43% 2.26% 0.82% 0.63% 7.26%
Ratio of net investment income to average net
assets+# 1.88% 1.28% 2.36% 2.94% (2.03)%
Portfolio turnover rate 17% 20% 15% 13% 53%
Net assets, end of period (in thousands) $ 141 $ 65 $ 72 $ 119 $ 9
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.43% 2.26% 0.82% 0.63% 7.26%
Net investment income (loss) 1.88% 1.28% 2.36% 2.94% (2.03)%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.43% 2.26% 0.82% 0.63% 7.26%
Net investment income (loss) 1.88% 1.28% 2.36% 2.94% (2.03)%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
141
Financial highlights
PIONEER MODERATE ALLOCATION FUND
CLASS A SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
------------ ------------- ------------ ------------ -------------
Net asset value, beginning of period $ 10.46 $ 10.74 $ 9.68 $ 8.79 $ 10.89
-------- -------- -------- -------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.21 $ 0.18 $ 0.17 $ 0.16 $ 0.27
Net realized and unrealized gain (loss) on
investments 1.27 (0.22) 1.07 1.00 (1.63)
-------- -------- -------- -------- --------
Net increase (decrease) from investment
operations $ 1.48 $ (0.04) $ 1.24 $ 1.16 $ (1.36)
Distributions to shareowners:
Net investment income $ (0.22) $ (0.24) $ (0.18) $ (0.27) $ (0.13)
Net realized gain - - - - (0.61)
-------- -------- -------- -------- --------
Total distributions to shareowners $ (0.22) $ (0.24) $ (0.18) $ (0.27) $ (0.74)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.26 $ (0.28) $ 1.06 $ 0.89 $ (2.10)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.72 $ 10.46 $ 10.74 $ 9.68 $ 8.79
-------- -------- -------- -------- --------
Total return* 14.32% (0.27)% 12.91% 13.26% (11.20)%
Ratio of net expenses to average net
assets+# 0.66% 0.72% 0.71% 0.73% 0.74%
Ratio of net investment income to average net
assets+# 1.85% 1.75% 1.59% 1.70% 3.20%
Portfolio turnover rate 9% 9% 14% 10% 44%
Net assets, end of period (in thousands) $128,425 $118,833 $132,166 $125,354 $120,786
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no
reduction for fees paid indirectly:
Total expenses 0.66% 0.72% 0.71% 0.73% 0.76%
Net investment income 1.85% 1.75% 1.59% 1.70% 3.18%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.66% 0.72% 0.71% 0.73% 0.74%
Net investment income 1.85% 1.75% 1.59% 1.70% 3.20%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
142
PIONEER MODERATE ALLOCATION FUND
CLASS B SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $ 10.04 $ 10.26 $ 9.25 $ 8.41 $ 10.39
------- ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.11 $ 0.11 $ 0.08 $ 0.08 $ 0.19
Net realized and unrealized gain (loss) on
investments 1.22 (0.22) 1.02 0.96 (1.53)
------- ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.33 $ (0.11) $ 1.10 $ 1.04 $ (1.34)
Distributions to shareowners:
Net investment income $ (0.06) $ (0.11) $ (0.09) $ (0.20) $ (0.03)
Net realized gain - - - - (0.61)
------- ------- ------- ------- --------
Total distributions to shareowners $ (0.06) $ (0.11) $ (0.09) $ (0.20) $ (0.64)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.27 $ (0.22) $ 1.01 $ 0.84 $ (1.98)
------- ------- ------- ------- --------
Net asset value, end of period $ 11.31 $ 10.04 $ 10.26 $ 9.25 $ 8.41
------- ------- ------- ------- --------
Total return* 13.31% (0.99)% 11.89% 12.39% (11.81)%
Ratio of net expenses to average net assets+# 1.52% 1.52% 1.52% 1.52% 1.52%
Ratio of net investment income to average net
assets+# 1.06% 1.11% 0.83% 0.92% 2.44%
Portfolio turnover rate 9% 9% 14% 10% 44%
Net assets, end of period (in thousands) $10,068 $16,072 $26,166 $33,115 $35,197
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.58% 1.60% 1.53% 1.56% 1.63%
Net investment income 0.99% 1.03% 0.82% 0.88% 2.33%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.52% 1.52% 1.52% 1.52% 1.52%
Net investment income 1.06% 1.11% 0.83% 0.92% 2.44%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
143
Financial highlights
PIONEER MODERATE ALLOCATION FUND
CLASS C SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $ 9.77 $ 10.07 $ 9.10 $ 8.29 $ 10.30
------- ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.12 $ 0.10 $ 0.09 $ 0.09 $ 0.19
Net realized and unrealized gain (loss) on
investments 1.19 (0.22) 1.01 0.94 (1.53)
------- ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.31 $ (0.12) $ 1.10 $ 1.03 $ (1.34)
Distributions to shareowners:
Net investment income $ (0.16) $ (0.18) $ (0.13) $ (0.22) $ (0.06)
Net realized gain - - - - (0.61)
------- ------- ------- ------- --------
Total distributions to shareowners $ (0.16) $ (0.18) $ (0.13) $ (0.22) $ (0.67)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.15 $ (0.30) $ 0.97 $ 0.81 $ (2.01)
------- ------- ------- ------- --------
Net asset value, end of period $ 10.92 $ 9.77 $ 10.07 $ 9.10 $ 8.29
------- ------- ------- ------- --------
Total return* 13.56% (1.08)% 12.12% 12.43% (11.85)%
Ratio of net expenses to average net assets+# 1.34% 1.41% 1.40% 1.44% 1.52%
Ratio of net investment income to average net
assets+# 1.15% 1.06% 0.89% 0.98% 2.44%
Portfolio turnover rate 9% 9% 14% 10% 44%
Net assets, end of period (in thousands) $64,989 $53,594 $52,059 $43,725 $37,513
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.34% 1.41% 1.40% 1.44% 1.52%
Net investment income 1.15% 1.06% 0.89% 0.98% 2.44%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.34% 1.41% 1.40% 1.44% 1.52%
Net investment income 1.15% 1.06% 0.89% 0.98% 2.44%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
144
PIONEER MODERATE ALLOCATION FUND
CLASS Y SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- --------------- ----------- ----------- -------------
Net asset value, beginning of period $10.58 $ 10.88 $ 9.80 $ 8.89 $ 10.94
------ ------- ------ ------ --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.25 $ 0.22 $ 0.21 $ 0.20 $ 0.29
Net realized and unrealized gain (loss) on
investments 1.28 (0.23) 1.09 1.02 (1.55)
------ ------- ------ ------ --------
Net increase (decrease) from investment
operations $ 1.53 $ (0.01) $ 1.30 $ 1.22 $ (1.26)
Distributions to shareowners:
Net investment income $(0.25) $ (0.29) $(0.22) $(0.31) $ (0.18)
Net realized gain - - - - (0.61)
------ ------- ------ ------ --------
Total distributions to shareowners $(0.25) $ (0.29) $(0.22) $(0.31) $ (0.79)
------ ------- ------ ------ --------
Net increase (decrease) in net asset value $ 1.28 $ (0.30) $ 1.08 $ 0.91 $ (2.05)
------ ------- ------ ------ --------
Net asset value, end of period $11.86 $ 10.58 $10.88 $ 9.80 $ 8.89
------ ------- ------ ------ --------
Total return* 14.68% 0.00%(b) 13.37% 13.75% (10.09)%
Ratio of net expenses to average net assets+# 0.36% 0.38% 0.32% 0.33% 0.33%
Ratio of net investment income to average net
assets+# 2.26% 2.14% 2.00% 2.10% 3.59%
Portfolio turnover rate 9% 9% 14% 10% 44%
Net assets, end of period (in thousands) $4,134 $ 5,208 $8,069 $8,120 $ 8,015
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 0.36% 0.38% 0.32% 0.33% 0.33%
Net investment income 2.26% 2.14% 2.00% 2.10% 3.59%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.36% 0.38% 0.32% 0.33% 0.33%
Net investment income 2.26% 2.14% 2.00% 2.10% 3.59%
(a) Calculated using average shares outstanding for the period.
(b) Amount rounds to less than 0.01%.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
145
Financial highlights
PIONEER GROWTH ALLOCATION FUND
CLASS A SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
------------ ------------- ------------ ------------ -------------
Net asset value, beginning of period $ 10.75 $ 11.09 $ 9.77 $ 8.74 $ 11.50
-------- -------- -------- -------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.17 $ 0.14 $ 0.12 $ 0.11 $ 0.19
Net realized and unrealized gain (loss) on
investments 1.57 (0.29) 1.33 1.10 (2.14)
-------- -------- -------- -------- --------
Net increase (decrease) from investment
operations $ 1.74 $ (0.15) $ 1.45 $ 1.21 $ (1.95)
Distributions to shareowners:
Net investment income $ (0.17) $ (0.19) $ (0.13) $ (0.18) $ (0.04)
Net realized gain - - - - (0.77)
-------- -------- -------- -------- --------
Total distributions to shareowners $ (0.17) $ (0.19) $ (0.13) $ (0.18) $ (0.81)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.57 $ (0.34) $ 1.32 $ 1.03 $ (2.76)
-------- -------- -------- -------- --------
Net asset value, end of period $ 12.32 $ 10.75 $ 11.09 $ 9.77 $ 8.74
-------- -------- -------- -------- --------
Total return* 16.40% (1.31)% 14.85% 13.90% (15.49)%
Ratio of net expenses to average net
assets+# 0.69% 0.76% 0.76% 0.79% 0.79%
Ratio of net investment income to average net
assets+# 1.50% 1.29% 1.11% 1.12% 2.24%
Portfolio turnover rate 6% 7% 12% 11% 49%
Net assets, end of period (in thousands) $149,586 $134,988 $140,979 $125,433 $111,447
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no
reduction for fees paid indirectly:
Total expenses 0.69% 0.76% 0.76% 0.80% 0.89%
Net investment income 1.50% 1.29% 1.11% 1.11% 2.14%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.69% 0.76% 0.76% 0.79% 0.79%
Net investment income 1.50% 1.29% 1.11% 1.12% 2.24%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
146
PIONEER GROWTH ALLOCATION FUND
CLASS B SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $ 9.52 $ 9.80 $ 8.64 $ 7.75 $ 10.33
------- ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.07 $ 0.06 $ 0.03 $ 0.03 $ 0.11
Net realized and unrealized gain (loss) on
investments 1.40 (0.26) 1.17 0.98 (1.92)
------- ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.47 $ (0.20) $ 1.20 $ 1.01 $ (1.81)
Distributions to shareowners:
Net investment income $ (0.06) $ (0.08) $ (0.04) $ (0.12) $ -
Net realized gain - - - - (0.77)
------- ------- ------- ------- --------
Total distributions to shareowners $ (0.06) $ (0.08) $ (0.04) $ (0.12) $ (0.77)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.41 $ (0.28) $ 1.16 $ 0.89 $ (2.58)
------- ------- ------- ------- --------
Net asset value, end of period $ 10.93 $ 9.52 $ 9.80 $ 8.64 $ 7.75
------- ------- ------- ------- --------
Total return* 15.46% (2.01)% 13.90% 13.03% (16.05)%
Ratio of net expenses to average net assets+# 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net
assets+# 0.68% 0.59% 0.35% 0.36% 1.47%
Portfolio turnover rate 6% 7% 12% 11% 49%
Net assets, end of period (in thousands) $17,441 $24,941 $35,567 $39,902 $43,390
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.60% 1.66% 1.61% 1.66% 1.77%
Net investment income 0.64% 0.50% 0.31% 0.27% 1.27%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.57% 1.57% 1.57% 1.57% 1.57%
Net investment income 0.68% 0.59% 0.35% 0.36% 1.47%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
147
Financial highlights
PIONEER GROWTH ALLOCATION FUND
CLASS C SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $ 10.18 $ 10.50 $ 9.26 $ 8.30 $ 10.99
------- ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.09 $ 0.06 $ 0.04 $ 0.04 $ 0.11
Net realized and unrealized gain (loss) on
investments 1.48 (0.27) 1.26 1.04 (2.03)
------- ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.57 $ (0.21) $ 1.30 $ 1.08 $ (1.92)
Distributions to shareowners:
Net investment income $ (0.10) $ (0.11) $ (0.06) $ (0.12) $ -
Net realized gain - - - - (0.77)
------- ------- ------- ------- --------
Total distributions to shareowners $ (0.10) $ (0.11) $ (0.06) $ (0.12) $ (0.77)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.47 $ (0.32) $ 1.24 $ 0.96 $ (2.69)
------- ------- ------- ------- --------
Net asset value, end of period $ 11.65 $ 10.18 $ 10.50 $ 9.26 $ 8.30
------- ------- ------- ------- --------
Total return* 15.58% (1.91)% 14.10% 13.08% (16.08)%
Ratio of net expenses to average net assets+# 1.40% 1.46% 1.46% 1.51% 1.57%
Ratio of net investment income to average net
assets+# 0.78% 0.59% 0.40% 0.40% 1.44%
Portfolio turnover rate 6% 7% 12% 11% 49%
Net assets, end of period (in thousands) $53,032 $45,570 $48,586 $43,087 $36,602
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.40% 1.46% 1.46% 1.51% 1.60%
Net investment income 0.78% 0.59% 0.40% 0.40% 1.40%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.40% 1.46% 1.46% 1.51% 1.57%
Net investment income 0.78% 0.59% 0.40% 0.40% 1.44%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
148
PIONEER GROWTH ALLOCATION FUND
CLASS Y SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $10.95 $11.45 $10.07 $ 9.00 $ 11.64
------ ------- ------ ------ --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.20 $ 0.17 $ 0.17 $ 0.15 $ 0.20
Net realized and unrealized gain (loss) on
investments 1.61 (0.44) 1.37 1.14 (1.97)
------ ------- ------ ------ --------
Net increase (decrease) from investment
operations $ 1.81 $(0.27) $ 1.54 $ 1.29 $ (1.77)
Distributions to shareowners:
Net investment income $(0.20) $(0.23) $(0.16) $(0.22) $ (0.10)
Net realized gain - - - - (0.77)
------ ------- ------ ------ --------
Total distributions to shareowners $(0.20) $(0.23) $(0.16) $(0.22) $ (0.87)
------ ------- ------ ------ --------
Net increase (decrease) in net asset value $ 1.61 $(0.50) $ 1.38 $ 1.07 $ (2.64)
------ ------- ------ ------ --------
Net asset value, end of period $12.56 $10.95 $11.45 $10.07 $ 9.00
------ ------- ------ ------ --------
Total return* 16.70% (2.28)% 15.39% 14.33% (13.68)%
Ratio of net expenses to average net assets+# 0.44% 0.50% 0.36% 0.39% 0.39%
Ratio of net investment income to average net
assets+# 1.71% 1.60% 1.58% 1.54% 2.44%
Portfolio turnover rate 6% 7% 12% 11% 49%
Net assets, end of period (in thousands) $1,314 $2,012 $1,947 $2,508 $ 1,614
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 0.44% 0.50% 0.36% 0.39% 0.39%
Net investment income 1.71% 1.60% 1.58% 1.54% 2.44%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.44% 0.50% 0.36% 0.39% 0.39%
Net investment income 1.71% 1.60% 1.58% 1.54% 2.44%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
149
Financial highlights
PIONEER AGGRESSIVE ALLOCATION FUND
CLASS A SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $ 10.60 $ 11.07 $ 9.56 $ 8.45 $ 11.85
------- ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.11 $ 0.08 $ 0.06 $ 0.04 $ 0.09
Net realized and unrealized gain (loss) on
investments 1.87 (0.42) 1.51 1.16 (2.54)
------- ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.98 $ (0.34) $ 1.57 $ 1.20 $ (2.45)
Distributions to shareowners:
Net investment income $ (0.11) $ (0.13) $ (0.06) $ (0.09) $ -
Net realized gain - - - - (0.95)
------- ------- ------- ------- --------
Total distributions to shareowners $ (0.11) $ (0.13) $ (0.06) $ (0.09) $ (0.95)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.87 $ (0.47) $ 1.51 $ 1.11 $ (3.40)
------- ------- ------- ------- --------
Net asset value, end of period $ 12.47 $ 10.60 $ 11.07 $ 9.56 $ 8.45
------- ------- ------- ------- --------
Total return* 18.86% (3.06)% 16.42% 14.16% (19.05)%
Ratio of net expenses to average net assets+# 0.82% 0.85% 0.85% 0.85% 0.85%
Ratio of net investment income to average net
assets+# 0.99% 0.76% 0.52% 0.44% 1.07%
Portfolio turnover rate 6% 7% 11% 12% 55%
Net assets, end of period (in thousands) $90,921 $82,940 $92,878 $85,488 $79,480
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 0.82% 0.87% 0.85% 0.88% 1.01%
Net investment income 0.99% 0.74% 0.52% 0.41% 0.91%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.82% 0.85% 0.85% 0.85% 0.85%
Net investment income 0.99% 0.76% 0.52% 0.44% 1.07%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
150
PIONEER AGGRESSIVE ALLOCATION FUND
CLASS B SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ------------ ------------ ------------ -------------
Net asset value, beginning of period $ 9.95 $ 10.35 $ 8.96 $ 7.93 $ 11.29
------ ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.03 $ 0.01 $ (0.02) $ (0.03) $ 0.02
Net realized and unrealized gain (loss) on
investments 1.74 (0.40) 1.41 1.08 (2.43)
------ ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.77 $ (0.39) $ 1.39 $ 1.05 $ (2.41)
Distributions to shareowners:
Net investment income $ - $ (0.01) $ - $ (0.02) $ -
Net realized gain - - - - (0.95)
------ ------- ------- ------- --------
Total distributions to shareowners $ - $ (0.01) $ - $ (0.02) $ (0.95)
------ ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.77 $ (0.40) $ 1.39 $ 1.03 $ (3.36)
------ ------- ------- ------- --------
Net asset value, end of period $11.72 $ 9.95 $ 10.35 $ 8.96 $ 7.93
------ ------- ------- ------- --------
Total return* 17.79% (3.72)% 15.51% 13.22% (19.69)%
Ratio of net expenses to average net assets+# 1.64% 1.64% 1.64% 1.64% 1.64%
Ratio of net investment income to average net
assets+# 0.25% 0.05% (0.21)% (0.33)% 0.28%
Portfolio turnover rate 6% 7% 11% 12% 55%
Net assets, end of period (in thousands) $8,495 $12,074 $17,642 $19,256 $20,884
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.73% 1.77% 1.71% 1.76% 1.89%
Net investment income (loss) 0.16% (0.08)% (0.28)% (0.45)% 0.04%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.64% 1.64% 1.64% 1.64% 1.64%
Net investment income (loss) 0.25% 0.05% (0.21)% (0.33)% 0.28%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
151
Financial highlights
PIONEER AGGRESSIVE ALLOCATION FUND
CLASS C SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ------------- ------------ ------------ -------------
Net asset value, beginning of period $ 10.07 $ 10.50 $ 9.08 $ 8.04 $ 11.43
------- ------- ------- ------- --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.03 0.00(b) $ (0.01) $ (0.03) $ 0.02
Net realized and unrealized gain (loss) on
investments 1.77 (0.38) 1.43 1.10 (2.46)
------- ------- ------- ------- --------
Net increase (decrease) from investment
operations $ 1.80 $ (0.38) $ 1.42 $ 1.07 $ (2.44)
Distributions to shareowners:
Net investment income $ (0.04) $ (0.05) $ - $ (0.03) $ -
Net realized gain - - - - (0.95)
------- ------- ------- ------- --------
Total distributions to shareowners $ (0.04) $ (0.05) $ - $ (0.03) $ (0.95)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 1.76 $ (0.43) $ 1.42 $ 1.04 $ (3.39)
------- ------- ------- ------- --------
Net asset value, end of period $ 11.83 $ 10.07 $ 10.50 $ 9.08 $ 8.04
------- ------- ------- ------- --------
Total return* 17.97% (3.61)% 15.64% 13.25% (19.71)%
Ratio of net expenses to average net assets+# 1.51% 1.56% 1.55% 1.58% 1.64%
Ratio of net investment income to average net
assets+# 0.31% 0.01% (0.14)% (0.31)% 0.27%
Portfolio turnover rate 6% 7% 11% 12% 55%
Net assets, end of period (in thousands) $19,582 $17,317 $18,899 $18,161 $17,171
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 1.51% 1.56% 1.55% 1.58% 1.70%
Net investment income 0.31% 0.01% (0.14)% (0.31)% 0.21%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 1.51% 1.56% 1.55% 1.58% 1.64%
Net investment income 0.31% 0.01% (0.14)% (0.31)% 0.27%
(a) Calculated using average shares outstanding for the period.
(b) Amount rounds to less than $0.01.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
152
PIONEER AGGRESSIVE ALLOCATION FUND
CLASS Y SHARES
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
7/31/13 7/31/12 7/31/11 7/31/10 7/31/09
----------- ----------- ----------- ----------- -------------
Net asset value, beginning of period $10.65 $11.24 $ 9.67 $ 8.55 $ 12.02
------ ------- ------ ------ --------
Increase (decrease) from investment
operations:
Net investment income (a) $ 0.22 $ 0.12 $ 0.11 $ 0.08 $ 0.13
Net realized and unrealized gain (loss) on
investments 1.77 (0.55) 1.56 1.16 (2.65)
------ ------- ------ ------ --------
Net increase (decrease) from investment
operations $ 1.99 $(0.43) $ 1.67 $ 1.24 $ (2.52)
Distributions to shareowners:
Net investment income $(0.15) $(0.16) $(0.10) $(0.12) $ -
Net realized gain - - - - (0.95)
------ ------- ------ ------ --------
Total distributions to shareowners $(0.15) $(0.16) $(0.10) $(0.12) $ (0.95)
------ ------- ------ ------ --------
Net increase (decrease) in net asset value $ 1.84 $(0.59) $ 1.57 $ 1.12 $ (3.47)
------ ------- ------ ------ --------
Net asset value, end of period $12.49 $10.65 $11.24 $ 9.67 $ 8.55
------ ------- ------ ------ --------
Total return* 18.87% (3.76)% 17.32% 14.49% (19.35)%
Ratio of net expenses to average net assets+# 0.67% 0.55% 0.46% 0.42% 0.43%
Ratio of net investment income to average net
assets+# 1.89% 1.11% 0.99% 0.88% 1.58%
Portfolio turnover rate 6% 7% 11% 12% 55%
Net assets, end of period (in thousands) $ 489 $1,189 $1,311 $1,868 $ 1,627
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no reduction
for fees paid indirectly:
Total expenses 0.67% 0.55% 0.46% 0.42% 0.43%
Net investment income 1.89% 1.11% 0.99% 0.88% 1.58%
Ratios with waiver of fees and assumption of
expenses by the Adviser and reduction for
fees paid indirectly:
Net expenses 0.67% 0.55% 0.46% 0.42% 0.43%
Net investment income 1.89% 1.11% 0.99% 0.88% 1.58%
(a) Calculated using average shares outstanding for the period.
* 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.
+ In addition to the expenses which the Fund bears directly, the Fund
indirectly bears pro rata shares of the expenses of the funds in which
the Fund invests. Because each of the underlying funds bears its own
varying expense levels and because the Fund may own differing proportions
of each fund at different times, the amount of expenses incurred
indirectly by the Fund will vary from time to time.
# Ratios with no reduction for fees paid indirectly.
153
Appendix A
INFORMATION ABOUT THE UNDERLYING FUNDS
The following is intended to summarize the investment objectives and primary
strategies of, and to provide you with certain other information about, the
underlying funds. These summaries do not reflect all of the investment policies
and strategies that are disclosed in each underlying fund's prospectus, and are
not an offer of the underlying funds' shares. The underlying funds in which the
fund intends to invest may change from time to time and the fund may invest in
underlying funds in addition to those described below at the discretion of
Pioneer without prior notice to or approval of shareholders. The prospectus and
statement of additional information for each underlying fund is available on
the Securities and Exchange Commission's website. The prospectus and statement
of additional information for each Pioneer underlying fund is available as well
on our website at www.pioneerinvestments.com.
Each underlying fund normally will be invested according to its investment
strategy. However, an underlying fund also may have the ability to invest
without limitation in money market instruments or other investments for
temporary, defensive purposes.
The underlying funds that invest primarily in equity securities are:
154
PIONEER FUND
INVESTMENT OBJECTIVES
Reasonable income and capital growth.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests in a broad group of carefully selected securities that the
fund's adviser believes are reasonably priced, rather than in securities whose
prices reflect a premium resulting from their current market popularity. The
fund invests predominantly in equity securities. For purposes of the fund's
investment policies, equity securities include common stocks and other equity
instruments, such as exchange-traded funds (ETFs) that invest primarily in
equity securities, equity interests in real estate investment trusts (REITs),
depositary receipts, warrants, rights and preferred stocks.
The fund primarily invests in securities of U.S. issuers. The fund may invest
up to 15% of its total assets in equity and debt securities of non-U.S.
issuers. The fund will not invest more than 5% of its total assets in the
securities of emerging markets issuers.
The fund may invest up to 15% of its net assets in REITs.
The fund may invest in initial public offerings of equity securities. The fund
may also invest in investment grade and below investment grade debt securities
(known as "junk bonds"). The fund may, but is not required to, use derivatives.
The fund may use derivatives, such as options and futures, for a variety of
purposes, including: as a hedge against adverse changes in the market price of
securities, interest rates or currency exchange rates; as a substitute for
purchasing or selling securities; and to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may choose
not to make use of derivatives for a variety of reasons, and any use may be
limited by applicable law and regulations. The fund may also hold cash or other
short-term investments.
The fund's investment adviser uses a value approach to select the fund's
investments to buy and sell. The adviser seeks securities selling at reasonable
prices or substantial discounts to their underlying values and then holds these
securities until the market values reflect their intrinsic values. The adviser
evaluates a security's potential value, including the attractiveness of its
market valuation, based on the company's assets and prospects for earnings
growth. In making that assessment, the adviser employs fundamental
155
research and an evaluation of the issuer based on its financial statements and
operations. In selecting securities, the adviser considers a security's
potential to provide a reasonable amount of income. The adviser focuses on the
quality and price of individual issuers.
INVESTMENT ADVISER
Pioneer^
156
PIONEER CORE EQUITY FUND
(FORMERLY, PIONEER VALUE FUND)
INVESTMENT OBJECTIVE
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, from investment purposes) in equity securities, primarily
of U.S. issuers. For purposes of the fund's investment policies, equity
securities include common stocks and other equity instruments, such as
exchange-traded funds (ETFs) that invest primarily in equity securities, equity
interests in real estate investment trusts (REITs), preferred stocks,
depositary receipts, rights and warrants. The fund may invest in initial public
offerings of equity securities.
The fund may invest up to 10% of its total assets in equity and debt securities
of non-U.S. issuers, including up to 5% of its total assets in the securities
of emerging markets issuers.
The fund may invest in debt securities of U.S. and non-U.S. issuers. Generally,
the fund acquires investment grade debt securities, but the fund may invest up
to 5% of its net assets in below investment grade debt securities (known as
"junk bonds"), including below investment grade convertible debt securities.
The fund may, but is not required to, use derivatives. The fund may use
derivatives, such as options and futures, for a variety of purposes, including
as a hedge against adverse changes in the market price of securities, interest
rates or currency exchange rates; as a substitute for purchasing or selling
securities; and to increase the fund's return as a non-hedging strategy that
may be considered speculative. The fund may choose not to make use of
derivatives for a variety of reasons, and any use may be limited by applicable
law and regulations. The fund may also hold cash and other short-term
investments.
The fund's investment adviser uses a valuation-conscious approach to select the
fund's investments based upon the recommendations of the adviser's research
team. The adviser selects securities that are highly ranked by the research
team and selling at reasonable prices or substantial discounts to their
underlying values. From the universe of highly ranked securities, the research
team constructs a portfolio that is reflective of
157
overall sector weightings in the fund's benchmark index. A security will not be
included in the portfolio simply because it is highly ranked by the research
team. A security may be sold if its ranking by the research team is reduced or
the security price reaches a reasonable valuation.
The adviser's research team evaluates a security's potential value based on the
company's assets and prospects for earning growth. In making that assessment,
the adviser employs fundamental research and an evaluation of the issuer based
on its financial statements and operations. The research team focuses on the
quality and price of individual issuers. The fund's portfolio includes
securities from a broad range of market sectors that have received favorable
rankings from the research team.
INVESTMENT ADVISER
Pioneer
158
PIONEER OAK RIDGE LARGE CAP GROWTH FUND
INVESTMENT OBJECTIVE
Capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in equity securities of large
capitalization companies. Large capitalization companies have market
capitalizations at the time of acquisition of $3 billion or more. The fund
anticipates that the average weighted market capitalization of the companies in
the fund's portfolio will be significantly higher than $3 billion. The equity
securities in which the fund principally invests are common stocks, preferred
stocks and depositary receipts, but the fund may invest in other types of
equity securities to a lesser extent, such as exchange-traded funds (ETFs) that
invest primarily in equity securities, equity interests in real estate
investment trusts (REITs), warrants and rights.
The fund may invest up to 20% of its total assets in equity and debt securities
of non-U.S. issuers. The fund will not invest more than 10% of its total assets
in the securities of emerging markets issuers.
The fund may invest in debt securities. The fund may invest up to 5% of its net
assets in below investment grade debt securities (known as "junk bonds"),
including below investment grade convertible debt securities.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including as a hedge against adverse
changes in the market prices of securities, interest rates or currency exchange
rates; as a substitute for purchasing or selling securities; and to increase
the fund's return as a non-hedging strategy that may be considered speculative.
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations. The fund may also
hold cash or other short-term instruments.
The fund uses a "growth" style of management and seeks to invest in issuers
with above average potential for earnings growth.
When making purchase decisions for the fund, the subadviser uses a disciplined
approach that involves three primary components:
159
o Research - The subadviser analyzes research on potential investments from a
wide variety of sources, including internally generated analysis and
research provided by institutions and the brokerage community.
o Fundamentals - Once a potential investment is identified, the subadviser
considers whether the issuer possesses certain attributes that the
subadviser believes a "buy" candidate should possess.
o Valuation - Finally, the subadviser values companies by considering price-to
sales ratios and price-to-earnings ratios within a peer group.
From this process, the subadviser constructs a list of securities for the fund
to purchase.
The subadviser makes sell decisions for the fund based on a number of factors,
including deterioration in a company's underlying fundamentals and better
relative value in other securities.
INVESTMENT ADVISER
Pioneer (adviser); Oak Ridge Investments, LLC (subadviser)
160
PIONEER FUNDAMENTAL GROWTH FUND
INVESTMENT OBJECTIVE
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in equity securities of large
companies, that is, companies similar in size to issuers included in the
Russell 1000 Growth Index. The Russell 1000 Growth Index (the "index") is a
large capitalization index that measures the performance of those companies in
the Russell 1000 Index with higher price-to-book ratios and higher forecasted
growth values. On June 30, 2013, securities in the index had market
capitalizations of approximately $0.52 billion or greater. The size of the
companies in the index changes constantly as a result of market conditions and
the composition of the index. The fund's investments will not be confined to
securities issued by companies included in the index.
For purposes of the fund's investment policies, equity securities include
common stocks and other equity instruments, such as exchange-traded funds
(ETFs) that invest primarily in equity securities, depositary receipts,
warrants, rights, equity interests in real estate investment trusts (REITs) and
preferred stocks.
The fund primarily invests in securities of U.S. issuers. The fund may invest
in securities of issuers in any industry or market sector. The fund may invest
in initial public offerings of equity securities. The fund may invest up to 20%
of its total assets in equity and debt securities of non-U.S. issuers. The fund
will not invest more than 10% of its total assets in the securities of emerging
markets issuers.
The fund may also invest in investment grade and below investment grade debt
securities (known as "junk bonds"), including below investment grade
convertible debt securities and securities of issuers that are in default.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including: in an attempt to hedge
against adverse changes in the market price of securities, interest rates or
currency exchange rates; as a substitute for purchasing or selling securities;
and to attempt to increase the fund's return as a non-hedging strategy that may
be considered speculative. The fund may choose not to make use of
161
derivatives for a variety of reasons, and any use may be limited by applicable
law and regulations. The fund may also hold cash or other short-term
investments.
The fund's investment adviser uses a "growth" style of management and seeks to
invest in securities of issuers with above average potential for earnings and
revenue growth. To select growth stocks, the adviser employs quantitative
analysis, fundamental research, and an evaluation of the issuer based on its
financial statements and operations, utilizing a bottom-up analytic style. The
adviser relies on the knowledge, experience and judgment of its staff and the
staff of its affiliates who have access to a wide variety of research. The
adviser focuses on the quality and price of individual issuers, not on economic
sector or market-timing strategies.
The adviser generally sells a portfolio security when it believes that the
issuer no longer offers the potential for above average earnings and revenue
growth. The adviser makes that determination based upon the same criteria it
uses to select portfolio securities.
INVESTMENT ADVISER
Pioneer
162
PIONEER DISCIPLINED GROWTH FUND
(FORMERLY, PIONEER INDEPENDENCE FUND)
INVESTMENT OBJECTIVE
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in equity securities of U.S. issuers.
For purposes of the fund's investment policies, equity securities include
common stocks and other equity instruments, such as exchange-traded funds
(ETFs) that invest primarily in equity securities, depositary receipts,
warrants, rights, equity interests in real estate investment trusts (REITs) and
preferred stocks.
The fund may invest in issuers of any market capitalization. The fund may
invest in securities in any industry or market sector. The fund may invest in
fewer than 40 securities. The fund may invest in initial public offerings of
equity securities. In addition, the fund may invest up to 10% of its total
assets in securities of non-U.S. issuers. The fund will not invest more than 5%
of its total assets in the securities of emerging market issuers. The fund may
invest in debt securities. Generally, the fund may acquire investment grade
debt securities, but the fund may invest up to 5% of its net assets in below
investment grade debt securities (known as "junk bonds"), including below
investment grade convertible debt securities. The fund also may hold cash or
other short-term investments.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including: in an attempt to hedge
against adverse changes in the market price of securities, interest rates or
currency exchange rates; as a substitute for purchasing or selling securities;
and to attempt to increase the fund's return as a non-hedging strategy that may
be considered speculative. The fund may choose not to make use of derivatives
for a variety of reasons, and any use may be limited by applicable law and
regulations.
The fund's investment adviser uses a valuation-conscious approach to select the
fund's investments based upon the recommendations of the adviser's research
teams. The research teams use a two-step process in selecting securities that
combines fundamental and quantitative research. First, the teams assess whether
a company's fundamentals - financial
163
condition, management, and position in its industry - indicate strong prospects
for growth and attractive valuations. Second, the teams employ a quantitative,
growth-oriented approach to construct the portfolio, emphasizing those
securities believed to have attractive prospects for earnings and revenue
growth. A security may be sold if its ranking by the research team is reduced
or the security price reaches a reasonable valuation.
INVESTMENT ADVISER
Pioneer
164
PIONEER DISCIPLINED VALUE FUND
(FORMERLY, PIONEER FUNDAMENTAL VALUE FUND)
INVESTMENT OBJECTIVE
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in equity securities of U.S. issuers.
For purposes of the fund's investment policies, equity securities include
common stocks and other equity instruments, such as exchange-traded funds
(ETFs) that invest primarily in equity securities, depositary receipts,
warrants, rights, equity interests in real estate investment trusts (REITs) and
preferred stocks.
The fund may invest in issuers of any market capitalization. The fund may
invest in securities in any industry or market sector. The fund may invest in
fewer than 40 securities. The fund may invest in initial public offerings of
equity securities. In addition, the fund may invest up to 10% of its total
assets in securities of non-U.S. issuers. The fund will not invest more than 5%
of its total assets in the securities of emerging market issuers. The fund may
invest in debt securities. Generally, the fund may acquire investment grade
debt securities, but the fund may invest up to 5% of its net assets in below
investment grade debt securities (known as "junk bonds"), including below
investment grade convertible debt securities. The fund also may hold cash or
other short-term investments.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including: in an attempt to hedge
against adverse changes in the market price of securities, interest rates or
currency exchange rates; as a substitute for purchasing or selling securities;
and to attempt to increase the fund's return as a non-hedging strategy that may
be considered speculative. The fund may choose not to make use of derivatives
for a variety of reasons, and any use may be limited by applicable law and
regulations.
The fund's investment adviser uses a valuation-conscious approach to select the
fund's investments based upon the recommendations of the adviser's research
teams. The research teams use a two-step process in selecting securities that
combines fundamental and quantitative research. First, the teams assess whether
a company's fundamentals - financial
165
condition, management, and position in its industry - indicate strong prospects
for growth and attractive valuations. Second, the teams employ a quantitative,
growth-oriented approach to construct the portfolio, emphasizing those
securities believed to have attractive prospects for earnings and revenue
growth. A security may be sold if its ranking by the research team is reduced
or the security price reaches a reasonable valuation.
INVESTMENT ADVISER
Pioneer^^
166
PIONEER SELECT MID CAP GROWTH FUND
(FORMERLY, PIONEER GROWTH OPPORTUNITIES FUND)
INVESTMENT OBJECTIVES
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in equity securities of mid-size
companies. Mid-size companies are those with market values, at the time of
investment, that do not exceed the greater of the market capitalization of the
largest company within the Russell Midcap Growth Index ($24.98 billion as of
December 31, 2012) or the 3-year rolling average of the market capitalization
of the largest company within the Russell Midcap Growth Index ($19.85 billion
as of December 31, 2012) as measured at the end of the preceding month, and are
not less than the smallest company within the index. The Russell Midcap Growth
Index measures the performance of U.S. mid-cap growth stocks. The size of the
companies in the index changes constantly as a result of market conditions and
the composition of the index. The fund's investments will not be confined to
securities issued by companies included in the index. For purposes of the
fund's investment policies, equity securities include common stocks and other
equity instruments, such as exchange-traded funds (ETFs) that invest primarily
in equity securities, depositary receipts, warrants, rights, equity interests
in real estate investment trusts (REITs) and preferred stocks. To the extent
consistent with its investment objective, the fund may invest in initial public
offerings of equity securities.
The fund may invest up to 20% of its total assets in debt securities. The fund
may invest up to 5% of its net assets in below investment grade debt securities
(known as "junk bonds"), including below investment grade convertible debt
securities, issued by both U.S. and non-U.S. issuers, and securities in
default.
The fund may invest up to 20% of its net assets in REITs.
The fund may invest up to 20% of its total assets in equity and debt securities
of non-U.S. issuers. The fund will not invest more than 5% of its total assets
in the securities of emerging markets issuers.
167
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including as a hedge against adverse
changes in the market prices of securities, interest rates or currency exchange
rates; as a substitute for purchasing or selling securities; and to increase
the fund's return as a non-hedging strategy that may be considered speculative.
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations. The fund also may
hold cash or other short-term instruments.
The fund uses a "growth" style of management and seeks to invest in companies
with above average potential for earnings and revenue growth that are also
trading at attractive market valuations. To select growth stocks the fund's
investment adviser employs quantitative analysis, fundamental research and an
evaluation of the issuer based on its financial statements and operations. The
adviser relies on the knowledge, experience and judgment of its staff and the
staff of its affiliates who have access to a wide variety of research. The
adviser focuses on the quality and price of individual issuers and economic
sector analysis, not on market-timing strategies.
The adviser generally sells a portfolio security when it believes that the
issuer no longer offers the potential for above average earnings and revenue
growth. The adviser makes that determination based upon the same criteria it
uses to select portfolio securities.
INVESTMENT ADVISER
Pioneer
168
PIONEER MID CAP VALUE FUND
INVESTMENT OBJECTIVE
Capital appreciation by investing in a diversified portfolio of securities
consisting primarily of common stocks.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its total assets in equity
securities of mid-size companies. Mid-size companies are those with market
values, at the time of investment, that do not exceed the greater of the market
capitalization of the largest company within the Russell Midcap Value Index
($24.98 billion as of December 31, 2012) or the 3-year rolling average of the
market capitalization of the largest company within the Russell Midcap Value
Index ($22.60 billion as of December 31, 2012), as measured at the end of the
preceding month, and are not less than the smallest company within the index.
The Russell Midcap Value Index measures the performance of U.S. mid-cap value
stocks. The size of the companies in the index changes constantly with market
conditions and the composition of the index. The equity securities in which the
fund principally invests are common stocks, preferred stocks and depositary
receipts, but the fund may invest in other types of equity securities to a
lesser extent, such as exchange-traded funds (ETFs), that invest primarily in
equity securities, equity interests in real estate investment trusts (REITs),
warrants and rights. The fund may invest in initial public offerings of equity
securities.
The fund may invest up to 25% of its total assets in equity and debt securities
of non-U.S. issuers. The fund will not invest more than 5% of its total assets
in the securities of emerging markets issuers.
The fund may invest up to 20% of its net assets in REITs.
The fund may invest up to 20% of its total assets in debt securities of U.S.
and non-U.S. issuers. The fund may invest up to 5% of its net assets in below
investment grade debt securities (known as "junk bonds"), including below
investment grade convertible debt securities.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including as a hedge against adverse
changes in the market price of securities, interest rates or currency exchange
rates; as a substitute for purchasing or selling securities; and to increase
the fund's return as a non-hedging strategy that may be considered speculative.
169
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations. The fund may also
hold cash or other short-term investments.
The fund uses a "value" style of management. The adviser seeks to identify
securities that are selling at reasonable prices or at substantial discounts to
their underlying values and then holds these securities until the market values
reflect their intrinsic values. The adviser evaluates a security's potential
value, including the attractiveness of its market valuation, based on the
company's assets and prospects for earnings growth. In making that assessment,
the adviser employs fundamental research and an evaluation of the issuer based
on its financial statements and operations, employing a bottom-up analytic
style, which focuses on specific securities rather than on industries. The
adviser focuses on the quality and price of individual issuers and securities.
The adviser generally sells a portfolio security when it believes that the
security's market value reflects its underlying value.
INVESTMENT ADVISER
Pioneer
170
PIONEER OAK RIDGE SMALL CAP GROWTH FUND
INVESTMENT OBJECTIVES
Capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in equity securities of small
capitalization companies. Small capitalization companies are those with market
values, at the time of investment, that do not exceed the greater of the market
capitalization of the largest company within the Russell 2000 Index ($4.66
billion as of December 31, 2012) or the 3-year rolling average of the market
capitalization of the largest company within the Russell 2000 Index ($4.23
billion as of December 31, 2012) as measured at the end of the preceding month.
The Russell 2000 Index is comprised of the 2,000 smallest U.S. domiciled,
publicly traded stocks that are included in the Russell 3000 Index. The size of
the companies in the Index changes constantly as a result of market conditions
and the composition of the Index. The fund's investments will not be confined
to securities issued by companies included in the Index. For purposes of the
fund's investment policies, equity securities include common stocks and other
equity instruments, such as exchange-traded funds (ETFs) that invest primarily
in equity securities, depositary receipts, warrants, rights, equity investments
in real estate investment trusts (REITs) and preferred stocks.
The fund may invest up to 20% of its total assets in equity and debt securities
of non-U.S. issuers. The fund will not invest more than 10% of its total assets
in the securities of emerging markets issuers.
The fund may invest in debt securities. The fund may invest up to 5% of its net
assets in below investment grade debt securities (known as "junk bonds"),
including below investment grade convertible debt securities.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including as a hedge against adverse
changes in the market prices of securities, interest rates or currency exchange
rates; as a substitute for purchasing or selling securities; and to increase
the fund's return as a non-hedging strategy that may be considered speculative.
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations. The fund may also
hold cash or other short-term instruments.
171
The fund uses a "growth" style of management and seeks to invest in issuers
with above average potential for earnings growth.
When making purchase decisions for the fund, the subadviser uses a disciplined
approach that involves three primary components:
o Research - The subadviser analyzes research on potential investments from a
wide variety of sources, including internally generated analysis and
research provided by institutions and the brokerage community.
o Fundamentals - Once a potential investment is identified, the subadviser
considers whether the issuer possesses certain attributes that the
subadviser believes a "buy" candidate should possess.
o Valuation - Finally, the subadviser values companies by considering price-to
sales ratios and price-to-earnings ratios within a peer group.
From this process, the subadviser constructs a list of securities for the fund
to purchase.
The subadviser makes sell decisions for the fund based on a number of factors,
including deterioration in a company's underlying fundamentals and better
relative value in other securities.
INVESTMENT ADVISER
Pioneer (adviser); Oak Ridge Investments, LLC (subadviser)
172
PIONEER GLOBAL EQUITY FUND
INVESTMENT OBJECTIVES
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in equity securities of issuers
located throughout the world. The fund's principal focus is on companies that
exhibit solid fundamental characteristics and are underappreciated by the
market. The fund may invest in securities of any market capitalization, and in
securities in any industry or market sector. The fund may invest in both
developed and emerging markets without limit. Normally, the fund invests at
least 40% of its net assets in issuers located outside of the United States.
The fund may invest up to 20% of its total assets in debt securities of
corporate and government issuers, including up to 5% of its net assets in below
investment grade debt securities (known as "junk bonds"), and cash and cash
equivalents.
The fund may, but is not required to, use derivatives, including forward
foreign currency exchange contracts and futures on equity based volatility
indices. The fund may use derivatives for a variety of purposes, including: in
an attempt to hedge against adverse changes in the market price of securities,
interest rates or currency exchange rates; as a substitute for purchasing or
selling securities; and to attempt to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may choose
not to make use of derivatives for a variety of reasons, and any use may be
limited by applicable law and regulations.
The fund uses a "growth at a reasonable price" style of management. The fund
seeks to invest in issuers with above average potential for earnings and
revenue growth that are also trading at attractive market valuations. To select
stocks, the fund's investment adviser employs fundamental research and an
evaluation of the issuer based on its financial statements and operations. The
adviser relies on the knowledge, experience and judgment of its staff and the
staff of its affiliates who have access to a wide variety of research. The
adviser focuses on the quality and price of individual issuers and securities,
not on economic sector or market-timing strategies. The adviser generally sells
a portfolio security when it believes that the issuer
173
no longer offers the potential for above average earnings and revenue growth.
The adviser makes that determination based upon the same criteria it uses to
select portfolio securities.
INVESTMENT ADVISER
Pioneer
174
PIONEER INTERNATIONAL VALUE FUND
INVESTMENT OBJECTIVES
Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its total assets in equity
securities of non-U.S. issuers. These issuers may be located in both developed
and emerging markets. Under normal circumstances, the fund's assets will be
invested in securities of companies domiciled in at least three different
foreign countries. Generally, the fund's investments in any country are limited
to 25% or less of its total assets. However, from time to time, the fund may
invest more than 25% of its assets in issuers organized in Japan or the United
Kingdom or in securities quoted or denominated in the Japanese yen, the British
pound and the euro.
The fund may invest without limitation in securities of issuers located in
countries with emerging economies or securities markets, but will not invest
more than 25% of its total assets in securities of issuers located in any one
such country. Emerging economies or securities markets generally will include,
but not be limited to, countries included in the Morgan Stanley Capital
International (MSCI) Emerging & Frontier Markets Index.
For purposes of the fund's investment policies, equity securities include
common stocks and other equity instruments, such as exchange-traded funds
(ETFs) that invest primarily in equity securities, depositary receipts, equity
interests in real estate investment trusts (REITs), warrants, rights and
preferred shares. The fund may also purchase and sell forward foreign currency
exchange contracts in non-U.S. currencies in connection with its investments,
including as a means of managing relative currency exposure.
The fund may invest up to 20% of its total assets in debt securities of U.S.
and non-U.S. issuers. The fund may invest up to 5% of its net assets in below
investment grade debt securities (known as "junk bonds"), including below
investment grade convertible debt securities.
The fund may, but is not required to, use derivatives. The fund may use
derivatives, including forward foreign currency exchange contracts, for a
variety of purposes, including as a hedge against adverse changes in the market
prices of securities, interest rates or currency exchange rates; as a
substitute for purchasing or selling securities; and to increase the fund's
175
return as a non-hedging strategy that may be considered speculative. The fund
may choose not to make use of derivatives for a variety of reasons, and any use
may be limited by applicable law and regulations. The fund also may hold cash
or other short-term instruments.
The fund's investment adviser uses a value approach to select the fund's
investments. The adviser seeks to identify securities that are selling at
reasonable prices or substantial discounts to their underlying values. The
adviser evaluates a security's potential value, including the attractiveness of
its market valuation, based on the company's assets and prospects for earnings
and revenue growth, employing a bottom-up analytical style. In making that
assessment, the adviser employs fundamental research and an evaluation of the
issuer based on its financial statements and operations. The adviser focuses on
the quality and price of individual issuers and securities.
The adviser generally sells a portfolio security when it believes that the
security's market value reflects its intrinsic value. The adviser makes that
determination based upon the same criteria it uses to select portfolio
securities.
INVESTMENT ADVISER
Pioneer
176
PIONEER EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in securities of emerging market issuers. Although
the fund invests in both equity and debt securities, it normally emphasizes
equity securities in its portfolio. Normally, the fund invests at least 80% of
its total assets in the securities of emerging market corporate and government
issuers. The fund considers emerging market issuers to include: issuers
organized under the laws of an emerging market country, issuers with a
principal office in an emerging market country, issuers that derive at least
50% of their gross revenues or profits from goods or services produced in
emerging markets or sales made in emerging markets, and emerging market
governmental issuers.
The fund invests in at least six emerging markets. The fund considers any
market that is not developed to be an emerging market. Emerging markets
generally will include, but not be limited to, countries included in the Morgan
Stanley Capital International (MSCI) Emerging & Frontier Markets Index. The
fund's investments will not be confined to securities issued by companies
included in the index. At the investment adviser's discretion, the fund may
invest in other emerging markets. The fund does not allocate more than 25% of
its total assets to any one country but can invest more than 25% of its total
assets in a particular region.
The fund may invest up to 20% of its total assets in securities of issuers in
any developed country (other than the U.S.).
For purposes of the fund's investment policies, equity securities include
common stocks and securities with common stock characteristics, such as
exchange-traded funds (ETFs) that invest primarily in equity securities, equity
interests in real estate investment trusts (REITs), preferred stocks,
depositary receipts, warrants and rights. The fund may invest in initial public
offerings of equity securities. The fund may also purchase and sell forward
foreign currency exchange contracts in non-U.S. currencies in connection with
its investments, including as a means of managing relative currency exposure.
177
The fund may invest in debt securities of any quality or maturity. The fund may
not invest more than 10% of its net assets in debt securities rated below
investment grade (known as "junk bonds") or in unrated securities of comparable
quality. The fund may invest in Brady bonds, which are restructured debt of
governmental issuers of emerging market countries.
The fund may, but is not required to, use derivatives. The fund may use
derivatives, including forward foreign currency exchange contracts and stock
index futures, for a variety of purposes, including as a hedge against adverse
changes in the market prices of securities, interest rates or currency exchange
rates; as a substitute for purchasing or selling securities; and to increase
the fund's return as a non-hedging strategy that may be considered speculative.
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations. The fund also may
hold cash or other short-term instruments.
The fund's investment adviser uses a value approach to select the fund's
investments. The adviser seeks to identify securities that are selling at
reasonable prices or substantial discounts to their underlying values. The
adviser evaluates a security's potential value, including the attractiveness of
its market valuation, based on the company's assets and prospects for long-term
revenue, earnings and cash flow growth. In making that assessment, the adviser
employs qualitative analysis, quantitative techniques, fundamental research and
an evaluation of the issuer based on its financial statements and operations.
In addition to analyzing specific securities, the adviser determines the
relative attractiveness of investing in different emerging markets. In
assessing the investment potential of each country, the adviser considers
economic growth prospects, monetary conditions, political risks, currency risk,
capital flows and other factors.
The adviser generally sells a portfolio security when it believes that the
security's market value reflects its intrinsic value. The adviser makes that
determination based upon the same criteria it uses to select portfolio
securities.
INVESTMENT ADVISER
Pioneer
178
PIONEER REAL ESTATE SHARES
INVESTMENT OBJECTIVES
Long-term growth of capital. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its total assets in equity
securities of real estate investment trusts (REITs) and other real estate
industry issuers. The fund may at times emphasize particular sub-sectors of the
real estate industry. For purposes of the fund's investment policies, equity
securities include common stocks and other equity instruments, such as
exchange-traded funds (ETFs) that invest primarily in equity securities,
warrants, rights, and preferred stocks.
The fund may invest up to 20% of its total assets in debt securities of real
estate industry issuers, mortgage-backed securities and short-term investments.
The fund may invest up to 5% of its net assets in below investment grade debt
securities (known as "junk bonds"), including below investment grade
convertible debt securities.
The fund may invest up to 10% of its total assets in securities of non-U.S.
issuers. Up to 5% of the fund's total assets may be invested in the securities
of emerging markets issuers.
The fund may, but is not required to, use derivatives. The fund may use
derivatives, such as options and futures, for a variety of purposes, including
as a hedge against adverse changes in the market price of securities, interest
rates or currency exchange rates; as a substitute for purchasing or selling
securities; and to increase the fund's return as a non-hedging strategy that
may be considered speculative. The fund may choose not to make use of
derivatives for a variety of reasons, and any use may be limited by applicable
law and regulations. The fund also may hold cash or other short-term
investments.
The fund may invest in fewer than 40 securities. The fund may invest in initial
public offerings of equity securities.
The fund uses a "growth at a reasonable price" style of management. The
subadviser seeks to invest in companies with above average potential for
earnings and revenue growth that are also trading at attractive market
valuations. To select stocks, the subadviser employs fundamental and
qualitative research and an evaluation of the issuer based on its financial
179
statements and operations. The subadviser focuses on the quality and price of
individual issuers and securities. The subadviser generally sells a portfolio
security when it believes that the issuer no longer offers the potential for
above average earnings and revenue growth.
INVESTMENT ADVISER
Pioneer (adviser); AEW Capital Management, L.P. (subadviser)^
180
PIONEER EQUITY INCOME FUND
INVESTMENT OBJECTIVE
Current income and long-term growth of capital from a portfolio consisting
primarily of income producing equity securities of U.S. corporations.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its total assets in income producing
equity securities of U.S. issuers. The income producing equity securities in
which the fund may invest include common stocks, preferred stocks,
exchange-traded funds (ETFs) that invest primarily in equity securities and
equity interests in real estate investment trusts (REITs). The remainder of the
fund may be invested in debt securities, most of which are expected to be
convertible into common stocks. The fund may invest in initial public offerings
of equity securities.
The fund may invest up to 20% of its total assets in equity and debt securities
of non-U.S. issuers. The fund will not invest more than 5% of its total assets
in the securities of emerging markets issuers.
The fund may invest up to 20% of its net assets in REITs.
The fund also may invest in investment grade and below investment grade debt
securities (known as "junk bonds"). Most of the debt securities the fund
acquires are expected to be securities convertible into common stocks.
The fund may, but is not required to, use derivatives. The fund may use
derivatives for a variety of purposes, including as a hedge against adverse
changes in the market price of securities, interest rates or currency exchange
rates; as a substitute for purchasing or selling securities; and to increase
the fund's return as a non-hedging strategy that may be considered speculative.
The fund may choose not to make use of derivatives for a variety of reasons,
and any use may be limited by applicable law and regulations. The fund may also
hold cash or other short-term investments.
The fund's investment adviser uses a value approach to select the fund's
investments to buy and sell. The adviser seeks securities that are selling at
substantial discounts to their underlying values and then holds these
securities until the market values reflect their intrinsic values. The adviser
evaluates a security's potential value, including the attractiveness of its
market valuation, based on the company's assets and prospects for earnings
growth. The adviser also considers a security's potential to provide a
reasonable amount
181
of income. In making these assessments, the adviser employs fundamental
research and an evaluation of the issuer based on its financial statements and
operations, employing a bottom-up analytic style, which focuses on specific
securities rather than on industries. The adviser generally sells a portfolio
security when it believes that the security's market value reflects its
underlying value.
INVESTMENT ADVISER
Pioneer
182
The underlying funds that invest primarily in debt securities are:
PIONEER GOVERNMENT INCOME FUND
INVESTMENT OBJECTIVE
Current income.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in U.S. government securities, and
repurchase agreements and "when-issued" commitments with respect to these
securities. For purposes of satisfying the 80% requirement, the fund also may
invest in derivative instruments that provide exposure to U.S. government
securities or have similar economic characteristics. U.S. government securities
include U.S. Treasury obligations, such as bills, bonds and notes; obligations
issued or guaranteed as to principal and interest by the U.S. Treasury and
certain U.S. government agencies or instrumentalities, such as Government
National Mortgage Association (Ginnie Mae); obligations of issuers that are
supported by the ability of the issuer to borrow from the U.S. Treasury; and
obligations of U.S. government-sponsored entities that are neither issued nor
guaranteed by the U.S. government, such as the Federal Home Loan Mortgage
Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie
Mae). The fund may invest in mortgage-backed securities issued by agencies or
instrumentalities of the U.S. government. The fund also may invest in
asset-backed securities and subordinated debt securities, and enter into
mortgage dollar roll transactions.
The fund may invest in securities with a broad range of maturities, and
maintains an average portfolio maturity which varies based upon the judgment of
the fund's investment adviser. The fund's investments may have fixed or
variable principal payments and all types of interest rate payment and reset
terms, including fixed rate, floating rate, inverse floating rate, zero coupon,
contingent, deferred and payment in kind and auction rate features.
The fund may, but is not required to, use derivatives, such as futures. The
fund may use derivatives for a variety of purposes, including: in an attempt to
hedge against adverse changes in the market price of securities, interest rates
or currency exchange rates; as a substitute for purchasing or selling
securities; and to attempt to increase the fund's return as a non-hedging
183
strategy that may be considered speculative. The fund may choose not to make
use of derivatives for a variety of reasons, and any use may be limited by
applicable law and regulations.
The adviser considers both broad economic and issuer specific factors in
selecting investments. In assessing the appropriate maturity and sector
weighting of the fund's portfolio, the adviser considers a variety of factors
that are expected to influence economic activity and interest rates. The
adviser selects individual securities to buy and sell based upon such factors
as a security's yield and sector diversification.
INVESTMENT ADVISER
Pioneer
184
PIONEER HIGH YIELD FUND
INVESTMENT OBJECTIVE
Maximize total return through a combination of income and capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its total assets in below investment
grade (high yield) debt securities and preferred stocks. For purposes of
satisfying the 80% requirement, the fund also may invest in derivative
instruments that have economic characteristics similar to such high yield debt
securities and preferred stocks. Debt securities rated below investment grade
are commonly referred to as "junk bonds" and are considered speculative. The
fund may invest in high yield securities of any rating, including securities
where the issuer is in default or bankruptcy at the time of purchase.
The fund invests in securities with a broad range of maturities. The fund's
investments may have fixed or variable principal payments and all types of
interest rate and dividend payment and reset terms, including fixed rate,
adjustable rate, floating rate, zero coupon, contingent, deferred, payment in
kind and auction rate features. The fund's investments may include instruments
that allow for balloon payments or negative amortization payments.
The fund may invest in investment grade and below investment grade convertible
bonds and preferred stocks that are convertible into the equity securities of
the issuer.
The fund may invest up to 20% of its net assets in inverse floating rate
obligations (a type of derivative instrument).
The fund may invest up to 20% of its net assets in common stock issued by both
U.S. and non-U.S. issuers and other equity investments, such as exchange-traded
funds (ETFs) that invest primarily in equity securities, depositary receipts,
warrants, rights and equity interests in real estate investment trusts (REITs).
The fund may invest up to 15% of its total assets in equity and debt securities
of non-U.S. issuers.
The fund may invest a portion of its assets in mortgage-related securities,
including "sub-prime" mortgages, and asset-backed securities. The fund also may
invest a portion of its assets in subordinated debt securities and event-linked
bonds.
185
The fund may, but is not required to, use derivatives. The fund may use
derivatives, such as credit default swaps and bond and interest rate futures,
for a variety of purposes, including: as a hedge against adverse changes in the
market price of securities, interest rates or currency exchange rates; as a
substitute for purchasing or selling securities; and to increase the fund's
return as a non-hedging strategy that may be considered speculative. The fund
may choose not to make use of derivatives for a variety of reasons, and any use
may be limited by applicable law and regulations. The fund may hold cash or
other short-term investments.
The fund's investment adviser uses a value approach to select investments to
buy and sell. The adviser seeks to identify securities that are selling at
reasonable prices or substantial discounts to their underlying values and then
holds these securities for their incremental yields or until the market values
reflect their intrinsic values. The adviser evaluates a security's potential
value, including the attractiveness of its market valuation, based on the
company's assets and prospects for earnings growth. In making that assessment,
the adviser employs fundamental research and an evaluation of the issuer based
on its financial statements and operations. The adviser also considers a
security's potential to provide income.
INVESTMENT ADVISER
Pioneer
186
PIONEER GLOBAL MULTISECTOR INCOME FUND
(FORMERLY, PIONEER GLOBAL AGGREGATE BOND FUND)
INVESTMENT OBJECTIVE
A high level of current income.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in debt securities of issuers
located throughout the world, including corporate and government issuers. For
purposes of satisfying the 80% requirement, the fund also may invest in
derivative instruments that have economic characteristics similar to such debt
securities. The fund will allocate its assets among various regions and
countries, including the United States (but in no less than three different
countries). Normally, the fund invests at least 40% of its net assets in
issuers located outside of the United States, including emerging market
issuers. The fund has the flexibility to invest in a broad range of issuers and
segments of the debt securities markets, including:
Below investment grade (high yield or "junk bond") securities of U.S. and o
non-U.S. issuers
Investment grade securities of U.S. and non-U.S. issuers
o
The adviser's allocations among the segments of the debt markets depend upon
its outlook for economic, interest rate and political trends. At any given
time, the fund may have a substantial amount of its assets in any one of such
segments.
The fund may invest up to 70% of its net assets in debt securities rated below
investment grade or, if unrated, of equivalent credit quality as determined by
the adviser. Up to 20% of the fund's net assets may be invested in debt
securities rated below CCC by Standard & Poor's Financial Services LLC or the
equivalent by another nationally recognized statistical rating organization or
determined to be of equivalent credit quality by the adviser. The fund's
investment in debt securities rated below investment grade may include debt
securities rated "D" or better, or comparable unrated securities. Debt
securities rated "D" are in default.
The fund may invest a portion of its assets in mortgage-related securities,
including "sub-prime" mortgages, and asset-backed securities. Mortgage-backed
securities represent interests in pools of mortgage loans assembled for sale to
investors by various U.S. governmental agencies,
187
government-related organizations and private issuers. The fund also may invest
a portion of its assets in subordinated debt securities and event-linked bonds.
The fund may invest in securities with a broad range of maturities and
maintains an average portfolio maturity which varies based upon the judgment of
the adviser. The fund's investments may have fixed or variable principal
payments and all types of interest rate payment and reset terms, including
fixed rate, floating rate, inverse floating rate, zero coupon, contingent,
deferred and payment in kind and auction rate features. The fund's investments
may include instruments that allow for balloon payments or negative
amortization payments.
In addition to investing in securities denominated in non-U.S. currencies, the
fund may hold non-U.S. currencies and may take long or short positions with
respect to a particular currency through a derivative position, such as a
forward currency exchange contract in a non-U.S. security. The fund may
purchase and sell forward currency exchange contracts in non-U.S. currencies.
The fund's currency and currency-related investments may be used to adjust
overall currency exposures, including as a means of seeking incremental return,
which may be considered a speculative technique.
The adviser considers both broad economic and issuer specific factors in
selecting a portfolio designed to achieve the fund's investment objective. In
assessing the appropriate maturity, rating, sector and country weighting of the
fund's portfolio, the adviser 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, global monetary policy and the relative value of global currencies.
Once the adviser determines the preferable portfolio characteristics, the
adviser selects individual securities based upon the terms of the securities
(such as yields compared to U.S. Treasuries or comparable issues), liquidity
and rating, country, sector and issuer diversification. The adviser 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 capabilities. The adviser actively
manages the fund's currency exposures based on its analysis of the relative
value of currencies, considering such factors as the global macroeconomic
environment,
188
global monetary policy and geopolitical factors. In making these portfolio
decisions, the adviser relies on the knowledge, experience and judgment of its
staff and the staff of its affiliates who have access to a wide variety of
research.
The fund may, but is not required to, use derivatives. The fund may enter into
credit default swaps, which can be used to acquire or to transfer the credit
risk of a security without buying or selling the security. The fund also may
use other derivatives, such as futures and options on securities, indices and
currencies, forward foreign currency exchange contracts, swaps, and bond and
interest rate futures. The fund may use derivatives for a variety of purposes,
including: in an attempt to hedge against adverse changes in the market prices
of securities, interest rates or currency exchange rates; as a substitute for
purchasing or selling securities; and to attempt to increase the fund's return
as a non-hedging strategy that may be considered speculative. The fund may
choose not to make use of derivatives for a variety of reasons, and any use may
be limited by applicable law and regulations. The fund also may hold cash or
other short-term investments.
INVESTMENT ADVISER
Pioneer
189
PIONEER GLOBAL HIGH YIELD FUND
INVESTMENT OBJECTIVE
Maximize total return through a combination of income and capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its total assets in below investment
grade (high yield) debt securities and preferred stocks of U.S. and non-U.S.
issuers, including governmental and corporate issuers in emerging markets. For
purposes of satisfying the 80% requirement, the fund also may invest in
derivative instruments that have economic characteristics similar to such high
yield debt securities and preferred stocks. Debt securities rated below
investment grade are commonly referred to as "junk bonds" and are considered
speculative. The fund may invest in high yield securities of any rating,
including securities that are in default at the time of purchase.
The fund's portfolio consists of securities of corporate or government issuers
located in at least three countries, one of which may be the United States. The
fund may purchase and sell forward foreign currency exchange contracts in
non-U.S. currencies in connection with its investments.
The fund may invest in securities with a broad range of maturities. The fund's
investments may have fixed or variable principal payments and all types of
interest rate and dividend payment and reset terms, including fixed rate,
adjustable rate, floating rate, zero coupon, contingent, deferred, payment in
kind and auction rate features. The fund's investments may include instruments
that allow for balloon payments or negative amortization payments.
The fund may invest in investment grade and below investment grade convertible
bonds and preferred stocks that are convertible into the equity securities of
the issuer.
The fund may invest up to 20% of its net assets in inverse floating rate
obligations (a type of derivative instrument).
The fund may invest up to 10% of its total assets in equity securities,
including common stocks, exchange-traded funds (ETFs) that invest primarily in
equity securities, depositary receipts, warrants, rights and equity interests
in real estate investment trusts (REITs).
190
The fund may invest a portion of its assets in mortgage-related securities,
including "sub-prime" mortgages, and asset-backed securities. The fund also may
invest a portion of its assets in subordinated debt securities and event-linked
bonds.
The fund may, but is not required to, use derivatives. The fund may use
derivatives, such as credit default swaps, forward foreign currency exchange
contracts and bond and interest rate futures, for a variety of purposes,
including: as a hedge against adverse changes in the market price of
securities, interest rates or currency exchange rates; as a substitute for
purchasing or selling securities; and to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may choose
not to make use of derivatives for a variety of reasons, and any use may be
limited by applicable law and regulations. The fund also may hold cash or other
short-term investments.
The fund's investment adviser uses a value approach to select investments to
buy and sell. The adviser seeks to identify securities that are selling at
reasonable prices or substantial discounts to their underlying values and then
holds these securities for their incremental yields or until the market values
reflect their intrinsic values. The adviser evaluates a security's potential
value, including the attractiveness of its market valuation, based on the
company's assets and prospects for earnings growth or the government's fiscal
policies and outlook for economic growth, inflation, unemployment and other
macroeconomic indicators. In making that assessment, the adviser employs
fundamental research and an evaluation of the issuer based on its financial
statements and operations, in the case of a corporate issuer, and the factors
referred to above in the case of a governmental issuer. The adviser also
considers a security's potential to provide income.
INVESTMENT ADVISER
Pioneer
191
PIONEER BOND FUND
INVESTMENT OBJECTIVE
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 portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in debt securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities,
investment grade debt securities (including convertible debt) of corporate or
other issuers and cash, cash equivalents and other short-term holdings. For
purposes of satisfying the 80% requirement, the fund also may invest in
derivative instruments that provide exposure to such securities or have similar
economic characteristics.
The fund may invest a substantial portion of its assets in mortgage-related
securities, including "sub-prime" mortgages, and asset-backed securities. The
fund also may invest a portion of its assets in subordinated debt securities,
below investment grade debt securities (known as "junk bonds"), securities that
are in default, securities of non-U.S. issuers, and event-linked bonds.
The fund may invest up to 20% of its net assets in debt securities rated below
investment grade or, if unrated, of equivalent credit quality as determined by
the adviser. The fund may invest up to 15% of its total assets in securities of
non-U.S. issuers, including up to 5% of its total assets in securities of
emerging market issuers.
The fund may invest in securities with a broad range of maturities, and
maintains an average portfolio maturity which varies based upon the judgment of
the fund's investment adviser. The fund's investments may have fixed or
variable principal payments and all types of interest rate payment and reset
terms, including fixed rate, floating rate, inverse floating rate, zero coupon,
contingent, deferred and payment in kind and auction rate features. The fund's
investments may include instruments that allow for balloon payments or negative
amortization payments.
192
The fund may, but is not required to, use derivatives, such as credit default
swaps,. The fund may use derivatives for a variety of purposes, including: in
an attempt to hedge against adverse changes in the market price of securities,
interest rates or currency exchange rates; as a substitute for purchasing or
selling securities; and to attempt to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may choose
not to make use of derivatives for a variety of reasons, and any use may be
limited by applicable law and regulations. The fund may also hold cash or other
short-term investments.
The adviser considers both broad economic and issuer specific factors in
selecting investments. In assessing the appropriate maturity, credit quality
and sector weighting of the fund's portfolio, the adviser considers a variety
of factors that are expected to influence economic activity and interest rates.
The adviser selects individual securities to buy and sell based upon such
factors as a security's yield, liquidity and rating, an assessment of credit
quality, and sector and issuer diversification.
INVESTMENT ADVISER
Pioneer
193
PIONEER STRATEGIC INCOME FUND
INVESTMENT OBJECTIVE
A high level of current income.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in debt securities. For purposes
of satisfying the 80% requirement, the fund also may invest in derivative
instruments that have economic characteristics similar to such debt securities.
The fund has the flexibility to invest in a broad range of issuers and segments
of the debt securities markets. The fund's investment adviser allocates the
fund's investments among the following three segments of the debt markets:
o Below investment grade (high yield or "junk bond") securities of U.S. and
non-U.S. issuers
o Investment grade securities of U.S. issuers
o Investment grade securities of non-U.S. issuers
The adviser's allocations among the segments of the debt markets depend upon
its outlook for economic, interest rate and political trends. At any given
time, the fund may have a substantial amount of its assets in any one of such
segments.
The fund invests primarily in debt securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or non-U.S. governmental
entities; debt securities of U.S. and non-U.S. corporate issuers (including
convertible debt); and mortgage-related securities, including "sub-prime"
mortgages, and asset-backed securities.
The fund invests in securities with a broad range of maturities and maintains
an average portfolio maturity which varies based upon the judgment of the
fund's investment adviser. The 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, floating rate, zero coupon, contingent,
deferred, payment in kind and auction rate features.
Depending upon the adviser's allocation among market segments, up to 70% of the
fund's total assets may be in debt securities rated below investment grade at
the time of purchase or determined to be of equivalent quality by the adviser.
Up to 20% of the fund's total assets may be invested in debt securities rated
below CCC by Standard & Poor's Financial Services LLC or
194
the equivalent by another nationally recognized statistical rating organization
or determined to be of equivalent credit quality by the adviser. The fund may
also invest in securities that are in default, subordinated debt securities,
event-linked bonds and Treasury Inflation Protected Securities ("TIPS") and
other inflation-linked debt securities.
Up to 85% of the fund's total assets may be in debt securities of non-U.S.
corporate and governmental issuers, including debt securities of corporate and
governmental issuers in emerging markets.
The fund may invest up to 20% of its total assets in equity securities,
including common stocks, preferred stocks, rights, warrants, depositary
receipts, exchange-traded funds (ETFs) that invest primarily in equity
securities and equity interests in real estate trusts (REITs).
The fund may, but is not required to, use derivatives, such as credit default
swaps, forward foreign currency exchange contracts, and bond and interest rate
futures. The fund may use derivatives for a variety of purposes, including: as
a hedge against adverse changes in the market price of securities, interest
rates or currency exchange rates; as a substitute for purchasing or selling
securities; and to increase the fund's return as a non-hedging strategy that
may be considered speculative. The fund may choose not to make use of
derivatives for a variety of reasons, and any use may be limited by applicable
law and regulations. The fund also may hold cash or other short-term
investments.
The adviser considers both broad economic and issuer specific factors in
selecting investments. In assessing the appropriate maturity, rating, sector
and country weightings of the portfolio, the adviser considers a variety of
factors that are expected to influence economic activity and interest rates.
The adviser selects individual securities to buy and sell based upon such
factors as a security's yield, liquidity and rating, an assessment of credit
quality, and sector and issuer diversification.
INVESTMENT ADVISER
Pioneer
195
PIONEER DYNAMIC CREDIT FUND
(FORMERLY, PIONEER ABSOLUTE RETURN CREDIT FUND)
INVESTMENT OBJECTIVES
A high level of current income. Capital appreciation is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES
The fund selects investments from a broad spectrum of debt securities. The fund
is managed using a benchmark unconstrained approach, which means that it is not
managed relative to an index. Accordingly, the fund does not seek to generate
returns consistent with broader financial market movements, instead seeking to
generate positive total returns over the course of different market
environments. Total return is a combination of current income and capital
appreciation. As part of its overall strategy, the fund uses derivatives in an
effort to limit the effect of market volatility on its portfolio of securities.
The fund also may use derivatives for a variety of other hedging and
non-hedging purposes.
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in debt securities. For purposes
of satisfying the 80% requirement, the fund may invest in derivative
instruments that have economic characteristics similar to such debt securities.
The fund has the flexibility to invest in a broad range of issuers and segments
of the debt securities markets. The adviser allocates the fund's debt
securities among different instruments and segments of the debt markets, based
on its outlook for economic, interest rate and political trends. Debt
securities may include instruments and obligations of U.S. and non-U.S.
corporate and other non-governmental entities, those of U.S. and non-U.S.
governmental entities, mortgage-related or mortgage-backed securities
(including "sub-prime" mortgages), asset-backed securities, floating rate
loans, convertible securities, preferred securities, Treasury Inflation
Protected Securities ("TIPS") and other inflation-linked debt securities,
subordinated debt securities, event-linked bonds, and funds that invest
primarily in debt securities. The fund may invest without limit in debt
securities of any credit quality, including those rated below investment grade
(known as "junk bonds") or, if unrated, of equivalent credit quality as
determined by the fund's investment adviser. The fund's investments in debt
securities rated below investment grade may include securities that are in
default. The fund may invest in securities of issuers located in emerging
markets.
196
The fund invests in securities with a broad range of maturities and maintains
an average portfolio maturity that varies based upon the judgment of the
adviser. The 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, floating rate, zero coupon, contingent, deferred, payment in
kind and auction rate features.
The fund may invest in equity securities, including common stocks, rights,
warrants, depositary receipts, exchange-traded funds (ETFs) that invest
primarily in equity securities and equity interests in real estate trusts
(REITs). The fund may invest in equity securities as a consequence of holding
debt of the same issuer or when the adviser believes the securities offer the
potential for capital gains or other portfolio management purposes, although
equity securities may not pay dividends or contribute to achieving the fund's
investment objective of a high level of current income.
The adviser considers both broad economic and issuer specific factors in
selecting a portfolio designed to achieve the fund's investment objectives. In
assessing the appropriate maturity, rating, sector and country weightings of
the fund's portfolio, the adviser 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 and other global monetary policies and the
relative value of the U.S. dollar compared to other currencies. Once the
adviser determines the preferable portfolio characteristics, the adviser
selects individual securities based upon the terms of the securities (such as
yields compared to U.S. Treasuries or comparable issuers), liquidity and
rating, country, sector and issuer diversification. The adviser also employs
fundamental quantitative and qualitative research 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 capabilities. In selecting among market
segments and instruments, the adviser considers the relative value of
particular investments. The adviser may sell a portfolio security when it
believes the security no longer will contribute to meeting the fund's
investment objectives. The adviser makes that determination based on the same
criteria it uses to select portfolio securities. In making these portfolio
decisions, the adviser relies on the knowledge, experience and judgment of its
staff and the staff of its affiliates who have access to a wide variety of
research.
197
In addition to seeking to manage portfolio risk through conventional means,
including through in-depth credit analysis and diversification, the adviser
employs a disciplined, two-fold derivatives strategy designed to limit the
effects of near-term volatility and severe market events. This strategy, which
relies on proprietary, quantitative techniques, incorporates the adviser's
macroeconomic views as well as its view of quantitative market indicators of
financial disruption, such as the volatility of the S&P 500 Index and credit
spreads. Credit spreads measure the difference in the yield of higher yielding
bond sectors relative to U.S. Treasury bonds. Widening credit spreads can
indicate higher levels of uncertainty or distress in financial markets. Over
time, the adviser uses derivatives to seek to maintain a "dynamic" hedge
against near-term market volatility through exposure to market-, volatility-
and/or credit-oriented derivatives, which it may adjust as credit spreads widen
and narrow or as other indicators of market volatility change. As a second
measure, when indicators signal severe market distress, the investment adviser
may employ derivatives techniques designed to help limit the effects of that
distress. Derivatives in which the fund may invest for these purposes include
equity index futures, futures or swaps based on the Chicago Board of Exchange
Volatility Index (VIX), credit default swaps and Treasury futures. The VIX is
an index of market sentiment derived from S&P 500 Index option prices that is
designed to reflect investors' consensus view of expected stock market
volatility over future periods. In combination, the two elements of this
strategy are intended to help limit the effect of market volatility on the
fund's returns and generate positive returns over time. However, there can be
no guarantee that such results will be achieved.
The fund also may use derivatives for a variety of other purposes, including:
in an attempt to hedge against adverse changes in the market price of
securities, interest rates or currency exchange rates; as a substitute for
purchasing or selling securities; and to attempt to increase the fund's return
as a non-hedging strategy that may be considered speculative. The fund may
establish, through derivatives, net short positions for individual sectors,
markets, currencies or securities, or as a means of adjusting the fund's
portfolio duration or other portfolio characteristics. The fund may invest
without limit in derivative instruments. The fund may choose not to make use of
derivatives for a variety of reasons, and any use may be limited by applicable
law and regulations. The fund also may hold cash or other short-term
investments.
198
INVESTMENT ADVISER
Pioneer
199
PIONEER MULTI-ASSET ULTRASHORT INCOME FUND
INVESTMENT OBJECTIVES
A high level of current income to the extent consistent with a relatively high
level of stability of principal.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in floating rate instruments of
U.S. and non-U.S. issuers, including: senior secured loans ("senior loans") and
second lien or other subordinated or unsecured loans; debt issued by banks and
other corporate, governmental and non-governmental entities; corporate bonds;
mortgage-backed and asset-backed securities; event-linked bonds (also known as
"catastrophe bonds"); and preferred stock. The fund may invest in floating rate
instruments of issuers in any industry or market sector. The fund also
considers as floating rate instruments, and the fund may invest without limit
in, adjustable rate securities, fixed rate securities with durations of less
than or equal to one year, funds that invest primarily in floating rate
instruments, and fixed rate securities with respect to which the fund has
entered into derivative instruments to effectively convert the fixed rate
interest payments into floating rate interest payments. The fund considers
these investments as economic equivalents of floating rate instruments. The
fund also may invest in other derivative instruments that have economic
characteristics similar to floating rate instruments for purposes of satisfying
the 80% requirement.
Under normal circumstances, the fund's average portfolio duration will be less
than two years. Duration seeks to measure the price sensitivity of a fixed
income security to changes in interest rates. If the fund's average portfolio
duration exceeds two years, the fund will take action to bring it within its
expected range within a reasonable period of time. The assumptions that are
made about a security's features and options when calculating duration may
prove to be incorrect. Duration is calculated by the adviser, is not an exact
measurement and may not reliably predict the fund's or a particular security's
price sensitivity to changes in yield or interest rates.
The fund does not have a targeted maturity range for its portfolio. The fund
may invest in securities with a broad range of maturities. The maturity of a
fixed income security is a measure of the time remaining until final payment on
the security is due.
200
The fund may invest up to 20% of its net assets in debt securities that are
rated below investment grade (debt securities rated below investment grade are
commonly referred to as "junk bonds") or are unrated but determined by the
fund's investment adviser to be of equivalent credit quality, and those that
are in default or in bankruptcy. The fund does not have a policy of maintaining
a specific average credit quality of its portfolio.
The fund may invest up to 35% of its total assets in debt securities of
non-U.S. issuers, including emerging market issuers. The fund does not
currently intend to invest more than 25% of its total assets in any one
non-U.S. country.
In addition to its investments in floating rate instruments, the fund also may
invest in other securities, including debt of U.S. and non-U.S. governmental,
corporate and other non-governmental issuers; mortgage-backed and asset-backed
securities; convertible securities; bonds not paying current income; bonds that
do not make regular interest payments; zero coupon securities; money market
instruments; and other short-term investments, including cash and cash
equivalents, certificates of deposit, repurchase agreements maturing in one
week or less and bankers' acceptances. The fund may receive debt securities or
equity securities as a result of the general restructuring of the debt of an
issuer, the restructuring of a floating rate loan, or as part of a package of
securities acquired with a loan.
The fund may, but is not required to, use derivatives, such as credit default
swaps. The fund may use derivatives for a variety of purposes, including: in an
attempt to hedge against adverse changes in the market price of securities,
interest rates or currency exchange rates; as a substitute for purchasing or
selling securities; and to attempt to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may invest
without limit in derivative instruments. However, the fund may choose not to
make use of derivatives for a variety of reasons, and any use may be limited by
applicable law and regulations. The fund may hold cash or other short-term
investments.
The fund's investments may have fixed or variable principal payments and all
types of interest rate and dividend payment and reset terms, including fixed
rate, adjustable rate, floating rate, contingent, deferred, payment in kind and
auction rate features. The fund's investments may include instruments that
allow for balloon payments or negative amortization payments.
201
The fund may invest in equity securities, including common stocks, rights,
warrants, depositary receipts, exchange-traded funds (ETFs) that invest
primarily in equity securities and equity interests in real estate investment
trusts (REITs). The fund may invest in equity securities as a consequence of
holding debt of the same issuer, when the adviser believes they offer the
potential for capital gains or for other portfolio management purposes,
although equity securities may not pay dividends or contribute to achieving the
fund's investment objective of a high level of current income.
The adviser considers both broad economic and issuer specific factors in
selecting a portfolio designed to achieve the fund's investment objectives. In
assessing the appropriate duration, rating, sector and country weightings of
the fund's portfolio, the adviser 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 the adviser determines the
preferable portfolio characteristics, the adviser selects individual securities
based upon the terms of the securities (such as yields compared to U.S.
Treasuries or comparable issues), liquidity, credit quality, and sector and
issuer diversification. The adviser also employs fundamental quantitative and
qualitative research 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
capabilities. The adviser may sell a portfolio security when it believes the
security no longer will contribute to meeting the fund's investment objectives.
The adviser makes that determination based on the same criteria it uses to
select portfolio securities.
INVESTMENT ADVISER
Pioneer
202
PIONEER FLOATING RATE FUND
INVESTMENT OBJECTIVE
A high level of current income.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests at least 80% of its net assets (plus the amount of
borrowings, if any, for investment purposes) in floating rate loans and other
floating rate investments. For purposes of satisfying the 80% requirement, the
fund also may invest in derivative instruments that have economic
characteristics similar to such floating rate securities. Floating rate
investments are securities and other instruments with interest rates that
adjust or "float" periodically based on a specified interest rate or other
reference and include floating rate loans, repurchase agreements, money market
securities and shares of money market and short term bond funds. Floating rate
loans typically are rated below investment grade (debt securities rated below
investment grade are commonly referred to as "junk bonds"). The fund's
investments in floating rate loans typically hold a senior position in the
borrower's capital structure.
The fund also may invest in other securities, including unsecured or
subordinated loans, revolving credit facility loans, high yield corporate
bonds, investment grade fixed income debt securities, preferred stocks and
convertible securities. The fund may receive debt securities or equity
securities as a result of the general restructuring of the debt of an issuer,
the restructuring of a floating rate loan, or as part of a package of
securities acquired with a loan.
The fund may invest up to 35% of its total assets in debt securities of
non-U.S. issuers, including emerging market issuers. The fund does not
currently intend to invest more than 25% of its total assets in any one
non-U.S. country.
The fund may invest without limit in securities of any rating, including those
that are in default. The fund does not have a targeted maturity range for its
portfolio. The fund invests in securities with a broad range of maturities. The
fund's investments may have fixed or variable principal payments and all types
of interest rate and dividend payment and reset terms, including fixed rate,
adjustable rate, floating rate, contingent, deferred, payment in kind and
auction rate features. The fund's investments may include instruments that
allow for balloon payments or negative amortization payments.
203
The fund may invest in mortgage-related securities, including "sub-prime"
mortgages and asset-backed securities. The fund also may invest in U.S.
government securities, zero coupon securities, subordinated debt securities and
event-linked bonds. The fund may, but is not required to, use derivatives. The
fund may use derivatives, such as credit default swaps, forward foreign
currency exchange contracts and bond and interest rate futures, for a variety
of purposes, including: as a hedge against adverse changes in the market price
of securities, interest rates or currency exchange rates; as a substitute for
purchasing or selling securities; and to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may choose
not to make use of derivatives for a variety of reasons, and any use may be
limited by applicable law and regulations. The fund also may hold cash and
other short-term investments.
The investment adviser considers both broad economic and issuer specific
factors in selecting a portfolio designed to achieve the fund's investment
objective. The adviser selects individual securities based upon the terms of
the securities (such as yields compared to U.S. Treasuries or comparable
issues), liquidity and rating, sector and exposure to particular issuers and
sectors. The adviser also employs fundamental research 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. The adviser may sell a
portfolio security when it believes the security no longer will contribute to
meeting the fund's investment objective. The adviser makes that determination
based on the same criteria it uses to select portfolio securities.
INVESTMENT ADVISER
Pioneer
204
PIONEER SHORT TERM INCOME FUND
INVESTMENT OBJECTIVE
A high level of current income to the extent consistent with a relatively high
level of stability of principal.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the fund invests primarily in debt securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, investment grade debt
securities (including convertible debt) of U.S. and non-U.S. corporate and
other issuers, mortgage-related securities, including "sub-prime" mortgages,
and asset-backed securities of U.S. and non-U.S. issuers and short-term money
market instruments of U.S. and non-U.S. issuers.
Normally, at least 80% of the fund's net assets (plus the amount of borrowings,
if any, for investment purposes) are invested in debt securities that are rated
investment grade at the time of purchase or cash and cash equivalents. The fund
may invest in debt securities of issuers in any industry or market sector. For
purposes of satisfying the 80% requirement, the fund also may invest in
derivative instruments that have economic characteristics similar to investment
grade debt securities. As of the date of this prospectus, the fund may invest
up to 10% of its net assets in below investment grade debt securities (known as
"junk bonds") and securities that are in default. The fund may invest in
subordinated debt securities and event-linked bonds. Effective September 1,
2013, the fund may invest up to 20% of its net assets in below investment grade
debt securities and securities that are in default.
The fund will normally maintain a dollar-weighted average portfolio maturity of
no more than 3 years. The 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, floating rate, inverse floating rate,
zero coupon, contingent, deferred, payment in kind and auction rate features.
The fund may invest up to 20% of its total assets in securities of non-U.S.
issuers, including up to 5% of its total assets in debt securities of emerging
market issuers.
The fund may invest a substantial portion of its assets in mortgage-related
securities, including mortgage-related securities issued by private issuers.
205
The fund may, but is not required to, use derivatives, such as credit default
swaps,. The fund may use derivatives for a variety of purposes, including: in
an attempt to hedge against adverse changes in the market price of securities,
interest rates or currency exchange rates; as a substitute for purchasing or
selling securities; and to attempt to increase the fund's return as a
non-hedging strategy that may be considered speculative. The fund may choose
not to make use of derivatives for a variety of reasons, and any use may be
limited by applicable law and regulations.
The adviser considers both broad economic and issuer specific factors in
selecting investments. In assessing the appropriate maturity, credit quality
and sector weighting of the fund's portfolio, the adviser considers a variety
of factors that are expected to influence economic activity and interest rates.
The adviser selects individual securities to buy and sell based upon such
factors as a security's yield, liquidity and rating, an assessment of credit
quality, and sector and issuer diversification.
INVESTMENT ADVISER
Pioneer
206
PIONEER CASH RESERVES FUND
INVESTMENT OBJECTIVES
High current income, preservation of capital and liquidity through investments
in high-quality short-term securities.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a money market fund. The fund seeks to maintain a constant net
asset value of $1.00 per share by investing in high-quality, U.S. dollar
denominated money market securities of U.S. and non-U.S. issuers, including
those issued by:
o U.S. and non-U.S. banks
o U.S. and non-U.S. corporate or private issuers
o The U.S. government and its agencies and instrumentalities
o Non-U.S. governments
o Multinational organizations such as the World Bank
The fund may invest more than 25% of its total assets in U.S. government
securities and obligations of U.S. banks. The fund may invest in any money
market instrument that is a permissible investment for a money market fund
under the rules of the Securities and Exchange Commission, including commercial
paper, certificates of deposit, time deposits, banker's acceptances,
mortgage-backed and asset-backed securities, repurchase agreements, municipal
obligations and other short-term debt securities. These investments may include
instruments specifically structured so that they are eligible for purchase by
money market funds, including securities that have demand, tender or put
features, auction features or interest rate reset features. The fund's
investments also may include U.S. dollar denominated securities issued by
non-U.S. governments and multinational issuers, such as the World Bank. These
securities may pay interest at fixed, floating or adjustable rates, or may be
purchased at a discount.
The fund invests in accordance with the credit quality, maturity, liquidity and
diversification requirements applicable to money market funds. Within these
standards, the adviser's assessment of broad economic factors that are expected
to affect economic activity and interest rates influences securities selection.
The adviser also employs fundamental research and an evaluation of the issuer
based on its financial statements and operations, to assess an issuer's credit
quality.
207
The fund invests in U.S. government obligations and money market securities
that at the time of purchase are rated in one of the two highest rating
categories for short-term debt by a nationally recognized statistical rating
organization or, if unrated, determined to be of equivalent credit quality by
the fund's investment adviser. If rating organizations differ in the rating
assigned to a security, the fund will only treat the security as having the
higher rating if at least two rating organizations assigned that rating. If,
after purchase, the quality rating assigned to one or more of the fund's
securities is downgraded, or the credit quality deteriorates, or if the
maturity on a security is extended, the adviser or the Board (where required by
applicable regulations) will decide whether the security should be held or
sold.
The fund invests exclusively in securities with a maximum remaining maturity of
397 days and maintains a dollar-weighted average portfolio maturity of 60 days
or less.
INVESTMENT ADVISER
Pioneer
208
Pioneer
Ibbotson Asset Allocation Series
YOU CAN OBTAIN MORE FREE INFORMATION about the fund from your investment firm
or by writing to Pioneer Investment Management Shareholder Services, Inc., 60
State Street, Boston, Massachusetts 02109. You may also call 1-800-225-6292 for
more information about the fund, to request copies of the fund's statement of
additional information and shareowner reports, and to make other inquiries.
VISIT OUR WEBSITE
www.pioneerinvestments.com
The fund makes available the statement of additional information and shareowner
reports, free of charge, on the fund's website at www.pioneerinvestments.com.
You also may find other information and updates about Pioneer and the fund,
including fund performance information, on the fund's website.
SHAREOWNER REPORTS
Annual and semiannual reports to shareowners, and quarterly reports filed with
the Securities and Exchange Commission, provide additional information about
the fund's investments. The annual report discusses market conditions and
investment strategies that significantly affected the fund's performance during
its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION
The statement of additional information provides more detailed information
about the fund.
The statement of additional information, and the independent registered public
accounting firm's report and financial statements in the fund's annual report
to shareowners, are incorporated by reference into this prospectus.
You can also review and copy the fund's shareowner reports, prospectus and
statement of additional information at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. Call 1-202-551-8090 for information.
The Commission charges a fee for copies. You can get the same information free
from the Commission'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 Commission's Public Reference Section, Washington,
D.C. 20549-1520.
(Investment Company Act file no. 811-21569)
[GRAPHIC APPEARS HERE]
PIONEER FUNDS DISTRIBUTOR, INC.
60 STATE STREET 20162-08-1213
BOSTON, MA 02109 (Copyright)2013 Pioneer Funds Distributor, Inc.
WWW.PIONEERINVESTMENTS.COM Member SIPC
[GRAPHIC APPEARS HERE]
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
www.pioneerinvestments.com
This is not part of the prospectus.
20162-08-1213
(Copyright)2013 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds
Member SIPC
PIONEER IBBOTSON ASSET ALLOCATION SERIES
--------------------------------------------------------------------------------
60 State Street
Boston, Massachusetts 02109
CLASS A, CLASS B, CLASS C AND CLASS Y SHARES OF PIONEER IBBOTSON CONSERVATIVE
ALLOCATION FUND,
PIONEER IBBOTSON MODERATE ALLOCATION FUND, PIONEER IBBOTSON GROWTH ALLOCATION
FUND AND
PIONEER IBBOTSON AGGRESSIVE ALLOCATION FUND
(EACH, A "FUND" AND COLLECTIVELY, THE "FUNDS")
Conservative Moderate Growth Aggressive
Allocation Allocation Allocation Allocation
Class Fund Fund Fund Fund
------- -------------- ------------ ------------ -----------
A PIAVX PIALX GRAAX PIAAX
B PIBVX PIBLX GRABX IALBX
C PICVX PIDCX GRACX IALCX
Y IBBCX IMOYX IBGYX IBAYX
Statement of Additional Information
December 1, 2013
This statement of additional information is not a prospectus. It should be read
in conjunction with the funds' Class A, Class B, Class C and Class Y shares
prospectus dated December 1, 2013, 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 funds at 60
State Street, Boston, Massachusetts 02109. You can also obtain a copy of the
prospectus from our website at: www.pioneerinvestments.com. The funds'
financial statements for the fiscal year ended July 31, 2013, including the
independent registered public accounting firm's report thereon, are
incorporated into this statement of additional information by reference.
CONTENTS
--------------------------------------------------------------------------------
PAGE
1. Trust history.............................................. 1
2. Investment policies, risks and restrictions................ 1
3. Trustees and officers...................................... 44
4. Investment adviser......................................... 53
5. Principal underwriter and distribution plan................ 56
6. Shareholder servicing/transfer agent....................... 60
7. Custodian and sub-administrator............................ 60
8. Independent registered public accounting firm.............. 60
9. Portfolio management....................................... 61
10. Portfolio transactions..................................... 66
11. Description of shares...................................... 67
12. Sales charges.............................................. 70
13. Redeeming shares........................................... 76
14. Telephone and online transactions.......................... 76
15. Pricing of shares.......................................... 78
16. Tax status................................................. 78
17. Financial statements....................................... 87
18. Annual fee, expense and other information.................. 88
19. Appendix A - Description of short-term debt, corporate bond
[GRAPHIC APPEARS HERE]
and preferred stock ratings//.............................. 95
20. Appendix B - Proxy voting policies and procedures.......... 99
1. TRUST HISTORY
Each fund is a diversified open-end management investment company. Each fund is
a series of Pioneer Ibbotson Asset Allocation Series (the "Trust"). The Trust
was organized as a Delaware statutory trust on April 22, 2004.
2. INVESTMENT POLICIES, RISKS AND RESTRICTIONS
The trust consists of the following four funds, each of which seeks to achieve
its investment objective by investing in other funds ("underlying funds") and
uses asset allocation strategies to allocate its assets among the underlying
funds: Pioneer Ibbotson Conservative Allocation Fund, Pioneer Ibbotson Moderate
Allocation Fund, Pioneer Ibbotson Growth Allocation Fund and Pioneer Ibbotson
Aggressive Allocation Fund (each, a "fund" and collectively, the "funds"). The
prospectus presents the investment objective and the principal investment
strategies and risks of each fund. Each fund has adopted fundamental and
non-fundamental investment restrictions as set forth in this statement of
additional information. However, in general, references in Section 2 of this
statement of additional information to "the fund" mean a fund or, where
applicable, an underlying fund, and references to a fund's investment
techniques and associated risks also refer to the investment techniques and
associated risks of the underlying funds and vice versa. Accordingly, a
reference to an adviser in Section 2 of this statement of additional
information means Pioneer Investment Management, Inc. ("Pioneer") as the
investment adviser for a fund, Ibbotson (as defined herein) as a fund's
subadviser or the adviser or any subadviser for the underlying funds, or all of
them, as the context indicates. This section supplements the disclosure in the
funds' prospectus and provides additional information on the investment
policies of the funds and the underlying funds and each fund's fundamental
investment restrictions. Restrictions or policies stated as a maximum
percentage of a 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 in a percentage resulting from a change in values, net
assets or other circumstances will not be considered in determining whether the
investment complies with a fund's restrictions and policies.
MONEY MARKET FUND MATTERS
The fund invests in accordance with the credit quality, diversification,
liquidity and maturity requirements of Rule 2a-7 under the Investment Company
Act of 1940, as amended (the "1940 Act"). Under the applicable quality
requirements of Rule 2a-7, the fund may purchase only U.S. dollar-denominated
instruments that are determined to present minimal credit risks and that are at
the time of acquisition "eligible securities" as defined in Rule 2a-7.
The fund invests in eligible securities that at the time of purchase are rated
in the highest short-term rating category (or with respect to not more than 3%
of its total assets, in the second highest category).
Eligible securities are divided into "first tier" and "second tier" securities.
The fund primarily invests in first tier securities. These include U.S.
government securities, a security that has received the highest short-term
rating (e.g., Standard & Poor's A-1 rating) by at least two rating agencies (or
if rated by only one rating agency, by that rating agency) or, a security that
is unrated but is determined to be of equivalent credit quality by Pioneer.
However, the fund may invest up to 3% of its total assets in second tier
securities, which are eligible securities that received ratings within the two
highest categories (e.g., Standard & Poor's A-1 or A-2) from at least two
rating services (or one, if only one has rated the security), but do not
qualify as first tier securities. If a security has been assigned different
ratings by different rating services, at least two rating services must have
assigned the higher rating in order for Pioneer to determine eligibility on the
basis of that higher rating. Based on procedures adopted by the fund's Board of
Trustees, Pioneer may determine that an unrated security is of equivalent
quality to a rated first tier or second tier security.
1
The fund may not invest more than 5% of its total assets in securities issued
by any one issuer (except U.S. government securities and securities subject to
a guarantee by a person that does not control the issuer of the security);
provided that the fund may invest up to 25% of its total assets in first tier
securities of a single issuer for a period of up to three business days.
The fund may not invest more than 1/2 of 1% of its total assets in the second
tier securities of any single issuer.
With respect to 75% of its total assets, the fund may not invest more than 10%
of its total assets in securities issued by or subject to demand features from
any one issuer (except U.S. government securities and securities subject to a
guarantee by a person that does not control the issuer of the security), and
not more than 2.5% of its total assets in second tier securities issued by or
subject to demand features from any one issuer.
The fund will maintain a dollar-weighted average portfolio maturity of 60 days
or less and will limit its investments to securities that have remaining
maturities of 397 calendar days or less or other features that shorten
maturities in a manner consistent with the requirements of Rule 2a-7, such as
interest rate reset and demand features.
DEBT SECURITIES AND RELATED INVESTMENTS
DEBT SECURITIES RATING INFORMATION
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 statistical 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.
Below investment grade debt securities are those rated "BB" and below by
Standard & Poor's or the equivalent rating of other nationally recognized
statistical rating organizations. See "Appendix A" for a description of rating
categories. The fund may invest in debt securities rated "D" or better, or
comparable unrated securities as determined by Pioneer.
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 issuers of high yield
securities also may be more adversely affected than issuers of higher rated
securities by specific corporate or governmental developments or the issuers'
inability to meet specific projected business forecasts. The amount of high
yield securities outstanding has proliferated as an increasing number of
issuers have used high yield securities for corporate financing. The recent
economic downturn has severely affected the ability of many 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 or to
take other steps to protect its investment in an issuer.
The secondary market for high yield securities is not usually 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, such as those recently prevailing, the secondary market for high
yield securities could contract further, independent of any specific adverse
changes in the condition of a particular issuer. As a result, the fund
2
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 and other 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, 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.
For purposes of the fund's credit quality policies, if a security receives
different ratings from nationally recognized statistical rating organizations,
the fund will use the rating chosen by the portfolio manager as most
representative of the security's credit quality. The ratings of nationally
recognized statistical rating organizations represent their opinions as to the
quality of the securities that they undertake to rate and may not accurately
describe the risk of the security. If a rating organization downgrades the
quality rating assigned to one or more of the fund's portfolio securities,
Pioneer will consider what actions, if any, are appropriate in light of the
fund's investment objectives and policies including selling the downgraded
security or purchasing additional investment grade securities of the
appropriate credit quality as soon as it is prudent to do so.
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, authority or instrumentality of the U.S. government, including the
Federal Housing Administration, Federal Financing Bank, Farm Service Agency,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association ("GNMA"), General Services Administration,
National Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan
Banks ("FHLBs"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
National Mortgage Association ("FNMA"), Maritime Administration, Tennessee
Valley Authority 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 FHLBs; (ii) the discretionary
authority of the U.S. government to purchase the agency's obligations, such as
securities of FNMA; or (iii) only the credit of the issuer. Although the U.S.
government provided financial support to FNMA and FHLMC in the past, no
assurance can be given that the U.S. government will provide financial support
in the future to these or other 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; (ii) participations in loans made
to non-U.S. governments or other entities that are so guaranteed; and (iii) as
a result of initiatives introduced in response to the recent financial market
difficulties, securities of commercial issuers or financial institutions that
qualify for guarantees by U.S. government agencies like the Federal Deposit
Insurance Corporation. The secondary market for certain loan participations
described above is limited and, therefore, the participations may be regarded
as illiquid.
3
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 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 forgo
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.
CONVERTIBLE DEBT SECURITIES
The fund may invest in convertible debt securities which are debt obligations
convertible at a stated exchange rate or formula into common stock or other
equity securities. Convertible securities rank senior to common stocks in an
issuer's capital structure and consequently may be of higher quality and entail
less risk than the issuer's common stock. As with all debt securities, the
market values of convertible securities tend to increase when interest rates
decline and, conversely, tend to decline when interest rates increase.
Depending on the relationship of the conversion price to the market value of
the underlying securities, convertible securities may trade more like equity
securities than debt securities.
A convertible security entitles the holder to receive interest that is
generally paid or accrued until the convertible security matures, or is
redeemed, converted, or exchanged. Convertible securities have unique
investment characteristics, in that they generally (i) have higher yields than
common stocks, but lower yields than comparable non-convertible securities,
(ii) are less subject to fluctuation in value than the underlying common stock
due to their fixed-income characteristics and (iii) provide the potential for
capital appreciation if the market price of the underlying common stock
increases. A convertible security may be subject to redemption at the option of
the issuer at a price established in the convertible security's governing
instruments. If a convertible security held by the fund is called for
redemption, the fund will be required to permit the issuer to redeem the
security, convert it into the underlying common stock or sell it to a third
party. Any of these actions could result in losses to the fund.
MUNICIPAL OBLIGATIONS
The fund may purchase municipal obligations. The term "municipal obligations"
generally is understood to include debt obligations issued by municipalities to
obtain funds for various public purposes, the income from which is, in the
opinion of bond counsel to the issuer, excluded from gross income for U.S.
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 U.S. 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 as ordinary income to shareholders that are
otherwise subject to tax.
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.
4
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 ("MBS") 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 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.
Through its investments in mortgage-backed securities, including those that are
issued by private issuers, the fund may have exposure to subprime loans as well
as to the mortgage and credit markets generally. Private issuers include
commercial banks, savings associations, mortgage companies, investment banking
firms, finance companies and special purpose finance entities (called special
purpose vehicles or "SPVs") and other entities that acquire and package
mortgage loans for resale as MBS.
Unlike mortgage-backed securities issued or guaranteed by the U. S. government
or one of its sponsored entities, mortgage-backed securities issued by private
issuers do not have a government or government-sponsored entity guarantee, but
may have credit enhancement provided by external entities such as banks or
financial institutions or achieved through the structuring of the transaction
itself. Examples of such credit support arising out of the structure of the
transaction include the issue of senior and subordinated securities (e.g., the
issuance of securities by an SPV in multiple classes or "tranches", with one or
more classes being senior to other subordinated classes as to the payment of
principal and interest, with the result that defaults on the underlying
mortgage loans are borne first by the holders of the subordinated class);
creation of "reserve funds" (in which case cash or investments, sometimes
funded from a portion of the payments on the underlying mortgage loans, are
held in reserve against future losses); and "overcollateralization" (in which
case the scheduled payments on, or the principal amount of, the underlying
mortgage loans exceeds that required to make payment of the securities and pay
any servicing or other fees). However, there can be no guarantee that credit
enhancements, if any, will be sufficient to prevent losses in the event of
defaults on the underlying mortgage loans.
In addition, mortgage-backed securities that are issued by private issuers are
not subject to the underwriting requirements for the underlying mortgages that
are applicable to those mortgage-backed securities that have a government or
government-sponsored entity guarantee. As a result, the mortgage loans
underlying
5
private mortgage-backed securities may, and frequently do, have less favorable
collateral, credit risk or other underwriting characteristics than government
or government-sponsored mortgage-backed securities and have wider variances in
a number of terms including interest rate, term, size, purpose and borrower
characteristics. Privately issued pools more frequently include second
mortgages, high loan-to-value mortgages and manufactured housing loans. The
coupon rates and maturities of the underlying mortgage loans in a private
mortgage-backed securities pool may vary to a greater extent than those
included in a government guaranteed pool, and the pool may include subprime
mortgage loans. Subprime loans refer to loans made to borrowers with weakened
credit histories or with a lower capacity to make timely payments on their
loans. For these reasons, the loans underlying these securities have had in
many cases higher default rates than those loans that meet government
underwriting requirements.
The risk of non-payment is greater for mortgage-backed securities that are
backed by mortgage pools that contain subprime loans, but a level of risk
exists for all loans. Market factors adversely affecting mortgage loan
repayments may include a general economic turndown, high unemployment, a
general slowdown in the real estate market, a drop in the market prices of real
estate, or an increase in interest rates resulting in higher mortgage payments
by holders of adjustable rate mortgages.
If the fund purchases subordinated mortgage-backed securities, the subordinated
mortgage-backed securities may serve as a credit support for the senior
securities purchased by other investors. In addition, the payments of principal
and interest on these subordinated securities generally will be made only after
payments are made to the holders of securities senior to the fund's securities.
Therefore, if there are defaults on the underlying mortgage loans, the fund
will be less likely to receive payments of principal and interest, and will be
more likely to suffer a loss.
Privately issued mortgage-backed securities are not traded on an exchange and
there may be a limited market for the securities, especially when there is a
perceived weakness in the mortgage and real estate market sectors. Without an
active trading market, mortgage-backed securities held in the portfolio may be
particularly difficult to value because of the complexities involved in
assessing the value of the underlying mortgage loans.
In the case of private issue mortgage-related securities whose underlying
assets are neither U.S. government securities nor U.S. government-insured
mortgages, to the extent that real properties securing such assets may be
located in the same geographical region, the security may be subject to a
greater risk of default than other comparable securities in the event of
adverse economic, political or business developments that may affect such
region and, ultimately, the ability of residential homeowners to make payments
of principal and interest on the underlying mortgages.
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
6
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"). 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"). 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 may
invest 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. 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.
OTHER 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
7
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. There may be no perfected security interest in
the collateral that relates to the financial assets that support asset-backed
securities. Asset backed securities have many of the same characteristics and
risks as mortgage-backed securities.
The fund may purchase commercial paper, including asset-backed commercial paper
("ABCP") that is issued by structured investment vehicles or other conduits.
These conduits may be sponsored by mortgage companies, investment banking
firms, finance companies, hedge funds, private equity firms and special purpose
finance entities. ABCP typically refers to a debt security with an original
term to maturity of up to 270 days, the payment of which is supported by cash
flows from underlying assets, or one or more liquidity or credit support
providers, or both. Assets backing ABCP include credit card, car loan and other
consumer receivables and home or commercial mortgages, including subprime
mortgages. The repayment of ABCP issued by a conduit depends primarily on the
cash collections received from the conduit's underlying asset portfolio and the
conduit's ability to issue new ABCP. Therefore, there could be losses to a fund
investing in ABCP in the event of credit or market value deterioration in the
conduit's underlying portfolio, mismatches in the timing of the cash flows of
the underlying asset interests and the repayment obligations of maturing ABCP,
or the conduit's inability to issue new ABCP. To protect investors from these
risks, ABCP programs may be structured with various protections, such as credit
enhancement, liquidity support, and commercial paper stop-issuance and
wind-down triggers. However there can be no guarantee that these protections
will be sufficient to prevent losses to investors in ABCP.
Some ABCP programs provide for an extension of the maturity date of the ABCP
if, on the related maturity date, the conduit is unable to access sufficient
liquidity through the issue of additional ABCP. This may delay the sale of the
underlying collateral and a fund may incur a loss if the value of the
collateral deteriorates during the extension period. Alternatively, if
collateral for ABCP deteriorates in value, the collateral may be required to be
sold at inopportune times or at prices insufficient to repay the principal and
interest on the
8
ABCP. ABCP programs may provide for the issuance of subordinated notes as an
additional form of credit enhancement. The subordinated notes are typically of
a lower credit quality and have a higher risk of default. A fund purchasing
these subordinated notes will therefore have a higher likelihood of loss than
investors in the senior notes.
Asset-backed securities include collateralized debt obligations ("CDOs"), such
as collateralized bond obligations ("CBOs"), collateralized loan obligations
("CLOs") and other similarly structured securities. A CBO is a trust backed by
a pool of fixed income securities. A CLO is a trust typically collateralized by
a pool of loans, which may include, among others, domestic and foreign senior
secured loans, senior unsecured loans, and subordinate corporate loans,
including loans that may be rated below investment grade or equivalent unrated
loans. CDOs may charge management fees and administrative expenses. Certain
CDOs may use derivatives, such as credit default swaps, to create synthetic
exposure to assets rather than holding such assets directly.
The trust is typically split into two or more portions, called tranches,
varying in credit quality and yield. The riskiest portion is the "equity"
tranche which bears the bulk of defaults from the bonds or loans in the trust
and helps protect the other, more senior tranches from default. Since it is
partially protected from defaults, a senior tranche from a CBO trust or CLO
trust typically has higher ratings and lower yields than its underlying
securities, and can be rated investment grade. Despite the protection from the
equity tranche, CBO or CLO tranches can experience substantial losses due to
actual defaults, increased sensitivity to defaults due to collateral default
and the disappearance of protecting tranches, market anticipation of defaults,
as well as aversion to CBO or CLO securities as a class.
The risks of an investment in a CDO depend largely on the type of the
collateral securities and the class of the CDO in which the fund invests.
Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in CDOs
may be characterized by the fund as illiquid securities. However, an active
dealer market may exist under some market conditions for some CDOs. In addition
to the normal risks associated with fixed income securities (e.g., interest
rate risk and default risk), CDOs carry additional risks including, but not
limited to: (i) the possibility that distributions from collateral securities
will not be adequate to make interest or other payments; (ii) the quality of
the collateral may decline in value or default; (iii) the fund may invest in
CDOs that are subordinate to other classes; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment results.
SUBORDINATED SECURITIES
The fund may also invest in other types of fixed income securities which are
subordinated or "junior" to more senior securities of the issuer, or which
represent interests in pools of such subordinated or junior securities. Such
securities may include so-called "high yield" or "junk" bonds (i.e., bonds that
are rated below investment grade by a rating agency or that are of equivalent
quality) and preferred stock. Under the terms of subordinated securities,
payments that would otherwise be made to their holders may be required to be
made to the holders of more senior securities, and/or the subordinated or
junior securities may have junior liens, if they have any rights at all, in any
collateral (meaning proceeds of the collateral are required to be paid first to
the holders of more senior securities). As a result, subordinated or junior
securities will be disproportionately adversely affected by a default or even a
perceived decline in creditworthiness of the issuer.
STRUCTURED SECURITIES
The fund may invest in structured securities. The value of the principal and/or
interest on such securities is determined by reference to changes in the value
of specific currencies, interest rates, commodities, indices or other financial
indicators (the "Reference") or the relative change in two or more References.
The interest rate or the principal amount payable upon maturity or redemption
may be increased or decreased depending upon changes in the Reference. The
terms of the structured securities may provide in certain circumstances that no
principal is due at maturity and therefore may result in a loss of the fund's
investment.
9
Changes in the interest rate or principal payable at maturity may be a multiple
of the changes in the value of the Reference. Structured securities are a type
of derivative instrument and the payment and credit qualities from these
securities derive from the assets embedded in the structure from which they are
issued. Structured securities may entail a greater degree of risk than other
types of fixed income securities.
FLOATING RATE LOANS
A floating rate loan is typically originated, negotiated and structured by a
U.S. or foreign commercial bank, insurance company, finance company or other
financial institution for a group of investors. The financial institution
typically acts as an agent for the investors, administering and enforcing the
loan on their behalf. In addition, an institution, typically but not always the
agent, holds any collateral on behalf of the investors.
The interest rates are adjusted based on a base rate plus a premium or spread
or minus a discount. The base rate usually is the London Interbank Offered Rate
("LIBOR"), the Federal Reserve federal funds rate, the prime rate or other base
lending rates used by commercial lenders. LIBOR usually is an average of the
interest rates quoted by several designated banks as the rates at which they
pay interest to major depositors in the London interbank market on U.S.
dollar-denominated deposits.
Floating rate loans include loans to corporations and institutionally traded
floating rate debt obligations issued by an asset-backed pool, and interests
therein. The fund may invest in loans in different ways. The fund may: (i) make
a direct investment in a loan by participating as one of the lenders; (ii)
purchase an assignment of a loan; or (iii) purchase a participation interest in
a loan.
DIRECT INVESTMENT IN LOANS. It can be advantageous to the fund to make a direct
investment in a loan as one of the lenders. When a new issue is purchased, such
an investment is typically made at par. This means that the fund receives a
return at the full interest rate for the loan. Secondary purchases of loans may
be made at par, at a premium from par or at a discount from par. When the fund
invests in an assignment of, or a participation interest in, a loan, the fund
may pay a fee or forgo a portion of the interest payment. Consequently, the
fund's return on such an investment may be lower than it would have been if the
fund had made a direct investment in the underlying corporate loan. The fund
may be able, however, to invest in corporate loans only through assignments or
participation interests at certain times when reduced direct investment
opportunities in corporate loans may exist. At other times, however, such as
recently, assignments or participation interests may trade at significant
discounts from par.
ASSIGNMENTS. An assignment represents a portion of a loan previously
attributable to a different lender. The purchaser of an assignment typically
succeeds to all the rights and obligations under the loan agreement of the
assigning investor and becomes an investor under the loan agreement with the
same rights and obligations as the assigning investor. Assignments may,
however, be arranged through private negotiations between potential assignees
and potential assignors, and the rights and obligations acquired by the
purchaser of an assignment may differ from, and be more limited than, those
held by the assigning investor.
PARTICIPATION INTERESTS. Participation interests are interests issued by a
lender or other financial institution, which represent a fractional interest in
a corporate loan. The fund may acquire participation interests from the
financial institution or from another investor. The fund typically will have a
contractual relationship only with the financial institution that issued the
participation interest. As a result, the fund may have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the financial institution and only upon receipt by such entity of such payments
from the borrower. In connection with purchasing a participation interest, the
fund generally will have no right to enforce compliance by the borrower with
the terms of the loan agreement, nor any rights with respect to any funds
acquired by other investors through set-off against the borrower and the fund
may not directly benefit from the collateral supporting the loan in which it
has purchased the participation interest. As a result, the fund may assume the
credit risk of both the borrower and the financial institution issuing the
participation interest. In the event of the insolvency of the financial
institution issuing a participation interest, the fund may be treated as a
general creditor of such entity.
10
OTHER INFORMATION ABOUT FLOATING RATE LOANS. Loans typically have a senior
position in a borrower's capital structure. The capital structure of a borrower
may include loans, senior unsecured loans, senior and junior subordinated debt,
preferred stock and common stock, typically in descending order of seniority
with respect to claims on the borrower's assets. Although loans typically have
the most senior position in a borrower's capital structure, they remain subject
to the risk of non-payment of scheduled interest or principal. Such non-payment
would result in a reduction of income to the fund, a reduction in the value of
the investment and a potential decrease in the net asset value of the fund.
There can be no assurance that the liquidation of any collateral securing a
loan would satisfy a borrower's obligation in the event of non-payment of
scheduled interest or principal payments, or that such collateral could be
readily liquidated. In the event of bankruptcy of a borrower, the fund could
experience delays or limitations with respect to its ability to realize the
benefits of the collateral securing a loan. Although a loan may be senior to
equity and other debt securities in an issuer's capital structure, such
obligations may be structurally subordinated to obligations of the issuer's
subsidiaries. For example, if a holding company were to issue a loan, even if
that issuer pledges the capital stock of its subsidiaries to secure the
obligations under the loan, the assets of the operating companies are available
to the direct creditors of an operating company before they would be available
to the holders of the loan issued by the holding company.
In order to borrow money pursuant to a loan, a borrower will frequently, for
the term of the loan, pledge collateral, including but not limited to, (i)
working capital assets, such as accounts receivable and inventory; (ii)
tangible fixed assets, such as real property, buildings and equipment; (iii)
intangible assets, such as trademarks and patent rights (but excluding
goodwill); and (iv) security interests in shares of stock of subsidiaries or
affiliates. In the case of loans made to non-public companies, the company's
shareholders or owners may provide collateral in the form of secured guarantees
and/or security interests in assets that they own. In many instances, a loan
may be secured only by stock in the borrower or its subsidiaries. Collateral
may consist of assets that may not be readily liquidated, and there is no
assurance that the liquidation of such assets would satisfy fully a borrower's
obligations under a loan.
In the process of buying, selling and holding loans, the fund may receive
and/or pay certain fees. Any fees received are in addition to interest payments
received and may include facility fees, commitment fees, commissions and
prepayment penalty fees. When the fund buys a loan it may receive a facility
fee and when it sells a loan it may pay a facility fee. On an ongoing basis,
the fund may receive a commitment fee based on the undrawn portion of the
underlying line of credit portion of a loan. In certain circumstances, the fund
may receive a prepayment penalty fee upon the prepayment of a loan by a
borrower. Other fees received by the fund may include covenant waiver fees and
covenant modification fees.
A borrower must comply with various restrictive covenants contained in a loan
agreement or note purchase agreement between the borrower and the holders of
the loan. Such covenants, in addition to requiring the scheduled payment of
interest and principal, may include restrictions on dividend payments and other
distributions to stockholders, provisions requiring the borrower to maintain
specific minimum financial ratios, and limits on total debt.
In a typical loan, the agent administers the terms of the loan agreement. In
such cases, the agent is normally responsible for the collection of principal
and interest payments from the borrower and the apportionment of these payments
to the credit of all institutions that are parties to the loan agreement. The
fund will generally rely upon the agent or an intermediate participant to
receive and forward to the fund its portion of the principal and interest
payments on the loan. Furthermore, unless the fund has direct recourse against
the borrower, the fund will rely on the agent and the other investors to use
appropriate credit remedies against the borrower.
For some loans, such as revolving credit facility loans ("revolvers"), an
investor may have certain obligations pursuant to the loan agreement that may
include the obligation to make additional loans in certain circumstances. The
fund generally will reserve against these contingent obligations by segregating
or otherwise designating a sufficient amount of permissible liquid assets.
Delayed draw term loans are similar to revolvers, except
11
that once drawn upon by the borrower during the commitment period, they remain
permanently drawn and become term loans. A prefunded L/C term loan is a
facility created by the borrower in conjunction with an agent, with the loan
proceeds acting as collateral for the borrower's obligations in respect of the
letters of credit. Each participant in a prefunded L/C term loan fully funds
its commitment amount to the agent for the facility.
The fund may acquire interests in loans that are designed to provide temporary
or "bridge" financing to a borrower pending the sale of identified assets or
the arrangement of longer-term loans or the issuance and sale of debt
obligations. Bridge loans often are unrated. The fund may also invest in loans
of borrowers that have obtained bridge loans from other parties. A borrower's
use of bridge loans involves a risk that the borrower may be unable to locate
permanent financing to replace the bridge loan, which may impair the borrower's
perceived creditworthiness.
From time to time, Pioneer and its affiliates may borrow money from various
banks in connection with their business activities. Such banks may also sell
interests in loans to or acquire them from the fund or may be intermediate
participants with respect to loans in which the fund owns interests. Such banks
may also act as agents for loans held by the fund.
INVERSE FLOATING RATE SECURITIES
The fund may invest in inverse floating rate obligations. The interest on an
inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values.
AUCTION RATE SECURITIES
The fund may invest in auction rate securities. Auction rate securities consist
of auction rate debt securities and auction rate preferred securities issued by
closed-end investment companies. Provided that the auction mechanism is
successful, auction rate securities usually permit the holder to sell the
securities in an auction at par value at specified intervals. The dividend is
reset by "Dutch" auction in which bids are made by broker-dealers and other
institutions for a certain amount of securities at a specified minimum yield.
The dividend rate set by the auction is the lowest interest or dividend rate
that covers all securities offered for sale. While this process is designed to
permit auction rate securities to be traded at par value, there is the risk
that an auction will fail due to insufficient demand for the securities. With
respect to auction rate securities issued by a closed-end fund, the fund will
indirectly bear its proportionate share of any management fees paid by the
closed-end fund in addition to the advisory fee payable directly by the fund.
Since February 2008, nearly all such auctions have failed, effectively locking
in below-market interest rates.
EVENT-LINKED BONDS
The fund may invest in "event-linked" bonds, which sometimes are referred to as
"insurance-linked" or "catastrophe" bonds. Event-linked bonds are debt
obligations for which the return of principal and the payment of interest are
contingent on the non-occurrence of a pre-defined "trigger" event, such as a
hurricane or an earthquake of a specific magnitude. For some event-linked
bonds, the trigger event's magnitude may be based on losses to a company or
industry, index-portfolio losses, industry indexes or readings of scientific
instruments rather than specified actual losses. If a trigger event, as defined
within the terms of an event-linked bond, involves losses or other metrics
exceeding a specific magnitude in the geographic region and time period
specified therein, the fund may lose a portion or all of its accrued interest
and/or principal invested in such event-linked bond. The fund is entitled to
receive principal and interest payments so long as no trigger event occurs of
the description and magnitude specified by the instrument.
Event-linked bonds may be issued by government agencies, insurance companies,
reinsurers, special purpose corporations or other on-shore or off-shore
entities. Event-linked bonds may include special purpose vehicles or similar
instruments structured to comprise a portion of a reinsurer's
catastrophe-oriented
12
business, known as sidecars, or to provide reinsurance to insurance companies,
known as collateralized reinsurance. In addition to the specified trigger
events, event-linked bonds may also expose the fund to other risks, including
but not limited to issuer (credit) default, adverse regulatory or
jurisdictional interpretations and adverse tax consequences. Event-linked bonds
are subject to the risk that the model used to calculate the probability of a
trigger event was not accurate and underestimated the likelihood of a trigger
event. This may result in more frequent and greater than expected loss of
principal and/or interest, which would adversely impact the fund's total
returns. Further, to the extent there are events that involve losses or other
metrics, as applicable, that are at, or near, the threshold for a trigger
event, there may be some delay in the return of principal and/or interest until
it is determined whether a trigger event has occurred. Finally, to the extent
there is a dispute concerning the definition of the trigger event relative to
the specific manifestation of a catastrophe, there may be losses or delays in
the payment of principal and/or interest on the event-linked bond. As a
relatively new type of financial instrument, there is limited trading history
for these securities, and there can be no assurance that a liquid market in
these instruments will develop. Lack of a liquid market may impose the risk of
higher transactions costs and the possibility that the fund may be forced to
liquidate positions when it would not be advantageous to do so.
Event-linked bonds are typically rated by at least one nationally recognized
rating agency, but also may be unrated. Although each rating agency utilizes
its own general guidelines and methodology to evaluate the risks of an
event-linked bond, the average rating in the current market for event-linked
bonds is "BB" by Standard &Poor's Rating Group (or the equivalent rating for
another rating agency). However, there are event-linked bonds rated higher or
lower than "BB."
The fund's investments in event-linked bonds generally will be rated B, BB or
BBB at the time of purchase, although the fund may invest in event-linked bonds
rated higher or lower than these ratings, as well as event-linked bonds that
are unrated. The rating for an event-linked bond primarily reflects the rating
agency's calculated probability that a pre-defined trigger event will occur.
This rating also assesses the bond's credit risk and model used to calculate
the probability of the trigger event.
Event-linked bonds typically are restricted to qualified institutional buyers
and, therefore, are not subject to registration with the Securities and
Exchange Commission or any state securities commission and are not listed on
any national securities exchange. The amount of public information available
with respect to event-linked bonds is generally less extensive than that
available for issuers of registered or exchange listed securities. Event-linked
bonds may be subject to the risks of adverse regulatory or jurisdictional
determinations. There can be no assurance that future regulatory determinations
will not adversely affect the overall market for event-linked bonds.
EVENT-LINKED SWAPS
The fund may obtain event-linked exposure by investing in event-linked swaps,
which typically are contingent, or formulaically related to defined trigger
events, or by pursuing similar event-linked derivative strategies. Trigger
events include hurricanes, earthquakes and weather-related phenomena. If a
trigger event occurs, the fund may lose the swap's notional amount. As
derivative instruments, event-linked swaps are subject to risks in addition to
the risks of investing in event-linked bonds, including counterparty risk and
leverage risk.
ZERO COUPON, PAY-IN-KIND, DEFERRED AND CONTINGENT PAYMENT SECURITIES
The fund may invest in zero coupon securities, which are securities that are
sold at a discount to par value and on which interest payments are not made
during the life of the security. Upon maturity, the holder is entitled to
receive the par value of the security. Pay-in-kind securities are securities
that have interest payable by delivery of additional securities. Upon maturity,
the holder is entitled to receive the aggregate par value of the securities. A
fund accrues income with respect to zero coupon and pay-in-kind securities
prior to the receipt of cash payments. Deferred payment securities are
securities that remain zero coupon securities until a predetermined date, at
which time the stated coupon rate becomes effective and interest
13
becomes payable at regular intervals. The interest rate on contingent payment
securities is determined by the outcome of an event, such as the performance of
a financial index. If the financial index does not increase by a prescribed
amount, the fund may receive no interest.
INFLATION-PROTECTED FIXED INCOME SECURITIES
The fund may invest in inflation-linked fixed income securities, including
Treasury Inflation Protected Securities ("TIPS") issued by the U.S. government,
which are fixed income securities whose principal value is periodically
adjusted according to the rate of inflation. The interest rate on TIPS is fixed
at issuance, but over the life of the bond this interest may be paid on an
increasing or decreasing principal value that has been adjusted for inflation.
Although repayment of the original bond principal upon maturity is guaranteed,
the market value of TIPS is not guaranteed, and will fluctuate.
The values of TIPS generally fluctuate in response to changes in real interest
rates, which are in turn tied to the relationship between nominal interest
rates and the rate of inflation. If inflation were to rise at a faster rate
than nominal interest rates, real interest rates might decline, leading to an
increase in the value of TIPS. In contrast, if nominal interest rates were to
increase at a faster rate than inflation, real interest rates might rise,
leading to a decrease in the value of TIPS. If inflation is lower than expected
during the period the fund holds TIPS, the fund may earn less on the TIPS than
on a conventional bond. If interest rates rise due to reasons other than
inflation (for example, due to changes in the currency exchange rates),
investors in TIPS may not be protected to the extent that the increase is not
reflected in the bonds' inflation measure. There can be no assurance that the
inflation index for TIPS will accurately measure the real rate of inflation in
the prices of goods and services.
Any increase in principal value of TIPS caused by an increase in the consumer
price index is taxable in the year the increase occurs, even though the fund
holding TIPS will not receive cash representing the increase at that time. As a
result, the fund could be required at times to liquidate other investments,
including when it is not advantageous to do so, in order to satisfy the
distribution requirements applicable to regulated investment companies under
the Code.
If the fund invests in TIPS, it will be required to treat as original issue
discount any increase in the principal amount of the securities that occurs
during the course of its taxable year. If the fund purchases such inflation
protected securities that are issued in stripped form either as stripped bonds
or coupons, it will be treated as if it had purchased a newly issued debt
instrument having original issue discount.
Because the fund is required to distribute substantially all of its net
investment income (including accrued original issue discount), the fund's
investment in either zero coupon bonds or TIPS may require it to distribute to
shareholders an amount greater than the total cash income it actually receives.
Accordingly, in order to make the required distributions, the fund may be
required to borrow or liquidate securities.
EQUITY SECURITIES AND RELATED INVESTMENTS
INVESTMENTS 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 prices 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.
WARRANTS AND STOCK PURCHASE RIGHTS
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.
14
The fund may also invest in stock purchase rights. Stock purchase rights are
instruments, frequently distributed to an issuer's shareholders as a dividend,
that entitle the holder to purchase a specific number of shares of common stock
on a specific date or during a specific period of time. The exercise price on
the rights is normally at a discount from market value of the common stock at
the time of distribution. The rights do not carry with them the right to
dividends or to vote and may or may not be transferable. Stock purchase rights
are frequently used outside of the United States as a means of raising
additional capital from an issuer's current shareholders.
As a result, an investment in warrants or stock purchase rights may be
considered more speculative than certain other types of investments. In
addition, the value of a warrant or a stock purchase right does not necessarily
change with the value of the underlying securities, and warrants and stock
purchase rights expire worthless if they are not exercised on or prior to their
expiration date.
PREFERRED SHARES
The fund may invest in preferred shares. 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.
Preferred stocks may differ in many of their provisions. Among the features
that differentiate preferred stocks from one another are the dividend rights,
which may be cumulative or noncumulative and participating or
non-participating, redemption provisions, and voting rights. Such features will
establish the income return and may affect the prospects for capital
appreciation or risks of capital loss.
The market prices of preferred stocks are subject to changes in interest rates
and are more sensitive to changes in an issuer's creditworthiness than are the
prices of debt securities. Shareholders of preferred stock may suffer a loss of
value if dividends are not paid. Under ordinary circumstances, preferred stock
does not carry voting rights.
INVESTMENTS IN INITIAL PUBLIC OFFERINGS
Companies involved in initial public offering (IPOs) generally have limited
operating histories, and prospects for future profitability are uncertain. The
market for IPO issuers has been volatile, and share prices of newly public
companies have fluctuated significantly over short periods of time. Further,
stocks of newly-public companies may decline shortly after the IPO. There is no
assurance that the fund will have access to IPOs. The purchase of IPO shares
may involve high transaction costs. Because of the price volatility of IPO
shares, the fund may choose to hold IPO shares for a very short period of time.
This may increase the turnover of the portfolio and may lead to increased
expenses to the fund, such as commissions and transaction costs. The market for
IPO shares can be speculative and/or inactive for extended periods of time.
There may be only a limited number of shares available for trading. The limited
number of shares available for trading in some IPOs may also make it more
difficult for the fund to buy or sell significant amounts of shares without an
unfavorable impact on prevailing prices.
NON-U.S. INVESTMENTS
EQUITY SECURITIES OF NON-U.S. ISSUERS
The fund may invest in equity securities of non-U.S. issuers, including
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts ("GDRs") and other similar instruments.
DEBT OBLIGATIONS OF NON-U.S. GOVERNMENTS
The fund may invest in all types of debt obligations of non-U.S. governments.
An investment in debt obligations of non-U.S. governments and their political
subdivisions (sovereign debt) involves special risks that are not present in
corporate debt obligations. The non-U.S. issuer of the sovereign debt or the
non-U.S. governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest
15
when due, and the fund may have limited recourse in the event of a default. As
a sovereign entity, the issuing government may be immune from lawsuits in the
event of its failure or refusal to pay the obligations when due. During periods
of economic uncertainty (such as the financial crisis that began in 2008), the
values of sovereign debt and of securities of issuers that purchase sovereign
debt may be more volatile than prices of debt obligations of U.S. issuers. In
the past, certain non-U.S. countries have encountered difficulties in servicing
their debt obligations, withheld payments of principal and interest, declared
moratoria on the payment of principal and interest on their sovereign debt, or
restructured their debt to effectively eliminate portions of it, and similar
occurrences may happen in the future. There is no bankruptcy proceeding by
which sovereign debt on which governmental entities have defaulted may be
collected in whole or in part.
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 disbursements
or assistance from non-U.S. governments, multinational agencies and other
entities to reduce principal and interest arrearages on their debt. Assistance
may be dependent on a country's implementation of austerity measures and
reforms, which measures may limit or be perceived to limit economic growth and
recovery. 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 non-U.S. governments and their agencies and non-U.S. 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 non-U.S. branches of domestic banks; ETDs are U.S. dollar-denominated
deposits in a non-U.S. branch of a U.S. bank or in a non-U.S. bank; and Yankee
CDs are U.S. dollar-denominated certificates of deposit issued by a U.S. branch
of a non-U.S. 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, non-U.S. withholding
or other taxes, seizure of non-U.S. deposits, currency controls, interest
limitations or other governmental restrictions which might affect payment of
principal or interest.
INVESTMENTS IN EMERGING MARKETS. The fund may invest in securities of issuers
in countries with emerging economies or securities markets. Emerging economies
or securities markets will generally include, but not be limited to, countries
included in the Morgan Stanley Capital International (MSCI) Emerging & Frontier
Markets Index. The fund will generally focus on emerging markets that do not
impose unusual trading requirements which tend to restrict the flow of
investments. In addition, the fund may invest in unquoted securities of
emerging market issuers.
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 generally, or in 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 portfolio securities are quoted or denominated,
exchange control regulations and costs associated
16
with currency exchange. The political and economic structures in certain
countries, particularly emerging markets, may undergo significant evolution and
rapid development, and such countries may lack the social, political and
economic stability characteristic of more developed countries.
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 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 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. In addition, it may be difficult for the fund to pursue claims
against a foreign issuer in the courts of a foreign country. 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 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.
Unanticipated political or social developments may affect the values of the
fund's investments and the availability to the fund of additional investments
in such countries. In the past, the economies, securities and currency markets
of many emerging markets have experienced significant disruption and declines.
There can be no assurance that these economic and market disruptions might not
occur again.
17
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 and significantly by economic conditions in
the countries with which they trade.
CURRENCY RISKS. The value of the securities quoted or denominated in foreign
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 may 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 may 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.
EUROPE - RECENT EVENTS. Some countries in Europe have experienced severe
economic and financial difficulties. Many non-governmental issuers, and even
certain governments, have defaulted on, or been forced to restructure, their
debts; many other issuers have faced difficulties obtaining credit or
refinancing existing obligations; financial institutions have in many cases
required government or central bank support, have needed to raise capital,
and/or have been impaired in their ability to extend credit; and financial
markets in Europe and elsewhere have experienced extreme volatility and
declines in asset values and liquidity. These difficulties may continue, worsen
or spread within and beyond Europe. Responses to the financial problems by
European governments, central banks and others, including austerity measures
and reforms, may not work, may result in social unrest and may limit future
growth and economic recovery or have other unintended consequences. Further
defaults or restructurings by governments and others of their debt could have
additional adverse effects on economies, financial markets and asset valuations
around the world. In addition, one or more countries may abandon the euro, the
common currency of the European Union, and/or withdraw from the European Union.
The impact of these actions, especially if they occur in a disorderly fashion,
is not clear but could be significant and far-reaching. Whether or not the fund
invests in securities of issuers located in Europe or with significant exposure
to European issuers or countries, these events could negatively affect the
value and liquidity of the fund's investments due to the interconnected nature
of the global economy and capital markets.
INVESTMENTS IN DEPOSITARY RECEIPTS
The fund may hold securities of non-U.S. issuers in the form of ADRs, EDRs,
GDRs and other similar instruments. Generally, ADRs in registered form are
designed for use in U.S. securities markets, and EDRs and GDRs and other
similar global instruments in bearer form are designed for use in non-U.S.
securities markets.
18
ADRs are denominated in U.S. dollars and represent an interest in the right to
receive securities of non-U.S. issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the fund will avoid currency
risks during the settlement period for either purchases or sales. EDRs and GDRs
are not necessarily denominated in the same currency as the underlying
securities which they represent.
For purposes of the fund's investment policies, investments in ADRs, EDRs, GDRs
and similar instruments will be deemed to be investments in the underlying
equity securities of non-U.S. issuers. The fund may acquire depositary receipts
from banks that do not have a contractual relationship with the issuer of the
security underlying the depositary receipt to issue and secure such depositary
receipt. To the extent the fund invests in such unsponsored depositary receipts
there may be an increased possibility that the fund may not become aware of
events affecting the underlying security and thus the value of the related
depositary receipt. In addition, certain benefits (i.e., rights offerings)
which may be associated with the security underlying the depositary receipt may
not inure to the benefit of the holder of such depositary receipt.
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 may enter into forward foreign currency
exchange contracts, which are contractual agreements to purchase or sell a
specified currency at a specified future date and price set at the time of the
contract.
The fund may 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. 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 or that its hedging activities will be successful. 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.
The fund may use forward currency exchange contracts to reduce or gain exposure
to a currency. To the extent the fund gains exposure to a currency through
these instruments, the resulting exposure may exceed the value of securities
denominated in that currency held by the fund. For example, where the fund's
security selection has resulted in an overweight or underweight exposure to a
particular currency relative to the fund's benchmark, the fund may seek to
adjust currency exposure using forward currency exchange contracts.
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
19
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 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 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 may benefit from foreign currency 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 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 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.
20
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, and 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 forgo 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.
NATURAL DISASTERS
Certain areas of the world, including areas within the United States,
historically have been prone to natural disasters, such as hurricanes,
earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes,
wildfires or droughts. Such disasters, and the resulting damage, could have a
significant adverse impact on the economies of those areas and on the ability
of issuers in which the fund invests to conduct their
21
businesses, and thus on the investments made by the fund in such geographic
areas and/or issuers. Adverse weather conditions could have a significant
adverse impact on issuers in the agricultural sector and on insurance companies
that insure against the impact of natural disasters.
INVESTMENT COMPANY SECURITIES AND REAL ESTATE INVESTMENT TRUSTS
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
objectives and policies and permissible under the Investment Company Act of
1940, as amended (the "1940 Act"). Under one provision of the 1940 Act, a fund
may not acquire the securities of another investment company if such purchase
would result in (i) 3% or more of the total outstanding voting securities of
any one investment company being held by the fund, (ii) 5% or more of the
fund's total assets being invested in any one investment company, or (iii) 10%
or more of the fund's total assets being invested in securities of other
investment companies. However, there are several provisions of the 1940 Act and
rules thereunder that allow more expansive investment in investment companies.
In addition, 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 may also invest without limit in money market funds. Investing in
other investment companies subjects the fund to the risks of investing in the
underlying securities held by those investment companies.
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.
EXCHANGE TRADED FUNDS
The fund may invest in exchange traded funds ("ETFs"). ETFs, such as SPDRs,
iShares and various country index funds, are funds whose shares are traded on a
national exchange or the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ"). ETFs may be based on underlying equity or fixed
income securities. SPDRs, for example, seek to provide investment results that
generally correspond to the performance of the component common stocks of the
S&P 500. ETFs do not sell individual shares directly to investors and only
issue their shares in large blocks known as "creation units." The investor
purchasing a creation unit then sells the individual shares on a secondary
market. Therefore, the liquidity of ETFs depends on the adequacy of the
secondary market. There can be no assurance that an ETF's investment objective
will be achieved. ETFs based on an index may not replicate and maintain exactly
the composition and relative weightings of securities in the index. ETFs are
subject to the risks of investing in the underlying securities. The fund, as a
holder of the securities of the ETF, will bear its pro rata portion of the
ETF's expenses, including advisory fees. These expenses are in addition to the
direct expenses of the fund's own operations. Many ETFs have received exemptive
orders issued by the Securities and Exchange Commission that would permit the
fund to invest in those ETFs beyond the limitations applicable to other
investment companies, subject to certain terms and conditions. Some ETFs are
not structured as investment companies and thus are not regulated under the
1940 Act.
Certain ETFs, including leveraged ETFs and inverse ETFs, may have embedded
leverage. Leveraged ETFs seek to multiply the return of the tracked index
(e.g., twice the return) by using various forms of derivative transactions.
Inverse ETFs seek to negatively correlate with the performance of a particular
index by using various forms of derivative transactions, including by
short-selling the underlying index. An investment in an inverse ETF will
decrease in value when the value of the underlying index rises. By investing in
leveraged ETFs or inverse ETFs, the fund can commit fewer assets to the
investment in the securities represented on the index than would otherwise be
required.
Leveraged ETFs and inverse ETFs present all of the risks that regular ETFs
present. In addition, leveraged ETFs and inverse ETFs determine their return
over a specific, pre-set time period, typically daily, and, as a result, there
is no guarantee that the ETF's actual long term returns will be equal to the
daily return that
22
the fund seeks to achieve. For example, on a long-term basis (e.g., a period of
6 months or a year), the return of a leveraged ETF may in fact be considerably
less than two times the long-term return of the tracked index. Furthermore,
because leveraged ETFs and inverse ETFs achieve their results by using
derivative instruments, they are subject to the risks associated with
derivative transactions, including the risk that the value of the derivatives
may rise or fall more rapidly than other investments, thereby causing the ETF
to lose money and, consequently, the value of the fund's investment to
decrease. Investing in derivative instruments also involves the risk that other
parties to the derivative contract may fail to meet their obligations, which
could cause losses to the ETF. Short sales in particular are subject to the
risk that, if the price of the security sold short increases, the inverse ETF
may have to cover its short position at a higher price than the short sale
price, resulting in a loss to the inverse ETF and, indirectly, to the fund. An
ETF's use of these techniques will make the fund's investment in the ETF more
volatile than if the fund were to invest directly in the securities underlying
the tracked index, or in an ETF that does not use leverage or derivative
instruments. However, by investing in a leveraged ETF or an inverse ETF rather
than directly purchasing and/or selling derivative instruments, the fund will
limit its potential loss solely to the amount actually invested in the ETF
(that is, the fund will not lose more than the principal amount invested in the
ETF).
REAL ESTATE INVESTMENT TRUSTS ("REITS")
The fund may invest in REITs. REITs are companies that 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 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. Such indirect expenses are not
reflected in the fee table or expense example in the fund's prospectus. 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").
23
DERIVATIVE INSTRUMENTS
DERIVATIVES
The fund may, but is not required to, use futures and options on securities,
indices and currencies, 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. The fund may use
derivatives for a variety of purposes, including: in an attempt to hedge
against adverse changes in the market prices of securities, interest rates or
currency exchange rates; as a substitute for purchasing or selling securities;
to attempt to increase the fund's return as a non-hedging strategy that may be
considered speculative; and to manage portfolio characteristics (for example,
for funds investing in securities denominated in non-U.S. currencies, a
portfolio's currency exposure, or, for funds investing in fixed income
securities, a portfolio's duration or credit quality). The fund may choose not
to make use of derivatives for a variety of reasons, and any use may be limited
by applicable law and regulations.
Using derivatives exposes the fund to additional risks and may increase the
volatility of the fund's net asset value and may not provide the expected
result. Derivatives may have a leveraging effect on the portfolio. Leverage
generally magnifies the effect of a change in the value of an asset and creates
a risk of loss of value in a larger pool of assets than the fund would
otherwise have had. Therefore, using derivatives can disproportionately
increase losses and reduce opportunities for gain. If changes in a derivative's
value do not correspond to changes in the value of the fund's other investments
or do not correlate well with the underlying assets, rate or index, the fund
may not fully benefit from, or could lose money on, or could experience
unusually high expenses as a result of, the derivative position. Derivatives
involve the risk of loss if the counterparty defaults on its obligation.
Certain derivatives may be less liquid, which may reduce the returns of the
fund if it cannot sell or terminate the derivative at an advantageous time or
price. The fund also may have to sell assets at inopportune times to satisfy
its obligations. The fund may not be able to purchase or sell a portfolio
security at a time that would otherwise be favorable for it to do so, or may
have to sell a portfolio security at a disadvantageous time or price to
maintain cover or to segregate securities in connection with its use of
derivatives. Some derivatives may involve the risk of improper valuation.
Suitable derivatives may not be available in all circumstances or at reasonable
prices and may not be used by the fund for a variety of reasons.
Financial reform laws enacted after the financial crisis of 2008-2009, such as
the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"),
are changing many aspects of financial regulation applicable to derivatives.
For instance, Dodd-Frank calls for the comprehensive regulation of swaps by the
Commodity Futures Trading Commission (the "CFTC") and the Securities and
Exchange Commission (the "SEC"). The CFTC and the SEC are in the process of
adopting and implementing new regulations applicable to these instruments,
including rules with respect to recordkeeping, reporting, business conduct,
relationship documentation, margin, clearing, and trade execution requirements.
In addition, Dodd-Frank requires the registration of certain parties that deal
or engage in substantial trading, execution or advisory activities in the
markets for swaps. The extent and impact of these regulations are not yet fully
known and may not be known for some time.
The fund's use of derivatives may be affected by other applicable laws and
regulations and may be subject to review by the SEC, the CFTC, exchange and
market authorities and other regulators in the United States and abroad. The
fund's ability to use derivatives may be limited by tax considerations.
Certain derivatives transactions, including certain options, swaps, forward
contracts, and certain options on foreign currencies, are entered into directly
by the counterparties or through financial institutions acting as market makers
(OTC derivatives), rather than being traded on exchanges or in markets
registered with the CFTC or the SEC. Many of the protections afforded to
exchange participants will not be available to participants in OTC derivatives
transactions. For example, OTC derivatives transactions are not subject to the
guarantee of an exchange, and only OTC derivatives that are either required to
be cleared or submitted
24
voluntarily for clearing to a clearinghouse will enjoy the protections that
central clearing provides against default by the original counterparty to the
trade. In an OTC derivatives transaction that is not cleared, the fund bears
the risk of default by its counterparty. In a cleared derivatives transaction,
the fund is instead exposed to the risk of default of the clearinghouse and, to
the extent the fund has posted any margin, the risk of default of the broker
through which it has entered into the transaction. Information available on
counterparty creditworthiness may be incomplete or outdated, thus reducing the
ability to anticipate counterparty defaults.
Derivatives involve operational risk. There may be incomplete or erroneous
documentation or inadequate collateral or margin, or transactions may fail to
settle. For derivatives not guaranteed by an exchange or clearinghouse, the
fund may have only contractual remedies in the event of a counterparty default,
and there may be delays, costs, disagreements as to the meaning of contractual
terms and litigation in enforcing those remedies.
Swap contracts that are required to be cleared must be traded on a regulated
execution facility or contract market that makes them available for trading.
The establishment of a centralized exchange or market for swap transactions may
disrupt or limit the swap market and may not result in swaps being easier to
trade or value. Market-traded swaps may become more standardized, and the fund
may not be able to enter into swaps that meet its investment needs. The fund
also may not be able to find a clearinghouse willing to accept the swaps for
clearing. The new regulations may make using swaps more costly, may limit their
availability, or may otherwise adversely affect their value or performance.
Risks associated with the use of derivatives are magnified to the extent that a
large portion of the fund's assets are committed to derivatives in general or
are invested in just one or a few types of derivatives.
OPTIONS ON SECURITIES AND SECURITIES INDICES
The fund may purchase and write 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 may 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. The exercise price may differ from the market price of an underlying
security. The fund has the risk of loss that the price of an underlying
security may decline during the call period. The risk may be offset to some
extent by the premium the fund receives. If the value of the investment does
not rise above the call price, it's likely that the call will lapse without
being exercised. In that case, the fund would keep the cash premium and the
investment. 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 forgo 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. The fund has no control over
when it may be required to purchase the underlying securities. 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.
25
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.
Index options are subject to the timing risk inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. If a fund
has purchased an index option and exercises it before the closing index value
for that day is available, it runs the risk that the level of the underlying
index may subsequently change. If such a change causes the exercised option to
fall "out-of-the-money", the fund will be required to pay cash in an amount of
the difference between the closing index value and the exercise price of the
option.
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."
OPTIONS SPREADS AND STRADDLES. Option spread and straddle transactions require
a fund to purchase and/or write more than one option simultaneously. A fund may
engage in option spread transactions in which it purchases and writes put or
call options on the same underlying instrument, with the options having
different exercise prices and/or expiration dates.
A fund also may engage in option straddles, in which it purchases or sells
combinations of put and call options on the same instrument. A long straddle is
a combination of a call and a put option purchased on the same security where
the exercise price of the put is less than or equal to the exercise price of
the call.
26
A short straddle is a combination of a call and a put written on the same
security where the exercise price of the put is less than or equal to the
exercise price of the call and where the same issue of security or currency is
considered cover for both the put and the call.
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 it is expected that 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 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 the ability of Pioneer 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.
27
In addition to the risks of imperfect correlation between the 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
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 enter into closing purchase and sale transactions with respect to any
futures contracts and options on futures contracts. The futures contracts may
be based on various securities (such as U.S. government securities), securities
indices, foreign currencies and other financial instruments and indices. The
fund may invest in futures contracts based on the Chicago Board of Exchange
Volatility Index ("VIX Futures"). The VIX is an index of market sentiment
derived from S&P 500 Index option prices, and is designed to reflect investors'
consensus view of expected stock market volatility over future periods. The
fund may invest in futures and options based on credit derivative contracts on
baskets of indicies of securities, such as CDX. An interest rate futures
contract provides for the future sale by one party and the purchase by the
other party of a specified amount of a particular financial instrument (debt
security) at a specified price, date, time and place. 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 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 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
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 securities
and futures contracts based on other financial
28
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 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 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 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 REGARDING FUTURES CONTRACTS. 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 U.S. 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. When futures
contracts and options are used for hedging purposes, perfect correlation
between the fund's futures positions and portfolio positions may be impossible
to achieve, particularly where futures contracts based on individual securities
are currently not available. In the event of an imperfect correlation between a
futures position and a portfolio position which is intended to be protected,
the desired protection
29
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.
If the fund were unable to liquidate a futures contract or an option on a
futures position due to the absence of a liquid secondary market, the
imposition of price limits or otherwise, it could incur substantial losses. The
fund would continue to be subject to market risk with respect to the position.
In addition, except in the case of purchased options, the fund would continue
to be required to make daily variation margin payments and might be required to
maintain the position being hedged by the future or option or to maintain cash
or securities in a segregated account.
INTEREST RATE SWAPS, COLLARS, CAPS AND FLOORS
In order to hedge the value of the portfolio against interest rate fluctuations
or to enhance the fund's income, the fund may, but is not required to, enter
into various interest rate transactions such as interest rate swaps and the
purchase or sale of interest rate caps and floors. To the extent that the fund
enters into these transactions, the fund expects to do so primarily to preserve
a return or spread on a particular investment or portion of its portfolio or to
protect against any increase in the price of securities the fund anticipates
purchasing at a later date. The fund intends to use these transactions
primarily as a hedge and not as a speculative investment. However, the fund
also may invest in interest rate swaps to enhance income or to increase the
fund's yield, for example, during periods of steep interest rate yield curves
(i.e., wide differences between short-term and long-term interest rates). The
fund is not required to hedge its portfolio and may choose not to do so. The
fund cannot guarantee that any hedging strategies it uses will work.
In an interest rate swap, the fund exchanges with another party their
respective commitments to pay or receive interest (e.g., an exchange of fixed
rate payments for floating rate payments). For example, if the fund holds a
debt instrument with an interest rate that is reset only once each year, it may
swap the right to receive interest at this fixed rate for the right to receive
interest at a rate that is reset every week. This would enable the fund to
offset a decline in the value of the debt instrument due to rising interest
rates but would also limit its ability to benefit from falling interest rates.
Conversely, if the fund holds a debt instrument with an interest rate that is
reset every week and it would like to lock in what it believes to be a high
interest rate for one year, it may swap the right to receive interest at this
variable weekly rate for the right to receive interest at a rate that is fixed
for one year. Such a swap would protect the fund from a reduction in yield due
to falling interest rates and may permit the fund to enhance its income through
the positive differential between one week and one year interest rates, but
would preclude it from taking full advantage of rising interest rates.
The fund usually will enter into interest rate swaps on a net basis (i.e., the
two payment streams are netted out with the fund receiving or paying, as the
case may be, only the net amount of the two payments). The net amount of the
excess, if any, of the fund's obligations over its entitlements with respect to
each interest rate swap will be accrued on a daily basis, and an amount of cash
or liquid instruments having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the fund's
custodian. If the interest rate swap transaction is entered into on other than
a net basis, the full amount of the fund's obligations will be accrued on a
daily basis, and the full amount of the fund's obligations will be maintained
in a segregated account by the fund's custodian.
The fund also may engage in interest rate transactions in the form of
purchasing or selling interest rate caps or floors. The fund will not sell
interest rate caps or floors that it does not own. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest equal to the
difference of the index and the predetermined rate on a notional principal
amount (i.e., the reference amount with respect to which interest obligations
are determined although no actual exchange of principal occurs) from the party
selling such interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls
30
below a predetermined interest rate, to receive payments of interest at the
difference of the index and the predetermined rate on a notional principal
amount from the party selling such interest rate floor. The fund will not enter
into caps or floors if, on a net basis, the aggregate notional principal amount
with respect to such agreements exceeds the net assets of the fund.
Typically, the parties with which the fund will enter into interest rate
transactions will be broker-dealers and other financial institutions. The fund
will not enter into any interest rate swap, cap or floor transaction unless the
unsecured senior debt or the claims-paying ability of the other party thereto
is rated investment grade quality by at least one nationally recognized
statistical rating organization at the time of entering into such transaction
or whose creditworthiness is believed by the fund's adviser to be equivalent to
such rating. If there is a default by the other party to such a transaction,
the fund will have contractual remedies pursuant to the agreements related to
the transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. Caps and floors are
less liquid than swaps. Certain federal income tax requirements may limit the
fund's ability to engage in interest rate swaps.
EQUITY SWAPS, CAPS, FLOORS AND COLLARS
The fund may enter into equity swaps, caps, floors and collars to hedge assets
or liabilities or to seek to increase total return. Equity swaps involve the
exchange by a fund with another party of their respective commitments to make
or receive payments based on notional equity securities. The purchase of an
equity cap entitles the purchaser, to the extent that the market value of a
specified equity security or benchmark exceeds a predetermined level, to
receive payments of a contractually based amount from the party selling the
cap. The purchase of an equity floor entitles the purchaser, to the extent that
the market value of a specified equity security or benchmark falls below a
predetermined level, to receive payments of a contractually based amount from
the party selling the floor. A collar is a combination of a cap and a floor
that preserves a certain return within a predetermined range of values.
Investments in swaps, caps, floors and collars are highly specialized
activities which involve investment techniques and risks different from those
associated with ordinary portfolio transactions. Investments in equity swaps,
caps, floors and collars may be considered speculative because they involve
significant risk of loss. If Pioneer is incorrect in its forecast of market
values, these investments could negatively impact the fund's performance. These
investments also are subject to default risk of the counterparty and may be
less liquid than other portfolio securities. Moreover, investments in swaps,
caps, floors and collars may involve greater transaction costs than investments
in other equity securities.
TOTAL RETURN SWAPS, CAPS, FLOORS AND COLLARS
The fund may enter into total return swaps, caps, floors and collars to hedge
assets or liabilities or to seek to increase total return. Total return swaps
involve the exchange by a fund with another party of their respective
commitments to make or receive payments based on the change in market value of
a specified security, basket of securities or benchmark. The fund may invest in
swaps based on VIX futures contracts. The VIX is an index of market sentiment
derived from S&P 500 Index option prices, and is designed to reflect investors'
consensus view of expected stock market volatility over future periods. Total
return swaps may be used to obtain exposure to a security or market without
owning or taking physical custody of such security or market. The purchase of a
cap entitles the purchaser, to the extent that the market value of a specified
security or benchmark exceeds a predetermined level, to receive payments of a
contractually-based amount from the party selling the cap. The purchase of a
floor entitles the purchaser, to the extent that the market value of a
specified security or benchmark falls below a predetermined level, to receive
payments of a contractually-based amount from the party selling the floor. A
collar is a combination of a cap and a floor that preserves a certain return
within a predetermined range of values. Investments in swaps, caps, floors and
collars are highly specialized activities which involve investment techniques
and risks different from those associated with ordinary portfolio transactions.
Investments in total return swaps, caps, floors and collars may be considered
speculative because they involve significant risk of loss. If Pioneer is
incorrect in its forecast of market values, these investments could negatively
impact the fund's performance. These
31
investments also are subject to default risk of the counterparty and may be
less liquid than other portfolio securities. Moreover, investments in swaps,
caps, floors and collars may involve greater transaction costs than investments
in other securities.
CREDIT DEFAULT SWAP AGREEMENTS
The fund may enter into credit default swap agreements. The "buyer" in a credit
default contract is obligated to pay the "seller" a periodic stream of payments
over the term of the contract provided that no specified events of default, or
"credit events", on an underlying reference obligation have occurred. If such a
credit event occurs, the seller must pay the buyer the "par value" (full
notional value) of the reference obligation in exchange for the reference
obligation, or must make a cash settlement payment. The fund may be either the
buyer or seller in the transaction. If the fund is a buyer and no credit event
occurs, the fund will receive no return on the stream of payments made to the
seller. However, if a credit event occurs, the fund, as the buyer, receives the
full notional value for a reference obligation that may have little or no
value. As a seller, the fund receives a fixed rate of income throughout the
term of the contract, which typically is between six months and three years,
provided that there is no credit event. If a credit event occurs, the fund, as
the seller, must pay the buyer the full notional value of the reference
obligation. The fund, as the seller, would be entitled to receive the reference
obligation. Alternatively, the fund may be required to make a cash settlement
payment, where the reference obligation is received by the fund as seller. The
value of the reference obligation, coupled with the periodic payments
previously received, would likely be less than the full notional value the fund
pays to the buyer, resulting in a loss of value to the fund as seller. When the
fund acts as a seller of a credit default swap agreement it is exposed to the
risks of a leveraged transaction. Credit default swaps may involve greater
risks than if the fund had invested in the reference obligation directly. In
addition to general market risks, credit default swaps are subject to
illiquidity risk, counterparty risk and credit risk. The fund will enter into
swap agreements only with counterparties who are rated investment grade quality
by at least one nationally recognized statistical rating organization at the
time of entering into such transaction or whose creditworthiness is believed to
be equivalent to such rating.
Recent legislation will require most swaps to be executed through a centralized
exchange or regulated facility and be cleared through a regulated
clearinghouse. The swap market could be disrupted or limited as a result of
this legislation, which could adversely affect the fund. Moreover, the
establishment of a centralized exchange or market for swap transactions may not
result in swaps being easier to trade or value.
The fund may also invest in credit derivative contracts on baskets or indices
of securities, such as CDX. A CDX can be used to hedge credit risk or to take a
position on a basket of credit entities or indices. The individual credits
underlying credit default swap indices may be rated investment grade or
non-investment grade. These instruments are designed to track representative
segments of the credit default swap market such as investment grade, below
investment grade and emerging markets. A CDX index tranche provides access to
customized risk, exposing each investor to losses at different levels of
subordination. The lowest part of the capital structure is called the "equity
tranche" as it has exposure to the first losses experienced in the basket. The
mezzanine and senior tranches are higher in the capital structure but can also
be exposed to loss in value. Investments are subject to liquidity risks as well
as other risks associated with investments in credit default swaps.
CREDIT-LINKED NOTES
The fund may invest in credit-linked notes ("CLNs"), which are derivative
instruments. A CLN is a synthetic obligation between two or more parties where
the payment of principal and/or interest is based on the performance of some
obligation (a reference obligation). In addition to credit risk of the
reference obligations and interest rate risk, the buyer/seller of the CLN is
subject to counterparty risk.
EXCHANGE TRADED NOTES
The fund may invest in exchange traded notes ("ETNs"). An ETN is a type of
senior, unsecured, unsubordinated debt security issued by financial
institutions that combines both aspects of bonds and ETFs. An ETN's returns are
based on the performance of a market index or other reference asset minus fees
and expenses.
32
Similar to ETFs, ETNs are listed on an exchange and traded in the secondary
market. However, unlike an ETF, an ETN can be held until the ETN's maturity, at
which time the issuer will pay a return linked to the performance of the market
index or other reference asset to which the ETN is linked minus certain fees.
Unlike regular bonds, ETNs do not make periodic interest payments and principal
is not protected.
An ETN that is tied to a specific index may not be able to replicate and
maintain exactly the composition and relative weighting of securities,
commodities or other components in the applicable index. ETNs also incur
certain expenses not incurred by their applicable index. Additionally, certain
components comprising the index tracked by an ETN may, at times, be temporarily
unavailable, which may impede an ETN's ability to track its index. Some ETNs
that use leverage can, at times, be relatively illiquid and, thus, they may be
difficult to purchase or sell at a fair price. Leveraged ETNs are subject to
the same risk as other instruments that use leverage in any form. While
leverage allows for greater potential return, the potential for loss is also
greater. However, the fund's potential loss is limited to the amount actually
invested in the ETN.
The market value of an ETN is influenced by supply and demand for the ETN, the
current performance of the index or other reference asset, the credit rating of
the ETN issuer, volatility and lack of liquidity in the reference asset,
changes in the applicable interest rates, and economic, legal, political or
geographic events that affect the reference asset. The market value of ETN
shares may differ from their net asset value. This difference in price may be
due to the fact that the supply and demand in the market for ETN shares at any
point in time is not always identical to the supply and demand in the market
for the securities underlying the index (or other reference asset) that the ETN
seeks to track. The value of an ETN may also change due to a change in the
issuer's credit rating. As a result, there may be times when an ETN share
trades at a premium or discount to its net asset value. The fund will bear its
pro rata portion of any fees and expenses borne by the ETN. These fees and
expenses generally reduce the return realized at maturity or upon redemption
from an investment in an ETN.
FOREIGN CURRENCY SWAPS
Foreign currency swaps involve the exchange by the lenders, including the Fund,
with another party (the "counterparty") of the right to receive the currency in
which the loans are denominated for the right to receive U.S. dollars. The Fund
will enter into a foreign currency swap only if the outstanding debt
obligations of the counterparty are rated investment grade quality by at least
one nationally recognized statistical rating organization at the time of
entering into such transaction or whose creditworthiness is believed by the
fund's adviser to be equivalent to such rating. The amounts of U.S. dollar
payments to be received by the fund and the foreign currency payments to be
received by the counterparty are fixed at the time the swap arrangement is
entered into. Accordingly, the swap protects the fund from the fluctuations in
exchange rates and locks in the right to receive payments under the loan in a
predetermined amount of U.S. dollars. If there is a default by the
counterparty, the fund will have contractual remedies pursuant to the swap
agreement; however, the U.S. dollar value of the fund's right to receive
foreign currency payments under the obligation will be subject to fluctuations
in the applicable exchange rate to the extent that a replacement swap
arrangement is unavailable or the fund is unable to recover damages from the
defaulting counterparty.
CROSS CURRENCY INTEREST RATE SWAP AGREEMENTS
Cross currency interest rate swap agreements combine features of currency swap
agreements and interest rate swap agreements. The cross currency interest rate
swaps in which the fund may enter generally will involve both the exchange of
currency and the payment of interest streams with reference to one currency
based on a specified index in exchange for receiving interest streams with
reference to the other currency. Such swaps may involve initial and final
exchanges that correspond to the agreed upon transaction amount. For example,
the payment stream on a specified amount of euro based on a European market
floating rate might be exchanged for a U.S. oriented floating rate on the same
principal amount converted into U.S. dollars.
FINANCIAL FUTURES AND OPTIONS TRANSACTIONS The fund has claimed an exclusion
from registration as a "commodity pool operator" under the Commodity Exchange
Act (the "CEA"), and, therefore, is not subject to registration or regulation
as a commodity pool operator.
33
As a result, while the fund continues to rely on this exemption, it will remain
limited in its ability to trade instruments subject to the jurisdiction of the
Commodity Futures Trading Commission ("CFTC"), including commodity futures
(which include futures on broad-based securities indexes and interest rate
futures), options on commodity futures and swaps. This limitation also applies
with respect to any indirect exposure that the fund may have to these
instruments through investments in other funds. The fund's investment adviser
may have to rely on representations from the underlying fund's manager about
the amount (or maximum permitted amount) of investment exposure that the
underlying fund has to instruments such as commodity futures, options on
commodity futures and swaps.
Under this exemption, the fund must satisfy one of the following two trading
limitations at all times: (1) the aggregate initial margin and premiums
required to establish the fund's positions in commodity futures, options on
commodity futures, swaps and other CFTC-regulated instruments may not exceed 5%
of the liquidation value of the fund's portfolio (after accounting for
unrealized profits and unrealized losses on any such investments); or (2) the
aggregate net notional value of such instruments, determined at the time the
most recent position was established, may not exceed 100% of the liquidation
value of the fund's portfolio (after accounting for unrealized profits and
unrealized losses on any such positions). The fund would not be required to
consider its exposure to such instruments if they were held for "bona fide
hedging" purposes, as such term is defined in the rules of the CFTC. In
addition to meeting one of the foregoing trading limitations, the fund may not
market itself as a commodity pool or otherwise as a vehicle for trading in the
markets for CFTC-regulated instruments.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES
SHORT-TERM INVESTMENTS
For temporary defensive or cash management purposes, the fund may invest in all
types of short-term investments including, but not limited to, (a) commercial
paper and other short-term commercial obligations; (b) obligations (including
certificates of deposit and bankers' acceptances) of banks; (c) obligations
issued or guaranteed by a governmental issuer, including governmental agencies
or instrumentalities; (d) fixed income securities of non-governmental issuers;
and (e) other cash equivalents or cash. Subject to the fund's restrictions
regarding investment in non-U.S. securities, these securities may be
denominated in any currency. Although these investments generally are rated
investment grade or are determined by Pioneer to be of equivalent credit
quality, the fund may also invest in these instruments if they are rated below
investment grade in accordance with its investment objectives, policies and
restrictions.
ILLIQUID SECURITIES
The fund may invest up to 15% of its net assets in illiquid and other
securities that are not readily marketable. If due to subsequent fluctuations
in value or any other reasons, the value of the fund's illiquid securities
exceeds this percentage limitation, the fund will consider what actions, if
any, are necessary to maintain adequate liquidity. 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. Under the
direction of the Board of Trustees, Pioneer monitors the 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.
34
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. A repurchase
agreement may be considered a loan by the fund collateralized by securities.
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. 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.
There is no specific limit on the fund's ability to enter into repurchase
agreements. The SEC frequently treats repurchase agreements as loans for
purposes of the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of securities to a bank or other
institution with an agreement that the fund will buy back the securities at a
fixed future date at a fixed price plus an agreed amount of "interest" which
may be reflected in the repurchase price. Reverse repurchase agreements involve
the risk that the market value of securities purchased by the fund with
proceeds of the transaction may decline below the repurchase price of the
securities sold by the fund that it is obligated to repurchase. The fund will
also continue to be subject to the risk of a decline in the market value of the
securities sold under the agreements because it will reacquire those securities
upon effecting their repurchase. Reverse repurchase agreements may be
considered to be a type of borrowing. The 1940 Act permits a fund to borrow
money in amounts of up to one-third of the fund's total assets from banks for
any purpose and up to 5% of the fund's total assets from banks and other
lenders for temporary purposes. The fund will segregate assets in an amount at
least equal to the repurchase price of the securities.
SHORT SALES AGAINST THE BOX
The fund may sell securities "short against the box." A short sale involves the
fund borrowing securities from a broker and selling the borrowed securities.
The fund has an obligation to return securities identical to the borrowed
securities to the broker. In a short sale against the box, the fund at all
times owns an equal amount of the security sold short or securities convertible
into or exchangeable for, with or without payment of additional consideration,
an equal amount of the security sold short. The fund intends to use short sales
against the box to hedge. For example when the fund believes that the price of
a current portfolio security may decline, the fund may use a short sale against
the box to lock in a sale price for a security rather than selling the security
immediately. In such a case, any future losses in the fund's long position
should be offset by a gain in the short position and, conversely, any gain in
the long position should be reduced by a loss in the short position. The fund
may engage in short sales of securities only against the box.
If the fund effects a short sale against the box at a time when it has an
unrealized gain on the security, it may be required to recognize that gain as
if it had actually sold the security (a "constructive sale") on the date it
effects the short sale. However, such constructive sale treatment may not apply
if the fund closes
35
out the short sale with securities other than the appreciated securities held
at the time of the short sale provided that certain other conditions are
satisfied. Uncertainty regarding the tax consequences of effecting short sales
may limit the extent to which the fund may make short sales against the box.
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.
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 securities subject to the 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 dollar rolls will depend upon Pioneer's ability to manage its interest rate
and prepayment exposure. There is no assurance that dollar rolls can be
successfully employed.
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 portfolio. If
the fund enters into a transaction requiring segregation, such as a forward
commitment or a reverse repurchase agreement, 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. In some instances a
fund may "cover" its obligation using other methods to the extent permitted
under the 1940 Act, orders or releases issued by the SEC thereunder, or
no-action letters or other guidance of the SEC staff.
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. A high rate of portfolio
turnover (100% or more) involves correspondingly greater transaction costs
which must be borne by the fund and its shareholders. See "Annual Fee, Expense
and Other Information" for the fund's annual portfolio turnover rate.
LENDING OF PORTFOLIO SECURITIES
The fund may lend portfolio securities to registered broker-dealers or other
institutional investors deemed by Pioneer to be of good standing under
agreements which require that the loans be secured continuously by collateral
in the form of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by banks approved by the fund. The value
of the collateral is monitored on a daily basis and the borrower is required to
maintain the collateral 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
36
issuer on the securities loaned and continues to have all of the other risks
associated with owning the securities. Where the collateral received is cash,
the cash will be invested and the fund will be entitled to a share of the
income earned on the investment, but will also be subject to investment risk on
the collateral and will bear the entire amount of any loss in connection with
investment of such collateral. The fund may pay administrative and custodial
fees in connection with loans of securities and, where the collateral received
is cash, the fund may pay a portion of the income earned on the investment of
collateral to the borrower, lending agent or other intermediary. Fees and
expenses paid by the fund in connection with loans of securities are not
reflected in the fee table or expense example in the fund's prospectus. If the
income earned on the investment of the cash collateral is insufficient to pay
these amounts or if the value of the securities purchased with such cash
collateral declines, the fund may take a loss on the loan. Where the fund
receives securities as collateral, the fund will earn no income on the
collateral, but will earn a fee from the borrower. The fund reserves the right
to recall loaned securities so that it may exercise voting rights on loaned
securities according to the fund's Proxy Voting Policies and Procedures.
The risk in lending portfolio securities, as with other extensions of credit,
consists of the possibility of loss to the fund due to (i) the inability of the
borrower to return the securities, (ii) a delay in receiving additional
collateral to adequately cover any fluctuations in the value of securities on
loan, (iii) a delay in recovery of the securities, or (iv) the loss of rights
in the collateral should the borrower fail financially. In addition, as noted
above, the fund continues to have market risk and other risks associated with
owning the securities on loan. Where the collateral delivered by the borrower
is cash, the fund will also have the risk of loss of principal and interest in
connection with its investment of collateral. If a borrower defaults, the value
of the collateral may decline before the fund can dispose of it. The fund will
lend portfolio securities only to firms that have been approved in advance by
Pioneer, which will monitor the creditworthiness of any such firms. However,
this monitoring may not protect the fund from loss. At no time would the value
of the securities loaned exceed 33 1/3% of the value of the fund's total
assets.
INTERFUND LENDING
To satisfy redemption requests or to cover unanticipated cash shortfalls, a
fund may enter into lending agreements ("Interfund Lending Agreements") under
which the fund would lend money and borrow money for temporary purposes
directly to and from another Pioneer fund through a credit facility ("Interfund
Loan"), subject to meeting the conditions of an SEC exemptive order granted to
the funds permitting such interfund lending. All Interfund Loans will consist
only of uninvested cash reserves that the fund otherwise would invest in
short-term repurchase agreements or other short-term instruments.
If a fund has outstanding borrowings, any Interfund Loans to the fund (a) will
be at an interest rate equal to or lower than any outstanding bank loan, (b)
will be secured at least on an equal priority basis with at least an equivalent
percentage of collateral to loan value as any outstanding bank loan that
requires collateral, (c) will have a maturity no longer than any outstanding
bank loan (and in any event not over seven days) and (d) will provide that, if
an event of default occurs under any agreement evidencing an outstanding bank
loan to the fund, the event of default will automatically (without need for
action or notice by the lending fund) constitute an immediate event of default
under the Interfund Lending Agreement entitling the lending fund to call the
Interfund Loan (and exercise all rights with respect to any collateral) and
that such call will be made if the lending bank exercises its right to call its
loan under its agreement with the borrowing fund.
A fund may make an unsecured borrowing through the credit facility if its
outstanding borrowings from all sources immediately after the interfund
borrowing total 10% or less of its total assets; provided, that if the fund has
a secured loan outstanding from any other lender, including but not limited to
another Pioneer fund, the fund's interfund borrowing will be secured on at
least an equal priority basis with at least an equivalent percentage of
collateral to loan value as any outstanding loan that requires collateral. If a
fund's total outstanding borrowings immediately after an interfund borrowing
would be greater than 10% of its total assets, the fund may borrow through the
credit facility on a secured basis only. A fund may not borrow through the
credit facility nor from any other source if its total outstanding borrowings
immediately after the interfund borrowing would be more than 33 1/3% of its
total assets.
37
No fund may lend to another fund through the interfund lending credit facility
if the loan would cause its aggregate outstanding loans through the credit
facility to exceed 15% of the lending fund's net assets at the time of the
loan. A fund's Interfund Loans to any one fund shall not exceed 5% of the
lending fund's net assets. The duration of Interfund Loans is limited to the
time required to receive payment for securities sold, but in no event more than
seven days. Loans effected within seven days of each other will be treated as
separate loan transactions for purposes of this condition. Each Interfund Loan
may be called on one business day's notice by a lending fund and may be repaid
on any day by a borrowing fund.
The limitations detailed above and the other conditions of the SEC exemptive
order permitting interfund lending are designed to minimize the risks
associated with interfund lending for both the lending fund and the borrowing
fund. However, no borrowing or lending activity is without risk. When a fund
borrows money from another fund, there is a risk that the loan could be called
on one day's notice or not renewed, in which case the fund may have to borrow
from a bank at higher rates if an Interfund Loan were not available from
another fund. A delay in repayment to a lending fund could result in a lost
opportunity or additional lending costs.
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 the fund enters into when-issued or delayed delivery
transactions it will segregate liquid assets with a value equal to the fund's
obligations. See "Asset Segregation."
DISCLOSURE OF PORTFOLIO HOLDINGS
The Board of Trustees has adopted policies and procedures relating to
disclosure of the Pioneer funds' portfolio securities. These policies and
procedures are designed to provide a framework for disclosing information
regarding portfolio holdings, portfolio composition or other portfolio
characteristics consistent with applicable federal securities laws and
regulations and general principles of fiduciary duty relating to fund
shareholders. While Pioneer may manage other separate accounts and unregistered
products that have substantially similar investment strategies to those of
another Pioneer fund, and therefore portfolio holdings that may be
substantially similar, and in some cases nearly identical, to such fund, these
policies and procedures only relate to the disclosure of portfolio information
of the Pioneer funds that are registered management companies. Separate account
and unregistered product clients are not subject to these policies and
procedures. Separate account and unregistered product clients of Pioneer have
access to their portfolio holdings, and prospective clients have access to
representative holdings.
Generally, Pioneer will make a fund's portfolio information available to the
public on a monthly basis with an appropriate delay based upon the nature of
the information disclosed. Pioneer normally will publish a fund's full
portfolio holdings thirty (30) days after the end of each month (this time
period may be different for certain funds). Such information shall be made
available on the funds' website (www.pioneerinvestments.com) and may be sent to
rating agencies, reporting/news services and financial intermediaries, upon
request. In addition, Pioneer generally makes publicly available information
regarding a fund's top ten holdings (including the percentage of a fund's
assets represented by each security), the percentage breakdown of a fund's
investments by country, sector and industry, various volatility measures (such
as beta, standard deviation, etc.), market capitalization ranges and other
portfolio characteristics (such as alpha, average P/E ratio, etc.) three (3)
business days after the end of each month.
Pioneer may provide a fund's full portfolio holdings or other information to
certain entities prior to the date such information is made public, provided
that certain conditions are met. The entities to which such disclosure may be
made as of the date of this statement of additional information are rating
agencies,
38
plan sponsors, prospective separate account clients and other financial
intermediaries (i.e., organizations evaluating a fund for purposes of
investment by their clients, such as broker-dealers, investment advisers,
banks, insurance companies, financial planning firms, plan sponsors, plan
administrators, shareholder servicing organizations and pension consultants).
The third party must agree to a limited use of that information which does not
conflict with the interests of the fund's shareholders, to use the information
only for that authorized purpose, to keep such information confidential, and
not to trade on such information. The Board of Trustees considered the
disclosure of portfolio holdings information to these categories of entities to
be consistent with the best interests of shareholders in light of the agreement
to maintain the confidentiality of such information and only to use such
information for the limited and approved purposes. Pioneer's compliance
department, the local head of investment management and the global chief
investment officer may, but only acting jointly, grant exemptions to this
policy. Exemptions may be granted only if these persons determine that
providing such information is consistent with the interests of shareholders and
the third party agrees to limit the use of such information only for the
authorized purpose, to keep such information confidential, and not to trade on
such information. Although the Board of Trustees will periodically be informed
of exemptions granted, granting exemptions entails the risk that portfolio
holdings information may be provided to entities that use the information in a
manner inconsistent with their obligations and the best interests of a fund.
Currently, Pioneer, on behalf of the Pioneer funds, has ongoing arrangements
whereby the following entities may receive a fund's full portfolio holdings or
other information prior to the date such information is made public:
Metropolitan Life Insurance Company (within 30 days after month end for board
materials and advance preparation of marketing materials, as needed to evaluate
Pioneer funds); Roszel Advisors (within 30 days after month end for due
diligence and review of certain Pioneer funds included in fund programs);
Oppenheimer & Co. (within 30 days after month end for due diligence and review
of certain Pioneer funds included in fund programs); UBS (within 15 days after
month end for due diligence and review of certain Pioneer funds included in
fund programs); Ibbotson Associates, Inc. (as needed to select Pioneer funds
for the Pioneer-Ibbotson fund of funds products); Beacon Pointe Advisors (as
needed for quarterly review of certain Pioneer funds); Commonwealth Financial
Network (within 30 days after month end for risk analysis on funds on behalf of
their clients); Hartford Retirement Services, LLC (as needed for risk analysis
on funds on behalf of their clients); Transamerica Life Insurance Company (as
needed for performance and risk analysis on funds on behalf of their clients);
TIBCO Software Inc./Spotfire Division (as needed to evaluate and develop
portfolio reporting software); Curcio Webb, LLC (as needed for evaluation and
research purposes); Fidelity Investments (as needed to evaluate Pioneer funds);
Egan Jones Ratings Company (as needed in order to evaluate and select
Nationally Recognized Statistical Rating Organizations (NRSROs)); DBRS Limited
(as needed in order to evaluate and select NRSROs); Wells Fargo Advisors (as
needed for risk analysis on funds on behalf of their clients and product
review); and Capital Market Consultants (as needed to complete quarterly due
diligence research).
Compliance with the funds' portfolio holdings disclosure policy is subject to
periodic review by the Board of Trustees, including a review of any potential
conflicts of interest in the disclosures made by Pioneer in accordance with the
policy or the exceptions permitted under the policy. Any change to the policy
to expand the categories of entities to which portfolio holdings may be
disclosed or an increase in the purposes for which such disclosure may be made
would be subject to approval by the Board of Trustees and, reflected, if
material, in a supplement to the fund's statement of additional information.
The funds' portfolio holdings disclosure policy is not intended to prevent the
disclosure of any and all portfolio information to the funds' service providers
who generally need access to such information in the performance of their
contractual duties and responsibilities, such as Pioneer, the funds' custodian,
fund accounting agent, principal underwriter, investment sub-adviser, if any,
independent registered public accounting firm or counsel. In approving the
policy, the Board of Trustees considered that the service providers are subject
to duties of confidentiality and duties not to trade on non-public information
arising under law or
39
contract that provide an adequate safeguard for such information. None of
Pioneer, the funds, or any other party receive any compensation or other
consideration from any arrangement pertaining to the release of a fund's
portfolio holdings information.
In addition, the funds make their portfolio holdings available semi-annually in
shareholder reports filed on Form N-CSR and after the first and third fiscal
quarters in regulatory filings on Form N-Q. These shareholder reports and
regulatory filings are filed with the SEC, as required by the federal
securities laws. Form N-Q is filed with the SEC within sixty (60) days after
the end of a fund's first and third fiscal quarters. Form N-CSR is filed with
the SEC within ten (10) days after the transmission to shareholders of a fund's
annual or semi-annual report, as applicable.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT POLICIES
Each fund has adopted certain fundamental investment policies which 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:
(1) 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
(2) more than 50% of the outstanding shares of the fund.
Each fund's fundamental policies are as follows:
(1) The fund may not borrow money except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC staff or other authority
of competent jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other authority of competent
jurisdiction.
(2) The fund may not engage in the business of underwriting the securities of
other issuers except as permitted by (i) the 1940 Act, or interpretations
or modifications by the SEC, SEC staff or other authority of competent
jurisdiction, or (ii) exemptive or other relief or permission from the
SEC, SEC staff or other authority of competent jurisdiction.
(3) The fund may lend money or other assets to the extent permitted by (i)
the 1940 Act, or interpretations or modifications by the SEC, SEC staff
or other authority of competent jurisdiction or (ii) exemptive or other
relief or permission from the SEC, SEC staff or other authority of
competent jurisdiction.
(4) The fund may not issue senior securities except as permitted by (i) the
1940 Act, or interpretations or modifications by the SEC, SEC staff or
other authority of competent jurisdiction, or (ii) exemptive or other
relief or permission from the SEC, SEC staff or other authority of
competent jurisdiction.
(5) The fund may not purchase or sell real estate except as permitted by (i)
the 1940 Act, or interpretations or modifications by the SEC, SEC staff
or other authority of competent jurisdiction, or (ii) exemptive or other
relief or permission from the SEC, SEC staff or other authority of
competent jurisdiction.
(6) The fund may purchase or sell commodities or contracts related to
commodities to the extent permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC staff or other authority
of competent jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other authority of competent
jurisdiction.
(7) Except as permitted by exemptive or other relief or permission from the
SEC, SEC staff or other authority of competent jurisdiction, the fund may
not make any investment if, as a result, the fund's investments will be
concentrated in any one industry.
40
With respect to the fundamental policy relating to borrowing money set forth in
(1) above, the 1940 Act permits a fund to borrow money in amounts of up to
one-third of the fund's total assets from banks for any purpose, and to borrow
up to 5% of the fund's total assets from banks or other lenders for temporary
purposes (the fund's total assets include the amounts being borrowed). To limit
the risks attendant to borrowing, the 1940 Act requires the fund to maintain at
all times an "asset coverage" of at least 300% of the amount of its borrowings.
Asset coverage means the ratio that the value of the fund's total assets
(including amounts borrowed), minus liabilities other than borrowings, bears to
the aggregate amount of all borrowings. Borrowing money to increase a fund's
investment portfolio is known as "leveraging." Borrowing, especially when used
for leverage, may cause the value of a fund's shares to be more volatile than
if the fund did not borrow. This is because borrowing tends to magnify the
effect of any increase or decrease in the value of the fund's portfolio
holdings. Borrowed money thus creates an opportunity for greater gains, but
also greater losses. To repay borrowings, the fund may have to sell securities
at a time and at a price that is unfavorable to the fund. There also are costs
associated with borrowing money, and these costs would offset and could
eliminate a fund's net investment income in any given period. Currently, the
fund does not contemplate borrowing for leverage, but if the fund does so, it
will not likely do so to a substantial degree. The policy in (1) above will be
interpreted to permit the fund to engage in trading practices and investments
that may be considered to be borrowing to the extent permitted by the 1940 Act.
Reverse repurchase agreements may be considered to be a type of borrowing.
Short-term credits necessary for the settlement of securities transactions and
arrangements with respect to securities lending will not be considered to be
borrowings under the policy. Practices and investments that may involve
leverage but are not considered to be borrowings are not subject to the policy.
Such trading practices may include futures, options on futures, forward
contracts and other derivative investments.
A fund may pledge its assets and guarantee the securities of another company
without limitation, subject to the fund's investment policies (including the
fund's fundamental policy regarding borrowing) and applicable laws and
interpretations. Pledges of assets and guarantees of obligations of others are
subject to many of the same risks associated with borrowings and, in addition,
are subject to the credit risk of the obligor for the underlying obligations.
To the extent that pledging or guaranteeing assets may be considered the
issuance of senior securities, the issuance of senior securities is governed by
the fund's policies on senior securities. If the fund were to pledge its
assets, the fund would take into account any then-applicable legal guidance,
including any applicable SEC staff position, would be guided by the judgment of
the fund's Board and Pioneer regarding the terms of any credit facility or
arrangement, including any collateral required, and would not pledge more
collateral than, in their judgment, is necessary for the fund to obtain the
credit sought. Shareholders should note that in 1973, the SEC staff took the
position in a no-action letter that a mutual fund could not pledge 100% of its
assets without a compelling business reason. In more recent no-action letters,
including letters that address the same statutory provision of the 1940 Act
(Section 17) addressed in the 1973 letter, the SEC staff has not mentioned any
limitation on the amount of collateral that may be pledged to support credit
obtained. This does not mean that the staff's position on this issue has
changed.
With respect to the fundamental policy relating to underwriting set forth in
(2) above, the 1940 Act does not prohibit a fund from engaging in the
underwriting business or from underwriting the securities of other issuers; in
fact, the 1940 Act permits a fund to have underwriting commitments of up to 25%
of its assets under certain circumstances. Those circumstances currently are
that the amount of the fund's underwriting commitments, when added to the value
of the fund's investments in issuers where the fund owns more than 10% of the
outstanding voting securities of those issuers, cannot exceed the 25% cap. A
fund engaging in transactions involving the acquisition or disposition of
portfolio securities may be considered to be an underwriter under the
Securities Act of 1933, as amended (the "1933 Act"). Under the 1933 Act, an
underwriter may be liable for material omissions or misstatements in an
issuer's registration statement or prospectus. Securities purchased from an
issuer and not registered for sale under the 1933 Act are considered restricted
securities. There may be a limited market for these securities. If these
securities are registered under the 1933 Act, they may then be eligible for
sale but participating in the sale may subject the seller to underwriter
liability. These risks could apply to a fund investing in restricted
securities. Although it is not
41
believed that the application of the 1933 Act provisions described above would
cause a fund to be engaged in the business of underwriting, the policy in (2)
above will be interpreted not to prevent the fund from engaging in transactions
involving the acquisition or disposition of portfolio securities, regardless of
whether the fund may be considered to be an underwriter under the 1933 Act.
With respect to the fundamental policy relating to lending set forth in (3)
above, the 1940 Act does not prohibit a fund from making loans; however, SEC
staff interpretations currently prohibit funds from lending more than one-third
of their total assets, except through the purchase of debt obligations or the
use of repurchase agreements. (A repurchase agreement is an agreement to
purchase a security, coupled with an agreement to sell that security back to
the original seller on an agreed-upon date at a price that reflects current
interest rates. The SEC frequently treats repurchase agreements as loans.)
While lending securities may be a source of income to a fund, as with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the underlying securities should the borrower fail financially.
However, loans would be made only when the fund's manager or a subadviser
believes the income justifies the attendant risks. The fund also will be
permitted by this policy to make loans of money, including to other funds. The
fund has obtained exemptive relief from the SEC to make short-term loans to
other Pioneer funds through a credit facility in order to satisfy redemption
requests or to cover unanticipated cash shortfalls; as discussed in this
Statement of Additional Information under "Interfund Lending". The conditions
of the SEC exemptive order permitting interfund lending are designed to
minimize the risks associated with interfund lending, however no lending
activity is without risk. A delay in repayment to a lending fund could result
in a lost opportunity or additional lending costs. The policy in (3) above will
be interpreted not to prevent the fund from purchasing or investing in debt
obligations and loans. In addition, collateral arrangements with respect to
options, forward currency and futures transactions and other derivative
instruments, as well as delays in the settlement of securities transactions,
will not be considered loans.
With respect to the fundamental policy relating to issuing senior securities
set forth in (4) above, "senior securities" are defined as fund obligations
that have a priority over the fund's shares with respect to the payment of
dividends or the distribution of fund assets. The 1940 Act prohibits a fund
from issuing senior securities except that the fund may borrow money in amounts
of up to one-third of the fund's total assets from banks for any purpose. A
fund also may borrow up to 5% of the fund's total assets from banks or other
lenders for temporary purposes, and these borrowings are not considered senior
securities. The issuance of senior securities by a fund can increase the
speculative character of the fund's outstanding shares through leveraging.
Leveraging of a fund's portfolio through the issuance of senior securities
magnifies the potential for gain or loss on monies, because even though the
fund's net assets remain the same, the total risk to investors is increased.
Certain widely used investment practices that involve a commitment by a fund to
deliver money or securities in the future are not considered by the SEC to be
senior securities, provided that a fund segregates cash or liquid securities in
an amount necessary to pay the obligation or the fund holds an offsetting
commitment from another party. These investment practices include repurchase
and reverse repurchase agreements, swaps, dollar rolls, options, futures and
forward contracts. The policy in (4) above will be interpreted not to prevent
collateral arrangements with respect to swaps, options, forward or futures
contracts or other derivatives, or the posting of initial or variation margin.
With respect to the fundamental policy relating to real estate set forth in (5)
above, the 1940 Act does not prohibit a fund from owning real estate; however,
a fund is limited in the amount of illiquid assets it may purchase. Investing
in real estate may involve risks, including that real estate is generally
considered illiquid and may be difficult to value and sell. Owners of real
estate may be subject to various liabilities, including environmental
liabilities. To the extent that investments in real estate are considered
illiquid, the current SEC staff position generally limits a fund's purchases of
illiquid securities to 15% of net assets. The policy in (5) above will be
interpreted not to prevent the fund from investing in real estate-related
companies, companies whose businesses consist in whole or in part of investing
in real estate, instruments (like mortgages) that are secured by real estate or
interests therein, or real estate investment trust securities.
42
With respect to the fundamental policy relating to commodities set forth in (6)
above, the 1940 Act does not prohibit a fund from owning commodities, whether
physical commodities and contracts related to physical commodities (such as oil
or grains and related futures contracts), or financial commodities and
contracts related to financial commodities (such as currencies and, possibly,
currency futures). However, a fund is limited in the amount of illiquid assets
it may purchase. To the extent that investments in commodities are considered
illiquid, the current SEC staff position generally limits a fund's purchases of
illiquid securities to 15% of net assets. If a fund were to invest in a
physical commodity or a physical commodity-related instrument, the fund would
be subject to the additional risks of the particular physical commodity and its
related market. The value of commodities and commodity-related instruments may
be extremely volatile and may be affected either directly or indirectly by a
variety of factors. There also may be storage charges and risks of loss
associated with physical commodities. The policy in (6) above will be
interpreted to permit investments in exchange traded funds that invest in
physical and/or financial commodities.
With respect to the fundamental policy relating to concentration set forth in
(7) above, the 1940 Act does not define what constitutes "concentration" in an
industry. The SEC staff has taken the position that investment of 25% or more
of a fund's total assets in one or more issuers conducting their principal
activities in the same industry or group of industries constitutes
concentration. It is possible that interpretations of concentration could
change in the future. A fund that invests a significant percentage of its total
assets in a single industry may be particularly susceptible to adverse events
affecting that industry and may be more risky than a fund that does not
concentrate in an industry. The policy in (7) above will be interpreted to
refer to concentration as that term may be interpreted from time to time. The
policy also will be interpreted to permit investment without limit in the
following: securities of the U.S. government and its agencies or
instrumentalities; with respect to tax-exempt funds that invest 80% of their
assets in tax-exempt securities, securities of state, territory, possession or
municipal governments and their authorities, agencies, instrumentalities or
political subdivisions; and repurchase agreements collateralized by any such
obligations. Accordingly, issuers of the foregoing securities will not be
considered to be members of any industry. Tax-exempt funds that invest 80% of
their assets in tax-exempt securities characterize investments in securities
the interest upon which is paid from revenues of similar type projects by the
type or types of projects. The policy also will be interpreted to give broad
authority to the fund as to how to classify issuers within or among industries.
When identifying industries for purposes of its concentration policy, the fund
may rely upon available industry classifications. As of the date of the SAI,
the fund relies primarily on the MSCI Global Industry Classification Standard
(GICS) classifications, and, with respect to securities for which no industry
classification under GICS is available or for which the GICS classification is
determined not to be appropriate, the fund may use industry classifications
published by another source, which, as of the date of the SAI, is Bloomberg
L.P. As of the date of the SAI, the fund's adviser may assign an industry
classification for an exchange-traded fund in which the fund invests based on
the constituents of the index on which the exchange-traded fund is based. The
fund may change any source used for determining industry classifications
without shareholder approval.
In accordance with the investment programs of each fund as set forth in the
prospectus, each fund may invest more than 25% of its assets in any one
underlying fund. No fund invests in an underlying fund with the intention of
directly or indirectly concentrating its investments in a particular industry.
However, subsequent to investing in an underlying fund, it is possible that a
fund may become indirectly concentrated in a particular industry as a result of
changes in one or more underlying fund's holdings. Each of the underlying funds
(other than Pioneer Cash Reserves Fund and Pioneer Real Estate Shares) will not
concentrate more than 25% of its total assets in any one industry. Pioneer Cash
Reserves Fund may invest without limit in obligations issued by banks. Pioneer
Real Estate Shares may invest without limit in real estate industry issuers.
Each fund's fundamental policies are written and will be interpreted broadly.
For example, the policies will be interpreted to refer to the 1940 Act and the
related rules as they are in effect from time to time, and to interpretations
and modifications of or relating to the 1940 Act by the SEC, SEC staff or other
authority of
43
competent jurisdiction as they are given from time to time. When a policy
provides that an investment practice may be conducted as permitted by the 1940
Act, the policy will be interpreted to mean either that the 1940 Act expressly
permits the practice or that the 1940 Act does not prohibit the practice.
DIVERSIFICATION
Each fund is currently classified as a diversified fund under the 1940 Act. A
diversified fund may not purchase securities of an issuer (other than
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities) if, with respect to 75% of the fund's total assets, (a) more
than 5% of the fund's total assets would be invested in securities of that
issuer, or (b) the fund would hold more than 10% of the outstanding voting
securities of that issuer. Under the 1940 Act, the fund cannot change its
classification from diversified to non-diversified without shareholder
approval.
3. TRUSTEES AND OFFICERS
The fund's Trustees and officers are listed below, together with their
principal occupations during at least the past five years. Trustees who are
interested persons of the fund within the meaning of the 1940 Act are referred
to as Interested Trustees. Trustees who are not interested persons of the fund
are referred to as Independent Trustees. Each of the Trustees, except Mr. West,
serves as a Trustee of each of the 54 U.S. registered investment portfolios for
which Pioneer serves as investment adviser (the "Pioneer Funds"). Mr. West
serves as Trustee of 49 U.S. registered investment portfolios for which Pioneer
serves as investment adviser. The address for all Trustees and all officers of
the fund is 60 State Street, Boston, Massachusetts 02109.
NAME, AGE AND TERM OF OFFICE AND OTHER DIRECTORSHIPS
POSITION HELD WITH THE FUND LENGTH OF SERVICE PRINCIPAL OCCUPATION HELD BY TRUSTEE
----------------------------- -------------------------- --------------------------------------- -----------------------
INDEPENDENT TRUSTEES:
----------------------------- -------------------------- --------------------------------------- -----------------------
THOMAS J. PERNA (63) Trustee since 2006. Chairman and Chief Executive Director, Broadridge
Chairman of the Board and Serves until a successor Officer, Quadriserv, Inc. (technology Financial Solutions,
Trustee trustee is elected or products for securities lending Inc. (investor
-----------------------------
earlier retirement or industry) (2008 - present); Private communications and
removal. investor (2004 - 2008); and Senior securities processing
--------------------------
Executive Vice President, The Bank provider for financial
of New York (financial and securities services industry)
services) (1986 - 2004) (2009 - present);
---------------------------------------
Director, Quadriserv,
Inc. (2005 -
present);
Commissioner, New
Jersey State Civil
Service Commission
(2011 - present)
-----------------------
44
NAME, AGE AND TERM OF OFFICE AND OTHER DIRECTORSHIPS
POSITION HELD WITH THE FUND LENGTH OF SERVICE PRINCIPAL OCCUPATION HELD BY TRUSTEE
----------------------------- -------------------------- ------------------------------------------- --------------------------
DAVID R. BOCK (69) Trustee since 2005. Managing Partner, Federal City Director of Enterprise
Trustee Serves until a successor Capital Advisors (corporate advisory Community
---
trustee is elected or services company) (1997 - 2004 Investment, Inc.
earlier retirement or and 2008 - present); Interim Chief (privately-held
removal. Executive Officer, Oxford Analytica, affordable housing
--------------------------
Inc. (privately held research and finance company)
consulting company) (2010); (1985 - 2010);
Executive Vice President and Chief Director of Oxford
Financial Officer, I-trax, Inc. (publicly Analytica, Inc. (2008
traded health care services - present); Director
company) (2004 - 2007); and of The Swiss
Executive Vice President and Chief Helvetia Fund, Inc.
Financial Officer, Pedestal Inc. (closed-end fund)
(internet-based mortgage trading (2010 - present);
company) (2000 - 2002) Director of New York
-------------------------------------------
Mortgage Trust
(publicly-traded
mortgage REIT)
(2004 - 2009, 2012
- present)
-----------------------
BENJAMIN M. FRIEDMAN Trustee since 2008. William Joseph Maier Professor of Trustee, Mellon
(69) Serves until a successor Political Economy, Harvard Institutional Funds
Trustee trustee is elected or University (1972 - present) Investment Trust and
--- -------------------------------------------
earlier retirement or Mellon Institutional
removal. Funds Master
--------------------------
Portfolio (oversaw
17 portfolios in fund
complex)
(1989-2008)
------------
MARGARET B.W. GRAHAM Trustee since 2004. Founding Director, Vice-President None
------------
(66) Serves until a successor and Corporate Secretary, The
Trustee trustee is elected or Winthrop Group, Inc. (consulting
---
earlier retirement or firm) (1982 - present); and
removal. Desautels Faculty of Management,
--------------------------
McGill University (1999 - present);
and Manager of Research
Operations and Organizational
Learning, Xerox PARC, Xerox's
advance research center
(1990-1994)
----------
MARGUERITE A. PIRET (65) Trustee since 2004. President and Chief Executive Director of New
Trustee Serves until a successor Officer, Newbury, Piret & Company, America High Income
---
trustee is elected or Inc. (investment banking firm) Fund, Inc.
earlier retirement or (1981 - present) (closed-end
-----------------------------------------
removal. investment company)
--------------------------
(2004 - present);
Member, Board of
Governors,
Investment Company
Institute (2000 -
2006)
------------
45
NAME, AGE AND TERM OF OFFICE AND OTHER DIRECTORSHIPS
POSITION HELD WITH THE FUND LENGTH OF SERVICE PRINCIPAL OCCUPATION HELD BY TRUSTEE
----------------------------- -------------------------- ------------------------------------- ---------------------
STEPHEN K. WEST (85) Trustee since 2004. Senior Counsel, Sullivan & Cromwell Director, The Swiss
Trustee Serves until a successor LLP (law firm) (1998 - present); Helvetia Fund, Inc.
-----------------------------
trustee is elected or Partner, Sullivan & Cromwell LLP (closed-end
earlier retirement or (prior to 1998) investment
-------------------------------------
removal. company); Director,
--------------------------
Invesco, Ltd.
(formerly AMVESCAP,
PLC) (investment
manager)
(1997-2005)
----------
INTERESTED TRUSTEE:
----------------------------- -------------------------- ------------------------------------- ----------
DANIEL K. KINGSBURY (55)* Trustee since 2007. Director, CEO and President of None
----------
Trustee and Executive Vice Serves until a successor PIM-USA (since February 2007);
President trustee is elected or Director and President of Pioneer
-----------------------------
earlier retirement or and Pioneer Institutional Asset
removal. Management, Inc. (since February
--------------------------
2007); Executive Vice President of
all of the Pioneer Funds (since
March 2007); Director of PGAM
(2007 - 2010); Head of New
Europe Division, PGAM (2000 -
2005); Head of New Markets
Division, PGAM (2005 - 2007)
-------------------------------------
FUND OFFICERS:
----------------------------- -------------------------- ------------------------------------- ----------
JOHN F. COGAN, JR. (87)* Since 2004. Serves at President of all of the Pioneer None
----------
President and Chief the discretion of the Funds; Non-Executive Chairman and
Executive Officer Board. a Director of Pioneer Investment
----------------------------- --------------------------
Management USA Inc. ("PIM-USA")
(until November 2013); Chairman
and a Director of Pioneer (until
November 2013); Chairman and
Director of Pioneer Institutional
Asset Management, Inc. (until
November 2013); Director of
Pioneer Alternative Investment
Management Limited (Dublin) (until
October 2011); President and a
Director of Pioneer Alternative
Investment Management (Bermuda)
Limited and affiliated funds (until
November 2013); Deputy Chairman
and a Director of Pioneer Global
Asset Management S.p.A. ("PGAM")
(until April 2010); Director of
Nano-C, Inc. (since 2003); Director
of Cole Management Inc. (2004 -
2011); Director of Fiduciary
Counseling, Inc. (until December
2011); Trustee of all of the Pioneer
Funds (until November 2013); and
Retired Partner, Wilmer Cutler
Pickering Hale and Dorr LLP
-------------------------------------
----------------------------- -------------------------- ------------------------------------- ----------
46
NAME, AGE AND TERM OF OFFICE AND OTHER DIRECTORSHIPS
POSITION HELD WITH THE FUND LENGTH OF SERVICE PRINCIPAL OCCUPATION HELD BY TRUSTEE
----------------------------- ----------------------- -------------------------------------- ---------------------
CHRISTOPHER J. KELLEY (48) Since 2010. Serves at Vice President and Associate None
---------------------
Secretary and Chief Legal the discretion of the General Counsel of Pioneer since
Officer Board January 2008; Secretary and Chief
----------------------------- -----------------------
Legal Officer of all of the Pioneer
Funds since June 2010; Assistant
Secretary of all of the Pioneer Funds
from September 2003 to May
2010; Vice President and Senior
Counsel of Pioneer from July 2002
to December 2007
--------------------------------------
CAROL B. HANNIGAN (52) Since 2010. Serves at Fund Governance Director of None
---------------------
Assistant Secretary the discretion of the Pioneer since December 2006 and
-----------------------------
Board Assistant Secretary of all the
-----------------------
Pioneer Funds since June 2010;
Manager - Fund Governance of
Pioneer from December 2003 to
November 2006; Senior Paralegal of
Pioneer from January 2000 to
November 2003.
--------------------------------------
THOMAS REYES (51) Since 2010. Serves at Counsel of Pioneer since June 2007 None
---------------------
Assistant Secretary the discretion of the and Assistant Secretary of all the
-----------------------------
Board Pioneer Funds since June 2010;
-----------------------
Vice President and Counsel at State
Street Bank from October 2004 to
June 2007
--------------------------------------
MARK E. BRADLEY (54) Since 2008. Serves at Vice President - Fund Treasury of None
---------------------
Treasurer and Chief the discretion of the Pioneer; and Treasurer of all of the
Financial and Accounting Board Pioneer Funds since March 2008;
-----------------------
Officer Deputy Treasurer of Pioneer from
-----------------------------
March 2004 to February 2008; and
Assistant Treasurer of all of the
Pioneer Funds from March 2004 to
February 2008
--------------------------------------
LUIS I. PRESUTTI (48) Since 2004. Serves at Assistant Vice President - Fund None
---------------------
Assistant Treasurer the discretion of the Treasury of Pioneer; and Assistant
-----------------------------
Board Treasurer of all of the Pioneer Funds
----------------------- --------------------------------------
GARY SULLIVAN (55) Since 2004. Serves at Fund Accounting Manager - Fund None
---------------------
Assistant Treasurer the discretion of the Treasury of Pioneer; and Assistant
-----------------------------
Board Treasurer of all of the Pioneer Funds
----------------------- --------------------------------------
DAVID F. JOHNSON (34) Since 2009. Serves at Fund Administration Manager - Fund None
---------------------
Assistant Treasurer the discretion of the Treasury of Pioneer since November
-----------------------------
Board 2008 and Assistant Treasurer of all
-----------------------
of the Pioneer Funds since January
2009; Client Service Manager -
Institutional Investor Services at
State Street Bank from March 2003
to March 2007
--------------------------------------
47
NAME, AGE AND TERM OF OFFICE AND OTHER DIRECTORSHIPS
POSITION HELD WITH THE FUND LENGTH OF SERVICE PRINCIPAL OCCUPATION HELD BY TRUSTEE
----------------------------- ----------------------- ------------------------------------- ---------------------
JEAN M. BRADLEY (61) Since 2010. Serves at Chief Compliance Officer of Pioneer None
---------------------
Chief Compliance Officer the discretion of the and of all the Pioneer Funds since
-----------------------------
Board March 2010; Director of Adviser and
-----------------------
Portfolio Compliance at Pioneer
since October 2005; Senior
Compliance Officer for Columbia
Management Advisers, Inc. from
October 2003 to October 2005
-------------------------------------
KELLY O'DONNELL (42) Since 2006. Serves at Director - Transfer Agency None
---------------------
Anti-Money Laundering the discretion of the Compliance of Pioneer and
Officer Board Anti-Money Laundering Officer of all
----------------------------- -----------------------
the Pioneer funds since 2006
-------------------------------------
* Mr. Kingsbury is an Interested Trustee because he is an officer or
director of the fund's investment adviser and certain of its affiliates.
BOARD COMMITTEES
The Board of Trustees is responsible for overseeing the fund's management and
operations. The Chairman of the Board is an Independent Trustee. Independent
Trustees constitute more than 75% of the Board. During the most recent fiscal
year, the Board of Trustees held 7 meetings. Each Trustee attended at least 75%
of such meetings.
The Trustees were selected to join the Board based upon the following as to
each Board member: such person's character and integrity; such person's
willingness and ability to commit the time necessary to perform the duties of a
Trustee; as to each Independent Trustee, his or her status as not being an
"interested person" as defined under the 1940 Act; and, as to Mr. Kingsbury,
his association with Pioneer. Each of the Independent Trustees also was
selected to join the Board based on the criteria and principles set forth in
the Nominating Committee Charter. In evaluating a Trustee's prospective service
on the Board, the Trustee's experience in, and ongoing contributions toward,
overseeing the fund's business as a Trustee also are considered. In addition,
the following specific experience, qualifications, attributes and/or skills
apply as to each Trustee: Mr. Bock, accounting, financial, business and public
company experience as a chief financial officer and an executive officer and
experience as a board member of other organizations; Mr. Friedman, academic
leadership, economic and finance experience and investment company board
experience; Ms. Graham, academic leadership, experience in business, finance
and management consulting; Mr. Perna, accounting, financial, and business
experience as an executive officer and experience as a board member of other
organizations; Ms. Piret, accounting, financial and entrepreneurial experience
as an executive, valuation experience and investment company board experience;
Mr. West, legal experience and securities and board experience; and Mr.
Kingsbury, investment management experience as an executive and leadership
roles with Pioneer and its affiliates. However, in its periodic assessment of
the effectiveness of the Board, the Board considers the complementary skills
and experience of individual Trustees primarily in the broader context of the
Board's overall composition so that the Board, as a body, possesses the
appropriate (and appropriately diverse) skills and experience to oversee the
business of the fund.
The Trust's Amended and Restated Agreement and Declaration of Trust provides
that the appointment, designation (including in any proxy or registration
statement or other document) of a Trustee as an expert on any topic or in any
area, or as having experience, attributes or skills in any area, or any other
appointment, designation or identification, shall not impose on that person any
standard of care or liability that is greater than that imposed on that person
as a Trustee in the absence of the appointment, designation or identification,
and no Trustee who has special attributes, skills, experience or expertise, or
is appointed, designated, or identified as aforesaid, shall be held to a higher
standard of care by virtue thereof.
48
The Board of Trustees has five standing committees: the Independent Trustees
Committee, the Audit Committee, the Governance and Nominating Committee, the
Policy Administration Committee and the Valuation Committee. Each committee is
chaired by an Independent Trustee and all members of each committee are
Independent Trustees.
The Chairs of the committees work with the Chairman of the Board and fund
management in setting the agendas for Board meetings. The Chairs of the
committees set the agendas for committee meetings with input from fund
management. As noted below, through the committees, the Independent Trustees
consider and address important matters involving the fund, including those
presenting conflicts or potential conflicts of interest for management. The
Independent Trustees also regularly meet without the presence of management and
are advised by independent legal counsel. The Board has determined that
delegation to the committees of specified oversight responsibilities helps
ensure that the fund has effective and independent governance and oversight.
Notwithstanding the fact that the Chairman of the Board is an Independent
Trustee, the Board continues to believe that the committee structure enables
the Board more effectively to provide governance and oversight of the fund's
affairs. Mr. Perna, Chairman of the Board, is a non-voting, ex-officio member
of each committee, except the Independent Trustees Committee, of which he is
Chair.
During the most recent fiscal year, the Independent Trustees, Audit, Governance
and Nominating, Policy Administration, and Valuation Committees held 7, 7, 2, 4
and 7 meetings, respectively.
INDEPENDENT TRUSTEES COMMITTEE
David R. Bock, Benjamin M. Friedman, Margaret B.W. Graham, Thomas J. Perna
(Chair), Marguerite A. Piret and Stephen K. West.
The Independent Trustees Committee is comprised of all of the Independent
Trustees. The Independent Trustees Committee serves as the forum for
consideration of a number of issues required to be considered separately by the
Independent Trustees under the 1940 Act, including the assessment and review of
the fund's advisory agreement and other related party contracts. The
Independent Trustees Committee also considers issues that the Independent
Trustees believe it is advisable for them to consider separately from the
Interested Trustees.
AUDIT COMMITTEE
David R. Bock (Chair), Benjamin M. Friedman and Marguerite A. Piret.
The Audit Committee, among other things, oversees the accounting and financial
reporting policies and practices of the fund, oversees the quality and
integrity of the fund's financial statements, approves, and recommends to the
Independent Trustees for their ratification, the engagement of the fund's
independent registered public accounting firm, reviews and evaluates the
accounting firm's qualifications, independence and performance, and approves
the compensation of the accounting firm. The Audit Committee also approves all
audit and permissible non-audit services provided to the fund by the fund's
accounting firm and all permissible non-audit services provided by the fund's
accounting firm to Pioneer and any affiliated service providers of the fund if
the engagement relates directly to the fund's operations and financial
reporting.
GOVERNANCE AND NOMINATING COMMITTEE
Margaret B.W. Graham (Chair), Thomas J. Perna and Stephen K. West.
The Governance and Nominating Committee considers governance matters affecting
the Board and the fund. Among other responsibilities, the Governance and
Nominating Committee reviews the performance of the Independent Trustees as a
whole, and reviews and recommends to the Independent Trustees Committee any
appropriate changes concerning, among other things, the size and composition of
the Board, the Board's committee structure and the Independent Trustees'
compensation. The Governance and Nominating Committee also makes
recommendations to the Independent Trustees Committee or the Board on matters
delegated to it.
49
In addition, the Governance and Nominating Committee screens potential
candidates for Independent Trustees. Among other responsibilities, the
Governance and Nominating Committee reviews periodically the criteria for
Independent Trustees and the spectrum of desirable experience and expertise for
Independent Trustees as a whole, and reviews periodically the qualifications
and requisite skills of persons currently serving as Independent Trustees and
being considered for re-nomination. The Governance and Nominating Committee
also reviews the qualifications of any person nominated to serve on the Board
by a shareholder or recommended by any Trustee, management or another person
and makes a recommendation as to the qualifications of such nominated or
recommended person to the Independent Trustees and the Board, and reviews
periodically the Committee's procedure, if any, regarding candidates submitted
by shareholders. The Governance and Nominating Committee does not have
specific, minimum qualifications for nominees, nor has it established specific
qualities or skills that it regards as necessary for one or more of the
Independent Trustees to possess (other than qualities or skills that may be
required by applicable law or regulation). However, in evaluating a person as a
potential nominee to serve as an Independent Trustee, the Governance and
Nominating Committee will consider the following general criteria and
principles, among any others that it may deem relevant:
o whether the person has a reputation for integrity, honesty and adherence to
high ethical standards;
o whether the person has demonstrated business acumen and ability to exercise
sound judgment in matters that relate to the objectives of the fund and
whether the person is willing and able to contribute positively to the
decision-making process of the fund;
o whether the person has a commitment and ability to devote the necessary time
and energy to be an effective Independent Trustee, to understand the fund
and the responsibilities of a trustee of an investment company;
o whether the person has the ability to understand the sometimes conflicting
interests of the various constituencies of the fund and to act in the
interests of all shareholders;
o whether the person has a conflict of interest that would impair his or her
ability to represent the interests of all shareholders and to fulfill the
responsibilities of a trustee; and
o the value of diversity on the Board. The Governance and Nominating Committee
Charter provides that nominees shall not be discriminated against on the
basis of race, religion, national origin, sex, sexual orientation,
disability or any other basis proscribed by law.
The Governance and Nominating Committee also will consider whether the nominee
has the experience or skills that the Governance and Nominating Committee
believes would maintain or enhance the effectiveness of the Independent
Trustees' oversight of the fund's affairs, based on the then current
composition and skills of the Independent Trustees and experience or skills
that may be appropriate in light of changing business conditions and regulatory
or other developments. The Governance and Nominating Committee does not
necessarily place the same emphasis on each criterion. Prior to the
establishment of the Governance and Nominating Committee, the fund's Nominating
Committee screened potential candidates for Independent Trustee using the same
general criteria and principles described above.
The Governance and Nominating Committee does not have a formal policy for
considering trustee nominees submitted by the fund's shareholders. Nonetheless,
the Nominating Committee may, on an informal basis, consider any shareholder
recommendations of nominees that it receives.
POLICY ADMINISTRATION COMMITTEE
Margaret B.W. Graham, Thomas J. Perna and Stephen K. West (Chair).
The Policy Administration Committee, among other things, oversees and monitors
the fund's compliance with legal and regulatory requirements that are not
directly related to financial reporting, internal financial controls,
independent audits or the performance of the fund's internal audit function.
The Policy Administration Committee also oversees the adoption and
implementation of certain of the fund's policies and procedures.
50
VALUATION COMMITTEE
David R. Bock, Benjamin M. Friedman and Marguerite A. Piret (Chair).
The Valuation Committee, among other things, determines with Pioneer the value
of securities under certain circumstances and considers other matters with
respect to the valuation of securities, in each case in accordance with the
fund's valuation procedures.
OVERSIGHT OF RISK MANAGEMENT
Consistent with its responsibility for oversight of the fund in the interests
of shareholders, the Board of Trustees oversees risk management of the fund's
investment management and business operations. In performing this oversight
function, the Board considers various risks and risk management practices
relating to the fund. The Board has delegated certain aspects of its risk
oversight responsibilities to the committees.
The fund faces a number of risks, such as investment risk, counterparty risk,
valuation risk, enterprise risk, reputational risk, risk of operational failure
or lack of business continuity, and legal, compliance and regulatory risk. The
goal of risk management is to identify and address risks, i.e., events or
circumstances that could have material adverse effects on the business,
operations, shareholder services, investment performance or reputation of the
fund.
Most of the fund's investment management and business operations are carried
out by or through Pioneer, its affiliates, the fund's sub-adviser and other
service providers, each of which has an independent interest in risk management
but whose policies and the methods by which one or more risk management
functions are carried out may differ from the fund's and each other's in the
setting of priorities, the resources available or the effectiveness of relevant
controls.
Under the overall supervision of the Board or the applicable committee of the
Board, the fund, or Pioneer and the affiliates of Pioneer or other service
providers to the fund employ a variety of processes, procedures and controls in
an effort to identify, address and mitigate risks. Different processes,
procedures and controls are employed with respect to different types of risks.
Various personnel, including the fund's and Pioneer's chief compliance officer
and Pioneer's chief risk officer and director of internal audit, as well as
various personnel of Pioneer and of other service providers, make periodic
reports to the applicable committee or to the Board with respect to various
aspects of risk management. The reports received by the Trustees related to
risks typically are summaries of relevant information. During the course of the
most recent fiscal year, the Trustees increased the number of presentations
from the directors of Internal Audit and Risk Management at Pioneer, as well as
the Chief Operating Officer to whom they report, concerning the results and
process of their responsibilities.
The Trustees recognize that not all risks that may affect the fund can be
identified, that it may not be practical or cost-effective to eliminate or
mitigate certain risks, that it may be necessary to bear certain risks (such as
investment-related risks) to achieve the fund's goals, that the processes,
procedures and controls employed to address certain risks may be limited in
their effectiveness, and that some risks are simply beyond the control of the
fund or Pioneer and its affiliates or other service providers. As a result of
the foregoing and other factors, the fund's ability to manage risk is subject
to substantial limitations.
In addition, it is important to note that the fund is designed for investors
that are prepared to accept investment risk, including the possibility that as
yet unforeseen risks may emerge in the future.
COMPENSATION OF OFFICERS AND TRUSTEES
The Pioneer Funds, including the fund, compensate their Trustees. The
Independent Trustees review and set their compensation annually, taking into
consideration the committee and other responsibilities assigned to specific
Trustees. The table under "Annual Fees, Expense and Other Information -
Compensation of Officers and Trustees" sets forth the compensation paid to each
of the Trustees. The compensation paid to the Trustees is then allocated among
the funds as follows:
51
o each fund with assets less than $250 million pays each Independent Trustee an
annual fee of $1,000.
o the remaining compensation of the Independent Trustees is allocated to each
fund with assets greater than $250 million based on the fund's net assets.
o the Interested Trustees receive an annual fee of $500 from each fund, except
in the case of funds with net assets of $50 million or less, which pay each
Interested Trustee an annual fee of $200. Pioneer reimburses these funds for
the fees paid to the Interested Trustees.
Except for the chief compliance officer, each fund does not pay any salary or
other compensation to its officers. Each fund pays a portion of the chief
compliance officer's compensation for her services as the fund's chief
compliance officer. Pioneer pays the remaining portion of the chief compliance
officer's compensation.
See "Compensation of Officers and Trustees" in "Annual Fee, Expense and Other
Information."
SALES LOADS
Each fund offers its shares to Trustees and officers of the fund and employees
of Pioneer and its affiliates without a sales charge in order to encourage
investment in the fund by individuals who are responsible for its management
and because the sales to such persons do not entail any sales effort by the
fund, brokers or other intermediaries.
OTHER INFORMATION
The Amended and Restated Agreement and Declaration of Trust provides that no
Trustee, officer or employee of a fund shall be liable to a fund or any
shareholder for any action, failure to act, error or mistake except in cases of
bad faith, willful misfeasance, gross negligence or reckless disregard of duty.
The Amended and Restated Agreement and Declaration of Trust requires each fund
to indemnify each Trustee, director, officer, employee and authorized agent to
the fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved as a party or otherwise by virtue of
his being or having been such a Trustee, director, officer, employee, or agent
and against amounts paid or incurred by him in settlement thereof. The 1940 Act
currently provides that no officer or director shall be protected from
liability to a fund or shareholders for willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties of office. The Amended and
Restated Agreement and Declaration of Trust extends to Trustees, officers and
employees of each fund the full protection from liability that the law allows.
MATERIAL RELATIONSHIPS OF THE INDEPENDENT TRUSTEES
Mr. West, an Independent Trustee, is Senior Counsel to Sullivan & Cromwell,
which acts as counsel to the Independent Trustees and the Independent Trustees
of the other Pioneer Funds. The aggregate compensation paid to Sullivan &
Cromwell by the fund and the other Pioneer Funds was approximately $447,665 and
$540,568 in each of 2011 and 2012.
SHARE OWNERSHIP
See "Annual Fee, Expense and Other Information" for information on the
ownership of fund shares by the Trustees, each fund's officers and owners in
excess of 5% of any class of shares of a fund and a table indicating the value
of shares that each Trustee beneficially owns in each fund and in all the
Pioneer Funds.
PROXY VOTING POLICIES
Information regarding how each fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners without charge at http://www.pioneerinvestments.com
and on the SEC's website at http://www.sec.gov. Each fund's proxy voting
policies and procedures are attached as "Appendix B".
52
4. INVESTMENT ADVISER
Each fund has entered into an amended and restated management agreement
(hereinafter, the "management contract") with Pioneer pursuant to which Pioneer
acts as the fund's investment adviser. Pioneer is an indirect, wholly owned
subsidiary of UniCredit. Certain Trustees or officers of each fund are also
directors and/or officers of certain of UniCredit's subsidiaries (see
management biographies above). Pioneer has entered into an agreement with its
affiliate, Pioneer Investment Management Limited ("PIML"), pursuant to which
PIML provides certain services to Pioneer.
As each fund's investment adviser, Pioneer provides each 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.
The management contract will continue in effect from year to year provided such
continuance is specifically approved at least annually (i) by the Trustees of
the fund or by a majority of the outstanding voting securities of the fund (as
defined in the 1940 Act), and (ii) in either event, by a majority of the
Independent Trustees of the fund, with such Independent Trustees casting votes
in person at a meeting called for such purpose.
The management contract may be terminated without penalty by the Trustees of
the fund or by vote of a majority of the outstanding voting securities of the
fund on not more than 60 days' nor less than 30 days' written notice to
Pioneer, or by Pioneer on not less than 90 days' written notice to the fund,
and will automatically terminate in the event of its assignment (as defined in
the 1940 Act) by Pioneer. The management contract is not assignable by the fund
except with the consent of Pioneer.
CONTINUANCE OF MANAGEMENT CONTRACT AND SUBADVISORY AGREEMENT
The Trustees' approval of and the terms, continuance and termination of the
management contract and subadvisory agreement are governed by the 1940 Act.
Pursuant to the management contract, Pioneer assumes no responsibility other
than to render the services called for under the management contract, in good
faith, and Pioneer will not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission in
the execution of securities or other transactions for the fund. 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. The management contract requires Pioneer to furnish all necessary
services, facilities and personnel in connection with the performance of its
services under the management contract, and except as specifically stated
therein, Pioneer is not responsible for any of the fund's ordinary and
extraordinary expenses.
Pursuant to the subadvisory agreement, the subadviser 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 the subadviser. The subadviser, 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 subadvisory agreement. The
subadvisory agreement terminates if assigned and may be terminated without
penalty upon not more than 60 days' nor less than 30 days' written notice to
the other party or by vote of a majority of a fund's outstanding voting
securities.
53
ADVISORY FEE
As compensation for the management services each fund pays Pioneer a fee at the
annual rate of the applicable fund's average daily net assets set forth below.
NET ASSETS ANNUAL FEE
---------------------------------------- ---------------------------------------------------------------------------------------
Up to $2.5 billion 0.13% on investments in underlying funds managed by Pioneer (and cash); and 0.17% on
----------------------------------------
other
investments
---------------------------------------------------------------------------------------
Over $2.5 billion and up to $4 billion 0.11% on investments in underlying funds managed by Pioneer (and cash); and 0.14% on
----------------------------------------
other
investments
---------------------------------------------------------------------------------------
Over $4 billion and up to $5.5 billion 0.10% on investments in underlying funds managed by Pioneer (and cash); and 0.12% on
----------------------------------------
other
investments
---------------------------------------------------------------------------------------
Over $5.5 billion and up to $7 billion 0.08% on investments in underlying funds managed by Pioneer (and cash); and 0.10% on
----------------------------------------
other
investments
---------------------------------------------------------------------------------------
Over $7 billion 0.08% on investments in underlying funds managed by Pioneer (and cash); and 0.09% on
----------------------------------------
other
investments
---------------------------------------------------------------------------------------
For purposes of calculating Pioneer's fee, the asset allocation between
underlying funds managed by Pioneer and other investments are determined
monthly based upon the average week end allocation of each fund's assets during
such calendar month and such allocation is applied in determining the fee in
the subsequent calendar month.
INVESTMENT SUBADVISER
Pioneer has engaged Ibbotson Associates, Inc. ("Ibbotson" or the "subadviser")
to act as the subadviser to each of the funds. Ibbotson is a wholly owned
subsidiary of Morningstar, Inc. Pioneer oversees the funds' operations and
supervises Ibbotson, which is responsible for the day-to-day management of the
funds. Ibbotson will, among other things, continuously review and analyze the
investments in the funds and, subject to the supervision of Pioneer, manage the
investment and reinvestment of the funds' assets. Ibbotson is registered as an
investment adviser under the Advisers Act.
Pioneer and Ibbotson have entered into a subadvisory agreement, pursuant to
which Ibbotson has agreed, among other things, to:
o comply with the provisions of the trust's Declaration of Trust and By-laws,
the 1940 Act, the Advisers Act and the investment objectives, policies and
restrictions of the respective fund;
o cause the respective fund to comply with the requirements of Subchapter M of
the Code for qualification as a regulated investment company;
o comply with any policies, guidelines, procedures and instructions as Pioneer
may from time to time establish;
o maintain separate books and detailed records of all matters pertaining to the
portion of the fund's assets advised by Ibbotson required by Rule 31a-1
under the 1940 Act relating to its responsibilities provided with respect to
the fund;
o ensure that its "access persons" comply in all respects with Ibbotson's Code
of Ethics, as in effect from time to time; and
o furnish reports to the Trustees and Pioneer.
For its services, Ibbotson is entitled to a subadvisory fee from Pioneer at an
annual rate of 0.10% of the each fund's average daily net assets up to $2.5
billion, 0.08% from $2.5 billion to $4 billion, 0.07% from $4 billion to $5.5
billion, 0.06% from $5.5 billion to $7 billion and 0.05% above $7 billion. The
fee is paid monthly in arrears. The funds do not pay a fee to the subadviser.
Pioneer has received an order from the SEC that permits Pioneer, subject to the
approval of the trust's Board of Trustees, to hire and terminate a subadviser
or to materially modify an existing subadvisory contract for the funds without
shareholder approval. Pioneer retains the ultimate responsibility to oversee
and recommend the hiring, termination and replacement of any subadviser. To the
extent that the SEC adopts
54
a rule that would supersede the order or would provide greater flexibility than
the order, Pioneer and the funds intend to rely on such rule to permit Pioneer,
subject to the approval of the trust's Board of Trustees and any other
applicable conditions of the rule, to hire and terminate a subadviser or to
materially modify an existing subadvisory contract for the funds without
shareholder approval.
EXPENSE LIMIT
Pioneer has contractually agreed to limit ordinary operating expenses (ordinary
operating expenses means all fund expenses other than extraordinary expenses,
such as litigation, taxes, and brokerage commissions) to the extent required to
reduce each fund's expenses, other than the underlying fund fees and expenses,
to the amounts listed below of the average daily net assets attributable to
Class A, Class B and Class C shares, respectively. These expense limitations
are in effect through December 1, 2014. There can be no assurance that Pioneer
will extend the contractual expense limitation beyond the aforementioned date.
While in effect, the arrangement may be terminated for a class only by
agreement of Pioneer and the Board of Trustees.
CLASS A CLASS B CLASS C
FUND EXPENSE LIMIT EXPENSE LIMIT EXPENSE LIMIT
------------------------- --------------- --------------- --------------
Conservative Allocation 0.78% 1.68% 1.68%
------------------------- ---- ---- ----
Moderate Allocation 0.74% 1.52% 1.52%
------------------------- ---- ---- ----
Growth Allocation 0.79% 1.57% 1.57%
------------------------- ---- ---- ----
Aggressive Allocation 0.85% 1.64% 1.64%
------------------------- ---- ---- ----
ADMINISTRATION AGREEMENT
Each fund has entered into an amended and restated administration agreement
with Pioneer pursuant to which Pioneer acts as each fund's administrator,
performing certain accounting, administration and legal services for each fund.
Pioneer is reimbursed for its cost of providing such services. The cost of
providing these services is based on direct costs and costs of overhead,
subject to review by the Board of Trustees. See "Annual Fee, Expense and Other
Information" for fees each fund paid to Pioneer for administration and related
services. In addition, Brown Brothers Harriman & Co. performs certain
sub-administration services to the fund pursuant to an agreement with Pioneer
and the fund.
Under the terms of the amended and restated administration agreement with each
fund, Pioneer pays or reimburses each fund for expenses 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 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; (l) interest on
borrowed money, if any; (m) fees payable by the fund under management
agreements and the administration agreement; and (n) extraordinary expenses.
Each fund shall also assume and pay any
55
other expense that the fund, Pioneer or any other agent of the fund may incur
not listed above that is approved by the Board of Trustees (including a
majority of the Independent Trustees) as being an appropriate expense of the
fund. The fund shall pay all fees and expenses to be paid by the fund under the
sub-administration agreement with Brown Brothers Harriman & Co. In addition,
each fund shall pay all brokers' and underwriting commissions chargeable to the
fund in connection with securities transactions to which the fund is a party.
POTENTIAL CONFLICTS OF INTEREST
Each fund is managed by Pioneer, which also serves as investment adviser to
other Pioneer mutual funds and other accounts (including separate accounts and
unregistered products) with investment objectives identical or similar to those
of the fund. Securities frequently meet the investment objectives of a fund,
the other Pioneer mutual funds and such other 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, a 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, a 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 a 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 a
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
Each fund, Pioneer, and PFD have adopted a code of ethics under Rule 17j-1
under the 1940 Act which is applicable to officers, trustees/directors and
designated employees of Pioneer and certain of Pioneer's affiliates. 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 PLAN
PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal underwriter
for each fund in connection with the continuous offering of its shares. PFD is
an indirect wholly owned subsidiary of PIM-USA.
56
Each 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 plan (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 each 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. Each 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 "Sales Charges" for the schedule of initial sales charge reallowed to
dealers as a percentage of the offering price of each fund's Class A shares.
See the tables under "Annual Fee, Expense and Other Information" for
commissions retained by PFD and reallowed to dealers in connection with PFD's
offering of each fund's Class A and Class C shares during recently completed
fiscal years.
Each fund will not generally issue fund shares for consideration other than
cash. At a 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.
It is each fund's general practice to repurchase its shares of beneficial
interest for cash consideration in any amount; however, the redemption price of
shares of the fund may, at Pioneer's discretion, be paid in portfolio
securities. Each fund has 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.
You may incur additional costs, such as brokerage fees and taxes, and risks,
including a decline in the value of the securities you receive, if the fund
makes an in-kind distribution.
DISTRIBUTION PLAN
The trust has adopted a distribution plan (the "Distribution Plan") pursuant to
Rule l2b-1 under the 1940 Act with respect to each fund's Class A, Class B and
Class C shares. The trust has not adopted a distribution plan with respect to
each fund's Class Y shares.
For each Class that has adopted a Distribution Plan, fees under the
Distribution Plan may be used to make payments to one or more principal
underwriters, broker-dealers, financial intermediaries (which may include
banks) and other parties that enter into a distribution, selling or service
agreement with respect to the shares of such Class (each of the foregoing, a
"Service Party"). Each fund, its principal underwriter or other parties also
may incur expenses in connection with the distribution or marketing and sales
of the fund's shares that may be paid or reimbursed by the fund. The aggregate
amount in respect of such fees and expenses with respect to each Class shall be
the amount calculated at a percentage per annum of the average daily net assets
attributable to such Class as set forth below:
CLASS APPLICABLE PERCENTAGE PER ANNUM
--------- --------------------------------
Class A 0.25%
--------- ----
Class B 1.00%
--------- ----
Class C 1.00%
--------- ----
57
Payments are made under the Distribution Plan for distribution services and
other activities in respect of the sale of shares of the fund and to make
payments for advertising, marketing or other promotional activity, and for
preparation, printing, and distribution of prospectuses, statements of
additional information and reports for recipients other than regulators and
existing shareholders. Each fund also may make payments to Service Parties
under the Distribution Plan for providing personal service or the maintenance
of shareholder accounts. The amounts paid to each recipient may vary based upon
certain factors, including, among other things, the levels of sales of fund
shares and/or shareholder services provided; provided, however, that the fees
paid to a recipient with respect to a particular Class that may be used to
cover expenses primarily intended to result in the sale of shares of that
Class, or that may be used to cover expenses primarily intended for personal
service and/or maintenance of shareholder accounts, may not exceed the maximum
amounts, if any, as may from time to time be permitted for such services under
the Financial Industry Regulatory Authority ("FINRA") Conduct Rule 2830 or any
successor rule, in each case as amended or interpreted by FINRA.
The Distribution Plan also provides that the Service Parties may receive all or
a portion of any sales charges paid by investors.
The Distribution Plan permits each fund to pay fees to the Service Parties as
compensation for their services, not as reimbursement for specific expenses
incurred. Thus, even if their expenses exceed the fees provided for by the
Distribution Plan, a fund will not be obligated to pay more than those fees
and, if their expenses are less than the fees paid to them, they will realize a
profit. Each fund may pay the fees to the Service Parties until the
Distribution Plan or any related distribution agreement is terminated or not
renewed. In that event, a Service Party's expenses in excess of fees received
or accrued through the termination date will be such Service Party's sole
responsibility and not obligations of the fund. In their annual consideration
of the continuation of the Distribution Plan for each fund, the Trustees will
review the Distribution Plan and the expenses for each Class within a fund
separately. Each fund may participate in joint distribution activities with
other Pioneer funds. The costs associated with such joint distribution
activities are allocated to a fund based on the number of shares sold.
The Distribution Plan also recognizes that Pioneer, PFD or any other Service
Party may make payments for distribution-related expenses out of its own
resources, including past profits, or payments received from a fund for other
purposes, such as management fees, and that the Service Parties may from time
to time use their own resources for distribution-related services, in addition
to the fees paid under the Distribution Plan. The Distribution Plan
specifically provides that, to the extent that such payments might be deemed to
be indirect financing of any activity primarily intended to result in the sale
of shares of a fund within the context of Rule 12b-1, then the payments are
deemed to be authorized by the Distribution Plan but not subject to the maximum
amounts set forth above.
Under its terms, the Distribution Plan continues in effect for one year and
thereafter for successive annual periods, provided such continuance is
specifically approved at least annually by vote of the Board, including a
majority of the Independent Trustees who have no direct or indirect financial
interest in the operation of the Distribution Plan. The Distribution Plan may
not be amended to increase materially the amount of the service and
distribution fees without shareholder approval, and all material amendments of
the Distribution Plan also must be approved by the Trustees, including all of
the Independent Trustees, in the manner described above. The Distribution Plan
may be terminated with respect to a Class of a fund at any time, without
penalty, by vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding voting securities of such Class of the fund (as
defined in the 1940 Act).
See "Annual Fee, Expense and Other Information" for fund expenses under the
Distribution Plan paid to PFD for the most recently completed fiscal year.
58
CLASS B SHARES
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 agreement with PFD. 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, PFD may finance the payment of commissions to
broker-dealers. In order to facilitate such financing, each fund has agreed
that the distribution fee attributable to the Class B shares 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 (or the assets attributable to the 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 distribution fee attributable to the Class B shares also does not
apply to a termination or modification:
o to the extent required by a change in the 1940 Act, the rules or regulations
under the 1940 Act, the Conduct Rules of FINRA or an order of any court or
governmental agency, in each case enacted, issued or promulgated after
September 30, 1998;
o if each fund (or any successor) terminates the Distribution Plan and all
payments under the Distribution 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 a 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, each 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 FINRA or any order of any court or
governmental agency.
PFD pays a service fee to broker-dealers at a rate of up to 0.25% of each
fund's average daily net assets attributable to Class B shares owned by
shareholders 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.
59
At the time of the sale of a Class B share, PFD also may 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.
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.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
Each fund has contracted with PIMSS, 60 State Street, Boston, Massachusetts
02109, to act as shareholder servicing and transfer agent for each fund.
Under the terms of its contract with each 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 $24.75 for each shareholder account from each
fund as compensation for the services described above. PIMSS is also reimbursed
by each fund for its cash out-of-pocket expenditures. Each 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 each fund would be in lieu of the per account fee which would otherwise be
paid by each fund to PIMSS.
7. CUSTODIAN AND SUB-ADMINISTRATOR
Brown Brothers Harriman & Co. ("BBH"), 40 Water Street, Boston, Massachusetts
02109, is the custodian of each fund's assets. The custodian's responsibilities
include safekeeping and controlling each fund's cash and securities, handling
the receipt and delivery of securities, and collecting interest and dividends
on each fund's investments.
Effective March 5, 2012, BBH also performs certain fund accounting and fund
administration services for the Pioneer Fund complex, including the fund. For
performing such services, BBH receives fees based on complex-wide assets.
8. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072, the
fund's independent registered public accounting firm, provides audit services,
tax return review services, and assistance and consultation with respect to
filings with the SEC.
60
9. PORTFOLIO MANAGEMENT
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO MANAGERS
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
The table below indicates, for the portfolio managers of each fund, information
about the accounts other than the fund over which the portfolio manager has
day-to-day investment responsibility. All information on the number of accounts
and total assets in the table is as of September 30, 2013. For purposes of the
table, "Other Pooled Investment Vehicles" may include investment partnerships,
undertakings for collective investments in transferable securities ("UCITS")
and other non-U.S. investment funds and group trusts, and "Other Accounts" may
include separate accounts for institutions or individuals, insurance company
general or separate accounts, pension funds and other similar institutional
accounts but generally do not include the portfolio manager's personal
investment accounts or those which the manager may be deemed to own
beneficially under the code of ethics. Certain funds and other accounts managed
by the portfolio manager may have substantially similar investment strategies.
AGGRESSIVE PORTFOLIO
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED BASED BASED
------------------- ---------------------------------- ----------- ----------------- ---------------- -------------
Scott Wentsel Other Registered Investment
Companies 16 $ 3,432,272,403 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 371 $49,863,961,976 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
Brian Huckstep Other Registered Investment
Companies 16 $ 3,432,272,403 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 9 $ 2,499,706,578 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
Paul Arnold Other Registered Investment
Companies 3 $ 915,065,464 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 5 $ 14,810,765 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
CONSERVATIVE PORTFOLIO
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED BASED BASED
------------------- ---------------------------------- ----------- ----------------- ---------------- -------------
Scott Wentsel Other Registered Investment
Companies 18 $ 3,487,480,205 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 371 $49,863,961,976 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
61
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED BASED BASED
------------------- ---------------------------------- ----------- ----------------- ---------------- -------------
Brian Huckstep Other Registered Investment
Companies 18 $3,487,480,205 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 9 $2,499,706,578 N/A N/A
------------------- ---------------------------------- -- -------------- ---------------- -------------
Paul Arnold Other Registered Investment
Companies 3 $ 970,273,266 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 5 $ 14,810,765 N/A N/A
------------------- ---------------------------------- -- -------------- ---------------- -------------
GROWTH PORTFOLIO
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED BASED BASED
------------------- ---------------------------------- ----------- ----------------- ---------------- -------------
Scott Wentsel Other Registered Investment
Companies 18 $ 3,325,585,322 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 371 $49,863,961,976 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
Brian Huckstep Other Registered Investment
Companies 18 $ 3,325,585,322 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 9 $ 2,499,706,578 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
Paul Arnold Other Registered Investment
Companies 3 $ 808,378,383 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 5 $ 14,810,765 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
MODERATE PORTFOLIO
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED BASED BASED
------------------- ---------------------------------- ----------- ----------------- ---------------- -------------
Scott Wentsel Other Registered Investment
Companies 18 $ 3,343,772,512 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 371 $49,863,961,976 N/A N/A
------------------- ---------------------------------- --- --------------- ---------------- -------------
Brian Huckstep Other Registered Investment
Companies 18 $ 3,343,772,512 N/A N/A
62
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED BASED BASED
------------------- ---------------------------------- ----------- ----------------- ---------------- -------------
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 9 $2,499,706,578 N/A N/A
------------------- ---------------------------------- ----------- -------------- ---------------- -------------
Paul Arnold Other Registered Investment
Companies 3 $ 826,565,573 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 5 $ 14,810,765 N/A N/A
------------------- ---------------------------------- ----------- -------------- ---------------- -------------
POTENTIAL CONFLICTS OF INTEREST
When a portfolio manager is responsible for the management of more than one
account, the potential arises for the portfolio manager to favor one account
over another. The principal types of potential conflicts of interest that may
arise are discussed below. For the reasons outlined below, Pioneer does not
believe that any material conflicts are likely to arise out of a portfolio
manager's responsibility for the management of the fund as well as one or more
other accounts. Although Pioneer has adopted procedures that it believes are
reasonably designed to detect and prevent violations of the federal securities
laws and to mitigate the potential for conflicts of interest to affect its
portfolio management decisions, there can be no assurance that all conflicts
will be identified or that all procedures will be effective in mitigating the
potential for such risks. Generally, the risks of such conflicts of interest
are increased to the extent that a portfolio manager has a financial incentive
to favor one account over another. Pioneer has structured its compensation
arrangements in a manner that is intended to limit such potential for conflicts
of interest. See "Compensation of Portfolio Managers" below.
o A portfolio manager could favor one account over another in allocating new
investment opportunities that have limited supply, such as initial public
offerings and private placements. If, for example, an initial public
offering that was expected to appreciate in value significantly shortly
after the offering was allocated to a single account, that account may be
expected to have better investment performance than other accounts that did
not receive an allocation of the initial public offering. Generally,
investments for which there is limited availability are allocated based upon
a range of factors including available cash and consistency with the
accounts' investment objectives and policies. This allocation methodology
necessarily involves some subjective elements but is intended over time to
treat each client in an equitable and fair manner. Generally, the investment
opportunity is allocated among participating accounts on a pro rata basis.
Although Pioneer believes that its practices are reasonably designed to
treat each client in an equitable and fair manner, there may be instances
where a fund may not participate, or may participate to a lesser degree than
other clients, in the allocation of an investment opportunity.
o A portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If a portfolio manager determines
to purchase a security for more than one account in an aggregate amount that
may influence the market price of the security, accounts that purchased or
sold the security first may receive a more favorable price than accounts
that made subsequent transactions. The less liquid the market for the
security or the greater the percentage that the proposed aggregate purchases
or sales represent of average daily trading volume, the greater the
potential for accounts that make subsequent purchases or sales to receive a
less favorable price. When a portfolio manager intends to trade the same
security on the same day for more than one account, the trades typically are
"bunched," which means that the trades for the individual accounts are
aggregated and each account receives the same price. There are some types of
accounts as to which bunching may not be possible for contractual reasons
(such as directed brokerage arrangements). Circumstances may also arise
63
where the trader believes that bunching the orders may not result in the best
possible price. Where those accounts or circumstances are involved, Pioneer
will place the order in a manner intended to result in as favorable a price as
possible for such client.
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater degree
than other accounts managed by the portfolio manager. If, for example, the
portfolio manager receives a bonus based upon the performance of certain
accounts relative to a benchmark while other accounts are disregarded for
this purpose, the portfolio manager will have a financial incentive to seek
to have the accounts that determine the portfolio manager's bonus achieve
the best possible performance to the possible detriment of other accounts.
Similarly, if Pioneer receives a performance-based advisory fee, the
portfolio manager may favor that account, whether or not the performance of
that account directly determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager has a
beneficial interest in the account, in order to benefit a large client or to
compensate a client that had poor returns. For example, if the portfolio
manager held an interest in an investment partnership that was one of the
accounts managed by the portfolio manager, the portfolio manager would have
an economic incentive to favor the account in which the portfolio manager
held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise. For
example, if a portfolio manager purchases a security for one account and
sells the same security for another account, such trading pattern may
disadvantage either the account that is long or short. In making portfolio
manager assignments, Pioneer seeks to avoid such potentially conflicting
situations. However, where a portfolio manager is responsible for accounts
with differing investment objectives and policies, it is possible that the
portfolio manager will conclude that it is in the best interest of one
account to sell a portfolio security while another account continues to hold
or increase the holding in such security.
The Ibbotson portfolio managers' management of "Other Accounts" may give rise
to potential conflicts of interest in connection with their management of the
Pioneer Ibbotson Asset Allocation Funds'. The Other Accounts may have the same
investment objective as the Pioneer Ibbotson Asset Allocation Funds.
Therefore, a potential conflict of interest may arise as a result of the
similar investment objectives, whereby the portfolio managers could favor one
account over another. Another potential conflict could include the portfolio
managers' knowledge about the size, timing, and possible market impact of the
trades within the Pioneer Ibbotson Asset Allocation Funds, whereby the
portfolio managers could use this information to the advantage of another
account and to the disadvantage of the Pioneer Ibbotson Asset Allocation Funds.
COMPENSATION OF PORTFOLIO MANAGERS. Ibbotson investment management employees
are compensated with a base salary plus a discretionary annual bonus. The base
salary is derived from the individual's work experience and performance of
their duties. At the discretion of the head of the investment management unit,
the base salary may change as a result of such things as an annual review or
assuming new duties. The annual bonus is derived from Ibbotson's revenue and
profitability and is allotted to the investment management employees based on
their immediate manager's judgment of their contribution to the investment
management unit including meeting the unit's goals and objectives,
contributions to the strategic planning and investment decisions of the unit,
and if applicable, their fulfillment of their supervisory duties. Investment
management employees also are eligible for customary benefits and programs
offered generally to Ibbotson employees, including restricted stock units.
SHARE OWNERSHIP BY PORTFOLIO MANAGERS
The following table indicates as of September 30, 2013 the value, within the
indicated range, of shares beneficially owned by the portfolio managers of each
fund.
64
AGGRESSIVE PORTFOLIO
BENEFICIAL OWNERSHIP
NAME OF PORTFOLIO MANAGER OF THE FUND*
--------------------------- ---------------------
Scott Wentsel A
--------------------------- ---------------------
Brian Huckstep C
--------------------------- ---------------------
Paul Arnold A
--------------------------- ---------------------
CONSERVATIVE PORTFOLIO
BENEFICIAL OWNERSHIP
NAME OF PORTFOLIO MANAGER OF THE FUND*
--------------------------- ---------------------
Scott Wentsel A
--------------------------- ---------------------
Brian Huckstep A
--------------------------- ---------------------
Paul Arnold A
--------------------------- ---------------------
GROWTH PORTFOLIO
BENEFICIAL OWNERSHIP
NAME OF PORTFOLIO MANAGER OF THE FUND*
--------------------------- ---------------------
Scott Wentsel A
--------------------------- ---------------------
Brian Huckstep A
--------------------------- ---------------------
Paul Arnold A
--------------------------- ---------------------
MODERATE PORTFOLIO
BENEFICIAL OWNERSHIP
NAME OF PORTFOLIO MANAGER OF THE FUND*
--------------------------- ---------------------
Scott Wentsel A
--------------------------- ---------------------
Brian Huckstep A
--------------------------- ---------------------
Paul Arnold A
--------------------------- ---------------------
* Key to Dollar Ranges
A. None
B. $1 - $10,000
C. $10,001 - $50,000
D. $50,001 - $100,000
E. $100,001 - $500,000
F. $500,001 - $1,000,000
G. Over $1,000,000
65
10. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by Ibbotson, subject to Pioneer's supervision, or Pioneer
pursuant to authority contained in the trust's management contract and
subadvisory agreement. Pioneer seeks to obtain the best execution on portfolio
trades on behalf of each fund. 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 trust and/or other investment companies or other accounts
managed by Pioneer over which they or their affiliates exercise investment
discretion. 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, each
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 trust 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 trust as well as other investment
companies or other accounts managed by them, although not all such research may
be useful to the trust. 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 their obligations to the trust. The
receipt of such research has not reduced Pioneer's normal independent research
activities; however, it enables each of them to avoid the additional expenses
which might otherwise be incurred if they were to attempt to develop comparable
information through their own staff.
The funds may participate in third-party brokerage and/or expense offset
arrangements to reduce the funds' total operating expenses. Pursuant to
third-party brokerage arrangements, a fund may incur lower expenses by
directing brokerage to third-party broker-dealers which have agreed to use part
of their commission to pay the fund's fees to service providers unaffiliated
with Pioneer or other expenses. Since the commissions paid to the third party
brokers reflect a commission cost that a fund would generally expect to incur
on its brokerage transactions but not necessarily the lowest possible
commission, this arrangement is intended to reduce the fund's operating
expenses without increasing the costs of its brokerage commissions. Since use
of such directed brokerage is subject to the requirement to achieve best
execution in connection with a fund's brokerage transactions, there can be no
assurance that such arrangements will be utilized. Pursuant to expense offset
arrangements, a fund may incur lower transfer agency expenses due to interest
earned on cash held with the transfer agent. See "Financial highlights" in the
prospectus.
66
See the table in "Annual Fee, Expense and Other Information" for aggregate
brokerage and underwriting commissions paid by a fund in connection with its
portfolio transactions during recently completed fiscal years. The Board of
Trustees periodically reviews Pioneer's performance of their responsibilities
in connection with the placement of portfolio transactions on behalf of a fund.
11. DESCRIPTION OF SHARES
As an open-end management investment company, each 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 contingent deferred sales charge ("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.
Each fund is a series of Pioneer Ibbotson Asset Allocation Series, a Delaware
statutory trust. The Trustees have authorized the issuance of the following
classes of shares of each fund, designated as Class A, Class B, Class C, Class
R, and Class Y shares. Class R shares have not been issued as of the date of
this statement of additional information. Each share of a class of a fund
represents an equal proportionate interest in the assets of the fund allocable
to that class. Upon liquidation of a 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 Trust 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 a fund. Each class has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of
different dividends by each class. Share classes have exclusive voting rights
with respect to matters affecting only that class, including with respect to
the distribution plan for that class.
THE TRUST
The Trust's operations are governed by the Amended and Restated Agreement and
Declaration of Trust, dated as of July 1, 2008 (referred to in this section as
the declaration). A copy of the Trust's Certificate of Trust dated as of April
21, 2004, as amended, is on file with the office of the Secretary of State of
Delaware.
Delaware law provides a statutory framework for the powers, duties, rights and
obligations of the board (referred to in this section as the trustees) and
shareholders of the Delaware statutory trust, while the more specific powers,
duties, rights and obligations of the trustees and the shareholders are
determined by the trustees as set forth in the declaration. Some of the more
significant provisions of the declaration are described below.
SHAREHOLDER VOTING
The declaration provides for shareholder voting as required by the 1940 Act or
other applicable laws but otherwise permits, consistent with Delaware law,
actions by the trustees without seeking the consent of shareholders. The
trustees may, without shareholder approval, where approval of shareholders is
not otherwise required under the 1940 Act, merge or consolidate the Trust into
other entities, reorganize the Trust or any series or class into another trust
or entity or a series or class of another entity, sell the assets of the Trust
or any series or class to another entity, or a series or class of another
entity, or terminate the Trust or any series or class.
67
Each fund is not required to hold an annual meeting of shareholders, but a fund
will call special meetings of shareholders whenever required by the 1940 Act or
by the terms of the declaration. The declaration gives the board the
flexibility to specify either per share voting or dollar-weighted voting. Under
per share voting, each share of a fund is entitled to one vote. Under
dollar-weighted voting, a shareholder's voting power is determined, not by the
number of shares the shareholder owns, but by the dollar value of those shares
determined on the record date. All shareholders of all series and classes of
the Trust vote together, except where required by the 1940 Act to vote
separately by series or by class, or when the trustees have determined that a
matter affects only the interests of one or more series or classes of shares.
ELECTION AND REMOVAL OF TRUSTEES
The declaration provides that the trustees may establish the number of trustees
and that vacancies on the board may be filled by the remaining trustees, except
when election of trustees by the shareholders is required under the 1940 Act.
Trustees are then elected by a plurality of votes cast by shareholders at a
meeting at which a quorum is present. The declaration also provides that a
mandatory retirement age may be set by action of two-thirds of the trustees and
that trustees may be removed at any time or for any reason by a majority of the
board or by a majority of the outstanding shareholders of the Trust.
AMENDMENTS TO THE DECLARATION
The trustees are authorized to amend the declaration without the vote of
shareholders, but no amendment may be made that impairs the exemption from
personal liability granted in the declaration to persons who are or have been
shareholders, trustees, officers or, employees of the trust or that limit the
rights to indemnification or insurance provided in the declaration with respect
to actions or omissions of persons entitled to indemnification under the
declaration prior to the amendment.
ISSUANCE AND REDEMPTION OF SHARES
Each fund may issue an unlimited number of shares for such consideration and on
such terms as the trustees may determine. Shareholders are not entitled to any
appraisal, preemptive, conversion, exchange or similar rights, except as the
trustees may determine. Each fund may involuntarily redeem a shareholder's
shares upon certain conditions as may be determined by the trustees, including,
for example, if the shareholder fails to provide the fund with identification
required by law, or if the fund is unable to verify the information received
from the shareholder. Additionally, as discussed below, shares may be redeemed
in connection with the closing of small accounts.
DISCLOSURE OF SHAREHOLDER HOLDINGS
The declaration specifically requires shareholders, upon demand, to disclose to
a fund information with respect to the direct and indirect ownership of shares
in order to comply with various laws or regulations, and a fund may disclose
such ownership if required by law or regulation.
SMALL ACCOUNTS
The declaration provides that a fund may close out a shareholder's account by
redeeming all of the shares in the account if the account falls below a minimum
account size (which may vary by class) that may be set by the trustees from
time to time. Alternately, the declaration permits a fund to assess a fee for
small accounts (which may vary by class) and redeem shares in the account to
cover such fees, or convert the shares into another share class that is geared
to smaller accounts.
SERIES AND CLASSES
The declaration provides that the trustees may establish series and classes in
addition to those currently established and to determine the rights and
preferences, limitations and restrictions, including qualifications for
ownership, conversion and exchange features, minimum purchase and account size,
expenses and
68
charges, and other features of the series and classes. The trustees may change
any of those features, terminate any series or class, combine series with other
series in the trust, combine one or more classes of a series with another class
in that series or convert the shares of one class into another class.
Each share of a fund, as a series of the Trust, represents an interest in the
fund only and not in the assets of any other series of the Trust.
SHAREHOLDER, TRUSTEE AND OFFICER LIABILITY
The declaration provides that shareholders are not personally liable for the
obligations of a fund and requires a fund to indemnify a shareholder against
liability arising solely from the shareholder's ownership of shares in the
fund. In addition, a fund will assume the defense of any claim against a
shareholder for personal liability at the request of the shareholder. The
declaration further provides that no trustee, officer or employee of a fund
shall be liable to the fund or any shareholder for any action, failure to act,
error or mistake except in cases of bad faith, willful misfeasance, gross
negligence or reckless disregard of duty. The declaration requires a fund to
indemnify each trustee, director, officer, employee and authorized agent to the
fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved as a party or otherwise by virtue of
his being or having been such a trustee, director, officer, employee, or agent
and against amounts paid or incurred by him in settlement thereof. The 1940 Act
currently provides that no officer or director shall be protected from
liability to a fund or shareholders for willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties of office. The declaration
extends to trustees, officers and employees of a fund the full protection from
liability that the law allows.
The declaration provides that the appointment, designation or identification of
a trustee as chairperson, a member of a committee, an expert, lead independent
trustee, or any other special appointment, designation or identification shall
not impose any heightened standard of care or liability on such trustee.
DERIVATIVE ACTIONS
The declaration provides a detailed process for the bringing of derivative
actions by shareholders in order to permit legitimate inquiries and claims
while avoiding the time, expense, distraction, and other harm that can be
caused to a fund or its shareholders as a result of spurious shareholder
demands and derivative actions. Prior to bringing a derivative action, a demand
by three unrelated shareholders must first be made on the fund's trustees. The
declaration details various information, certifications, undertakings and
acknowledgements that must be included in the demand. Following receipt of the
demand, the trustees have a period of 90 days, which may be extended by an
additional 60 days, to consider the demand. If a majority of the trustees who
are considered independent for the purposes of considering the demand determine
that maintaining the suit would not be in the best interests of the fund, the
trustees are required to reject the demand and the complaining shareholders may
not proceed with the derivative action unless the shareholders are able to
sustain the burden of proof to a court that the decision of the trustees not to
pursue the requested action was not a good faith exercise of their business
judgment on behalf of the fund. The declaration further provides that
shareholders owning shares representing at least 10% of the voting power of the
affected fund must join in bringing the derivative action. If a demand is
rejected, the complaining shareholders will be responsible for the costs and
expenses (including attorneys' fees) incurred by the fund in connection with
the consideration of the demand, if in the judgment of the independent
trustees, the demand was made without reasonable cause or for an improper
purpose. If a derivative action is brought in violation of the declaration, the
shareholders bringing the action may be responsible for the fund's costs,
including attorneys' fees.
The declaration further provides that a fund shall be responsible for payment
of attorneys' fees and legal expenses incurred by a complaining shareholder
only if required by law, and any attorneys' fees that the fund is obligated to
pay shall be calculated using reasonable hourly rates. The declaration also
requires
69
that actions by shareholders against the fund be brought only in federal court
in Boston, Massachusetts, or if not permitted to be brought in federal court,
then in state court in Boston, Massachusetts, and that shareholders have no
right to jury trial for such actions.
12. SALES CHARGES
Each fund continuously offers the following classes of shares: Class A, Class
B, Class C and Class Y shares, as described in the prospectus. Each fund offers
its shares at a reduced sales charge to investors who meet certain criteria
that permit the fund's shares to be sold with low distribution costs. These
criteria are described below or 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 $50,000 5.75 6.10 5.00
--------------------------------- ---- ---- ----
$50,000 but less than $100,000 4.50 4.71 4.00
--------------------------------- ---- ---- ----
$100,000 but less than $250,000 3.50 3.63 3.00
--------------------------------- ---- ---- ----
$250,000 but less than $500,000 2.50 2.56 2.00
--------------------------------- ---- ---- ----
$500,000 or more 0.00 0.00 see below
--------------------------------- ---- ---- ------------
The schedule of sales charges above is applicable to purchases of Class A
shares of a 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 $500,000
or more, or for purchases by participants in employer-sponsored retirement
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:
1.00% Up to $4 million
---- ---------------------------------
Greater than $4 million and less
0.50% than or equal to $50 million
---- ---------------------------------
0.25% Over $50 million
---- ---------------------------------
Commissions are based on cumulative investments in Class A shares of the
Pioneer funds. 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 employer-sponsored retirement plans with at
least $500,000 in total plan assets (or that has 1,000 or
70
more eligible participants for employer-sponsored retirement plans with
accounts established with Pioneer on or before March 31, 2004) 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 $50,000 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 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 a fund to sell, the amount
specified in the LOI. Any share class for which no sales charge is paid cannot
be included under the LOI.
If the total purchases exceed the amount specified under the LOI and are in an
amount that 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 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
Effective December 31, 2009, Class B shares are no longer offered to new or
existing shareholders, except for reinvestment of dividends and/or capital
gains distributions and exchanges for Class B shares of other Pioneer funds.
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 five 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. In
processing redemptions of Class B shares, a fund will first redeem shares not
subject to any CDSC and then shares held longest during the five-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:
71
CDSC AS A % OF DOLLAR
YEAR SINCE PURCHASE AMOUNT SUBJECT TO CDSC
---------------------- -----------------------
First 4.0
---------------------- ---
Second 4.0
---------------------- ---
Third 3.0
---------------------- ---
Fourth 2.0
---------------------- ---
Fifth 1.0
---------------------- ---
Sixth 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 a
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 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 over time in the same proportion as other shares held in the account.
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 the net asset value per share next computed after
receipt of a purchase order without the imposition of an initial sales charge;
however, Class C shares redeemed within one year of purchase will be subject to
a CDSC of 1%. The charge will be assessed on the amount equal to the lesser of
the current market value or the original purchase cost of the shares being
redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gain distributions. Class C shares do not convert to any
other class of fund shares.
In processing redemptions of Class C shares, a fund will first redeem shares
not subject to any CDSC and then shares held for the longest 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 a
fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
CLASS Y SHARES
No front-end, deferred or asset-based sales charges are applicable to Class Y
shares.
ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES
The financial intermediaries through which shares are purchased may receive all
or a portion of the sales charges and Rule 12b-1 fees discussed above. In
addition to those payments, Pioneer or one or more of its affiliates
(collectively, "Pioneer Affiliates") may make additional payments to financial
intermediaries in connection with the promotion and sale of shares of Pioneer
funds. Pioneer Affiliates make these payments from their own resources, which
include resources that derive from compensation for providing
72
services to the Pioneer funds. These additional payments are described below.
The categories described below are not mutually exclusive. The same financial
intermediary may receive payments under more than one or all categories. Many
financial intermediaries that sell shares of Pioneer funds receive one or more
types of these payments. The financial intermediary typically initiates
requests for additional compensation. Pioneer negotiates these arrangements
individually with financial intermediaries and the amount of payments and the
specific arrangements may differ significantly. A financial intermediary also
may receive different levels of compensation with respect to sales or assets
attributable to different types of clients of the same intermediary or
different Pioneer funds. Where services are provided, the costs of providing
the services and the overall array of services provided may vary from one
financial intermediary to another. Pioneer Affiliates do not make an
independent assessment of the cost of providing such services. While the
financial intermediaries may request additional compensation from Pioneer to
offset costs incurred by the financial intermediary in servicing its clients,
the financial intermediary may earn a profit on these payments, since the
amount of the payment may exceed the financial intermediary's costs. In this
context, "financial intermediary" includes any broker, dealer, bank (including
bank trust departments), insurance company, transfer agent, registered
investment adviser, financial planner, retirement plan administrator and any
other financial intermediary having a selling, administrative and shareholder
servicing or similar agreement with a Pioneer Affiliate.
A financial intermediary's receipt of additional compensation may create
conflicts of interest between the financial intermediary and its clients. Each
type of payment discussed below may provide your financial intermediary with an
economic incentive to actively promote the Pioneer funds over other mutual
funds or cooperate with the distributor's promotional efforts. The receipt of
additional compensation for Pioneer Affiliates may be an important
consideration in a financial intermediary's willingness to support the sale of
the Pioneer funds through the financial intermediary's distribution system.
Pioneer Affiliates are motivated to make the payments described above since
they promote the sale of Pioneer fund shares and the retention of those
investments by clients of financial intermediaries. In certain cases these
payments could be significant to the financial intermediary. The financial
intermediary may charge additional fees or commissions other than those
disclosed in the prospectus. Financial intermediaries may categorize and
disclose these arrangements differently than Pioneer Affiliates do. To the
extent financial intermediaries sell more shares of the funds or retain shares
of the funds in their clients' accounts, Pioneer Affiliates benefit from the
incremental management and other fees paid to Pioneer Affiliates by the funds
with respect to those assets.
REVENUE SHARING PAYMENTS
Pioneer Affiliates make revenue sharing payments as incentives to certain
financial intermediaries to promote and sell shares of Pioneer funds. The
benefits Pioneer Affiliates receive when they make these payments include,
among other things, entry into or increased visibility in the financial
intermediary's sales system, participation by the intermediary in the
distributor's marketing efforts (such as helping facilitate or providing
financial assistance for conferences, seminars or other programs at which
Pioneer personnel may make presentations on the funds to the intermediary's
sales force), placement on the financial intermediary's preferred fund list,
and access (in some cases, on a preferential basis over other competitors) to
individual members of the financial intermediary's sales force or management.
Revenue sharing payments are sometimes referred to as "shelf space" payments
because the payments compensate the financial intermediary for including
Pioneer funds in its fund sales system (on its "shelf space"). Pioneer
Affiliates also may pay financial intermediaries "finders'" or "referral" fees
for directing investors to the Pioneer funds. Pioneer Affiliates compensate
financial intermediaries differently depending typically on the level and/or
type of considerations provided by the financial intermediary.
The revenue sharing payments Pioneer Affiliates make may be calculated on sales
of shares of Pioneer funds ("Sales-Based Payments"); although there is no
policy limiting the amount of Sales-Based Payments any one financial
intermediary may receive, the total amount of such payments normally does not
exceed 0.25% per annum of those assets. Such payments also may be calculated on
the average daily net assets
73
of the applicable Pioneer funds attributable to that particular financial
intermediary ("Asset-Based Payments"); although there is no policy limiting the
amount of Asset-Based Payments any one financial intermediary may receive, the
total amount of such payments normally does not exceed 0.16% per annum of those
assets. Sales-Based Payments primarily create incentives to make new sales of
shares of Pioneer funds and Asset-Based Payments primarily create incentives to
retain previously sold shares of Pioneer funds in investor accounts. Pioneer
Affiliates may pay a financial intermediary either or both Sales-Based Payments
and Asset-Based Payments.
ADMINISTRATIVE AND PROCESSING SUPPORT PAYMENTS
Pioneer Affiliates also may make payments to certain financial intermediaries
that sell Pioneer fund shares for certain administrative services, including
record keeping and sub-accounting shareholder accounts, to the extent that the
funds do not pay for these costs directly. Pioneer Affiliates also may make
payments to certain financial intermediaries that sell Pioneer fund shares in
connection with client account maintenance support, statement preparation and
transaction processing. The types of payments that Pioneer Affiliates may make
under this category include, among others, payment of ticket charges per
purchase or exchange order placed by a financial intermediary, payment of
networking fees in connection with certain mutual fund trading systems, or
one-time payments for ancillary services such as setting up funds on a
financial intermediary's mutual fund trading system.
OTHER PAYMENTS
From time to time, Pioneer Affiliates, at their expense, may provide additional
compensation to financial intermediaries which sell or arrange for the sale of
shares of the Pioneer funds. Such compensation provided by Pioneer Affiliates
may include financial assistance to financial intermediaries that enable
Pioneer Affiliates to participate in and/or present at conferences or seminars,
sales or training programs for invited registered representatives and other
employees, client entertainment, client and investor events, and other
financial intermediary-sponsored events, and travel expenses, including lodging
incurred by registered representatives and other employees in connection with
client prospecting, retention and due diligence trips. Other compensation may
be offered to the extent not prohibited by federal or state laws or any
self-regulatory agency, such as FINRA. Pioneer Affiliates make payments for
entertainment events they deem appropriate, subject to Pioneer Affiliates'
guidelines and applicable law. These payments may vary depending upon the
nature of the event or the relationship.
As of January 1, 2013, Pioneer anticipates that the following broker-dealers or
their affiliates will receive additional payments as described in the fund's
prospectus and statement of additional information:
AIG VALIC
ADP Retirement Services
Ameriprise Financial Services, Inc.
AXA Advisors, LLC
Charles Schwab & Co., Inc.
Citigroup Global Markets Inc.
Commonwealth Financial Network
D.A. Davidson & Co.
Edward Jones
Fidelity Brokerage Services LLC
First Clearing, LLC
First Command Financial Planning, Inc.
FSC Securities Corporation
GWFS Equities, Inc.
H.D. Investment Services
Hartford Securities Distribution Company, Inc.
Hewitt Financial Services LLC
74
ING
J.J.B. Hilliard, W.L Lyons, Inc.
Janney Montgomery Scott LLC
Jefferson National Securities Corporation
Legend Equities Corporation
Lincoln Investment Planning, Inc.
LPL Financial Corp.
Merrill Lynch & Co., Inc.
MetLife Securities Inc.
Mid Atlantic Capital Corporation
Morgan Keegan & Co., Inc.
Morgan Stanley & Co., Inc.
MSCS Financial Services, LLC
Mutual of Omaha Investor Services, Inc.
Mutual Service Corporation
N.I.S. Financial Services, Inc.
National Financial Services LLC
Nationwide Securities, Inc.
Northwestern Investment Services, LLC
NYLife Securities, LLC
OneAmerica Securities, Inc.
Oppenheimer & Co., Inc.
Penson Financial Services, Inc.
Pershing LLC
PFS Investments Inc.
PNC Investments
Prudential Financial
Raymond James Financial Services, Inc.
RBC Dain Rauscher Inc.
Robert W. Baird & Co., Inc.
Royal Alliance Associates, Inc.
SagePoint Financial
Sammons Financial Network, LLC
Scott and Stringfellow, Inc.
Securities America, Inc.
Southwest Securities, Inc.
StanCorp Equities, Inc.ING
Sterne Agee & Leach, Inc.
Stifel Nicholas & Company, Inc.
Symetra Investment Services, Inc.
TD Ameritrade, Inc.
T. Rowe Price Investment Services, Inc.
UBS Financial Services Inc.
Upromise Investments, Inc.
Vanguard Marketing Corporation
Wells Fargo Investments, LLC
Woodbury Financial Services
Please contact your financial intermediary for details about any payments it
receives from Pioneer Affiliates or the funds, as well as about fees and/or
commissions it charges.
75
13. REDEEMING SHARES
Redemptions may be suspended or payment postponed during any period in which
any of the following conditions exist: the New York Stock Exchange (the
"Exchange") is closed or trading on the Exchange is restricted; an emergency
exists as a result of which disposal by a fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for a fund to fairly
determine the value of the net assets of its portfolio; or otherwise as
permitted by the rules of or by the order of the SEC.
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, CLASS B AND CLASS C 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. 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 medallion signature guarantee must accompany your instructions.
Withdrawals under the SWP are redemptions that may have tax consequences for
you.
While you are making systematic withdrawals from your account, you may pay
unnecessary initial sales charges on additional purchases of Class A shares or
contingent deferred sales charges. 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 and 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.
14. TELEPHONE AND ONLINE TRANSACTIONS
You may purchase, exchange or sell Class A, Class B or Class C shares by
telephone or online. Class Y shares may not be purchased by telephone, and
Class Y shareowners are not eligible for online transaction privileges. See the
prospectus for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 7:00 p.m. (Class Y account holders should contact
Pioneer's Group Plans Department at 1-800-665-8839 between 9:00 a.m. and 5:30
p.m.) Eastern time on
76
weekdays. Computer-assisted telephone 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 OR ONLINE TRANSACTION.
TELEPHONE TRANSACTION PRIVILEGES
To confirm that each transaction instruction received by telephone is genuine,
the fund will record each telephone transaction, require the caller to provide
validating information 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.
ONLINE TRANSACTION PRIVILEGES
If your account is registered in your name, you may be able buy, exchange or
sell fund shares online. Your investment firm may also be able to buy, exchange
or sell your fund shares online.
To establish online transaction privileges:
o For new accounts, complete the online section of the account application
o For existing accounts, complete an account options form, write to the
transfer agent or complete the online authorization screen on
www.pioneerinvestments.com
To use online transactions, you must read and agree to the terms of an online
transaction agreement available on the Pioneer website. When you or your
investment firm requests an online transaction the transfer agent
electronically records the transaction, requires an authorizing password and
sends a written confirmation. The fund may implement other 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. You may not be able to use the online transaction privilege
for certain types of accounts, including most retirement accounts.
TELEPHONE AND WEBSITE ONLINE ACCESS
You may have difficulty contacting the fund by telephone or accessing
www.pioneerinvestments.com during times of market volatility or disruption in
telephone or Internet services. On Exchange holidays or on days when the
Exchange closes early, Pioneer will adjust the hours for the telephone center
and for online transaction processing accordingly. If you are unable to access
www.pioneerinvestments.com or to reach the fund by telephone, you should
communicate with the fund in writing.
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
77
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.
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 funds; 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 each class of 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.
15. PRICING OF SHARES
The net asset value per share of each class of a 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 each 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. A 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. The
value of a fund's investment in an underlying fund is determined on the basis
of the net asset value of the shares of the class of the underlying fund held
by the fund. Generally, the underlying funds determine their net asset value
based upon the market value of their assets. Certain assets of the underlying
funds may be valued at "fair value" using procedures approved by the boards of
trustees of the underlying funds.
The net asset value per share of each class of a 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 a fund are accrued daily and taken into
account. Each 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, Class C, and Class Y 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).
16. TAX STATUS
Each fund is treated as a separate entity for U.S. federal income tax purposes.
Each fund has elected to be treated, and has qualified and intends to continue
to qualify each year, as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), so that it will not
pay U.S. federal income tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company under
Subchapter M of the Code, each fund must, among other things, (i) derive at
least 90% of its gross income for each taxable year from dividends, interest,
payments with respect to certain securities loans, gains from the sale or other
disposition of stock, securities or
78
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, and net income derived from an interest in a
qualified publicly traded partnership (as defined in Section 851(h) of the
Code) (the "90% income test"), and (ii) diversify its holdings so that, at the
end of each quarter of each taxable year: (a) at least 50% of the value of the
fund's total assets is represented by (1) cash and cash items, U.S. government
securities, securities of other regulated investment companies, and (2) other
securities, with such other securities limited, in respect of any one issuer,
to an amount not greater than 5% of the value of the fund's total assets and to
not more than 10% of the outstanding voting securities of such issuer and (b)
not more than 25% of the value of the fund's total assets is invested in (1)
the securities (other than U.S. government securities and securities of other
regulated investment companies) of any one issuer, (2) the securities (other
than securities of other regulated investment companies) of two or more issuers
that the fund controls and that are engaged in the same, similar, or related
trades or businesses, or (3) the securities of one or more qualified publicly
traded partnerships.
If a fund qualifies as a regulated investment company and properly distributes
to its shareholders each taxable year an amount equal to or exceeding the sum
of (i) 90% of its "investment company taxable income" as that term is defined
in the Code (which includes, among other things, dividends, taxable interest,
and the excess of any net short-term capital gains over net long-term capital
losses, as reduced by certain deductible expenses) without regard to the
deduction for dividends paid and (ii) 90% of the excess of its gross tax-exempt
interest income, if any, over certain disallowed deductions, the fund generally
will not be subject to U.S. federal income tax on any income of the fund,
including "net capital gain" (the excess of net long-term capital gain over net
short-term capital loss), distributed to shareholders. However, if the fund
meets such distribution requirements, but chooses to retain some portion of its
taxable income or gains, it generally will be subject to U.S. federal income
tax at regular corporate rates on the amount retained. Each fund may designate
certain amounts retained as undistributed net capital gain in a notice to its
shareholders, who (i) will be required to include in income for U.S. federal
income tax purposes, as long-term capital gain, their proportionate shares of
the undistributed amount so designated, (ii) will be entitled to credit their
proportionate shares of the income tax paid by the fund on that undistributed
amount against their federal income tax liabilities and to claim refunds to the
extent such credits exceed their liabilities and (iii) will be entitled to
increase their tax basis, for federal income tax purposes, in their shares by
an amount equal to the excess of the amount of undistributed net capital gain
included in their respective income over their respective income tax credits.
Each fund intends to distribute at least annually all or substantially all of
its investment company taxable income (computed without regard to the
dividends-paid deduction), net tax-exempt interest income, and net capital
gain.
If, for any taxable year, a fund does not qualify as a regulated investment
company or does not satisfy the 90% distribution requirement, it will be
treated as a U.S. corporation subject to U.S. federal income tax, thereby
subjecting any income earned by the fund to tax at the corporate level and to a
further tax at the shareholder level when such income is distributed. Under
certain circumstances, a fund may be able to cure a failure to qualify as a
regulated investment company, but in order to do so, the fund may incur
significant fund-level taxes and may be forced to dispose of certain assets.
Under the Code, each fund will be subject to a nondeductible 4% U.S. federal
excise tax on a portion of its undistributed ordinary income and capital gain
net income if it fails to meet certain distribution requirements with respect
to each calendar year and each year ending October 31, respectively. Each fund
intends to make distributions in a timely manner and accordingly does not
expect to be subject to the excise tax.
Each fund generally distributes any net short- and long-term capital gains in
December. Each fund generally pays dividends from any net investment income
(excluding capital gains) in December. Dividends from income and/or capital
gains may also be paid at such other times as may be necessary for a fund to
avoid U.S. federal income or excise tax. Unless a shareholder specifies
otherwise, all distributions from a fund to that shareholder will be
automatically reinvested in additional full and fractional shares of the fund.
79
For U.S. federal income tax purposes, all dividends generally are taxable
whether a shareholder takes them in cash or reinvests them in additional shares
of the applicable fund. In general, assuming that a fund has sufficient
earnings and profits, dividends from net investment income and net short-term
capital gains are taxable either as ordinary income or, if certain conditions
are met, as "qualified dividend income," taxable to individual and certain
other noncorporate shareholders at U.S. federal income tax rates of up to 20%.
In general, dividends may be reported by a fund as qualified dividend income if
they are attributable to qualified dividend income received by the fund. A
fund's qualified dividend income generally will consist of any dividend income
that is (i) received by a fund from underlying funds that themselves received
such income as dividends on common and preferred stock of U.S. companies or on
stock of certain qualified foreign corporations, and (ii) reported as such by
the underlying funds, provided that certain holding period and other
requirements are met by both the fund and the shareholders. If 95% or more of a
fund's gross income (calculated without taking into account net capital gain
derived from sales or other dispositions of stock or securities) consists of
qualified dividend income, the fund may report all distributions of such income
as qualified dividend income.
A foreign corporation is treated as a qualified foreign corporation for this
purpose if it is incorporated in a possession of the United States or it is
eligible for the benefits of certain income tax treaties with the United States
and meets certain additional requirements. Certain foreign corporations that
are not otherwise qualified foreign corporations will be treated as qualified
foreign corporations with respect to dividends paid by them if the stock with
respect to which the dividends are paid is readily tradable on an established
securities market in the United States. Passive foreign investment companies
are not qualified foreign corporations for this purpose. Dividends received by
a fund that are attributable to an underlying fund's investments in REITs
generally are not expected to qualify for treatment as qualified dividend
income.
A dividend that is attributable to qualified dividend income of a fund that is
paid by the fund to a shareholder will not be taxable as qualified dividend
income to such shareholder (1) if the dividend is received with respect to any
share of the fund held for fewer than 61 days during the 121-day period
beginning on the date which is 60 days before the date on which such share
became ex-dividend with respect to such dividend, (2) to the extent that the
shareholder is under an obligation (whether pursuant to a short sale or
otherwise) to make related payments with respect to positions in substantially
similar or related property, or (3) if the shareholder elects to have the
dividend treated as investment income for purposes of the limitation on
deductibility of investment interest. The "ex-dividend" date is the date on
which the owner of the share at the commencement of such date is entitled to
receive the next issued dividend payment for such share even if the share is
sold by the owner on that date or thereafter. Distributions by a fund in excess
of the fund's current and accumulated earnings and profits will be treated as a
return of capital to the extent of (and in reduction of) the shareholder's tax
basis in its shares and any such amount in excess of that basis will be treated
as gain from the sale of shares, as discussed below.
Certain dividends received by a fund from an underlying fund and attributable
to the underlying fund's dividend income from stock of U.S. corporations
(generally, dividends received by an underlying fund in respect of any share of
stock (1) as to which the underlying fund has a tax holding period of at least
46 days during the 91-day period beginning on the date that is 45 days before
the date on which the stock becomes ex-dividend as to that dividend and (2)
that is held in an unleveraged position) and distributed and appropriately so
reported by the underlying fund may be eligible for the 70% dividends-received
deduction generally available to corporations under the Code, provided such
dividends are also appropriately so reported as eligible for the
dividends-received deduction by the fund. Certain preferred stock must have a
holding period of at least 91 days during the 181-day period beginning on the
date that is 90 days before the date on which the stock becomes ex-dividend as
to that dividend in order to be eligible. Capital gain dividends distributed to
a fund from underlying funds and capital gain dividends
80
distributed to an underlying fund from other regulated investment companies are
not eligible for the dividends-received deduction. In order to qualify for the
dividends-received deduction, corporate shareholders must meet the minimum
holding period requirement stated above with respect to their fund shares,
taking into account any holding period reductions from certain hedging or other
transactions or positions that diminish their risk of loss with respect to
their fund shares, and, if they borrow to acquire or otherwise incur debt
attributable to fund shares, they may be denied a portion of the
dividends-received deduction with respect to those shares. The applicable
holding period requirements must also be satisfied by both the fund and the
underlying funds. The entire dividend, including the otherwise deductible
amount, will be included in determining the excess, if any, of a corporation's
adjusted current earnings over its alternative minimum taxable income, which
may increase a corporation's alternative minimum tax liability. Any corporate
shareholder should consult its tax adviser regarding the possibility that its
tax basis in its shares may be reduced, for U.S. federal income tax purposes,
by reason of "extraordinary dividends " received with respect to the shares
and, to the extent such basis would be reduced below zero, current recognition
of income may be required.
Distributions from net capital gains, if any, that are reported as capital gain
dividends by a fund 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. Capital gain dividends distributed by a fund to
individual and certain other noncorporate shareholders generally will be taxed
as long-term capital gains, which are taxable to noncorporate taxpayers at U.S.
federal income tax rates of up to 20%. A shareholder should also be aware that
the benefits of the favorable tax rates applicable to long-term capital gains
and qualified dividend income may be affected by the application of the
alternative minimum tax to individual shareholders.
The U.S. federal income tax status of all distributions will be reported to
shareholders annually.
A 3.8% Medicare contribution tax generally applies to all or a portion of the
net investment income of a shareholder who is an individual and not a
nonresident alien for federal income tax purposes and who has adjusted gross
income (subject to certain adjustments) that exceeds a threshold amount
($250,000 if married filing jointly or if considered a "surviving spouse" for
federal income tax purposes, $125,000 if married filing separately, and
$200,000 in other cases). This 3.8% tax also applies to all or a portion of the
undistributed net investment income of certain shareholders that are estates
and trusts. For these purposes, dividends, interest and certain capital gains
(among other categories of income) are generally taken into account in
computing a shareholder's net investment income.
Although dividends generally will be treated as distributed when paid, any
dividend declared by a fund in October, November or December and payable to
shareholders of record in such a month that is 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 was declared. In
addition, certain distributions made after the close of a taxable year of the
fund may be "spilled back" and treated for certain purposes as paid by a fund
during such taxable year. In such case, shareholders generally will be treated
as having received such dividends in the taxable year in which the
distributions were actually made. For purposes of calculating the amount of a
regulated investment company's undistributed income and gain subject to the 4%
excise tax described above, such "spilled back" dividends are treated as paid
by the regulated investment company when they are actually paid.
For purposes of determining the character of income received by a fund when an
underlying fund distributes net capital gain to such fund, the fund will treat
the distribution as long-term capital gain, even if the fund has held shares of
the underlying fund for less than one year. If it is not disallowed under wash
sale rules, any loss incurred by a fund on the redemption or other sale of such
underlying fund shares that have a tax holding period of six months or less
will be treated as a long-term capital loss to the extent of the gain
distribution received on the shares disposed of by such fund.
81
Each fund may invest in underlying funds with capital loss carryforwards. If
such an underlying fund realizes capital gains, it will be able to offset the
gains to the extent of its loss carryforwards in determining the amount of
capital gains which must be distributed to shareholders such as a fund. To the
extent that gains are offset in this manner, distributions to a fund and its
shareholders may be reduced. Similarly, for U.S. federal income tax purposes,
each fund is permitted to carry forward a net capital loss from any taxable
year that began on or before December 22, 2010 to offset its capital gains, if
any, for up to eight years following the year of the loss. Each fund is
permitted to carry forward indefinitely a net capital loss from any taxable
year that began after December 22, 2010 to offset its capital gains, if any, in
years following the year of the loss. To the extent subsequent capital gains
are offset by such losses, they will not result in U.S. federal income tax
liability to the fund and may not be distributed as capital gains to
shareholders. Carryforwards of losses from taxable years that began after
December 22, 2010 must be fully utilized before the fund may utilize
carryforwards of losses from taxable years that began on or before December 22,
2010. See the prospectus and statement of additional information of each
underlying fund for each underlying fund's available capital loss
carryforwards. See "Annual Fee, Expense and Other Information" for the funds'
available capital loss carryforwards. Generally, neither a fund nor any
underlying fund may carry forward any losses other than net capital losses.
Under certain circumstances, a fund or an underlying fund may elect to treat
certain losses as though they were incurred on the first day of the taxable
year immediately following the taxable year in which they were actually
incurred.
A fund will not be able to offset gains distributed by any underlying fund in
which it invests against losses incurred by another underlying fund in which it
invests because the underlying funds cannot distribute losses. A fund's
redemptions of shares in an underlying fund, including those resulting from
changes in the allocation among underlying funds, could cause the fund to
recognize taxable gains or losses. A portion of any such gains may be
short-term capital gains that would be distributable as ordinary income to
shareholders of the fund. Further, a portion of losses on redemptions of shares
in the underlying funds may be deferred. Short-term capital gains earned by an
underlying fund will be treated as ordinary dividends when distributed to a
fund and therefore may not be offset by any short-term capital losses incurred
by that fund. Thus, a fund's short-term capital losses may instead offset its
long-term capital gains, which might otherwise be eligible for the reduced U.S.
federal income tax rates for individuals, as discussed above. As a result of
these factors, the use of the fund-of-funds structure by the funds could
adversely affect the amount, timing and character of distributions to their
shareholders.
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
applicable fund's portfolio or to undistributed taxable income of the
applicable 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 generally 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. In general, if fund shares are sold, the
shareholder will recognize gain or loss equal to the difference between the
amount realized on the sale and the shareholder's adjusted basis in the shares.
Such gain or loss generally will be treated as long-term capital gain or loss
if the shares were held for more than one year and otherwise generally will be
treated as short-term capital gain or loss. Any loss recognized 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 to the shareholder
of long-term capital gain with respect to such shares (including any amounts
credited to the shareholder as undistributed capital gains).
82
Each fund will report to the IRS the amount of sale proceeds that a shareholder
receives from a sale or exchange of fund shares. For sales or exchanges of
shares acquired on or after January 1, 2012, each fund will also report the
shareholder's basis in those shares and whether any gain or loss that the
shareholder realizes on the sale or exchange is short-term or long-term gain or
loss. For purposes of calculating and reporting basis, shares acquired prior to
January 1, 2012 and shares acquired on or after January 1, 2012 will be treated
as held in separate accounts. If a shareholder has a different basis for
different shares of a fund, acquired on or after January 1, 2012, in the same
account (e.g., if a shareholder purchased fund shares in the same account at
different times for different prices), the fund will calculate the basis of the
shares sold using its default method unless the shareholder has properly
elected to use a different method. Each fund's default method for calculating
basis will be the average basis method, under which the basis per share is
reported as the average of the bases of all of the shareholder's fund shares in
the account. A shareholder may elect, on an account-by-account basis, to use a
method other than average basis by following procedures established by each
fund. If such an election is made on or prior to the date of the first exchange
or redemption of shares in the account and on or prior to the date that is one
year after the shareholder receives notice of the fund's default method, the
new election will generally apply as if the average basis method had never been
in effect for such account. If such an election is not made on or prior to such
dates, the shares in the account at the time of the election will retain their
averaged bases. Shareholders should consult their tax advisers concerning the
tax consequences of applying the average basis method or electing another
method of basis calculation.
Losses on redemptions or other dispositions of shares may be disallowed under
"wash sale" rules in the event of other investments in a 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.
Gain may be increased (or loss reduced) upon a redemption of Class A shares of
a fund within 90 days after their purchase followed by any purchase (including
purchases by exchange or by reinvestment), without payment of an additional
sales charge, of Class A shares of that fund or of another Pioneer fund (or any
other shares of a Pioneer fund generally sold subject to a sales charge) before
February 1 of the calendar year following the calendar year in which the
original Class A shares were redeemed.
Under Treasury regulations, if a shareholder recognizes a loss with respect to
fund shares of $2 million or more for an individual shareholder, or $10 million
or more for a corporate shareholder, in any single taxable year (or certain
greater amounts over a combination of years), the shareholder must file with
the IRS a disclosure statement on IRS Form 8886. Shareholders who own portfolio
securities directly are in many cases excepted from this reporting requirement
but, under current guidance, shareholders of regulated investment companies are
not excepted. A shareholder who fails to make the required disclosure to the
IRS may be subject to substantial penalties. The fact that a loss is reportable
under these regulations does not affect the legal determination of whether or
not the taxpayer's treatment of the loss is proper. Shareholders should consult
with their tax advisers to determine the applicability of these regulations in
light of their individual circumstances.
Shareholders that are exempt from U.S. federal income tax, such as retirement
plans that are qualified under Section 401 of the Code, generally are not
subject to U.S. federal income tax on fund dividends or distributions, or on
sales or exchanges of fund shares unless the fund shares are "debt-financed
property" within the meaning of the Code. However, in the case of fund shares
held through a non-qualified deferred compensation plan, fund dividends and
distributions received by the plan and gains from sales and exchanges of fund
shares by the plan generally are taxable to the employer sponsoring such plan
in accordance with the U.S. federal income tax laws that are generally
applicable to shareholders receiving such dividends or distributions from
regulated investment companies such as the funds.
83
A plan participant whose retirement plan invests in a fund, whether such plan
is qualified or not, generally is not taxed on fund dividends or distributions
received by the plan or on gains from sales or exchanges of fund shares by the
plan for U.S. federal income tax purposes. However, distributions to plan
participants from a retirement plan account generally are taxable as ordinary
income, and 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. Foreign exchange gains and losses realized by an
underlying 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 a fund and thus of the fund's income.
Under Treasury regulations that may be promulgated in the future, any gains
from such transactions that are not directly related to an underlying fund's
principal business of investing 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 an underlying fund acquires any equity interest (under Treasury regulations
that may be promulgated in the future, generally including not only stock but
also an option to acquire stock such as is inherent in a convertible bond) in
certain foreign corporations (i) 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 (ii) where at least 50% of the
corporation's assets (computed based on average fair market value) either
produce or are held for the production of passive income ("passive foreign
investment companies"), the underlying 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. An underlying fund would not be able to pass through to any
fund that invests in that underlying fund any credit or deduction for such a
tax. A "qualified electing fund" election or a "mark to market" election may be
available that would ameliorate these adverse tax consequences, but such
elections could require the underlying fund to recognize taxable income or gain
(subject to the distribution requirements applicable to regulated investment
companies, as described above) without the concurrent receipt of cash. In order
to satisfy the distribution requirements and avoid a tax on the underlying
fund, the underlying fund may be required to liquidate portfolio securities
that it might otherwise have continued to hold, potentially resulting in
additional taxable gain or loss to the underlying fund. Gains from the sale of
stock of passive foreign investment companies may also be treated as ordinary
income. In order for an underlying fund to make a qualified electing fund
election with respect to a passive foreign investment company, the passive
foreign investment company would have to agree to provide certain tax
information to the underlying fund on an annual basis, which it might not agree
to do. An underlying 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.
An underlying fund may invest in or hold debt obligations of issuers not
currently paying interest or that are in default. Investments in debt
obligations that are at risk of or are in default present special tax issues
for that underlying fund. Federal income tax rules are not entirely clear about
issues such as when the underlying 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 interest and
whether certain exchanges of debt obligations in a workout context are taxable.
These and other issues will be addressed by an underlying fund, in the event it
invests in or holds 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.
84
If an underlying 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 underlying fund
elects to include market discount in income currently), the underlying fund
generally 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 underlying fund must distribute to its shareholders, at least
annually, all or substantially all of its investment company taxable income
(determined without regard to the deduction for dividends paid), including such
accrued income, to qualify to be treated as a regulated investment company
under the Code and avoid U.S. federal income and excise taxes. Therefore, the
underlying fund may have to dispose of its portfolio securities, potentially
under disadvantageous circumstances, to generate cash, or may have to borrow
the cash, to satisfy distribution requirements. Such a disposition of
securities may potentially result in additional taxable gain or loss to the
underlying fund and may affect the amount and timing of distributions to a fund
investing in the underlying fund.
Options written or purchased and futures contracts entered into by an
underlying fund on certain securities, indices and foreign currencies, as well
as certain forward foreign currency contracts, may cause the underlying fund to
recognize gains or losses from marking-to-market even though such options may
not have lapsed or 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 an underlying 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, an underlying 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 underlying 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
underlying fund may receive no corresponding cash amounts, possibly requiring
the disposition of portfolio securities or borrowing to obtain the necessary
cash. Such a disposition of securities may potentially result in additional
taxable gain or loss to the underlying fund and may affect the amount and
timing of distributions to a fund investing in the underlying fund. Losses on
certain options, futures or forward contracts and/or offsetting positions
(portfolio securities or other positions with respect to which the underlying
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
underlying 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
underlying fund's income and gains or losses and hence of its distributions to
the funds. An underlying 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. Any such
taxes 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. If more than 50% of an underlying fund's total assets
at the close of any taxable year consist of stock or securities of foreign
corporations, then the underlying fund may elect to pass through to its
shareholders their pro rata shares of qualified foreign taxes paid by the
underlying fund. If at least 50% of the value of a fund's assets at the close
of each quarter of a taxable year consist of interests in other regulated
investment companies, that fund may elect to pass through to its shareholders
their pro rata shares of qualified foreign taxes paid by the fund and any
underlying funds in which it invests that also make the election. If a fund so
elects, shareholders would be required to include
85
such taxes in their gross incomes (in addition to the dividends and
distributions they actually receive), would treat such taxes as foreign taxes
paid by them, and as described below may be entitled to a tax deduction for
such taxes or a tax credit, subject to a holding period requirement and other
limitations under the Code.
Qualified foreign taxes generally include taxes that would be treated as income
taxes under U.S. tax regulations but do not include most other taxes, such as
stamp taxes, securities transaction taxes, and similar taxes. If a fund
qualifies to make, and makes, the election described above, shareholders may
deduct their pro rata portion of qualified foreign taxes paid by the fund or an
underlying fund for that taxable year in computing their income subject to U.S.
federal income taxation or, alternatively, claim the taxes as credits, subject
to applicable limitations under the Code, against their U.S. federal income
taxes. Shareholders who do not itemize deductions for U.S. federal income tax
purposes will not, however, be able to deduct their pro rata portion of such
qualified foreign taxes, although such shareholders will be required to include
their shares of such taxes in gross income if the applicable fund makes the
election described above. No deduction for such taxes will be permitted to
individuals in computing their alternative minimum tax liability.
If a fund makes this election and a shareholder chooses to take a credit for
the foreign taxes deemed paid by such shareholder, the amount of the credit
that may be claimed in any year may not exceed the same proportion of the U.S.
tax against which such credit is taken that the shareholder's taxable income
from foreign sources (but not in excess of the shareholder's entire taxable
income) bears to his entire taxable income. For this purpose, long-term and
short-term capital gains a fund distributes to shareholders will generally not
be treated as income from foreign sources in their hands, nor will
distributions of certain foreign currency gains subject to Section 988 of the
Code or of any other income that is deemed, under the Code, to be U.S.-source
income in the hands of the fund. This foreign tax credit limitation may also be
applied separately to certain specific categories of foreign-source income and
the related foreign taxes. As a result of these rules, which may have different
effects depending upon each shareholder's particular tax situation, certain
shareholders may not be able to claim a credit for the full amount of their
proportionate share of the foreign taxes paid by the applicable fund and the
underlying funds in which it invests. Shareholders who are not liable for U.S.
federal income taxes, including tax-exempt shareholders, will ordinarily not
benefit from this election. If a fund does make the election, it will provide
required tax information to shareholders. Each fund 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.
Each fund is required to withhold (as "backup withholding") a portion 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 certain IRS regulations. The backup
withholding rate is 28%. In order to avoid this withholding requirement,
shareholders, other than certain exempt entities, must generally certify 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. A fund may
nevertheless be required to backup 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.
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.,
generally, U.S. citizens or residents or U.S. corporations, partnerships,
trusts or estates, and who are subject to U.S. federal income tax and hold
their shares as capital assets. Except as otherwise provided, 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, other regulated investment companies, or tax-exempt or
86
tax-deferred plans, accounts or entities. Investors other than U.S. persons may
be subject to different U.S. federal income tax treatment, including a
non-resident alien U.S. withholding tax at the rate of 30% or any lower
applicable treaty rate on amounts treated as ordinary dividends from a fund
(other than, for taxable years of the fund that began on or before December 31,
2013, certain dividends reported by the fund as (i) interest-related dividends,
to the extent such dividends are derived from the fund's "qualified net
interest income," or (ii) short-term capital gain dividends, to the extent such
dividends are derived from the fund's "qualified short-term gain") or, in
certain circumstances, unless an effective IRS Form W-8BEN or other authorized
withholding certificate is on file, to backup withholding on certain other
payments from the fund. "Qualified net interest income" is a fund's net income
derived from U.S.-source interest and original issue discount, subject to
certain exceptions and limitations, and also includes interest-related
dividends received by the fund from other regulated investment companies.
"Qualified short-term gain" generally means the excess of the net short-term
capital gain of a fund for the taxable year (including short-term capital gain
dividends received by the fund from other regulated investment companies) over
its net long-term capital loss, if any. Backup withholding will not be applied
to payments that have been subject to the 30% (or lower applicable treaty rate)
withholding tax on shareholders who are neither citizens nor residents of the
United States.
Unless certain non-U.S. entities that hold fund shares comply with IRS
requirements that will generally require them to report information regarding
U.S. persons investing in, or holding accounts with, such entities, a 30%
withholding tax may apply to fund distributions payable to such entities after
June 30, 2014 (or, in certain cases, after later dates) and redemptions and
certain capital gain dividends payable to such entities after December 31,
2016. A non-U.S. shareholder may be exempt from the withholding described in
this paragraph under an applicable intergovernmental agreement between the U.S.
and a foreign government, provided that the shareholder and the applicable
foreign government comply with the terms of such agreement.
Shareholders should consult their own tax advisers on these matters and on
state, local, foreign and other applicable tax laws. If a fund qualifies as a
regulated investment company under the Code (as is anticipated to be the case
for each fund), that fund will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent each fund's distributions are
derived from interest on (or, in the case of intangible property taxes, to the
extent 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. No fund will seek
to satisfy any threshold or reporting requirements that may apply in particular
taxing jurisdictions, although each fund may in its sole discretion provide
relevant information to shareholders.
17. FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the fiscal year
ended July 31, 2013 appearing in the fund's annual report, filed with the SEC
on September 26, 2013 (Accession No. 0001331854-13-000003) are incorporated by
reference into this statement of additional information. Those financial
statements and financial highlights have been audited by Ernst & Young LLP,
independent registered public accounting firm, as indicated in their report
thereon, and are incorporated herein by reference in reliance upon such report,
given on the authority of Ernst & Young LLP as experts in accounting and
auditing.
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.
87
18. ANNUAL FEE, EXPENSE AND OTHER INFORMATION
PORTFOLIO TURNOVER
Each fund's annual portfolio turnover rate for the fiscal years ended July 31:
2013 2012
------ ------
Pioneer Ibbotson Conservative Allocation Fund 17% 20%
----------------------------------------------- -- -- --
Pioneer Ibbotson Moderate Allocation Fund 9% 9%
----------------------------------------------- -- -- --
Pioneer Ibbotson Growth Allocation Fund 6% 7%
----------------------------------------------- -- -- --
Pioneer Ibbotson Aggressive Allocation Fund 6% 7%
----------------------------------------------- -- -- --
SHARE OWNERSHIP
As of November 1, 2013, 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 November 1, 2013:
PIONEER IBBOTSON CONSERVATIVE ALLOCATION FUND
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
---------------------------------------- ------------- ------------------ -----------
Special Custody Acct for the Exclusive Class B 22,519.326 8.12
------------- ----------- -----
Benefit of Customer
2801 Market St
Saint Louis, MO 63103
----------------------------------------
Raymond James Class B 66,028.427 23.08
------------- ----------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
----------------------------------------
Pershing LLC Class B 15,185.779 5.47
------------- ----------- -----
1 Pershing Plaza
Jersey City, NJ 07399
----------------------------------------
MLPF&S Class C 558,224.757 30.50
------------- ----------- -----
For the benefit of its customers
Mutual Fund Administration
4800 Deer Lake Dr E Floor 2
Jacksonville, FL 32246-6484
----------------------------------------
MLPF&S Class Y 12,400.664 97.23
------------- ----------- -----
For the benefit of its customers
Mutual Fund Administration
4800 Deer Lake Dr E Floor 2
Jacksonville, FL 32246-6484
----------------------------------------
PIONEER IBBOTSON MODERATE ALLOCATION FUND
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
------------------------- ------------- ------------------ -----------
Raymond James Class A 845,053.571 7.82
------------- ----------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
-------------------------
Raymond James Class B 148,470.893 18.26
------------- ----------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
-------------------------
88
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
------------------------------------------- ------------- ------------------ -----------
MLPF&S Class C 1,388,207.365 23.23
------------- ------------- -----
For the benefit of its customers
Mutual Fund Administration
4800 Deer Lake Dr E Floor 2
Jacksonville, FL 32246-6484
-------------------------------------------
National Financial Services LLC Class Y 172,568.869 59.94
------------- ------------- -----
For the exclusive benefit of its customers
499 Washington Blvd
Attn Mutual Fund Dept 4th Floor
-------------------------------------------
PIONEER IBBOTSON GROWTH ALLOCATION FUND
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
---------------------------------------- ------------- ------------------ -----------
Raymond James Class A 1,076,243.653 8.85
------------- ------------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
----------------------------------------
Raymond James Class B 336,488.702 23.81
------------- ------------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
----------------------------------------
MLPF&S Class C 1,078,817.014 23.21
------------- ------------- -----
For benefit of its customers
Mutual Fund Administration
4800 Deer Lake Dr E Floor 2
Jacksonville, FL 32246-6484
----------------------------------------
Special Custody Acct for the Exclusive Class Y 13,883.322 12.77
------------- ------------- -----
Benefit of Customer
2801 Market St
Saint Louis, MO 63103
----------------------------------------
PIONEER IBBOTSON AGGRESSIVE ALLOCATION FUND
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
--------------------------------- ------------- ------------------ -----------
Raymond James Class A 459,989,724 6.40
------------- ----------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
---------------------------------
Raymond James Class B 126,534.674 18.86
------------- ----------- -----
Omnibus For Mutual Funds
Attn Courtney Waller
880 Carillon Pkwy
St Petersburg, FL
---------------------------------
Pershing LLC Class B 34,151.062 5.09
------------- ----------- -----
1 Pershing Plaza
Jersey City, NJ 07399
---------------------------------
MLPF&S Class C 433,797.498 25.83
------------- ----------- -----
For the benefit of its customers
Mutual Fund Administration
4800 Deer Lake Dr E Floor 2
Jacksonville, FL 32246-6484
---------------------------------
89
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
------------------------------------------- ------------- ------------------ -----------
National Financial Services LLC Class Y 7,563.764 18.94
------------- --------- -----
For the exclusive benefit of its customers
499 Washington Blvd
Attn Mutual Fund Dept 4th Floor
-------------------------------------------
TRUSTEE OWNERSHIP OF SHARES OF THE TRUST AND OTHER PIONEER FUNDS
The following table indicates the value of shares that each Trustee
beneficially owned in the trust and Pioneer Funds in the aggregate as of
December 31, 2012. Beneficial ownership is determined in accordance with SEC
rules. The share value of any closed-end fund is based on its closing market
price on December 31, 2012. The share value of any open-end Pioneer Fund is
based on the net asset value of the class of shares on December 31, 2012. The
dollar ranges in this table are in accordance with SEC requirements.
AGGREGATE
DOLLAR RANGE
OF EQUITY
DOLLAR RANGE DOLLAR RANGE DOLLAR RANGE SECURITIES IN
OF EQUITY OF EQUITY OF EQUITY DOLLAR RANGE ALL REGISTERED
SECURITIES IN SECURITIES IN SECURITIES IN OF EQUITY INVESTMENT
PIONEER PIONEER PIONEER SECURITIES IN COMPANIES
IBBOTSON IBBOTSON IBBOTSON PIONEER OVERSEEN BY
CONSERVATIVE MODERATE GROWTH IBBOTSON TRUSTEE IN THE
ALLOCATION ALLOCATION ALLOCATION AGGRESSIVE PIONEER FAMILY
NAME OF TRUSTEE FUND FUND FUND ALLOCATION FUND OF FUNDS
----------------------- --------------- --------------- --------------- ----------------- ---------------
INTERESTED TRUSTEES:
----------------------- --------------- --------------- --------------- ----------------- ---------------
John F. Cogan, Jr. + None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
Daniel K. Kingsbury None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
INDEPENDENT TRUSTEES:
----------------------- --------------- --------------- --------------- ----------------- ---------------
David R. Bock None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
Benjamin M. Friedman None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
Margaret B.W. Graham None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
Thomas J. Perna None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
Marguerite A. Piret None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
Stephen K. West None None None None Over $100,000
----------------------- --------------- --------------- --------------- ----------------- ---------------
+ Mr. Cogan resigned as a Trustee of the Pioneer Funds effective November
12, 2013.
90
COMPENSATION OF OFFICERS AND TRUSTEES
The following table sets forth certain information with respect to the
compensation of each Trustee of the trust.
AGGREGATE AGGREGATE AGGREGATE AGGREGATE PENSION OR
COMPENSATION COMPENSATION COMPENSATION COMPENSATION RETIREMENT TOTAL
FROM PIONEER FROM PIONEER FROM PIONEER FROM PIONEER BENEFITS COMPENSATION
IBBOTSON IBBOTSON IBBOTSON IBBOTSON ACCRUED AS FROM THE TRUST
CONSERVATIVE MODERATE GROWTH AGGRESSIVE PART OF AND OTHER
ALLOCATION ALLOCATION ALLOCATION ALLOCATION FUND PIONEER
NAME OF TRUSTEE FUND ** FUND ** FUND ** FUND ** EXPENSES FUNDS**
----------------- -------------- -------------- -------------- -------------- ------------ ---------------
INTERESTED
TRUSTEES:
----------------- --------- --------- --------- --------- ----- -------------
John F. Cogan,
Jr.* + $ 500.00 $ 500.00 $ 500.00 $ 500.00 $0.00 $ 25,600.00
----------------- --------- --------- --------- --------- ----- -------------
Daniel K.
Kingsbury $ 0.00 $ 0.00 $ 0.00 $ 0.00 $0.00 $ 0.00
----------------- --------- --------- --------- --------- ----- -------------
INDEPENDENT
TRUSTEES:
----------------- --------- --------- --------- --------- ----- -------------
David R. Bock $1,000.00 $1,000.00 $1,000.00 $1,000.00 $0.00 $ 246,751.00
----------------- --------- --------- --------- --------- ----- -------------
Benjamin M.
Friedman $1,000.00 $1,000.00 $1,000.00 $1,000.00 $0.00 $ 217,751.00
----------------- --------- --------- --------- --------- ----- -------------
Margaret B.W.
Graham $1,000.00 $1,000.00 $1,000.00 $1,000.00 $0.00 $ 202,752.00
----------------- --------- --------- --------- --------- ----- -------------
Thomas J. Perna $1,000.00 $1,000.00 $1,000.00 $1,000.00 $0.00 $ 265,333.00
----------------- --------- --------- --------- --------- ----- -------------
Marguerite A.
Piret $1,000.00 $1,000.00 $1,000.00 $1,000.00 $0.00 $ 228,000.00
----------------- --------- --------- --------- --------- ----- -------------
Stephen K. West $1,000.00 $1,000.00 $1,000.00 $1,000.00 $0.00 $ 202,752.00
----------------- --------- --------- --------- --------- ----- -------------
Total $6,500.00 $6,500.00 $6,500.00 $6,500.00 $0.00 $1,388,939.00
----------------- --------- --------- --------- --------- ----- -------------
* Under the management contract, Pioneer reimburses the trust for any
Interested Trustee fees paid by the trust.
** For the fiscal year ended July 31, 2013. As of July 31, 2013, there were
52 U.S. registered investment portfolios in the Pioneer Family of Funds.
+ Mr. Cogan resigned as a Trustee of the Pioneer Funds effective November
12, 2013.
APPROXIMATE MANAGEMENT FEES THE TRUST PAID OR OWED PIONEER
The following table shows the dollar amount of gross investment management fees
incurred by each fund, along with the net amount of fees that were paid after
applicable fee waivers or expense reimbursements, if any. The data is for the
past three fiscal years or shorter period if the fund has been in operation for
a shorter period.
91
FOR THE FISCAL YEARS ENDED JULY 31
-----------------------------------------------------------------------------------
2013 2012 2011
----------------------------------------------- -------- -------- --------
PIONEER IBBOTSON CONSERVATIVE ALLOCATION FUND
----------------------------------------------- -------- -------- --------
Gross Fee Incurred $ 86,296 $ 80,277 $ 79,903
----------------------------------------------- -------- -------- --------
Net Fee Paid $ 86,296 $ 80,277 $ 69,977
----------------------------------------------- -------- -------- --------
PIONEER IBBOTSON MODERATE ALLOCATION FUND
----------------------------------------------- -------- -------- --------
Gross Fee Incurred $259,507 $254,742 $288,118
----------------------------------------------- -------- -------- --------
Net Fee Paid $251,214 $254,742 $285,391
----------------------------------------------- -------- -------- --------
PIONEER IBBOTSON GROWTH ALLOCATION FUND
----------------------------------------------- -------- -------- --------
Gross Fee Incurred $278,714 $272,243 $295,458
----------------------------------------------- -------- -------- --------
Net Fee Paid $271,451 $272,243 $277,653
----------------------------------------------- -------- -------- --------
PIONEER IBBOTSON AGGRESSIVE ALLOCATION FUND
----------------------------------------------- -------- -------- --------
Gross Fee Incurred $151,063 $152,428 $173,437
----------------------------------------------- -------- -------- --------
Net Fee Paid $141,501 $152,428 $160,019
----------------------------------------------- -------- -------- --------
FEES THE TRUST PAID TO PIONEER UNDER THE ADMINISTRATION AGREEMENT
FOR THE FISCAL YEARS ENDED JULY 31 2013 2012 2011
----------------------------------------------- ---------- ---------- ----------
Pioneer Ibbotson Conservative Allocation Fund $33,546 $17,075 $15,782
----------------------------------------------- ------- ------- ------- --- --
Pioneer Ibbotson Moderate Allocation Fund $72,827 $54,042 $56,915
----------------------------------------------- ------- ------- ------- --- --
Pioneer Ibbotson Growth Allocation Fund $77,291 $57,830 $58,325
----------------------------------------------- ------- ------- ------- --- --
Pioneer Ibbotson Aggressive Allocation Fund $48,938 $32,314 $34,257
----------------------------------------------- ------- ------- ------- --- --
UNDERWRITING EXPENSES AND COMMISSIONS
FOR THE FISCAL YEARS ENDED JULY 31 2013 2012 2011
--------------------------------------------------------------- ---------- ---------- ----------
PIONEER IBBOTSON CONSERVATIVE ALLOCATION FUND
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Net Underwriting Expenses Retained by PFD $ 16,485 $ 22,486 $ 19,386
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Commissions Reallowed to Dealers (Class A shares) $ 89,146 $124,351 $110,399
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Brokerage and Underwriting Commissions (Portfolio
Transactions) $ 0 $ 0 $ 0
--------------------------------------------------------------- -------- -------- -------- --- --
PIONEER IBBOTSON MODERATE ALLOCATION FUND
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Net Underwriting Expenses Retained by PFD $ 42,874 $ 37,667 $ 54,755
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Commissions Reallowed to Dealers (Class A shares) $234,011 $208,625 $287,859
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Brokerage and Underwriting Commissions (Portfolio
Transactions) $ 0 $ 0 $ 0
--------------------------------------------------------------- -------- -------- -------- --- --
PIONEER IBBOTSON GROWTH ALLOCATION FUND
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Net Underwriting Expenses Retained by PFD $ 52,482 $ 59,026 $ 74,952
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Commissions Reallowed to Dealers (Class A shares) $286,336 $323,098 $416,421
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Brokerage and Underwriting Commissions (Portfolio
Transactions) $ 0 $ 0 $ 0
--------------------------------------------------------------- -------- -------- -------- --- --
PIONEER IBBOTSON AGGRESSIVE ALLOCATION FUND
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Net Underwriting Expenses Retained by PFD $ 34,407 $ 39,216 $ 47,138
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Commissions Reallowed to Dealers (Class A shares) $190,632 $221,036 $266,126
--------------------------------------------------------------- -------- -------- -------- --- --
Approximate Brokerage and Underwriting Commissions (Portfolio
Transactions) $ 0 $ 0 $ 0
--------------------------------------------------------------- -------- -------- -------- --- --
92
FUND EXPENSES UNDER THE DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JULY 31, 2013 COMBINED PLAN CLASS A CLASS B CLASS C
----------------------------------------------- --------------- ----------- ----------- -----------
Pioneer Ibbotson Conservative Allocation Fund $ 335,125 $109,188 $ 40,893 $185,044
----------------------------------------------- ---------- -------- -------- --------
Pioneer Ibbotson Moderate Allocation Fund $1,025,854 $307,391 $129,587 $588,876
----------------------------------------------- ---------- -------- -------- --------
Pioneer Ibbotson Growth Allocation Fund $1,064,360 $354,231 $216,901 $493,228
----------------------------------------------- ---------- -------- -------- --------
Pioneer Ibbotson Aggressive Allocation Fund $ 504,785 $215,982 $105,368 $183,435
----------------------------------------------- ---------- -------- -------- --------
ALLOCATION OF FUND EXPENSES UNDER THE DISTRIBUTION PLAN - CONSERVATIVE FUND
An estimate by category of the allocation of fees paid by each class of shares
of the fund during the period ended September 30, 2013 is set forth in the
following table:
PAYMENTS
TO SERVICING SALES PRINTING
PARTIES/1/ ADVERTISING MEETINGS AND MAILING TOTAL
-------------- ------------- ---------- ------------- -----------
Class A $121,764 $1,775 $5,480 $4,140 $133,159
--------- -------- ------ ------ ------ --------
Class B $ 9,733 $ 0 $ 0 $ 0 $ 9,733
--------- -------- ------ ------ ------ --------
Class C $191,627 $1,417 $4,939 $3,418 $201,401
--------- -------- ------ ------ ------ --------
1 Payments to Servicing Parties include Pioneer Funds Distributor, Inc.,
broker-dealers, financial intermediaries and other parties that enter into
a distribution, selling or service agreement with respect to one or more
classes of the fund (annualized for the period ended September 30, 2013).
ALLOCATION OF FUND EXPENSES UNDER THE DISTRIBUTION PLAN - MODERATE FUND
An estimate by category of the allocation of fees paid by each class of shares
of the fund during the period ended September 30, 2013 is set forth in the
following table:
PAYMENTS
TO SERVICING SALES PRINTING
PARTIES/1/ ADVERTISING MEETINGS AND MAILING TOTAL
-------------- ------------- ---------- ------------- -----------
Class A $326,471 $3,762 $12,594 $ 8,965 $351,792
--------- -------- ------ ------- ------- --------
Class B $ 29,897 $ 0 $ 0 $ 0 $ 29,897
--------- -------- ------ ------- ------- --------
Class C $613,907 $4,291 $15,031 $10,371 $643,600
--------- -------- ------ ------- ------- --------
1 Payments to Servicing Parties include Pioneer Funds Distributor, Inc.,
broker-dealers, financial intermediaries and other parties that enter into
a distribution, selling or service agreement with respect to one or more
classes of the fund (annualized for the period ended September 30, 2013).
ALLOCATION OF FUND EXPENSES UNDER THE DISTRIBUTION PLAN - GROWTH FUND
An estimate by category of the allocation of fees paid by each class of shares
of the fund during the period ended September 30, 2013 is set forth in the
following table:
PAYMENTS
TO SERVICING SALES PRINTING
PARTIES/1/ ADVERTISING MEETINGS AND MAILING TOTAL
-------------- ------------- ---------- ------------- -----------
Class A $358,076 $3,940 $13,220 $9,376 $384,612
--------- -------- ------ ------- ------ --------
Class B $ 50,840 $ 0 $ 0 $ 0 $ 50,840
--------- -------- ------ ------- ------ --------
Class C $507,353 $2,675 $ 9,383 $6,450 $525,861
--------- -------- ------ ------- ------ --------
1 Payments to Servicing Parties include Pioneer Funds Distributor, Inc.,
broker-dealers, financial intermediaries and other parties that enter into
a distribution, selling or service agreement with respect to one or more
classes of the fund (annualized for the period ended September 30, 2013).
93
ALLOCATION OF FUND EXPENSES UNDER THE DISTRIBUTION PLAN - AGGRESSIVE FUND
An estimate by category of the allocation of fees paid by each class of shares
of the fund during the period ended September 30, 2013 is set forth in the
following table:
PAYMENTS
TO SERVICING SALES PRINTING
PARTIES/1/ ADVERTISING MEETINGS AND MAILING TOTAL
-------------- ------------- ---------- ------------- -----------
Class A $212,962 $2,515 $8,422 $5,993 $229,892
--------- -------- ------ ------ ------ --------
Class B $ 24,748 $ 0 $ 0 $ 0 $ 24,748
--------- -------- ------ ------ ------ --------
Class C $189,536 $ 846 $2,788 $2,013 $195,183
--------- -------- ------ ------ ------ --------
1 Payments to Servicing Parties include Pioneer Funds Distributor, Inc.,
broker-dealers, financial intermediaries and other parties that enter into
a distribution, selling or service agreement with respect to one or more
classes of the fund (annualized for the period ended September 30, 2013).
CDSCS
During the fiscal year ended July 31, 2013, the following CDSCs were paid to
PFD:
Pioneer Ibbotson Conservative Allocation Fund $ 3,795
----------------------------------------------- -------
Pioneer Ibbotson Moderate Allocation Fund $ 7,665
----------------------------------------------- -------
Pioneer Ibbotson Growth Allocation Fund $14,536
----------------------------------------------- -------
Pioneer Ibbotson Aggressive Allocation Fund $ 6,560
----------------------------------------------- -------
CAPITAL LOSS CARRYFORWARDS AS OF JULY 31, 2013
At July 31, 2013, the funds had the following net capital loss carryforward:
Pioneer Ibbotson Conservative Allocation Fund $ 2,788,108
----------------------------------------------- -----------
Pioneer Ibbotson Moderate Allocation Fund $32,484,474
----------------------------------------------- -----------
Pioneer Ibbotson Growth Allocation Fund $42,274,920
----------------------------------------------- -----------
Pioneer Ibbotson Aggressive Allocation Fund $30,672,473
----------------------------------------------- -----------
94
19. APPENDIX A - DESCRIPTION OF SHORT-TERM DEBT, CORPORATE BOND AND PREFERRED
STOCK RATINGS/1/
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S ("MOODY'S") SHORT-TERM
RATINGS:
Moody's short-term ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers,
short-term programs or to individual short-term debt instruments. Such
obligations generally have an original maturity not exceeding thirteen months,
unless explicitly noted.
Moody's employs the following designations to indicate the relative repayment
ability of rated issuers:
P-1: Issuers (or supporting institutions) rated Prime-1 have a superior ability
to repay short-term debt obligations.
P-2: Issuers (or supporting institutions) rated Prime-2 have a strong ability
to repay short-term debt obligations.
P-3: Issuers (or supporting institutions) rated Prime-3 have an acceptable
ability to repay short-term obligations.
NP: Issuers (or supporting institutions) rated Not Prime do not fall within any
of the Prime rating categories.
NOTE: Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced
by the senior-most long-term rating of the issuer, its guarantor or
support-provider.
DESCRIPTION OF MOODY'S LONG-TERM CORPORATE RATINGS:
Moody's long-term obligation ratings are opinions of the relative credit risk
of fixed-income obligations with an original maturity of one year or more. They
address the possibility that a financial obligation will not be honored as
promised. Such ratings use Moody's Global Scale and reflect both the likelihood
of default and any financial loss suffered in the event of default.
AAA: Obligations rated Aaa are judged to be of the highest quality, with
minimal credit risk.
AA: Obligations rated Aa are judged to be of high quality and are subject to
very low credit risk.
A: Obligations rated A are considered upper-medium grade and are subject to low
credit risk.
BAA: Obligations rated Baa are subject to moderate credit risk. They are
considered medium-grade and as such may possess certain speculative
characteristics.
BA: Obligations rated Ba are judged to have speculative elements and are
subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high
credit risk.
CAA: Obligations rated Caa are judged to be of poor standing and are subject to
very high credit risk.
CA: Obligations rated Ca are highly speculative and are likely in, or very
near, default, with some prospect of recovery of principal and interest.
------------------------
/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.
95
C: Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.
NOTE: Moody's appends numerical modifiers "1", "2", and "3" to 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.
DESCRIPTION OF MOODY'S MEDIUM-TERM NOTE RATINGS:
Moody's assigns long-term ratings to individual debt securities issued from
medium-term note (MTN) programs, in addition to indicating ratings to MTN
programs themselves. These long-term ratings are expressed on Moody's general
long-term scale. 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:
o Notes containing features that link interest or principal to the credit
performance of any third party or parties (i.e., credit-linked notes);
o Notes allowing for negative coupons, or negative principal;
o Notes containing any provision that could obligate the investor to make any
additional payments;
o Notes containing provisions that subordinate the claim.
For notes with any of these characteristics, the rating of the individual note
may differ from the indicated rating of the program.
STANDARD & POOR'S RATINGS GROUP'S LONG-TERM ISSUE CREDIT RATINGS:
Issue credit ratings are based, in varying degrees, on Standard & Poor's
analysis of the following considerations:
o 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;
o Nature of and provisions of the obligation;
o 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.
Issue ratings are an assessment of default risk, but may incorporate an
assessment of relative seniority or ultimate recovery in the event of default.
Junior obligations are typically rated lower than senior obligations, to
reflect the lower priority in bankruptcy, as noted above. (Such differentiation
may apply when an entity has both senior and subordinated obligations, secured
and unsecured obligations, or operating company and holding company
obligations.)
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 to
a small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated "A" is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
96
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.
BB, B, CCC, CC, AND C: 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 "C" rating is assigned to obligations that are currently highly vulnerable
to nonpayment, obligations that have payment arrearages allowed by the terms of
the documents, or obligations of an issuer that is the subject of a bankruptcy
petition or similar action which have not experienced a payment default. Among
others, the "C" rating may be assigned to subordinated debt, preferred stock or
other obligations on which cash payments have been suspended in accordance with
the instrument's terms or when preferred stock is the subject of a distressed
exchange offer, whereby some or all of the issue is either repurchased for an
amount of cash or replaced by other instruments having a total value that is
less than par.
D: An obligation rated "D" is in payment default. The "D" rating category is
used when payments on an obligation, including a regulatory capital instrument,
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. An obligation's rating is lowered to "D" upon
completion of a distressed exchange offer, whereby some or all of the issue is
either repurchased for an amount of cash or replaced by other instruments
having a total value that is less than par.
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.
NR: 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.
STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS:
Short-term ratings are generally assigned to those obligations considered
short-term in the relevant market. In the U.S., for example, that means
obligations with an original maturity date of no more than 365 days - including
commercial paper. Short-term ratings are also used to indicate the
creditworthiness of an obligor with respect to put features on long-term
obligations. The result is a dual rating, in which the short-term rating
addresses the put feature, in addition to the usual long-term rating.
97
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. Ratings of "B-1", "B-2", and "B-3" may be assigned
to indicate finer distinctions within the "B" category. 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.
B-1: A short-term obligation rated "B-1" is regarded as having significant
speculative characteristics, but the obligor has a relatively stronger capacity
to meet its financial commitments over the short-term compared to other
speculative-grade obligors.
B-2: A short-term obligation rated "B-2" is regarded as having significant
speculative characteristics, and the obligor has an average speculative-grade
capacity to meet its financial commitments over the short-term compared to
other speculative-grade obligors.
B-3: A short-term obligation rated "B-3" is regarded as having significant
speculative characteristics, and the obligor has a relatively weaker capacity
to meet its financial commitments over the short-term compared to other
speculative-grade obligors.
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, including a regulatory capital
instrument, 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.
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.
98
20. APPENDIX B - PROXY VOTING POLICIES AND PROCEDURES
POLICY
Each of Pioneer Investment Management, Inc. and Pioneer Institutional Asset
Management, Inc. (collectively, "Pioneer") is a fiduciary that owes each of its
clients the duties of care and loyalty with respect to all services undertaken
on the client's behalf, including voting proxies for securities held by the
client. When Pioneer has been delegated proxy-voting authority for a client,
the duty of care requires Pioneer to monitor corporate events and to vote the
proxies. To satisfy its duty of loyalty, Pioneer must place the client's
interests ahead of its own and must cast proxy votes in a manner consistent
with the best interest of the client. It is Pioneer's policy to vote proxies
presented to Pioneer in a timely manner in accordance with these principles.
Pioneer's sole concern in voting proxies is the economic effect of the proposal
on the value of portfolio holdings, considering both the short- and long-term
impact. In many instances, Pioneer believes that supporting the company's
strategy and voting "for" management's proposals builds portfolio value. In
other cases, however, proposals set forth by management may have a negative
effect on that value, while some shareholder proposals may hold the best
prospects for enhancing it. Pioneer monitors developments in the proxy-voting
arena and will revise this policy as needed.
Pioneer's clients may request copies of their proxy voting records and of
Pioneer's proxy voting policies and procedures by either sending a written
request to Pioneer's Proxy Coordinator, or clients may review Pioneer's proxy
voting policies and procedures online at pioneerinvestments.com. Pioneer may
describe to clients its proxy voting policies and procedures by delivering a
copy of Pioneer's Form ADV (Part II), by separate notice to the client or by
other means.
APPLICABILITY
This Proxy Voting policy and the procedures set forth below are designed to
complement Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of companies
that are issuers of securities held in accounts managed by Pioneer. This policy
sets forth Pioneer's position on a number of issues for which proxies may be
solicited, but it does not include all potential voting scenarios or proxy
events. Furthermore, because of the special issues associated with proxy
solicitations by closed-end Funds, Pioneer will vote shares of closed-end Funds
on a case-by-case basis.
PURPOSE
The purposes of this policy is to ensure that proxies for United States ("US")
and non-US companies that are received in a timely manner will be voted in
accordance with the principles stated above. Unless the Proxy Voting Oversight
Group (as described below) specifically determines otherwise, all shares in a
company held by Pioneer-managed accounts for which Pioneer has proxy-voting
authority will be voted alike, unless a client has given specific voting
instructions on an issue.
Pioneer does not delegate the authority to vote proxies relating to securities
held by its clients to any of its affiliates, which include other subsidiaries
of UniCredit S.p.A. ("UniCredit").
Any questions about this policy should be directed to Pioneer's Director of
Investment Operations (the "Proxy Coordinator").
99
PROCEDURES
PROXY VOTING SERVICE
Pioneer has engaged an independent proxy voting service to assist in the voting
of proxies. The proxy voting service works with custodians to ensure that all
proxy materials are received by the custodians and are processed in a timely
fashion. To the extent applicable, the proxy voting service votes all proxies
in accordance with the proxy voting guidelines established by Pioneer and set
forth herein. The proxy voting service will refer proxy questions to the Proxy
Coordinator (described below) for instructions under circumstances where: (1)
the application of the proxy voting guidelines is unclear; (2) a particular
proxy question is not covered by the guidelines; or (3) the guidelines call for
specific instructions on a case-by-case basis. The proxy voting service is also
requested to call to the Proxy Coordinator's attention specific proxy questions
that, while governed by a guideline, appear to involve unusual or controversial
issues. Pioneer reserves the right to attend a meeting in person and may do so
when it determines that the company or the matters to be voted on at the
meeting are strategically important to its clients.
PROXY COORDINATOR
The Proxy Coordinator coordinates the voting, procedures and reporting of
proxies on behalf of Pioneer's clients. The Proxy Coordinator will deal
directly with the proxy voting service and, in the case of proxy questions
referred by the proxy voting service, will solicit voting recommendations and
instructions from the Portfolio Management Group or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring that
these questions and referrals are responded to in a timely fashion and for
transmitting appropriate voting instructions to the proxy voting service. The
Proxy Coordinator is responsible for verifying with the Chief Legal Officer or
his or her designee whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an employee
benefit plan, the plan's trustee or other fiduciaries).
REFERRAL ITEMS
The proxy voting service will refer proxy questions to the Proxy Coordinator or
his or her designee that are described by Pioneer's proxy voting guidelines as
to be voted on a case-by-case basis, that are not covered by Pioneer's
guidelines or where Pioneer's guidelines may be unclear with respect to the
matter to be voted on. Under such circumstances, the Proxy Coordinator will
seek a written voting recommendation from the Head of Portfolio Management U.S.
or his or her designated equity portfolio-management representative. Any such
recommendation will include: (i) the manner in which the proxies should be
voted; (ii) the rationale underlying any such decision; and (iii) the
disclosure of any contacts or communications made between Pioneer and any
outside parties concerning the proxy proposal prior to the time that the voting
instructions are provided.
SECURITIES LENDING
In accordance with industry standards, proxies are not available to be voted
when the shares are out on loan through either Pioneer's lending program or a
client's managed security lending program. However, Pioneer will reserve the
right to recall lent securities so that they may be voted according to the
Pioneer's instructions. If a portfolio manager would like to vote a block of
previously lent shares, the Proxy Coordinator will work with the portfolio
manager and Investment Operations to recall the security, to the extent
possible, to facilitate the vote on the entire block of shares. Certain clients
participate in securities lending programs. Although such programs allow for
the recall of securities for any reason, Pioneer may determine not to vote
securities on loan and it may not always be possible for securities on loan to
be recalled in time to be voted.
100
SHARE-BLOCKING
"Share-blocking" is a market practice whereby shares are sent to a custodian
(which may be different than the account custodian) for record keeping and
voting at the general meeting. The shares are unavailable for sale or delivery
until the end of the blocking period (typically the day after general meeting
date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time frame and
practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
PROXY VOTING OVERSIGHT GROUP
The members of the Proxy Voting Oversight Group include Pioneer's Head of
Portfolio Management U.S. or his or her designated equity portfolio management
representative, the Director of Investment Operations, and the Chief Compliance
Officer of the Adviser and Funds. Other members of Pioneer will be invited to
attend meetings and otherwise participate as necessary. The Director of
Investment Operations will chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating, and
changing (when necessary) Pioneer's proxy voting policies and procedures. The
group meets at least annually to evaluate and review this policy and procedures
and the services of its third-party proxy voting service. In addition, the
Proxy Voting Oversight Group will meet as necessary to vote on referral items
and address other business as necessary.
AMENDMENTS
Pioneer may not amend this policy without the prior approval of the Proxy
Voting Oversight Group and its corporate parent, Pioneer Global Asset
Management S.p.A. ("PGAM").
FILING FORM N-PX
The Proxy Coordinator and the Regulatory Compliance Manager are responsible for
ensuring that Form N-PX documents receive the proper review by a member of the
Proxy Voting Oversight Group prior to a Fund officer signing the forms.
The Investment Operations department will provide the Compliance department
with a copy of each Form N-PX filing prepared by the proxy voting service.
COMPLIANCE FILES N-PX.
The Compliance department will ensure that a corresponding Form N-PX exists for
each Pioneer registered investment company.
Following this review, each Form N-PX is formatted for public dissemination via
the EDGAR system.
Prior to submission, each Form N-PX is to be presented to the Fund officer for
a final review and signature.
Copies of the Form N-PX filings and their submission receipts are maintained
according to Pioneer record keeping policies.
PROXY VOTING GUIDELINES
ADMINISTRATIVE
While administrative items appear infrequently in U.S. issuer proxies, they are
quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
101
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
o Authorization of the transferring of reserves and allocation of income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine administrative
items; however, Pioneer will oppose any routine proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of the
proposal. Pioneer has also instructed its proxy voting service to inform
Pioneer of its analysis of any administrative items that may be inconsistent,
in its view, with Pioneer's goal of supporting the value of its clients'
portfolio holdings so that Pioneer may consider and vote on those items on a
case-by-case basis.
AUDITORS
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are concerned
about the auditors' independence or their past work for the company.
Specifically, we will oppose the ratification of auditors and withhold votes
for audit committee members if non-audit fees paid by the company to the
auditing firm exceed the sum of audit fees plus audit-related fees plus
permissible tax fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily required or
where rotation would demonstrably strengthen financial disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the company.
BOARD OF DIRECTORS
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in instances
where corporate performance has been very poor or where the board appears to
lack independence.
GENERAL BOARD ISSUES
Pioneer will vote for:
o Audit, compensation and nominating committees composed of independent
directors exclusively.
o Indemnification for directors for actions taken in good faith in accordance
with the business judgment rule. We will vote against proposals for broader
indemnification.
102
o Changes in board size that appear to have a legitimate business purpose and
are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced directors, and
shareholder control is better achieved through annual votes.
o Requirements for union or special interest representation on the board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate performance.
ELECTIONS OF DIRECTORS
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid reason. We
support proposals that require disclosure of director attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the purposes of our
policy, we accept the definition of affiliated directors provided by our
proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the majority of
shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with very poor
corporate performance.
We will vote on a case-by-case basis on these issues:
o Re-election of directors who have implemented or renewed a dead-hand or
modified dead-hand poison pill (a "dead-hand poison pill" is a shareholder
rights plan that may be altered only by incumbent or "dead" directors. These
plans prevent a potential acquirer from disabling a poison pill by obtaining
control of the board through a proxy vote).
o Contested election of directors.
o Election of a greater number of independent directors (in order to move
closer to a majority of independent directors in cases of poor performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been approved by
shareholders for two consecutive years.
We will vote for:
o Precatory and binding resolutions requesting that the board changes the
company's bylaws to stipulate that directors need to be elected with
affirmative majority of votes cast, provided that the resolutions allow for
plurality voting in cases of contested elections.
103
TAKEOVER-RELATED MEASURES
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increasing the ability for shareholders to call special meetings.
o Increasing the ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
- Control share acquisition statutes, which deny large holders voting rights
on holdings over a specified threshold.
- Control share cash-out provisions, which require large holders to acquire
shares from other holders
- Freeze-out provisions, which impose a waiting period on large holders
before they can attempt to gain control
- Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
- Disgorgement provisions, which require acquirers to disgorge profits on
purchases made before gaining control.
- Fair price provisions.
- Authorization of shareholder rights plans.
- Labor protection provisions.
- Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider voting
against proposals that require a supermajority vote to repeal or amend the
provision. Finally, we will consider the mechanism used to determine the
fair price; we are generally opposed to complicated formulas or requirements
to pay a premium.
o Opting out of state takeover statutes regarding fair price provisions. We
will use the criteria used for fair price provisions in general to determine
our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end funds, where we shall
vote on a case-by-case basis.
o Limiting shareholder ability to remove or appoint directors. We will support
proposals to restore shareholder authority in this area. We will review on
case-by-case basis proposals that authorize the board to make interim
appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support proposals
to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we ordinarily
support measures that encourage takeover bids, we believe that management
should have full control over corporate funds.
104
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g., amend
charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally allow
shareholders to buy additional shares at a below-market price in the event
of a change in control and may deter some bids.
CAPITAL STRUCTURE
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals in
this area. We will, however, reject proposals that impose high barriers to
potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Shares repurchase programs, if all shareholders may participate on equal
terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank check common stock placements (other than shares
issued in the normal course of business) submitted for shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
- Number of shares currently available for issuance;
- Size of requested increase (we would normally approve increases of up to
100% of current authorization);
- Proposed use of the proceeds from the issuance of additional shares, and
- Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank check preferred. We will normally oppose issuance of a new class of
blank check preferred, but may approve an increase in a class already
outstanding if the company has demonstrated that it uses this flexibility
appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
COMPENSATION
Pioneer supports compensation plans that link pay to shareholder returns and
believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same time,
stock-related compensation plans have a significant economic impact and a
direct effect on the balance sheet. Therefore, while we do not want to
micromanage a company's compensation programs, we will place limits on the
potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
105
o Employee stock ownership plans (ESOPs), as long as shares allocated to ESOPs
are less than 5% of outstanding shares. Larger blocks of stock in ESOPs can
serve as a takeover defense. We will support proposals to submit ESOPs to
shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act of 1993
(OBRA), including:
- Amendments to performance plans to conform with OBRA;
- Caps on annual grants or amendments of administrative features;
- Adding performance goals, and
- Cash or cash and stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricing be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred compensation,
split-dollar life insurance, SERPs, and pension benefits).
o Employee stock purchase plans where the purchase price is equal to at least
85% of the market price, where the offering period is no greater than 27
months and where potential dilution (as defined below) is no greater than
10%.
We will vote on a case-by-case basis on the following issues:
o Shareholder proposals seeking additional disclosure of executive and director
pay information.
o Executive and director stock-related compensation plans. We will consider the
following factors when reviewing these plans:
- The program must be of a reasonable size. We will approve plans where the
combined employee and director plans together would generate less than 15%
dilution. We will reject plans with 15% or more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
- The plan must not:
- Explicitly permit unlimited option repricing authority or that have
repriced in the past without shareholder approval
- Be a self-replenishing "evergreen" plan, or a plan that grants discount
options and tax offset payments
- We are generally in favor of proposals that increase participation beyond
executives.
- We generally support proposals asking companies to adopt rigorous vesting
provisions for stock option plans such as those that vest incrementally
over, at least, a three- or four-year period with a pro rata portion of
the shares becoming exercisable on an annual basis following grant date.
- We generally support proposals asking companies to disclose their window
period policies for stock transactions. Window period policies ensure that
employees do not exercise options based on insider information
contemporaneous with quarterly earnings releases and other material
corporate announcements.
- We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
106
o All other compensation-related proposals, including deferred compensation
plans, employment agreements, loan guarantee programs and retirement plans.
o All other proposals regarding stock compensation plans, including extending
the life of a plan, changing vesting restrictions, repricing options,
lengthening exercise periods or accelerating distribution of awards and
pyramiding and cashless exercise programs.
We will vote against:
o Pensions for non-employee directors. We believe these retirement plans reduce
director objectivity.
o Elimination of stock option plans.
We will vote on a case-by-case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
CORPORATE GOVERNANCE
Pioneer will vote for:
o Confidential voting.
o Equal access provisions, which allow shareholders to contribute their
opinions to proxy materials.
o Proposals requiring directors to disclose their ownership of shares in the
company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support reincorporations
supported by valid business reasons. We will oppose those that appear to be
solely for the purpose of strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand judicial
review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit shareholder
input, we prefer to leave the method of doing so to management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
107
MERGERS AND RESTRUCTURINGS
Pioneer will vote on the following and similar issues on a case-by-case basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset sales,
joint ventures, conversions to holding company and conversions to
self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the company
be put up for sale.
MUTUAL FUNDS
Many of our portfolios may invest in shares of closed-end funds or
exchange-traded funds. The non-corporate structure of these investments raises
several unique proxy-voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes that do not
affect the investment objective or overall risk level of the fund. We will
examine more fundamental changes on a case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Election of a greater number of independent directors (in order to move
closer to a majority of independent directors) in cases of poor performance.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end funds, but will typically support such
proposals.
SOCIAL ISSUES
Pioneer will abstain on stockholder proposals calling for greater disclosure of
corporate activities with regard to social issues. "Social Issues" may
generally be described as shareholder proposals for a company to:
o Conduct studies regarding certain issues of public concern and interest;
o Study the feasibility of the company taking certain actions with regard to
such issues; or
o Take specific action, including ceasing certain behavior and adopting company
standards and principles, in relation to issues of public concern and
interest.
We believe these issues are important and should receive management attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against proposals
with regard to contributions, believing that management should control the
routine disbursement of funds.
108
AVOIDING CONFLICTS OF INTEREST
Pioneer recognizes that in certain circumstances a conflict of interest may
arise when Pioneer votes a proxy.
A conflict of interest occurs when Pioneer's interests interfere, or appear to
interfere with the interests of Pioneer's clients.
A conflict may be actual or perceived and may exist, for example, when the
matter to be voted on concerns:
o An affiliate of Pioneer, such as another company belonging to the UniCredit
S.p.A. banking group (a "UniCredit Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor, advisor,
manager, custodian, distributor, underwriter, broker, or other similar
capacity (including those securities specifically declared by PGAM to
present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredit has informed Pioneer that a
UniCredit Affiliate acts as a sponsor, advisor, manager, custodian,
distributor, underwriter, broker, or other similar capacity; or
o A person with whom Pioneer (or any of its affiliates) has an existing,
material contract or business relationship.
Any member of the Proxy Voting Oversight Group and any other associate involved
in the proxy voting process with knowledge of any apparent or actual conflict
of interest must disclose such conflict to the Proxy Coordinator and the Chief
Compliance Officer of Pioneer and the Funds. If any associate is lobbied or
pressured with respect to any voting decision, whether within or outside of
Pioneer, he or she should contact a member of the Proxy Voting Oversight Group
or Pioneer's Chief Compliance Officer.
The Proxy Voting Oversight Group will review each item referred to Pioneer by
the proxy voting service to determine whether an actual or potential conflict
of interest exists in connection with the proposal(s) to be voted upon. The
review will be conducted by comparing the apparent parties affected by the
proxy proposal being voted upon against the Controller's and Compliance
Department's internal list of interested persons and, for any matches found,
evaluating the anticipated magnitude and possible probability of any conflict
of interest being present. The Proxy Voting Oversight Group may cause any of
the following actions to be taken when a conflict of interest is present:
o Vote the proxy in accordance with the vote indicated under "Voting
Guidelines," If a vote is indicated;
o Direct the independent proxy voting service to vote the proxy in accordance
with its independent assessment; or
o As determined by the Proxy Voting Oversight Group in its discretion
consistent with its fiduciary duty.
If the Proxy Voting Oversight Group perceives a material conflict of interest,
the group may also choose to disclose the conflict to the affected clients and
solicit their consent to proceed with the vote, or may take such other action
in good faith (in consultation with counsel) that would protect the interest of
clients.
For each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a Conflicts
of Interest Report prepared by the Proxy Coordinator.
The Proxy Voting Oversight Group will review periodically the independence of
the proxy voting service. This may include a review of the service's conflict
management procedures and other documentation, and an evaluation as to whether
the service continues to have the competency and capacity to vote proxies.
DECISION NOT TO VOTE PROXIES
Although it is Pioneer's general policy to vote all proxies in accordance with
the principles set forth in this policy, there may be situations in which the
Proxy Voting Oversight Group does not vote a proxy referred to it. For example,
because of the potential conflict of interest inherent in voting shares of a
UniCredit
109
affiliate, Pioneer will abstain from voting the shares unless otherwise
directed by a client. In such a case, the Proxy Coordinator will inform PGAM
Global Compliance and the PGAM Independent Directors before exercising voting
rights.
There exist other situations in which the Proxy Voting Oversight Group may
refrain from voting a proxy. For example, if the cost of voting a foreign
security outweighs the benefit of voting, the Group may not vote the proxy. The
Group may not be given enough time to process a vote, perhaps because it
receives a meeting notice too late or it cannot obtain a translation of the
agenda in the time available. If Pioneer has outstanding "sell" orders, the
proxies for shares subject to the order may not be voted to facilitate the
sale. Although Pioneer may hold shares on a company's record date, if the
shares are sold prior to the meeting date, the Group may decide not to vote
those shares.
SUPERVISION
ESCALATION
It is each associate's responsibility to contact his or her business unit head,
the Proxy Coordinator, a member of the Proxy Voting Oversight Group or
Pioneer's Chief Compliance Officer if he or she becomes aware of any possible
noncompliance with this policy.
TRAINING
Pioneer will conduct periodic training regarding proxy voting and this policy.
It is the responsibility of the business line policy owner and the applicable
Compliance Department to coordinate and conduct such training.
RELATED POLICIES AND PROCEDURES
Pioneer Investment Management, Inc.'s Books and Records Policy and the Books
and Records of the Pioneer Funds' Policy.
RECORD KEEPING
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of each proxy statement received (unless the proxy statement
is available from the SEC's Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a registered
investment company; and
o Is able to promptly provide Pioneer with a copy of the voting record upon its
request.
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation
(i.e. conflicts of interest, exception votes and case-by-case votes) the
following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in making the
decision on how to vote the subject proxy;
o A copy of any recommendation of the proxy voting service; and
o A copy of any conflict notice, conflict consent or any other written
communication (including emails or other electronic communications) to or
from the client (or in the case of an employee benefit plan, the plan's
trustee or other fiduciaries) regarding the subject proxy vote cast by, or
the vote recommendation of, Pioneer.
Pioneer shall maintain the above records in the client's file in accordance
with applicable regulations.
RELATED REGULATIONS
Form N-1A, ICA Rule 30b1-4, Rule 31a1-3, Rule 38a-1 & IAA 206(4)-6, 204-2
110
ADOPTED BY THE PIONEER FUNDS' BOARD OF TRUSTEES
October 5, 2004
EFFECTIVE DATE:
October 5, 2004
REVISION DATE:
September 2009
22109-07-1213
111