As filed with the Securities and Exchange Commission on January 18, 2005
File No. 333-120226
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
Post-Effective Amendment No. ______
(Check appropriate box or boxes)
PIONEER SERIES TRUST III
(on behalf of its series: Pioneer Cullen Value Fund)
(Exact Name of Registrant as Specified in Charter)
(617) 742-7825
(Area Code and Telephone Number)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Dorothy E. Bourassa, Esq.
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copies to: David C. Phelan, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f) of the Investment Company Act of
1940, which permits registration of an indefinite number of securities.
Title of Securities Being Registered: Shares of beneficial interest of the
Registrant.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment, which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall be effective on
such date as the Commission, acting pursuant to Section 8(a), may determine.
Dear Shareholder,
I am writing to let you know that a meeting will be held on February 23, 2005
for shareholders to vote on an important proposal affecting Cullen Value Fund.
As a Cullen Value Fund shareholder, we are requesting your vote on this matter.
This package contains information about the proposal, along with a proxy card,
for you to vote by mail. Please take a moment to read the enclosed materials and
cast your vote using the enclosed proxy card.
The proposal has been reviewed by your fund's Board of Trustees. The Trustees
recommend that you vote FOR the proposal.
HERE IS WHAT A "FOR" VOTE MEANS FOR THE PROPOSAL.
Approval of an Agreement and Plan of Reorganization between Cullen Value Fund
and Pioneer Cullen Value Fund. Cullen Value Fund will transfer all of its assets
to Pioneer Cullen Value Fund, a fund which has the same investment objectives
and similar investment policies as your fund, in exchange for Class A shares of
Pioneer Cullen Value Fund and the assumption by Pioneer Cullen Value Fund of
Cullen Value Fund's liabilities that are included in the calculation of Cullen
Value Fund's net asset value at the closing of the reorganization. Following the
reorganization, Cullen Value Fund will be dissolved. As a result of the
reorganization, you will become a shareholder of Pioneer Cullen Value Fund.
Cullen Capital Management LLC, your fund's investment adviser, will act as
investment subadviser to Pioneer Cullen Value Fund.
HERE'S HOW TO VOTE.
Simply complete and sign the enclosed proxy card and mail it in the postage-paid
envelope provided.
Please feel free to call Cullen at 1-877-485-8586 or Pioneer at 1-800-225-6292
if you have any questions about the proposal or the process for voting your
shares.
Thank you for your prompt response.
Sincerely,
James P. Cullen
President
CULLEN FUNDS TRUST
On behalf of its Series:
Cullen Value Fund
("your fund" or "Cullen Fund")
645 Fifth Avenue
New York, New York 10022
1-877-485-8586
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR FEBRUARY 23, 2005
This is the formal agenda for your fund's shareholder meeting (the
"meeting"). It tells you what matters will be voted on and the time and place of
the meeting, in case you want to attend in person.
A special shareholder meeting for your fund will be held at the offices of
Cullen Capital Management LLC, 645 Fifth Avenue, 7th Floor, New York, New York
10022 on Wednesday, February 23, 2005, at 10:00 a.m., New York time, to consider
the following:
1. A proposal to approve an Agreement and Plan of Reorganization
between your fund and Pioneer Cullen Value Fund. Under the Agreement
and Plan of Reorganization, your fund will transfer all of its
assets to the Pioneer Cullen Value Fund in exchange for Class A
shares of Pioneer Cullen Value Fund, a newly created fund with the
same investment objectives and similar investment policies as your
fund. Class A shares of Pioneer Cullen Value Fund will be
distributed to your fund's shareholders in proportion to their share
holdings on the closing date of the reorganization. Pioneer Cullen
Value Fund also will assume your fund's liabilities that are
included in the calculation of your fund's net asset value on the
closing date of the reorganization. Your fund then will be
dissolved. Your fund's current investment adviser will act as
subadviser to Pioneer Cullen Value Fund. YOUR BOARD OF TRUSTEES
RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
2. Any other business that may properly come before the meeting.
YOUR TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF THE PROPOSAL.
Shareholders of record as of the close of business on December 28, 2004
are entitled to vote at the meeting and any related follow-up meetings.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD. IF SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT
NUMBERS, YOUR FUND MAY BE REQUIRED TO MAKE ADDITIONAL SOLICITATIONS.
By Order of the Board of Trustees,
Rahul D. Sharma, Secretary
January 18, 2005
PROXY STATEMENT OF
CULLEN FUNDS TRUST
On behalf of its Series:
CULLEN VALUE FUND
("your fund" or "Cullen Fund")
645 Fifth Avenue, 7th Floor
New York, New York 10022
1-877-485-8586
PROSPECTUS FOR
PIONEER SERIES TRUST III
On behalf of its Series:
PIONEER CULLEN VALUE FUND
60 State Street
Boston, Massachusetts 02109
1-800-622-3265
SHARES OF PIONEER CULLEN VALUE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES OF
PIONEER CULLEN VALUE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
SHARES OF PIONEER CULLEN VALUE FUND HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC"). THE SEC HAS NOT PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
HOW THE REORGANIZATION WILL WORK
- Your fund will transfer all of its assets to Pioneer Cullen Value Fund.
Pioneer Cullen Value Fund will assume your fund's liabilities that are
included in the calculation of your fund's net asset value on the closing
date of the reorganization.
- Pioneer Cullen Value Fund will issue Class A shares to your fund in an
amount equal to the aggregate net asset value of your fund. These shares
will be distributed to your fund's shareholders in proportion to their
holdings on the closing date of the reorganization. Since the net asset
value per share of both funds will be the same on the closing date of the
reorganization, you will receive the same number of Class A shares of
Pioneer Cullen Value Fund that you held in your fund immediately prior to
the reorganization.
- The Cullen Fund will be dissolved following the closing of the
reorganization.
- Pioneer Investment Management, Inc. ("Pioneer") will act as investment
adviser to the Pioneer Cullen Value Fund. Your fund's current investment
adviser, Cullen Capital Management LLC ("Cullen"), will act as investment
subadviser to Pioneer Cullen Value Fund. Pioneer has agreed to limit
Pioneer Cullen Value Fund's ordinary operating expenses for Class A shares
until November 1, 2008 to 1.25% of average daily net assets. Pioneer is
not required to limit the Pioneer Cullen Value Fund's expenses after such
date.
- The reorganization is intended to result in no income, gain or loss for
federal income tax purposes to the Pioneer Cullen Value Fund, the Cullen
Fund or the shareholders of the Cullen Fund.
WHY YOUR FUND'S TRUSTEES RECOMMEND THE REORGANIZATION
1
The trustees of your fund believe that reorganizing your fund into
another fund with the same investment objectives and similar investment policies
that is part of the Pioneer family of funds and subadvised by Cullen offers you
potential benefits. These potential benefits and considerations include:
- The potential to attract additional assets, which may reduce per share
operating expenses of Pioneer Cullen Value Fund in the long term;
- The resources of Pioneer, including its infrastructure in shareholder
services and the opportunity to be part of a significantly larger family
of funds;
- The lower advisory fee payable to Pioneer;
- Continuity of portfolio management, since Cullen will be the subadviser to
the Pioneer Cullen Value Fund;
- Pioneer's experience and resources in managing mutual funds;
- Pioneer's commitment until November 1, 2008 to limit the ordinary
operating expenses of the Pioneer Cullen Value Fund;
- The exchange privileges offered to shareholders of Pioneer funds; and
- That shareholders who own shares in their name as of the close of the
reorganization (i.e., not in the name of the broker or other intermediary)
and shareholders who own shares in the name of an omnibus account provider
that agrees to distinguish beneficial holders in the same manner, and who
maintain their account may purchase additional Class A shares of the
Pioneer Cullen Value Fund through such account in the future or may
exchange those shares for Class A shares of another Pioneer fund without
paying any sales charge.
Therefore, your fund's trustees recommend that you vote FOR the reorganization.
This combined proxy statement and prospectus contains the information you
should know before voting on the proposed reorganization of your fund into
Pioneer Cullen Value Fund. Please read it carefully and retain it for future
reference. Additional information about Pioneer Cullen Value Fund has been filed
with the SEC and is available upon oral or written request and without charge.
See "Where to Get More Information."
2
WHERE TO GET MORE INFORMATION
Your fund's prospectus dated October 28, 2004. On file with the SEC and available at no charge by calling our toll-free number:
1-877-485-8586. The prospectus is on file with the SEC and incorporated by
reference into this proxy statement and prospectus.
Your fund's annual report to shareholders dated On file with the SEC and available at no charge by calling our toll-free
June 30, 2004. number: 1-877-485-8586. The annual report is on file with the SEC and
incorporated by reference into this proxy statement and prospectus.
A statement of additional information for this On file with the SEC and available at no charge by calling our toll-free number:
proxy statement and prospectus (the "SAI"), dated 1-800-622-3265. The SAI is on file with the SEC and incorporated by reference
January 18, 2005. It contains additional into this proxy statement and prospectus.
information about your fund and Pioneer Cullen
Value Fund.
Your fund's SAI dated October 28, 2004. It On file with the SEC and available at no charge by calling our toll-free number:
contains additional information about your fund. 1-877-485-8586--. Your fund's SAI is on file with the SEC and incorporated by
reference into this proxy statement and prospectus.
To ask questions about this proxy statement and Call our toll-free telephone number: 1-877-485-8586.
prospectus.
THE DATE OF THIS PROXY STATEMENT AND PROSPECTUS IS JANUARY 18, 2005.
3
TABLE OF CONTENTS
PAGE
----
INTRODUCTION [ ]
SUMMARY [ ]
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION [ ]
BOARD'S EVALUATION AND RECOMMENDATION [ ]
VOTING RIGHTS AND REQUIRED VOTE [ ]
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS [ ]
MATERIAL PROVISIONS OF THE MANAGEMENT AGREEMENTS AND THE SUB-ADVISORY AGREEMENT [ ]
FINANCIAL HIGHLIGHTS [ ]
INFORMATION CONCERNING THE MEETING [ ]
OWNERSHIP OF SHARES OF THE FUND [ ]
EXPERTS [ ]
AVAILABLE INFORMATION [ ]
EXHIBIT A -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION [ ]
EXHIBIT B -- PORTFOLIO MANAGER'S DISCUSSION OF FUND PERFORMANCE [ ]
4
INTRODUCTION
This proxy statement and prospectus is being used by the board of trustees
of your fund to solicit proxies to be voted at a special meeting of shareholders
(the "meeting") of your fund. This meeting will be held at the offices of the
Cullen Capital Management LLC, 645 Fifth Avenue, 7th Floor, New York, New York
10022 on Wednesday, February 23, 2005 at 10:00 a.m., New York time. The purpose
of the meeting is to consider a proposal to approve an Agreement and Plan of
Reorganization providing for the reorganization of your fund into Pioneer Cullen
Value Fund. Pioneer Cullen Value Fund is a newly created fund and is not yet
operational. This proxy statement and prospectus is being mailed to your fund's
shareholders on or about January 21, 2005.
This proxy statement and prospectus includes information about the
proposal, including a comparison summary. You should read the entire proxy
statement carefully, including Exhibit A, the Form of Agreement and Plan of
Reorganization, and your portfolio manager's most recent discussion of your
fund's performance attached as Exhibit B, because they contain details that are
not in the summary.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record on December 28, 2004 are entitled to attend and
vote at the meeting or any adjourned meeting. Each share is entitled to one
vote. Shares represented by properly executed proxies, unless revoked before or
at the meeting, will be voted according to shareholders' instructions. If you
sign a proxy but do not fill in a vote, your shares will be voted to approve the
Agreement and Plan of Reorganization. If any other business comes before the
meeting, your shares will be voted at the discretion of the persons named as
proxies.
5
SUMMARY
The following is a summary of more complete information appearing later in
this proxy statement and prospectus or incorporated herein. You should read the
entire proxy statement carefully, including the Form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
In the table below, if a row extends across the entire table, the policy
disclosed applies to both your fund and Pioneer Cullen Value Fund.
COMPARISON OF CULLEN FUND TO PIONEER CULLEN VALUE FUND
CULLEN FUND PIONEER CULLEN VALUE FUND
----------------------------------------- ---------------------------------------
Business A diversified series of Cullen Funds A newly created diversified series of
Trust, an open-end investment management Pioneer Series Trust III, an open-end
company organized as a Delaware management investment company organized
statutory trust. as a Delaware statutory trust.
Net assets, as of $42,100,141 None. Pioneer Cullen Value Fund is
December 31, 2004 newly created and does not expect to
commence investment operations until the
reorganization occurs.
Investment adviser Investment Adviser: Investment Adviser:
and portfolio managers Cullen Capital Management LLC (as Pioneer Investment Management, Inc. (as
defined above, "Cullen") defined above, "Pioneer")
Investment Subadviser:
Cullen
Pioneer retains the ultimate
responsibility to oversee the subadviser
and may, subject only to the approval of
the board of trustees of Pioneer Series
Trust III, hire, terminate and replace
the subadviser without shareholder
approval. Pioneer has no current
intention to replace Cullen as
subadviser for Pioneer Cullen Value Fund.
Portfolio Manager:
James P. Cullen has been the portfolio manager of the Cullen Fund since its
inception and will be the portfolio manager of Pioneer Cullen Value Fund. Mr.
Cullen has been in the investment management business for more than 30 years. He
is a founder of Schafer Cullen Capital Management, Inc., a registered investment
adviser, and has been its President since December 1982. Prior to forming Schafer
Cullen Capital Management, Inc., Mr. Cullen was a Vice President of Donaldson,
Lufkin & Jenrette.
Investment objective Long-term capital appreciation is the primary investment objective. Current income
is a secondary objective.
The Cullen Fund's primary investment Each of Pioneer Cullen Value Fund's
objective is fundamental and your fund's investment objectives is fundamental.
secondary objective is non-fundamental,
and may be changed by a vote of a
majority of the board of trustees
without a vote of the shareholders.
6
CULLEN FUND PIONEER CULLEN VALUE FUND
----------------------------------------- ---------------------------------------
Primary investments The Cullen Fund invests primarily in Pioneer Cullen Value Fund invests
common stocks of medium- and primarily in equity securities.
large-capitalization companies
(companies with a market capitalization For purposes of the fund's investment
of $1.5 billion or more at the time of policies, equity securities include
purchase by the fund). common stocks, convertible debt and
other equity instruments, such as
depositary receipts, warrants, rights,
interests in real estate investment
trusts (REITs) and preferred stocks.
Pioneer Cullen Value Fund may invest a
significant portion of its assets in
equity securities of medium- and
large-capitalization companies.
Consequently, the fund will be subject
to the risks of investing in companies
with market capitalizations of $1.5
billion or more.
Investment strategies Each fund uses a "value" style of management. Cullen generally selects stocks of
companies that have:
- a below average price/earnings ratio as compared to that of the Standard &
Poor's 500 Stock Index; and
- above average projected earnings growth as compared to that of the
Standard & Poor's 500 Stock Index.
Each fund generally invests substantially all of its assets in common stocks.
Cullen may sell portfolio stocks when they are no longer attractive based on their
growth potential or price.
Non-U.S. securities Although the Cullen Fund has the Pioneer Cullen Value Fund may invest up
ability to invest up to 30% of its to 30% of its total assets in securities
assets in foreign securities, it of non-U.S. issuers. Up to 5% of Pioneer
expects to normally invest up to only Cullen Value Fund's total assets may be
20% of its assets in these securities. invested in securities of emerging
These investments are generally made market issuers. Non-U.S. securities may
in American Depositary Receipts, which be issued by non-U.S. governments, banks
trade on U.S. exchanges. or corporations and certain
supranational organizations, such as the
World Bank and the European Union.
Pioneer Cullen Value Fund may invest in
securities of Canadian issuers to the
same extent as securities of U.S.
issuers. Investing in Canadian and other
non-U.S. issuers, particularly issuers
in emerging markets, may involve unique
risks compared to investing in the
securities of U.S. issuers.
Temporary defensive No express policy. Pioneer Cullen Value Fund intends to
strategies normally invest substantially all of its
assets to meet its investment
objectives. Pioneer Cullen Value Fund
may invest the remainder of its assets
in securities with remaining maturities
of less than one year, cash equivalents
or may hold cash. For temporary defense
purposes, including during periods of
unusual cash flows, Pioneer Cullen Value
Fund may depart from its principal
investment strategies and invest part or
all of its assets in these securities or
may hold cash. Pioneer Cullen Value Fund
intends to adopt a defensive strategy
when Cullen believes securities in which
the fund normally invests have
extraordinary risks due to political or
economic factors and under other
extraordinary circumstances.
Diversification Each fund is diversified, which means that, with respect to 75% of total assets,
the fund cannot invest (i) more than 5% of total assets in securities of a single
issuer or (ii) in securities representing more than 10% of the outstanding voting
securities of an issuer.
7
CULLEN FUND PIONEER CULLEN VALUE FUND
----------------------------------------- ---------------------------------------
Industry concentration Each fund does not concentrate its investments in any particular industry.
Restricted and Each fund is permitted to invest up to 15% of its net assets in securities which,
illiquid securities based upon their nature or the market for such securities, are illiquid or for
which no readily available market exists.
Borrowing The Cullen Fund may not borrow money or Pioneer Cullen Value Fund may not borrow
issue senior securities except for money, except on a temporary basis and
temporary bank borrowings (not in excess to the extent permitted by applicable
of 5% of the value of its total assets) law, as amended and interpreted or
for emergency or extraordinary purposes, modified from time to time by any
or pledge, mortgage or hypothecate any regulatory authority having
of its assets to secure such borrowings jurisdiction. Under current regulatory
to an extent greater than 10% of the requirements, a fund may: (a) borrow
value of the Fund's net assets. from banks or through reverse repurchase
agreements in an amount up to 33 1/3% of
the fund's total assets (including the
amount borrowed); (b) borrow up to an
additional 5% of the fund's assets for
temporary purposes; (c) obtain such
short-term credits as are necessary for
the clearance of portfolio transactions;
(d) purchase securities on margin to the
extent permitted by applicable law; and
(e) engage in transactions in mortgage
dollar rolls that are accounted for as
financings.
Lending The Cullen Fund may not loan portfolio Pioneer Cullen Value Fund may lend
securities except where collateral portfolio securities only to firms that
values are continuously maintained at no have been approved in advance by the
less than 100% by "marking to market" board of trustees, which will monitor
daily and the practice is fair, just and the creditworthiness of any such firms.
equitable. At no time would the value of the
securities loaned exceed 33 1/3% of the
value of the Pioneer Cullen Value Fund's
total assets.
Debt securities Each fund may invest in debt securities which are convertible into equity
securities and preferred stocks which are convertible into common stocks, which in
each case are considered by each fund to be equity securities.
Pioneer Cullen Value Fund may invest up
to 10% of its total assets in debt
securities.
Short-term trading Neither fund usually trades for short-term profits. Both funds 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.
Derivatives The Cullen Fund does not currently use Pioneer Cullen Value Fund may use
derivatives. 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. Neither fund uses derivatives as a primary investment
technique and generally limits their use to hedging.
8
BUYING, SELLING AND EXCHANGING SHARES
CULLEN FUND PIONEER CULLEN VALUE FUND
----------- -------------------------
Sales charge The Cullen Fund shares are offered with no The Class A shares of Pioneer Cullen Value Fund you receive in
sales charges. the reorganization will not be subject to any sales charge
including any deferred sales charge. Moreover, shareholders
who own shares in their own name as of the closing of the
reorganization (i.e., not in the name of a broker or other
intermediary) and shareholders who own shares in the name of an
omnibus account provider that agrees to distinguish beneficial
holders in the same manner, and who maintain such account, may
purchase additional Class A shares of Pioneer Cullen Value Fund
through such account in the future without paying any sales
charge.
Except as described above, Class A shares of Pioneer Cullen Value
Fund are subject to a front-end sales charge of up to 5.75%.
Minimum initial Your initial investment must be at least
investment $1,000.
Additional investments must be at least Additional investments must be at least $100 for Class A shares
$100. and $500 for Class B or Class C shares. You may qualify for lower
initial or subsequent investment minimums if you are opening a
IRAs and UGMA/UTMA accounts, Simple IRA, retirement plan account, establishing an automatic investment plan
SEP-IRA, 403(b)(7), Keogh, Pension Plan or placing your trade through your investment firm.
and Profit Sharing Plan Accounts, your
initial investment must be the lesser of
at least $250 or $25 per month. Additional
investments must be at least $50.
9
Management and The Cullen Fund pays Cullen a management Pioneer Cullen Value Fund will pay Pioneer an annual management fee
other fees fee equal to 1.00% of the Cullen Fund's based on Pioneer Cullen Value Fund's average daily net
average daily net assets. assets equal to:
During the most recent fiscal year, Cullen
Fund paid an advisory fee at an average $0 - $1 billion: 0.70%
rate of 1.00% of average daily net assets. Greater than $1 billion and
less than or equal to $2 billion: 0.65%
For the fiscal year ended June 30, 2004, Greater than $2 billion and
Cullen Fund's total annual operating Less than or equal to $3 billion: 0.60%
expenses were 2.00%. Greater than $3 billion: 0.55%
Cullen has contractually agreed to limit
the total annual fund operating expenses
(excluding taxes) to no more than 2.00% at The fee is computed daily and paid monthly.
least through June 30, 2005. Cullen can
recapture any expenses or fees it has In addition, Pioneer Cullen Value Fund reimburses Pioneer
waived or reimbursed within a three-year for certain fund accounting and legal expenses incurred on
period from the date of reimbursement, behalf of the Pioneer Cullen Value Fund in an amount equal to
provided that recapture does not cause the approximately 0.02% of average daily net assets and
Cullen Fund to exceed existing expense pays a separate shareholder servicing/transfer agency fee to
limitations. However, the Cullen Fund is Pioneer Investment Management Shareholder Services, Inc.
not obligated to pay any such waived fees ("PIMSS"), and affiliate of Pioneer, at an annual fee of $26.60
more than three years after the end of the for each Class A shareholder account.
fiscal year in which the fee was waived.
Without the expense recoupment, the total Pioneer pays the fees of Cullen as the subadviser to the Pioneer
annual fund operating expenses would have Cullen Value Fund. Pioneer will pay Cullen a monthly subadvisory
been 1.92%. fee equal on an annual basis to 0.35% of average daily net assets
up to $1 billion, 0.325% of the average daily net assets of the
fund greater than $1 billion and less than or equal to $2 billion,
0.30% of the average daily net assets of the fund greater than $2
billion and less than or equal to $3 billion, and 0.275% of the
average daily net assets of the fund over $3 billion.
Pioneer has agreed to limit Pioneer Cullen Value Fund's ordinary
operating expenses for Class A shares until November 1, 2008 to
1.25% of the fund's average daily net assets. There can be no
assurance that Pioneer will limit the fund's operating expenses
after November 1, 2008.
Pioneer Cullen Value Fund's total annual fund operating expenses
are estimated to be 1.40%, for the current fiscal year, and the
operating expenses upon giving effect to the expense limitation
will be 1.25% of average daily net assets.
Distribution and Cullen Fund shares and Class A shares of are subject to a Rule 12b-1 fee equal to 0.25% annually of average
service (12b-1) daily net assets.
fee
Exchanging shares Exchanging shares is not offered. You may exchange your Class A shares of Pioneer Cullen Value Fund
for Class A shares of another Pioneer mutual fund. Your exchange
request must be for at least $1,000. Pioneer Cullen Value Fund
allows you to exchange your shares at net asset value without
charging you either an initial or contingent deferred charge at the
time of the exchange. An exchange generally is treated as a sale
and a new purchase of shares for federal income tax purposes.
After you establish an eligible fund account, you can exchange fund
shares by telephone or online.
10
Selling shares Your shares will be sold at net asset value per share next calculated after the fund receives your request in
good order.
If you purchased your shares through a If you have an eligible non-retirement account, you may sell up to
broker/dealer or other financial $100,000 per account per day by telephone or online. You may sell
organization, your redemption order may be fund shares held in a retirement plan account by telephone only if
placed through the same organization. The your account is an eligible IRA (tax penalties may apply).
organization is responsible for sending
your redemption order to your fund on a
timely basis.
Net asset value Each fund's net asset value is the value of its portfolio of securities plus any other assets minus its operating
expenses and any other liabilities. Each fund calculates its 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).
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each fund has substantially the same portfolio team, the
same investment objectives and strategies, and similar investment policies, the
funds are subject to the same principal risks. You could lose money on your
investment in the fund or not make as much as if you invested elsewhere if:
- - The stock market goes down (this risk may be greater in the short term)
- - Large, mid-size or value stocks fall out of favor with investors
- - The fund's assets remain undervalued or do not have the potential value
originally expected
Each fund also has risks associated with investing in mid-size
companies. Compared to large companies, mid-size companies, and the market for
their equity securities, are likely to:
- - 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
- - Be harder to sell at the times and prices Cullen thinks appropriate
- - Offer greater potential for gain and loss
Risks of investing in non-U.S. issuers 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, Cullen may not be able to sell Pioneer Cullen Value
Fund's portfolio securities at times, in amounts and at prices it
considers reasonable
- - Adverse effect of currency exchange rates or controls on the value of
Pioneer Cullen Value Fund's investments
- - The economies of non-U.S. countries may grow at slower rates than expected
or may experience a downturn or recession
- - Economic, political and social developments may adversely affect the
securities markets
- - Withholding and other non-U.S. taxes may decrease Pioneer Cullen Value
Fund's return
At times, more than 25% of Pioneer Cullen Value Fund's assets may be
invested in the same market segment, such as financials or technology. To the
extent Pioneer Cullen Value Fund emphasizes investments in a market segment, the
fund will be subject to a greater degree to the risks particular to the
industries in 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, may be sensitive to changes in interest rates and general economic
activity and are subject to extensive government regulation. Industries in the
technology segment, such as information technology, communications equipment,
computer hardware and software, and office and scientific equipment, are subject
to risks of rapidly evolving technology, short product lives, rates of corporate
expenditures, falling prices and profits, competition from new market entrants,
and general economic conditions.
11
Investments in the funds are not bank deposits and are not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money by investing in either fund.
OTHER CONSEQUENCES OF THE REORGANIZATION
THE FUNDS' FEES AND EXPENSES
Shareholders of your fund and Pioneer Cullen Value Fund each pay
monthly management fees equal to the following annual percentages of average
daily net assets:
CULLEN FUND PIONEER CULLEN VALUE FUND
MANAGEMENT FEE MANAGEMENT FEE
- ------------------------------------------------- ----------------------------------------------
1.00% Up to $1 billion: 0.70%
Greater than $1 billion and
less than or equal to $2 billion: 0.65%
Greater than $2 billion and
Less than or equal to $3 billion: 0.60%
Greater than $3 billion: 0.55%
The annual management fee for Pioneer Cullen Value Fund (without
giving effect to expense limitations) is less than the rate paid by your fund.
Both funds also pay the same Rule 12b-1 fee of 0.25%. At current asset levels,
the combined management fee and Rule 12b-1 fee for Class A shares of the Pioneer
Cullen Value Fund is less than the combined fee for the Cullen Fund.
Pioneer will provide certain accounting and legal services under a
separate administration agreement for approximately 0.02% of average daily net
assets. PIMSS will provide shareholder servicing and transfer agency services to
Pioneer Cullen Value Fund under a separate shareholder servicing/transfer agency
agreement at an annual fee of $26.60 for each Class A shareholder account. PIMSS
will also be reimbursed for its cash out-of-pocket expenditures. Pioneer, and
not Pioneer Cullen Value Fund, will pay Cullen a monthly subadvisory fee equal
on an annual basis to 0.35% of average daily net assets up to $1 billion, 0.325%
of the average daily net assets of the fund greater than $1 billion and less
than or equal to $2 billion, 0.30% of the average daily net assets of the fund
greater than $2 billion and less than or equal to $3 billion, and 0.275% of the
average daily net assets of the fund over $3 billion.
For its most recent fiscal year, your fund's total operating
expenses were 1.92% of average daily net assets (before waiver of fees or
reimbursement of expenses). Cullen agreed to reimburse your fund to the extent
your fund's total operating expenses (excluding taxes) exceeded 2.00% of its
average daily net asset value through June 30, 2005. After such time, this
expense limit may be terminated or revised at any time. Cullen may recover
reimbursed expenses within three years of being incurred from your fund if the
expense ratio of the fund is less than the expense limitation of the fund. Upon
consummation of the closing of the reorganization, neither Pioneer Cullen Value
Fund nor Pioneer will have any obligation to pay any amounts owed to Cullen
pursuant to this reimbursement provision.
Similarly, with regard to Pioneer Cullen Value Fund, Pioneer has
agreed to limit, until November 1, 2008, ordinary operating expenses of Class A
shares to 1.25% of the average daily net assets attributable to that class by
not imposing all or a portion of its management fee and, if necessary, limiting
other ordinary operating expenses of the fund.
PAST PERFORMANCE
Performance information for Pioneer Cullen Value Fund is not
presented because the fund has not yet commenced operations. As accounting
successor to your fund, Pioneer Cullen Value Fund will assume your fund's
historical performance after the reorganization, which performance will be
adjusted to
12
take into account Pioneer Cullen Value Fund's applicable sales loads for its
various classes. This will show lower performance for the same periods indicated
below.
Set forth below is performance information for your fund. The
following performance information indicates some of the risks of investing in
your fund. The bar chart shows how your fund's total return has varied from year
to year for each full calendar year since its inception. The table shows your
fund's average annual total return (before and after taxes) over time compared
with a broad-based market index. Past performance before and after taxes does
not indicate future results.
CULLEN FUND'S ANNUAL RETURN* (Year ended December 31)
[DATA BELOW IS REPRESENTED BY A GRAPHICAL BAR CHART IN THE ORIGINAL REPORT]
'01 2.13%
'02 -7.92%
'03 38.07%
'04 14. 14%
*During the period shown in the bar chart, your fund's highest quarterly return
was 19.12% for the quarter ended December 31, 2003 and the lowest quarterly
return was -17.98% for the quarter ended September 30, 2002.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2004
1 YEAR SINCE INCEPTION*
------ ----------------
CULLEN FUND
Return Before Taxes 14.14% 11.18%
Return After Taxes on Distributions (1) 13.68% 10.98%
Return After Taxes on Distributions and 9.68% 9.66%
Sale of Fund Shares (1)
S&P 500 INDEX(2) 10.87% N/A%
(1) 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. Furthermore, the after-tax returns shown are not
relevant to shareholders who hold fund shares through tax-deferred arrangements
such as 401(k) plans or individual retirement accounts.
(2) The S&P 500 Index is an unmanaged index generally representative of the
market for stocks of large-sized U.S. companies. The figures above reflect all
dividends reinvested but do not reflect any deductions for fees, expenses, or
taxes.
* The Cullen Fund's inception was on July 1, 2000.
13
THE FUNDS' FEES AND EXPENSES
Shareholders of both funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each fund. The expenses in the tables are
based on (i) for your fund, the expenses of your fund for the period ended June
30, 2004 and (ii) for Pioneer Cullen Value Fund, the estimated expenses for the
current fiscal year. Future expenses for all share classes may be greater or
less.
SHAREHOLDER
TRANSACTION FEES PIONEER CULLEN VALUE
(PAID DIRECTLY FROM FUND
YOUR INVESTMENT) CULLEN FUND CLASS A
- ------------------- ----------- -------
Maximum sales None 5.75%(1)
charge (load) when
you buy shares as a
percentage of
offering price
Maximum deferred None None(2)
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
Redemption fees for None(3) None
shares held less
than 30 days
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS) (AS A % OF
AVERAGE NET ASSETS)
Management fee 1.00% 0.70%
Distribution and 0.25% 0.25%
service (12b-1) fee
Other expenses 0.67% 0.45%
Total fund 1.92% 1.40%(4)
operating expenses
Expense recoupment 0.08%(5) ---
Fee waiver and --- 0.15%(6)
expense
reimbursement
Net fund operating 2.00% 1.25%
expenses
(1) No sales load will apply to shares received in the reorganization by
shareholders of your fund who become shareholders of record of Pioneer Cullen
Value Fund through the reorganization. In addition, shareholders of your fund
who own shares in their own name (i.e., not in the name of a broker or other
intermediary) and shareholders who own shares in the name of an omnibus account
provider that agrees to distinguish beneficial holders in the same manner and
who maintain such account as of the closing of the reorganization may purchase
Class A shares of Pioneer Cullen Value Fund through such account in the future
without paying this sales charge.
14
(2) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to a
contingent deferred sales charge of 1%.
(3) The Cullen Fund's transfer agent charges a $15 wire redemption fee.
(4) Pioneer Cullen Value Fund's total annual operating expenses in the table
have not been reduced by any expense offset arrangements.
(5) Cullen has contractually agreed to limit the total annual fund operating
expenses (excluding taxes) to no more than 2.00% at least through June 30, 2005.
Cullen can recapture any expenses or fees it has waived or reimbursed within a
three-year period from the date of reimbursement, provided that recapture does
not cause the Fund to exceed existing expense limitations. However, Cullen Fund
is not obligated to pay any such waived fees more than three years after the end
of the fiscal year in which the fee was waived. Without the expense recoupment,
the total fund operating expenses were 1.92%.
(6) Pioneer has agreed to waive its fees for Pioneer Cullen Value Fund to the
extent certain of the fund's ordinary operating expenses exceed 1.25% of the
fund's average daily net asset value in a fiscal year. This expense limitation
is contractual through November 1, 2008.
The hypothetical example below helps you compare the cost of
investing in each fund. It assumes that: (a) you invest $10,000 in each fund for
the time periods shown, (b) you reinvest all dividends and distributions, (c)
your investment has a 5% return each year, (d) each fund's gross operating
expenses remain the same, and (e) the expense limitations are in effect for one
year for the Cullen Fund and until November 1, 2008 for Pioneer Cullen Value
Fund. The examples are for comparison purposes only and are not a representation
of either fund's actual expenses or returns, either past or future. Investors'
expenses may be higher or lower than those set forth in the following table:
PRO FORMA PRO FORMA
PIONEER CULLEN VALUE PIONEER CULLEN VALUE
FUND FUND
CLASS A SHARES CLASS A SHARES
CULLEN FUND (INCLUDING SALES LOAD) (WITHOUT SALES LOAD)
----------- ---------------------- --------------------
Year 1 $ 203 $ 695 $ 127
Year 3 $ 627 $ 949 $ 397
Year 5 $1,078 $1,254 $ 720
Year 10 $2,327 $2,119 $1,638
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
THE REORGANIZATION
- - The reorganization is scheduled to occur as of 5:00 p.m., Eastern time, on
Friday, February 25, 2005, unless your fund and Pioneer Cullen Value Fund
agree in writing to a later date. Your fund will transfer all of its
assets to Pioneer Cullen Value Fund. Pioneer Cullen Value Fund will assume
your fund's liabilities that are included in the calculation of your
fund's net asset value of the closing date of the reorganization. The net
asset value of both funds will be computed as of 4:00 p.m., Eastern time,
on the closing date of the reorganization.
- - Pioneer Cullen Value Fund will issue to your fund Class A shares with an
aggregate net asset value equal to the net assets attributable to your
fund's shares. These shares will immediately be distributed to your fund's
shareholders in proportion to their holdings of your fund's shares on the
closing date of the reorganization. Your fund's shareholders will not
experience any dilution in net asset value as a result of the
reorganization. As a result, your fund's shareholders will become Class A
shareholders of Pioneer Cullen Value Fund.
- - After the distribution of shares, your fund will be dissolved.
15
REASONS FOR THE PROPOSED REORGANIZATION
The trustees of your fund believe that the proposed reorganization will be
advantageous to the shareholders of your fund for several reasons. The trustees
considered the following matters, among others, in approving the proposal.
First, Pioneer and its affiliates have greater potential for increasing the size
of the fund due to Pioneer's experience in distributing mutual funds through a
broader range of distribution channels than currently available to your fund.
Over the long-term, if this potential for a larger asset base is realized, it is
expected to reduce the fund's per share operating expenses and increase the
portfolio management options available to the fund. In this regard, the trustees
noted the fact that Pioneer's advisory fee decreases as a percentage of assets
as the fund's assets increase, whereas your fund has the same advisory fee
regardless of the size of the fund.
Second, Pioneer's current advisory fee is lower than your fund's advisory fee.
In addition, as stated above, if the fund grows to over $1 billion, Pioneer's
advisory fee, as a percentage of average daily net assets, will be further
reduced. Your fund's fee is the same at all asset levels.
Third, shareholders of your fund will enjoy continuity of portfolio management.
Because Pioneer will retain Cullen to act as subadviser to Pioneer Cullen Value
Fund, the portfolio management team of your fund will be the same portfolio
management team for Pioneer Cullen Value Fund. Pioneer will oversee Cullen as
subadviser to Pioneer Cullen Value Fund in accordance with the terms of the
sub-advisory agreement among Pioneer Cullen Value Fund, Pioneer and Cullen (the
"Sub-Advisory Agreement").
Fourth, although Cullen will manage the assets of Pioneer Cullen Value Fund as
its subadviser, Pioneer will be responsible for the overall management of
Pioneer Cullen Value Fund's operations, including supervision of Cullen's
compliance with the fund's investment guidelines and regulatory restrictions.
Your fund will benefit from Pioneer's experience and resources in managing
investment companies. At December 31, 2004, Pioneer managed over 73 investment
companies and accounts with approximately $42 billion in assets. Pioneer is part
of the global asset management group of UniCredito Italiano S.p.A., one of the
largest banking groups in Italy, providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2004, assets under management by UniCredito Italiano S.p.A. were approximately
$175 billion worldwide.
Fifth, until November 1, 2008, Pioneer has agreed to limit the ordinary
operating expenses of Class A shares of Pioneer Cullen Value Fund to 1.25% of
average daily net assets, which is lower than your fund's operating expenses of
1.92% (2.00% including the expense recoupment) for the fiscal year ended June
30, 200) and the expense limitation of 2.00% currently in place for your fund
(until at least June 30, 2005). After November 1, 2008,, Pioneer is not
obligated to maintain an expense limitation but may voluntarily agree to
continue such arrangement. The long-term asset growth potential, resulting
economies of scale and efficiencies in other expenses could result in lower
overall expenses of Pioneer Cullen Value Fund compared to those of your fund
after the expense limitation agreement expires, although there can be no
assurance that this can be achieved.
Sixth, the Class A shares of Pioneer Cullen Value Fund received in the
reorganization will provide your fund's shareholders with exposure to
substantially the same investment product as they currently have.
Seventh, the reorganization should not be a taxable event for a shareholder of
your fund.
Eighth, the exchange privileges offered to shareholders of Pioneer funds.
Ninth, that shareholders who own shares in their name as of the close of the
reorganization (i.e., not in the name of the broker or other intermediary) and
shareholders who own shares in the name of an omnibus account provider that
agrees to distinguish beneficial holders in the same manner, and who maintain
their account, may purchase additional Class A shares of the Pioneer Cullen
Value Fund through such account in the future or may exchange those shares for
Class A shares of another Pioneer fund without paying any sales charge.
The boards of both funds considered that Pioneer would pay all of the expenses
of your fund and Pioneer Cullen Value Fund associated with the preparation,
printing and mailing of any shareholder
16
communications, including this combined proxy statement and prospectus, and any
filings with the SEC and other governmental agencies in connection with the
reorganization.
The boards of both funds also considered that in accordance with Section 15(f)
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), Pioneer and Cullen have agreed that for a period of at least three years
after the consummation of the reorganization, Pioneer will use commercially
reasonable efforts to assure that at least 75% of the Pioneer Series Trust III's
board of trustees are not "interested persons" (as defined in the Investment
Company Act) of Pioneer or Cullen; however, the nomination and election of the
members of the board of trustees of the Pioneer funds is determined by the board
of trustees of the Pioneer funds or their shareholders. In addition, the board
of trustees also considered that Pioneer and Cullen have agreed that, for two
years after the consummation of the reorganization, Pioneer will not increase
its management fees or the Rule 12b-1 fees applicable to Class A shares.
The boards of both funds considered that each fund's investment adviser, as well
as Pioneer Cullen Value Fund's principal distributor, Pioneer Funds Distributor,
Inc. ("PFD"), may benefit from the reorganization. Because Pioneer Cullen Value
Fund will be the accounting successor to your fund and will assume your fund's
performance record, Pioneer expects to be able to increase Pioneer Cullen Value
Fund's assets at a faster rate than would otherwise be possible if it began
offering a fund with similar objectives and no historical performance record.
Such a growth in asset size benefits Pioneer by increasing its management fees
and accelerating the point at which management of the fund is profitable to
Pioneer. As subadviser to Pioneer Cullen Value Fund, Cullen would similarly
benefit from increased assets because it would receive greater subadvisory fees.
Moreover, as discussed below under "Certain Agreements between Pioneer and
Cullen," Cullen will receive economic benefits from Pioneer if the
reorganization is completed.
The board of trustees of Pioneer Cullen Value Fund also considered that the
reorganization presents an excellent opportunity for the Pioneer Cullen Value
Fund to acquire substantial investment assets without the obligation to pay
commissions or other transaction costs that a fund normally incurs when
purchasing securities. This opportunity provides an economic benefit to Pioneer
Cullen Value Fund and its shareholders.
CERTAIN AGREEMENTS BETWEEN PIONEER AND CULLEN
In connection with the reorganization, Pioneer and Cullen have entered into an
agreement dated as of October 5, 2004 (the "Transfer Agreement"), which
provides, among other things, that (i) Pioneer shall make a payment in the
amount of $2 million to Cullen upon the closing of the reorganization, (ii)
Cullen shall enter into and perform its obligations under the Sub-Advisory
Agreement to serve as subadviser of Pioneer Cullen Value Fund, (iii) Pioneer
shall pay Cullen a fee equal to twenty-four months' fees payable under the
Sub-Advisory Agreement if within five years of the closing of the reorganization
Pioneer terminates the Sub-Advisory Agreement with Cullen without cause,
calculated based on Pioneer Cullen Value Fund's assets as of the date of
termination and (iv) Cullen will be subject to certain non-competition
provisions. Based on the net asset of the Cullen Fund as of December 31, 2004,
the termination fee would be $294,701. As Pioneer Cullen Value Fund's assets
increase over time, the termination fee would be higher. The termination fee
would not be triggered if the Sub-Advisory Agreement is terminated by Pioneer
Cullen Value Fund or its shareholders with or without cause. THE TERMINATION FEE
MAY CREATE A POTENTIAL CONFLICT OF INTEREST BETWEEN PIONEER CULLEN VALUE FUND
AND PIONEER. THE TERMINATION FEE COULD CAUSE PIONEER TO RECOMMEND THAT THE FUND
CONTINUE TO ENGAGE CULLEN AS THE FUND'S SUBADVISER TO AVOID THE FEE IN
CIRCUMSTANCES UNDER WHICH THE APPOINTMENT OF A NEW SUBADVISER OR THE DIRECT
MANAGEMENT OF THE FUND BY PIONEER MAY BE IN THE BEST INTERESTS OF THE FUND.
WHILE UNDERPERFORMANCE OF PIONEER CULLEN VALUE FUND MAY PERMIT PIONEER TO
TERMINATE CULLEN FOR CAUSE AND AVOID THE TERMINATION FEE, THE FUND MUST
SUBSTANTIALLY UNDERPERFORM RELATIVE TO ITS PEER GROUP FOR TWO YEARS IN ORDER FOR
CAUSE DUE TO UNDERPERFORMANCE TO EXIST. WHILE THESE POTENTIAL CONFLICTS OF
INTEREST COULD ARISE, THE BOARD OF TRUSTEES OF PIONEER CULLEN VALUE FUND DOES
NOT INTEND TO CONSIDER THE POTENTIAL FOR PIONEER INCURRING A TERMINATION FEE IN
EVALUATING WHETHER TO CONTINUE CULLEN'S APPOINTMENT AS SUBADVISER TO THE FUND.
The terms of the Sub-Advisory Agreement with Cullen are discussed under
"Material Provisions of the Management Agreements and the Sub-Advisory
Agreement."
17
AGREEMENT AND PLAN OF REORGANIZATION
The shareholders of your fund are being asked to approve an Agreement and Plan
of Reorganization, substantially in the form attached as Exhibit A. The
description of the Agreement and Plan of Reorganization contained herein is
qualified in its entirety by the attached copy. The material terms of the
Agreement and Plan of Reorganization are described below.
TAX STATUS OF THE REORGANIZATION
The reorganization is not intended to result in income, gain or loss for United
States federal income tax purposes and will not take place unless both funds
receive a satisfactory opinion from Wilmer Cutler Pickering Hale and Dorr LLP,
counsel to Pioneer Cullen Value Fund, that the reorganization described above
will be a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Cullen Fund and Pioneer
Cullen Value Fund have elected and qualified for the special tax treatment
afforded "regulated investment companies" under the Code. Pioneer Cullen Value
Fund intends to continue to so qualify after the reorganization.
As a result, for federal income tax purposes:
- - No gain or loss will be recognized by your fund upon (1) the transfer of
all of its assets to Pioneer Cullen Value Fund as described above or (2)
the distribution by your fund of Pioneer Cullen Value Fund shares to your
fund's shareholders;
- - No gain or loss will be recognized by Pioneer Cullen Value Fund upon the
receipt of your fund's assets solely in exchange for the issuance of
Pioneer Cullen Value Fund shares to your fund and the assumption of your
fund's liabilities by Pioneer Cullen Value Fund;
- - The basis of the assets of your fund acquired by Pioneer Cullen Value Fund
will be the same as the basis of those assets in the hands of your fund
immediately before the transfer;
- - The tax holding period of the assets of your fund in the hands of Pioneer
Cullen Value Fund will include your fund's tax holding period for those
assets;
- - You will not recognize gain or loss upon the exchange of your shares of
your fund solely for Pioneer Cullen Value Fund shares as part of the
reorganization;
- - The basis of Pioneer Cullen Value Fund shares received by you in the
reorganization will be the same as the basis of your shares of your fund
surrendered in the exchange; and
- - The tax holding period of Pioneer Cullen Value Fund shares you receive
will include the tax holding period of the shares of your fund surrendered
in the exchange, provided that the shares of your fund were held as
capital assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of your fund and Pioneer
Cullen Value Fund. These representations are included as Annex A and Annex B to
the Agreement and Plan of Reorganization, which is attached hereto as Exhibit A.
No tax ruling has been or will be received from the Internal Revenue Service
("IRS") in connection with the reorganization. An opinion of counsel is not
binding on the IRS or a court, and no assurance can be given that the IRS would
not assert, or a court would not sustain, a contrary position.
You should consult your tax adviser for the particular tax consequences to you
of the transaction, including the applicability of any state, local or foreign
tax laws.
ADDITIONAL TERMS OF AGREEMENT AND PLAN OF REORGANIZATION
CONDITIONS TO CLOSING THE REORGANIZATION. The obligation of your fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the execution by Cullen and Pioneer of an investment
subadvisory agreement whereby Cullen would serve as subadviser to the Pioneer
Cullen Value Fund, the performance by Pioneer Cullen Value Fund of all its
obligations under the Agreement and Plan of Reorganization and the receipt of
all consents, orders and permits necessary to
18
consummate the reorganization (see Sections 6 and 8 of the Agreement and Plan of
Reorganization, attached as Exhibit A).
The obligation of Pioneer Cullen Value Fund to consummate the reorganization is
subject to the satisfaction of certain conditions, including your fund's
performance of all of its obligations under the Agreement and Plan of
Reorganization, the receipt of certain documents and financial statements from
your fund and the receipt of all consents, orders and permits necessary to
consummate the reorganization (see Sections 7 and 8 of the Agreement and Plan of
Reorganization, attached as Exhibit A).
The obligations of both funds are subject to the approval of the Agreement and
Plan of Reorganization by the necessary vote of the outstanding shares of your
fund, in accordance with the provisions of your fund's declaration of trust and
by-laws and applicable law. The funds' obligations are also subject to the
receipt of a favorable opinion of Wilmer Cutler Pickering Hale and Dorr LLP as
to the federal income tax consequences of the reorganization, consistent with
the tax consequences described under "Tax Status of the Reorganization" (see
Section 8 of the Agreement and Plan of Reorganization, attached as Exhibit A).
TERMINATION OF AGREEMENT. The board of either your fund or Pioneer Cullen Value
Fund may terminate the Agreement and Plan of Reorganization (even if the
shareholders of your fund have already approved it) at any time before the
closing date of the reorganization, if that board believes in good faith that
proceeding with the reorganization would no longer be in the best interests of
shareholders.
EXPENSES OF THE REORGANIZATION. Pioneer will pay all of the expenses of Cullen
Fund and Pioneer Cullen Value Fund associated with the preparation, printing and
mailing of any shareholder communications, including this combined proxy
statement and prospectus, and any filings with the SEC and other governmental
agencies in connection with the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of December
28, 2004, and the pro forma combined capitalization of both funds as if the
reorganization had occurred on that date. This table reflects the pro forma
ratios of one Class A share of Pioneer Cullen Value Fund being issued for each
share of your fund. The exchange ratio will remain 1:1 on the closing date of
the reorganization.
DECEMBER 28, 2004
- ---------------------------------------------------------------------------------------------
PIONEER CULLEN VALUE
PIONEER CULLEN VALUE FUND
CULLEN FUND FUND PRO FORMA
------------- -------------------- --------------------
Net Assets $41.6 million N/A $41.6 million
Net Asset Value Per Share 15.47 N/A 15.47
Shares Outstanding 2,689,083 N/A 2,689,083
It is impossible to predict how many shares of Pioneer Cullen Value Fund will
actually be received and distributed by your fund on the reorganization date.
The table should not be relied upon to determine the amount of Pioneer Cullen
Value Fund's shares that will actually be received and distributed.
BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the board of trustees of your fund, including
the trustees who are not "interested persons" of your fund or Cullen
("independent trustees"), approved the reorganization. In particular, the board
of trustees determined that the reorganization is in the best interests of your
fund. Similarly, the board of trustees of Pioneer Cullen Value Fund, including
its independent trustees, approved the reorganization. They also determined that
the reorganization is in the best interests of Pioneer Cullen Value Fund.
19
THE TRUSTEES OF YOUR FUND RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR
THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
VOTING RIGHTS AND REQUIRED VOTE
Each share of your fund is entitled to one vote. A quorum is required to
conduct business at the meeting. The presence in person or by proxy of a
majority of shareholders entitled to cast votes at the meeting will constitute a
quorum. Approval of the proposal described above requires the affirmative vote
of a majority of the shares of your fund outstanding and entitled to vote. For
this purpose, the vote of a majority of the shares of your fund outstanding and
entitled to vote means the vote of the lesser of:
(1) 67% or more of the shares present at the meeting, if the holders of more
than 50% of the shares of the fund are present or represented by proxy, or
(2) more than 50% of the outstanding shares of the fund.
The table below shows how shares will be treated for the purposes of
quorum and voting requirements.
SHARES QUORUM VOTING
------ ------ ------
In General All shares "present" in Shares "present" in person will be voted in person at
person or by proxy are the meeting. Shares present by proxy will be voted in
counted toward a quorum. accordance with instructions.
Signed Proxy with no Considered "present" at Voted "for" the proposal.
VotingInstruction meeting for purposes of
(other than quorum.
Broker Non-Vote)
Broker Non-Vote (where Considered "present" at Broker non-votes do not count as a vote "for" the
the underlying holder meeting for purposes of proposal and effectively result in a vote "against" the
had not voted and the quorum. proposal.
broker does not have
discretionary authority
to vote the shares)
Vote to Abstain Considered "present" at Abstentions do not constitute a vote "for" the proposal
meeting for purposes of and effectively result in a vote "against" the proposal.
quorum.
If the required approval of shareholders is not obtained, the meeting may
be adjourned as more fully described in this combined proxy statement and
prospectus, and your fund will continue to engage in business as a separate
mutual fund and the board of trustees will consider what further actions may be
appropriate. Such action could include liquidation of your fund.
20
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS
INVESTMENT ADVISER
Pioneer serves as the investment adviser to the Pioneer Cullen Value Fund.
Pioneer is an indirect, wholly owned subsidiary of UniCredito Italiano 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 December 31, 2004, assets
under management were approximately $175 billion worldwide, including over $42
billion in assets under management by Pioneer. Pioneer's main office is at 60
State Street, Boston, Massachusetts 02109. Pioneer's U.S. mutual fund investment
history includes creating one of the first mutual funds in 1928.
The board of trustees of the Pioneer funds is responsible for overseeing the
performance of each of Pioneer funds' investment adviser and subadviser and
determining whether to approve and renew the fund's investment management
agreement and the sub-advisory agreements. For a discussion of these contracts,
see "Material Provisions of the Management Agreements and the Sub-Advisory
Agreement" below.
Pioneer has received an order (the "Exemptive Order") from the SEC that permits
Pioneer, subject to the approval of the Pioneer funds' board of trustees, to
hire and terminate a subadviser or to materially modify an existing subadvisory
agreement for a Pioneer fund 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 a rule which
would supersede the Exemptive Order, Pioneer and the Pioneer funds intend to
rely on such rule to permit Pioneer, subject to the approval of the Pioneer
funds' board of trustees and any other applicable conditions of the rule, to
hire and terminate a subadviser or to materially modify an existing subadvisory
agreement for a Pioneer fund without shareholder approval. This means that
Pioneer could remove Cullen and replace it without the approval of Pioneer
Cullen Value Fund shareholders. However, Pioneer has no current intention to
replace Cullen as subadviser for any of the Pioneer funds.
INVESTMENT SUBADVISER
Cullen will serve as the investment subadviser to the Pioneer Cullen Value Fund.
Cullen is located at 645 Fifth Avenue, New York, New York, 10022. As of December
31, 2004, assets under management were approximately $59.3 million.
DISCLOSURE OF PORTFOLIO HOLDINGS
The fund's policies and procedures with respect to the disclosure of the fund's
portfolio securities are described in the statement of additional information
and on Pioneer's website at www.pioneerfunds.com.
BUYING, EXCHANGING AND SELLING SHARES OF THE PIONEER FUNDS
NET ASSET VALUE. The Pioneer Cullen Value Fund's net asset value is the value of
its portfolio of securities plus any other assets minus its operating expenses
and any other liabilities. The Pioneer Cullen Value 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).
The Pioneer Cullen Value Fund generally values its portfolio securities using
closing market prices or readily available market quotations. When closing
market prices or market quotations are not available or are considered by
Pioneer to be unreliable, the fund uses a security's fair value. All methods of
determining the value of a security used by the fund, including those discussed
below, on a basis other than market value, are forms of fair value. All
valuations of securities on a fair value basis are made pursuant to
21
procedures adopted by the board of trustees. The use of fair value pricing by
the fund may cause the net asset value of its shares to differ from the net
asset value that would be calculated only using market prices. For market prices
and quotations, as well as for some fair value methods, the fund relies upon
securities prices provided by pricing services.
The Pioneer Cullen Value Fund uses the fair value of a security, including a
non-U.S. security, when Pioneer determines that the closing market price on the
primary exchange where the security is traded no longer accurately reflects the
value of the security at the time the fund calculates its net asset value. This
may occur for a variety of reasons that affect either the relevant securities
markets generally or the specific issuer. For example, with respect to non-U.S.
securities held by the fund, developments relating to specific events, the
securities markets or the specific issuer may occur between the time the primary
market closes and the time the fund determines its net asset value. In those
circumstances, when the fund believes the price of the security may be affected,
the fund uses the fair value of the security. International securities markets
may be open on days when the U.S. markets are closed. For this reason, the
values of any international securities owned by the fund could change on a day
you cannot buy or sell shares of the fund.
Certain types of securities, including those discussed in this paragraph, are
priced using fair value rather than market prices. The Pioneer Cullen Value Fund
uses a pricing matrix to determine the value of fixed income securities that do
not trade daily. A pricing matrix is a means of valuing a debt security on the
basis of current market prices for other debt securities and historical trading
patterns in the market for fixed income securities. The fund values debt
securities with remaining maturities of 60 days or less at amortized cost. To
the extent that the fund invests in the shares of other registered open-end
investment companies that are not traded on an exchange (mutual funds), such
shares are valued at their published net asset values per share as reported by
the funds. The prospectuses of these funds explain the circumstances under which
the funds will use fair value pricing and the effects of using fair value
pricing.
OPENING YOUR ACCOUNT. If your shares are held in your investment firm's name,
the options and services available to you may be different from those described
herein or in the Pioneer Cullen Value Fund's prospectus. Ask your investment
professional for more information.
If you invest in Pioneer Cullen Value Fund through investment professionals or
other financial intermediaries, including wrap programs and fund supermarkets,
additional conditions may apply to your investment in a Pioneer fund, and the
investment professional or intermediary may charge you a transaction-based or
other fee for its services. These conditions and fees are in addition to those
imposed by the Pioneer fund and its affiliates. You should ask your investment
professional or financial intermediary about its services and any applicable
fees.
ACCOUNT OPTIONS. Use your account application to select options and privileges
for your account. You can change your selections at any time by sending a
completed account options form to the transfer agent. You may be required to
obtain a signature guarantee to make certain changes to an existing account.
Call or write to the Pioneer funds' 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
TELEPHONE TRANSACTION PRIVILEGES. If your account is registered in your name,
you can buy, exchange or sell shares of the Pioneer funds 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.
22
When you request a telephone transaction the transfer agent will try to confirm
that the request is genuine. The transfer agent records the call, requires the
caller to provide the personal identification number for the account and sends
you a written confirmation. Each Pioneer 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.
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 complete an account options form,
write to the transfer agent or complete the online authorization screen on
www.pioneerfunds.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. Each Pioneer 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.
SHARE PRICE. If you place an order with your investment firm before the New York
Stock Exchange closes and your investment firm submits the order to PFD prior to
PFD's close of business (usually 5:30 p.m. Eastern time), your share price will
be calculated that day. Otherwise, your price per share will be calculated at
the close of the New York Stock Exchange after the distributor receives your
order. Your investment firm is responsible for submitting your order to the
distributor.
BUYING PIONEER FUND SHARES. You may buy shares of a Pioneer fund from any
investment firm that has a sales agreement with PFD. If you do not have an
investment firm, please call 1-800-225-6292 for information on how to locate an
investment professional in your area.
You can buy shares of the Pioneer funds at the offering price. The distributor
may reject any order until it has confirmed the order in writing and received
payment. The fund reserves the right to stop offering any class of shares.
MINIMUM INVESTMENT AMOUNTS. Your initial investment must be at least $1,000.
Additional investments must be at least $100 for Class A shares and $500 for
Class B and 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.
The minimum investment amount does not apply for purposes of the reorganization.
EXCHANGING PIONEER FUND SHARES. You may exchange your shares in a Pioneer fund
for shares of the same class of another Pioneer mutual fund. Your exchange
request must be for at least $1,000 unless the fund you are exchanging into has
a different minimum. You may make up to four exchange redemptions of $25,000 or
more per account per calendar year. Each Pioneer 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. An exchange
generally is treated as a sale and a new purchase of shares for federal income
tax purposes. 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. You will
not be charged any sales loads for exchanging Class A shares of Pioneer Cullen
Value Fund you receive as a result of the reorganization with Class A shares of
another Pioneer fund.
SELLING PIONEER FUND SHARES. Your shares will be sold at net asset value per
share next calculated after the Pioneer Cullen Value Fund receives your request
in good order. If the shares you are selling are subject to a deferred sales
charge, it will be deducted from the sale proceeds. The Pioneer Cullen Value
Fund generally will send your sale proceeds by check, bank wire or electronic
funds transfer. Normally you will
23
be paid within seven days. If you are selling shares from a non-retirement
account or certain IRAs, you may use any of the methods described below. If you
are selling shares from a retirement account other than an IRA, you must make
your request in writing.
You may have to pay federal income taxes on a sale or an exchange or any
distributions received in cash or additional shares.
Good Order means that:
- You have provided adequate instructions
- There are no outstanding claims against your account
- There are no transaction limitations on your account
- If you have any Pioneer fund share certificates, you submit them and
they are signed by each record owner exactly as the shares are
registered
- Your request includes a signature guarantee if you:
[ ] Are selling over $100,000 or exchanging over $500,000 worth of
shares
[ ] Changed your account registration or address within the last 30
days
[ ] Instruct the transfer agent to mail the check to an address
different from the one on your account
[ ] Want the check paid to someone other than the account owner(s)
[ ] Are transferring the sale proceeds to a Pioneer mutual fund
account with a different registration
EXCESSIVE TRADING. Frequent trading into and out of the 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. The 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:
- - You sell shares within a short period of time after the shares were
purchased;
- - You make two or more purchases and redemptions within a short period of
time;
- - You enter into a series of transactions that is indicative of a timing
pattern or strategy; or
- - We reasonably believe that you have engaged in such practices in
connection with other mutual funds.
The 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 has engaged in excessive short-term trading that we
believe may be harmful to the fund, we will ask the investor or broker to cease
such activity and we will refuse to process purchase orders (including purchases
by exchange) of such investor, broker 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. To the
extent the fund invests in securities that use the fair value of a significant
portion of its portfolio, this risk may be greater. Frequently, fund shares are
held through omnibus accounts maintained by financial intermediaries such as
brokers and retirement plan administrators, where the holdings of multiple
shareholders, such as all the clients of a particular broker, are aggregated.
Our ability to monitor trading practices by investors purchasing shares through
omnibus accounts is limited and dependent upon the cooperation of the financial
intermediary in observing the fund's policies.
24
In addition to monitoring trades, the policies and procedures provide that:
- The fund imposes limitations on the number of exchanges out of an
account holding the fund's Class A shares that may occur in any
calendar year.
- Certain funds managed by Pioneer have adopted redemption fees that are
incurred if you redeem shares within a short period after purchase,
including exchanges. These redemption fees are described in the
applicable prospectuses under "Fees and expenses."
The fund may reject a purchase or exchange order before its acceptance or cancel
any purchase or exchange order prior to issuance of shares, which occurs within
three days after receipt of an order in good standing. The fund also may
restrict additional purchases or exchanges in an account. Each of these steps
may be taken, for any reason, without prior notice, including transactions that
the fund believes are requested on behalf of market timers. The fund reserves
the right to reject any purchase 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 or cancelled will not
achieve the investment results, whether gain or loss, that would have been
realized if the order were accepted and an investment made in the fund. The fund
and its shareholders do not incur any gain or loss as a result of a rejected or
cancelled order. The fund may impose further restrictions on trading activities
by market timers in the future. The fund's prospectus will be amended or
supplemented to reflect any material additional restrictions on trading
activities intended to prevent excessive trading.
MATERIAL PROVISIONS OF THE MANAGEMENT AGREEMENTS AND THE SUB-ADVISORY AGREEMENT
MANAGEMENT AGREEMENT - CULLEN FUND
The following is a summary of the material terms of the Cullen Fund's existing
investment advisory agreement with Cullen (the "Cullen Advisory Agreement").
SERVICES. Under the terms of the Cullen Advisory Agreement, Cullen manages the
Cullen Fund's investments and business affairs, subject to the supervision of
the board of trustees. At its expense, Cullen provides office space and all
necessary office facilities, equipment and personnel for managing the
investments of the Cullen Fund.
COMPENSATION. As compensation under the Cullen Advisory Agreement, the Cullen
Fund pays Cullen a monthly advisory fee at an annual rate of 1.00% of the Fund's
average daily net assets. In addition, Cullen has agreed to reimburse the Cullen
Fund to the extent that the Fund's total annual expenses, other than taxes,
interest and extraordinary litigation expenses, during any of the Fund's fiscal
years, exceed 2.00 % of its average daily net asset value through June 30, 2005.
Brokers' commissions and other charges relative to the purchase and sale of
portfolio securities are not regarded as expenses.
The table below shows gross advisory fees paid by the Cullen Fund and any
expense reimbursements by Cullen during the fiscal year ended June 30, 2004:
25
CULLEN FUND
- ------------
Advisory Fee $288,959
TERM. The Cullen Advisory Agreement continues in effect for successive annual
periods, subject to the annual approval of its continuance as described below
under "Termination, Continuance and Amendment."
LIMITATION OF LIABILITY. The Cullen Advisory Agreement provides that Cullen
shall not be subject to liability to your fund or to any shareholder of your
fund for any loss suffered by your fund or its shareholders from or as a
consequence of any act or omission of Cullen, or of any of the partners,
employees or agents of Cullen, in connection with or pursuant to the agreement,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of Cullen in the performance of its duties or by reason of reckless
disregard by Cullen of its obligations and duties under the agreement.
TERMINATION, CONTINUANCE AND AMENDMENT. The Cullen Advisory Agreement continues
from year to year subject to approval of its continuance at least annually by
the vote of (1) a majority of your fund's trustees, including a majority of the
independent trustees, in each case cast in person at a meeting called for the
purpose of voting on such approval; or (2) a majority of the outstanding voting
securities (as that phrase is defined in Section 2(a)(42) of the Investment
Company Act) of your fund. The Agreement may be terminated at any time without
penalty on 60 days' written notice by the trustees, by a vote of a majority of
your fund's outstanding voting securities, or by Cullen. The Agreement
terminates automatically in the event of its assignment.
MANAGEMENT AGREEMENT - PIONEER CULLEN VALUE FUND
The following is a summary of the material terms of the Pioneer Cullen Value
Fund's investment management agreement with Pioneer (the "Pioneer Management
Agreement").
SERVICES. Under the Pioneer Management Agreement, Pioneer, subject to the
direction of the trustees, provides the fund with a continuous investment
program for the management of its assets, consistent with the fund's investment
objective and policies. Pioneer provides for such investment program through the
retention of Cullen as subadviser. In addition, Pioneer:
- - pays the fee of Cullen as subadviser and supervises Cullen's activities as
subadviser;
- - advises the fund in connection with policy decisions to be made by the
trustees;
- - provides day-to-day administration; and
- - provides required reports and recommendations to the trustees and
maintains the records of the fund.
Under the Pioneer Management Agreement, Pioneer pays all expenses not
specifically assumed by the fund where such expenses are incurred by Pioneer or
the fund in connection with the management of the affairs of, and the investment
and reinvestment of the assets of, the fund. Under the Pioneer Management
Agreement, the fund assumes the following expenses: (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 the independent 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
26
accordance with Rule 12b-1 under the Investment Company 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), Pioneer Investment Management USA
Inc. or Pioneer Funds Distributor, Inc.; (k) the cost of preparing and printing
share certificates; and (l) interest on borrowed money, if any and (m) expenses
incurred (i) as a result of a change in the law or regulations, (ii) as a result
of a mandate from the board of trustees with associated costs of a character
generally assumed by similarly structured investment companies or (iii) that is
similar to the expenses listed in the existing contract.
COMPENSATION. The Pioneer Cullen Value Fund pays an investment management fee,
accrued daily and paid monthly in arrears, to Pioneer equal on an annual basis
to 0.70% of the average daily net assets of the fund up to $1 billion, 0.65% of
the average daily net assets of the fund greater than $1 billion and less than
or equal to $2 billion, 0.60% of the average daily net assets of the fund
greater than $2 billion and less than or equal to $3 billion, and 0.55% of the
average daily net assets of the fund over $3 billion. Because the Pioneer Cullen
Value Fund is not operational and does not expect to be operational until the
consummation of the reorganization, the fund has not yet paid any management
fees.
As described above, Pioneer has agreed to limit, until November 1, 2008, the
ordinary operating expense attributable to the Class A expenses of Pioneer
Cullen Value Fund to 1.25% of the average daily net assets attributable to the
Class A shares of the Pioneer Cullen Value Fund by not imposing all or a portion
of its management fee and, if necessary, limiting other ordinary operating
expenses of the Pioneer Cullen Value Fund.
TERM. The Pioneer Management Agreement will take effect on the closing date of
the reorganization and will remain in effect for two years. Thereafter, the
Pioneer Management Agreement will continue in effect from year to year subject
to the annual approval of its continuance as described below under "Termination,
Continuance and Amendment."
LIMITATION OF LIABILITY. The Pioneer Management Agreement provides that Pioneer
is not 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 security on the recommendation of Pioneer, whether or
not such recommendation shall have been based upon its own investigation and
research or upon investigation and research made by any other individual, firm
or corporation, except a loss resulting from 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 agreement.
TERMINATION, CONTINUANCE AND AMENDMENT. Except as described above, the Pioneer
Management Agreement continues from year to year subject to annual approval of
its continuance by (1) a majority of the independent trustees, cast in person at
a meeting called for the purpose of voting on such approval, or (2) by a
majority of the fund's outstanding voting securities, as defined in the
Investment Company Act. The Agreement may be terminated at any time without
penalty on 60 days' written notice by the trustees, by a vote of a majority of
the fund's outstanding voting securities, or by Pioneer. The Agreement
terminates automatically in the event of its assignment.
SUB-ADVISORY AGREEMENT - PIONEER CULLEN VALUE FUND
Cullen will serve as subadviser to the Pioneer Cullen Value Fund pursuant to a
sub-advisory agreement among the fund, Pioneer and Cullen (as defined previously
above, the "Sub-Advisory Agreement"). The following is a summary of the material
terms of the Sub-Advisory Agreement.
SERVICES. Under the Sub-Advisory Agreement, Cullen will, subject to the
supervision of Pioneer and the board of trustees of the fund, regularly provide
the fund with investment research, advice and supervision and shall furnish
continuously an investment program for the fund, consistent with the investment
objective and policies of the fund. Cullen will also provide assistance to
Pioneer with respect to the voting of proxies for the fund as Pioneer may
request. Cullen shall maintain certain books and records with respect to the
27
fund's securities transactions and will cooperate with and provide reasonable
assistance to Pioneer, the fund, and the fund's other agents and representatives
with respect to requests for information and preparation of regulatory filings
and reports. Cullen will bear its own costs of providing services under the
Sub-Advisory Agreement.
COMPENSATION. Pioneer will pay Cullen a monthly fee equal on an annual basis to
0.35% of average daily net assets up to $1 billion, 0.325% of the average daily
net assets of the fund greater than $1 billion and less than or equal to $2
billion, 0.30% of the average daily net assets of the fund greater than $2
billion and less than or equal to $3 billion, and 0.275% of the average daily
net assets of the fund over $3 billion.
LIMITATION OF LIABILITY. The Sub-Advisory Agreement provides that Cullen shall
not be liable to Pioneer or the fund for any losses, claims, damages,
liabilities or litigation incurred or suffered by Pioneer or the fund as a
result of any error of judgment or mistake of law by Cullen with respect to the
fund, except that Cullen shall be liable for and shall indemnify Pioneer and the
fund from any loss arising out of or based on (i) Cullen being in violation of
any applicable federal or state law, rule or regulation or any investment policy
or restriction set forth in the fund's prospectus or statement of additional
information or any written policies, procedures, guidelines or instructions
provided in writing to Cullen by the trustees of the fund or Pioneer, (ii)
Cullen causing the fund to fail to satisfy the diversification or source of
income requirements of Subchapter M of the Code by reason of an act or omission
of Cullen, unless acting at the direction of Pioneer, (iii) Cullen's willful
misfeasance, bad faith or gross negligence generally in the performance of its
duties hereunder or its reckless disregard of its obligations and duties under
the Sub-Advisory Agreement, or (iv) the fund being in violation of any
applicable federal or state law, rule or regulation or any written policies,
procedures, guidelines or instructions provided in writing to Cullen by the
trustees of the fund or Pioneer by reason of any action or inaction by Cullen.
TERM AND TERMINATION. The Sub-Advisory Agreement shall remain in force provided
its continuance is approved prior to December 31, 2006 by either (1) a majority
vote of the Board or (2) the affirmative vote of a majority of the outstanding
voting securities of the fund, and a majority of the independent trustees. The
Sub-Advisory Agreement may be terminated at any time on not more than sixty (60)
days' nor less than thirty (30) days' written notice without penalty by (a)
Pioneer, (b) the fund's board of trustees, (c) a majority of the fund's
outstanding voting securities, as defined in the Investment Company Act, or (d)
Cullen. The Sub-Advisory Agreement shall automatically terminate in the event of
its assignment or upon termination of the Pioneer Management Agreement.
PIONEER CULLEN VALUE FUND'S CLASS A RULE 12b-1 PLAN
As described above, the Pioneer Cullen Value Fund has adopted a Rule 12b-1 plan
for its Class A shares (the "Class A Plan" or the "Plan"). Because the Rule
12b-1 fees payable under the Plan are an ongoing expense, over time they may
increase the cost of your investment and your shares may cost more than shares
that are not subject to a distribution or service fee or sales charge.
COMPENSATION AND SERVICES. The Class A Plan is a reimbursement plan, and
distribution expenses of PFD are expected to substantially exceed the
distribution fees paid by the fund in a given year. Pursuant to the Class A
Plan, the fund reimburses PFD for its actual expenditures to finance any
activity primarily intended to result in the sale of Class A shares or to
provide services to holders of Class A shares, provided the categories of
expenses for which reimbursement is made are approved by the board of trustees.
The expenses of the fund pursuant to the Class A Plan are accrued daily at a
rate which may not exceed the annual rate of 0.25% of the fund's average daily
net assets attributable to Class A shares.
TRUSTEE APPROVAL AND OVERSIGHT. The Plan was approved by the board of trustees
of the Pioneer Cullen Value Fund, including a majority of the independent
trustees, by votes cast in person at a meeting called for the purpose of voting
on the Plan on August 8, 2004. Pursuant to the Plan, at least quarterly, PFD
will provide the fund with a written report of the amounts expended under the
Plan and the purpose for which
28
these expenditures were made. The trustees review these reports on a quarterly
basis to determine their continued appropriateness.
TERM, TERMINATION AND AMENDMENT. The Plan's adoption, terms, continuance and
termination are governed by Rule 12b-1 under the Investment Company Act. The
board of trustees believes that there is a reasonable likelihood that the Plan
will benefit the fund and its current and future shareholders. The Plan may not
be amended to increase materially the annual percentage limitation of average
net assets which may be spent for the services described therein without
approval of the shareholders of the fund affected thereby, and material
amendments of the Plan must also be approved by the trustees as provided in Rule
12b-1.
FINANCIAL HIGHLIGHTS
This table shows the financial performance for the fiscal years indicated. It is
intended to help you understand your fund's financial results for a single fund
share. "Total return" shows how much your investment in the Cullen Fund would
have increased or decreased during each period, assuming you had reinvested all
dividends and distributions. This information for the fiscal year ended June 30,
of each year has been audited by PricewaterhouseCoopers LLP, your funds'
independent registered public accounting firm. Their report and the Cullen
Fund's financial statements are included in their annual and semi-annual
reports, which are available upon request free of charge by calling the
toll-free telephone number 1-877-485-8586.
29
CULLEN VALUE FUND
YEARS ENDED JUNE 30,
2004 2003 2002 2001
--------- -------- -------- --------
PER SHARE DATA:
Net asset value, beginning of
period $ 11.27 $ 11.90 $ 11.34 $ 10.00
Income from investment operations:
Net investment (loss)/income 0.02 0.04 0.03 0.01
Net realized and unrealized
(loss)/gain on investments 2.71 (0.64) 0.59 1.36
-------- -------- ------- --------
Total from investment operations 2.73 (0.60) 0.62 1.35
Less distributions:
Dividend from net investment income (0.04) (0.03) -- (0.02)
Dividend from net realized gain -- -- (0.06) --
Total distributions (0.04) (0.03) (0.06) (0.02)
Net asset value, end of period $ 13.96 $ 11.27 $ 11.90 $ 11.34
======== ======== ======= ========
TOTAL RETURN 24.24% (5.04)% 5.52% 13.65%
======== ======== ======= ========
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period 33,089 $ 22,235 $16,501 $ 12,618
(thousands)
Ratio of expenses to average net assets:
Before expense waiver and
reimbursement 1.92% 2.22% 2.33% 3.31%
After expense waiver and
reimbursement 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income
(loss) to average net assets
Before expense waiver and
reimbursement 0.32% 0.30% (0.01)% (1.19)%
After expense waiver and
reimbursement 0.24% 0.52% 0.31% 0.12%
Portfolio turnover rate 69.67% 70.64% 44.12% 29.31%
30
INFORMATION CONCERNING THE MEETING
SOLICITATION OF PROXIES
In addition to the mailing of these proxy materials, proxies may be
solicited by telephone, by fax or in person by the trustees, officers and
employees of your fund; by personnel of your fund's investment adviser, by
Cullen, by the Pioneer Cullen Value Fund's investment adviser, Pioneer, by
Pioneer Cullen Value Fund's transfer agent, PIMSS, or by broker-dealer
firms. Pioneer and its affiliates, together with a third party solicitation
firm, have agreed to provide proxy solicitation services at a cost of
approximately $5,000. Pioneer will bear the cost of such solicitation.
REVOKING PROXIES
A Cullen Fund shareholder signing and returning a proxy has the power to
revoke it at any time before it is exercised:
- - By filing a written notice of revocation with your fund's transfer agent,
U.S Bancorp Fund Services, LLC, 615 E. Michigan Street, Third Floor,
Milwaukee, Wisconsin 53202, or
- - By returning a duly executed proxy with a later date before the time of the
meeting, or
- - If a shareholder has executed a proxy but is present at the meeting and
wishes to vote in person, by notifying the secretary of your fund (without
complying with any formalities) at any time before it is voted.
Being present at the meeting alone does not revoke a previously executed
and returned proxy.
OUTSTANDING SHARES AND QUORUM
As of December 28, 2004, 2,689,082.969 shares of beneficial interest of the
Cullen Fund were outstanding. Only shareholders of record on December 28,
2004, (the "record date") are entitled to notice of and to vote at the
meeting. The presence in person or by proxy by the majority of shareholders
of your fund entitled to cast votes at the meeting will constitute a
quorum.
OTHER BUSINESS
Your fund's board of trustees knows of no business to be presented for
consideration at the meeting other than the four reorganization proposals.
If other business is properly brought before the meeting, proxies will be
voted according to the best judgment of the persons named as proxies.
ADJOURNMENTS
If, by the time scheduled for the meeting, a quorum of shareholders is not
present or if a quorum is present but sufficient votes "for" the proposal
have not been received, the persons named as proxies may propose one or
more adjournments of the meeting to another date and time, and the meeting
may be held as adjourned within a reasonable time after the date set for
the original meeting without further notice. Any such adjournment will
require the affirmative vote of a majority of the votes cast on the
question in person or by proxy at the session of the meeting to be
adjourned. The persons named as proxies will vote all proxies in favor of
the adjournment that voted in favor of the proposal or that abstained. They
will vote against such adjournment those proxies required to be voted
against the proposal. Broker non-votes will be disregarded in the vote for
adjournment. If the adjournment requires setting a new record date or the
adjournment is for more than 120 days of the original meeting (in which
case the board of trustees of your fund will set a new record date), your
fund will give notice of the adjourned meeting to its shareholders.
31
OWNERSHIP OF SHARES OF THE FUND
To the knowledge of your fund, as of December 28, 2004, the following persons
owned of record or beneficially owned 5% or more of the outstanding shares of
the Cullen Value Fund. No shares of the Pioneer Cullen Value Fund were
outstanding as of that date.
CULLEN VALUE FUND
NAME AND ADDRESS % OWNERSHIP* TYPE OF OWNERSHIP
- ------------------------------- ------------ -----------------
Charles Schwab & Co.
101 Montgomery Street
San Francisco, CA 94104-4122 46% Record
Larry R. Tachett
6101 Almond Terrace
Plantation, FL 33317-2505 16% Record
Curtis J. Flanagan 14% Record
777 Bayshore Drive, Apt. 901
Fort Lauderdale, FL 33304-3981
* Percentage ownership also represents pro-forma percentage ownership of the
corresponding Pioneer Fund.
As of December 28, 2004, the trustees and officers of your fund, as a group,
owned in the aggregate approximately 20% of the outstanding shares of the Cullen
Value Fund on such date. The trustees and officers of the Pioneer Cullen Value
Fund, as a group, owned in the aggregate less than 1% of the outstanding shares
of Pioneer Cullen Value Fund.
EXPERTS
The financial statements and the financial highlights of the Cullen Fund for the
fiscal year ended June 30, 2004 are incorporated by reference into this
prospectus and proxy statement. The financial statements and financial
highlights for the Cullen Value Fund have been independently audited by
PricewaterhouseCoopers LLP as stated in their reports appearing in the statement
of additional information. These financial statements and financial highlights
have been included in reliance on their reports given on their authority as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Cullen Fund and the Pioneer Cullen Value Fund are subject to the
informational requirements of the Securities Exchange Act of 1934 and the
Investment Company Act and are required to file reports, proxy statements and
other information with the Securities and Exchange Commission. These reports,
proxy statements and other information filed by the Funds can be inspected and
copied (for a duplication fee) at the public reference facilities of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
Copies of these materials can also be obtained by mail from the Public Reference
Section of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, copies of these
documents may be viewed on-screen or downloaded from the SEC's Internet site at
no charge at http://www.sec.gov.
32
EXHIBIT A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made this __ day
of February, 2005, by and between Pioneer Series Trust III, a Delaware statutory
trust (the "ACQUIRING TRUST") on behalf of its series Pioneer Cullen Value Fund
(the "ACQUIRING FUND"), with its principal place of business at 60 State Street,
Boston, Massachusetts 02109, and Cullen Funds Trust, a Delaware statutory trust
("CULLEN TRUST"), on behalf of its series, Cullen Value Fund (the "ACQUIRED
FUND"), a series of Cullen Trust with its principal place of business at 645
Fifth Avenue, New York, New York 10022. The Acquiring Fund and the Acquired Fund
are sometimes referred to collectively herein as the "FUNDS" and individually as
a "FUND."
This Agreement is intended to be and is adopted as a plan of "reorganization" as
such term is defined in Section 368(a) (1)(F) of the United States Internal
Revenue Code of 1986, as amended (the "CODE"). The reorganization (the
"REORGANIZATION") will consist of (1) the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for (A) the issuance of
Class A shares of beneficial interest of the Acquiring Fund (collectively, the
"ACQUIRING FUND SHARES" and each, an "ACQUIRING FUND SHARE") to the Acquired
Fund, and (B) the assumption by the Acquiring Fund of all liabilities of the
Acquired Fund or the Cullen Trust attributable to the Acquired Fund, whether
accrued, absolute, contingent or otherwise (collectively, the "ASSUMED
LIABILITIES"), and (2) the distribution by the Acquired Fund, on or promptly
after the closing date of the Reorganization as provided herein (the "CLOSING
DATE"), of the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation and termination of the Acquired Fund, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquiring Trust and Cullen Trust are each registered investment
companies classified as management companies of the open-end type, and the
Acquired Fund owns securities that are generally assets of the character in
which the Acquiring Fund is permitted to invest.
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of Cullen Trust has determined that the exchange
of all of the assets of the Acquired Fund for Acquiring Fund Shares, and the
assumption of the Assumed Liabilities of the Acquired Fund by the Acquiring Fund
are in the best interests of the Acquired Fund shareholders.
WHEREAS, the Board of Trustees of Acquiring Trust has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares,
and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquiring Fund shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND TERMINATION OF
THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund will
transfer all of its assets as set forth in Paragraph 1.2 (the "ACQUIRED ASSETS")
to the Acquiring Fund free and clear of all liens and encumbrances (other than
those arising under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), with respect to privately placed or other restricted securities the
Acquired Fund may have acquired, liens for taxes not yet due and contractual
restrictions on the transfer of the Acquired Assets) and the Acquiring Fund
agrees in exchange therefor: (i) to issue to the Acquired Fund the number of
Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined in
the manner set forth in Paragraph 2.2; and (ii) to assume the Assumed
Liabilities, as set forth in Paragraph 1.3. Such transactions shall take place
at the Closing (as defined in Paragraph 3.1 below).
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights of the Acquired Fund (to the extent transferable) or Cullen Trust in
respect of the Acquired Fund, all other intangible property owned by the
Acquired Fund, originals or copies of all books and records of the Acquired
Fund, and all other assets of the Acquired Fund on the Closing Date. The
Acquiring Fund shall also be entitled to receive (or to the extent agreed upon
between Cullen Trust and the Acquiring Trust, be provided access to) copies of
all records that Cullen Trust is required to maintain under the Investment
Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT") and the rules of
the Securities and Exchange Commission (the "COMMISSION") thereunder to the
extent such records pertain to the Acquired Fund.
(b) The Acquired Fund has provided the Acquiring Fund with a list of
all of the Acquired Fund's securities and other assets as of the date of
execution of this Agreement, and the Acquiring Fund has provided the Acquired
Fund with a copy of the current fundamental investment policies and restrictions
and fair value procedures applicable to the Acquiring Fund. The Acquired Fund
reserves the right to sell any of such securities or other assets before the
Closing Date (except to the extent sales may be limited by representations of
the Acquired Fund contained herein and made in connection with the issuance of
the tax opinion provided for in Paragraph 8.5 hereof), but will not, without the
prior approval of the Acquiring Fund, acquire any additional securities of the
type in which the Acquiring Fund is not permitted to invest in accordance with
its fundamental investment policies and restrictions. The Acquired Fund will
notify the Acquiring Fund on the fifth day prior to the Closing Date if the
Acquired Fund has purchased since the date of this Agreement any securities that
are valued at "fair value" under the valuation procedures of the Acquired Fund
and will promptly notify the Acquiring Fund if between said fifth day prior to
the Closing date and the Closing Date if the Acquired Fund purchases any
securities that are valued at "fair value."
1.3 The Acquired Fund will use commercially reasonable efforts to
discharge all the Acquired Fund's known liabilities and obligations that are or
will become due prior to the Closing. The Acquiring Fund shall assume all of the
Assumed Liabilities at Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "LIQUIDATION DATE"), Cullen Trust shall liquidate the Acquired Fund and
distribute pro rata to its shareholders of record (the "ACQUIRED FUND
SHAREHOLDERS"), determined as of the close of regular trading on the New York
Stock Exchange on the Closing Date, the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such liquidation and
distribution will be accomplished by Cullen Trust instructing the Acquiring Fund
to transfer the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open accounts on the share
records of the Acquiring Fund established and maintained by the Acquiring Fund's
transfer agent in the names of the Acquired Fund Shareholders and representing
the respective pro rata number of the Acquiring Fund Shares due such Acquired
Fund Shareholders. Fractional shares shall be carried to the third decimal
place. Cullen Trust shall promptly provide the Acquiring Fund with evidence of
such liquidation and distribution. All issued and outstanding shares of the
Acquired Fund will simultaneously be cancelled on the books of the Acquired
Fund. The Acquiring Fund shall not issue certificates representing the Acquiring
Fund Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent for its Class A shares. The Acquired Fund
Shareholders holding certificates representing their ownership of common shares
of the Acquired Fund shall be entitled to surrender such certificates to the
transfer agent for the Acquiring Fund or deliver to the transfer agent for the
Acquiring Fund an affidavit with respect to lost certificates in such form and
accompanied by such surety bonds as the Acquired Fund may require (collectively,
an "AFFIDAVIT"), to Pioneer Investment Management Shareholder Services, Inc.
prior to the Closing Date. Any Acquired Fund Share certificate which remains
outstanding on the Closing Date shall be deemed to be cancelled, shall no longer
evidence ownership of shares of beneficial interest of the Acquired Fund.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.7 The Acquired Fund shall effect, following the Closing Date, the
transfer of the Acquired Assets by the Acquired Fund to the Acquiring Fund, the
assumption of the Assumed Liabilities by the Acquiring Fund, and the
distribution of the Acquiring Fund Shares by the Acquired Fund to the Acquired
Fund Shareholders pursuant to Paragraph 1.4, and the Acquired Fund, as soon as
reasonably practicable thereafter, shall be terminated as a series of Cullen
Trust under the laws of the State of Delaware and in accordance with Cullen
Trust's Declaration of Trust and By-Laws.
2
1.8 Any reporting responsibility of Cullen Trust with respect to the
Acquired Fund for taxable periods ending on or before the Closing Date,
including, but not limited to, the responsibility for filing of regulatory
reports, Tax Returns (as defined in Paragraph 4.1), or other documents with the
Commission, any state securities commissions, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of Cullen Trust.
2. VALUATION
2.1 The NAV of the Acquiring Fund Shares and the NAV of the Acquired
Assets shall, in each case, be determined as of the close of business (4:00
p.m., Eastern time) on the Closing Date (the "VALUATION TIME"). The NAV of each
Acquiring Fund Share shall be computed by Pioneer Investment Management, Inc.
(the "ACQUIRING FUND ADVISER") in the manner set forth in the Acquiring Fund's
Declaration of Trust (the "DECLARATION"), or By-Laws, and the Acquiring Fund's
then-current prospectus and statement of additional information; provided,
however, if the Acquiring Fund has no assets as of the Closing Date (other than
a nominal amount of assets represented by shares issued to the Acquiring Fund
Adviser, or its affiliate, as the initial shareholder of the Acquiring Fund),
the NAV of each Acquiring Fund Share shall be the same as the NAV of each share
of the Acquired Fund. The NAV of the Acquired Assets shall be computed by U.S.
Bank, National Association (the "ACQUIRED FUND CUSTODIAN") by calculating the
value of the Acquired Assets and by subtracting therefrom the amount of the
liabilities of the Acquired Fund on the Closing Date included on the face of the
Statement of Assets and Liabilities of the Acquired Fund delivered pursuant to
Section 5.7 (the "STATEMENT OF ASSETS AND LIABILITIES"), said assets and
liabilities to be valued in the manner set forth in the Acquired Fund's then
current prospectus and statement of additional information. The Acquiring Fund
Adviser shall confirm the NAV of the Acquired Assets.
2.2 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Assets and the assumption of the
Assumed Liabilities shall be determined by the Acquiring Fund Adviser by
dividing the NAV of the Acquired Assets, as determined in accordance with
Paragraph 2.1, by the NAV of each Acquiring Fund Share, as determined in
accordance with Paragraph 2.1.
2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring
Fund Adviser and the Acquired Fund Custodian, respectively, to deliver a copy of
its valuation report, reviewed by its independent accountants, to the other
party at Closing. All computations of value shall be made by the Acquiring Fund
Custodian (as defined below) and the Acquired Fund Custodian in accordance with
its regular practice as custodian and pricing agent for the Acquiring Fund and
the Acquired Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be February [ ], 2005 or such later date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of 5:00 p.m. (Eastern time) on the
Closing Date unless otherwise provided (the "CLOSING"). The Closing shall be
held at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts, or at such other place as the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name
of the Acquired Fund Custodian as record holder for the Acquired Fund shall be
presented by the Acquired Fund to Brown Brothers Harriman & Co. (the "ACQUIRING
FUND CUSTODIAN") for examination no later than three business days preceding the
Closing Date. Portfolio securities which are not held in book-entry form shall
be delivered by the Acquired Fund to the Acquiring Fund Custodian for the
account of the Acquiring Fund on the Closing Date, duly endorsed in proper form
for transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate purchase
price thereof. Portfolio securities held of record by the Acquired Fund
Custodian in book-entry form on behalf of the Acquired Fund shall be delivered
to the Acquiring Fund by the Acquired Fund Custodian by recording the transfer
of beneficial ownership thereof on the Acquired Fund Custodian's records.
3
3.3 The Acquiring Fund Custodian shall deliver within one business day
after the Closing a certificate of an authorized officer stating that: (a) the
Acquired Assets have been delivered in proper form to the Acquiring Fund on the
Closing Date, and (b) all necessary transfer taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or provision
for payment shall have been made in conjunction with the delivery of portfolio
securities as part of the Acquired Assets. Any cash delivered shall be in the
form of currency or by the Acquired Fund Custodian crediting the Acquiring
Fund's account maintained with the Acquiring Fund Custodian with immediately
available funds by wire transfer pursuant to instruction delivered prior to
Closing.
3.4 In the event that on the Closing Date (a) the New York Stock Exchange
is closed to trading or trading thereon shall be restricted, or (b) trading or
the reporting of trading on such exchange or elsewhere is disrupted so that
accurate appraisal of the NAV of the Acquiring Fund Shares or the Acquired
Assets pursuant to Paragraph 2.1 is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.5 The Acquired Fund shall deliver at the Closing a list (which may be in
electronic form) of the names, addresses, federal taxpayer identification
numbers and backup withholding and nonresident alien withholding status and
certificates of the Acquired Fund Shareholders and the number and percentage
ownership of outstanding shares of beneficial interest of the Acquired Fund
owned by each such Acquired Fund Shareholder as of the Valuation Time, certified
by the President or a Secretary of Cullen Trust and its Treasurer, Secretary or
other authorized officer (the "SHAREHOLDER LIST") as being an accurate record of
the information (a) provided by the Acquired Fund Shareholders, (b) provided by
the Acquired Fund Custodian, or (c) derived from Cullen Trust's records by such
officers or one of Cullen Trust's service providers. The Acquiring Fund shall
issue and deliver to the Acquired Fund a confirmation evidencing the Acquiring
Fund Shares to be credited on the Closing Date, or provide evidence satisfactory
to the Acquired Fund that such Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts or other documents as such other party or its counsel may
reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on Schedule 4.1 hereto, Cullen Trust, on behalf of
the Acquired Fund, represents, warrants and covenants to the Acquiring Fund,
which representations, warrantees and covenants will be true and correct on the
date hereof and on the Closing Date as though made on and as of the Closing
Date, as follows:
(a) The Acquired Fund is a duly established and designated series of
Cullen Trust. Cullen Trust is a Delaware statutory trust duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the statutory trust power to own all of its properties and assets and, subject
to approval by the Acquired Fund Shareholders, to perform its obligations under
this Agreement. The Acquired Fund is not required to qualify to do business in
any jurisdiction in which it is not so qualified or where failure to qualify
would subject it to any material liability or disability. Each of Cullen Trust
and the Acquired Fund has all necessary federal, state and local authorizations
to own all of its properties and assets and to carry on its business as now
being conducted;
(b) Cullen Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is and on
the Closing Date will be in full force and effect. The Acquired Fund is a
diversified investment company under the Investment Company Act;
(c) Cullen Trust is not in violation of, and the execution, delivery
and (subject to the approval of this Agreement by the Acquired Fund
Shareholders) performance of its obligations under this Agreement in respect of
the Acquired Fund will not result in a violation of, any provision of Cullen
Trust's Declaration of Trust or By-Laws or any material agreement, indenture,
instrument, contract, lease or other undertaking with respect to the Acquired
Fund to which Cullen Trust is a party or by which the Acquired Fund or its
assets are bound;
4
(d) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to its knowledge
threatened against Cullen Trust or the Acquired Fund or any of the Acquired
Fund's properties or assets. Cullen Trust knows of no facts which might form the
basis for the institution of such proceedings. Except as disclosed on Schedule
4.1 to this Agreement (the "Disclosure Schedule"), neither Cullen Trust nor the
Acquired Fund is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially adversely affects
the Acquired Fund's business or its ability to consummate the transactions
herein contemplated or would be binding upon the Acquiring Fund as the successor
to the Acquired Fund and that could be reasonably expected to have an adverse
effect on the Acquired Fund;
(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement, the Cullen Trust's constituent documents or
agreements for the purchase and sale of securities entered into in the ordinary
course of business and consistent with its obligations under this Agreement)
which will not be terminated at or prior to the Closing Date and no such
termination will result in liability to the Acquired Fund (or the Acquiring
Fund);
(f) The statement of assets and liabilities of the Acquired Fund, and
the related statements of income and changes in net asset value as of and for
the fiscal year ended June 30, 2004 has been audited by PricewaterhouseCoopers,
independent certified public accountants, and are in accordance with GAAP
consistently applied and fairly reflect, in all material respects, the financial
condition of the Acquired Fund as of such dates and the results of its
operations for the periods indicated. The Statement of Assets and Liabilities of
the Acquired Fund to be delivered as of the Closing Date pursuant to Paragraph
5.7 will be in accordance with GAAP consistently applied and will fairly
reflect, in all material respects, the financial condition of the Acquired Fund
as of such date and the results of its operations for the period then ended.
Except for the Assumed Liabilities, the Acquired Fund will not have any known or
contingent liabilities on the Closing Date. As of the date hereof, no
significant deficiency, material weakness, fraud, significant change or other
factor that could significantly affect the internal controls of the Acquired
Fund has been disclosed or is required to be disclosed in the Acquired Fund's
reports on Form N-SAR or Form N-CSR to enable the chief executive officer and
chief financial officer or other officers of Cullen Trust to make the
certifications required by the Sarbanes-Oxley Act of 2002, and no deficiency,
weakness, fraud, change, event or other factor exists that will be required to
be disclosed in the Acquiring Fund's Form N-CSR after the Closing Date;
(g) Since June 30, 2004, except as specifically disclosed in the
Acquired Fund's prospectus, statement of additional information as in effect on
the date of this Agreement, there has not been any material adverse change in
the Acquired Fund's financial condition, assets, liabilities, business or
prospects, or any incurrence by the Acquired Fund of indebtedness, except for
normal contractual obligations incurred in the ordinary course of business or in
connection with the settlement of purchases and sales of portfolio securities.
For the purposes of this subparagraph (g) (but not for any other purpose of this
Agreement including Paragraph 7.4), a change in NAV per share of the Acquired
Fund arising out of its normal investment operations or a change in market
values of securities in the Acquired Fund's portfolio or a change in net assets
of the Acquired Fund as a result of redemptions shall not constitute a material
adverse change;
(h) (A) For each taxable year of its operation since its inception
(including the current taxable year), the Acquired Fund has met the requirements
of Subchapter M of the Code for qualification and treatment as a regulated
investment company and has elected to be treated as such and will qualify as
such as of the Closing Date and will satisfy the diversification requirements of
Section 851(b)(3) of the Code without regard to the last sentence of Section
851(d) of the Code. The Acquired Fund has not taken any action, caused any
action to be taken or caused any action to fail to be taken which action or
failure could cause the Acquired Fund to fail to qualify as a regulated
investment company under the Code;
5
(B) Within the times and in the manner prescribed by law, the
Acquired Fund has properly filed on a timely basis all Tax Returns that it was
required to file, and all such Tax Returns were complete and accurate in all
material respects. The Acquired Fund has not been informed by any jurisdiction
that the jurisdiction believes that the Acquired Fund was required to file any
Tax Return that was not filed; and the Acquired Fund does not know of any basis
upon which a jurisdiction could assert such a position;
(C) The Acquired Fund has timely paid, in the manner prescribed
by law, all Taxes (as defined below), which were due and payable or which were
claimed to be due (or adequate provision for such payment has been made in its
financial statements in accordance with GAAP);
(D) All Tax Returns filed by the Acquired Fund constitute
complete and accurate reports of the respective Tax liabilities in all material
respects and all attributes of the Acquired Fund or, in the case of information
returns and payee statements, the amounts required to be reported, and
accurately set forth all items required to be included or reflected in such
returns in all material respects;
(E) Except as set forth on the Disclosure Schedule, the Acquired
Fund has not waived or extended any applicable statute of limitations relating
to the assessment or collection of Taxes;
(F) The Acquired Fund has not been notified that any
examinations of the Tax Returns of the Acquired Fund are currently in progress
or threatened, and no deficiencies have been asserted or assessed against the
Acquired Fund as a result of any audit by the Internal Revenue Service or any
state, local or foreign taxing authority, and no such deficiency has been
proposed or threatened;
(G) The Acquired Fund has no actual or potential liability for
any Tax obligation of any taxpayer other than itself. The Acquired Fund is not
and has never been a member of a group of corporations with which it has filed
(or been required to file) consolidated, combined or unitary Tax Returns. The
Acquired Fund is not a party to any Tax allocation, sharing, or indemnification
agreement;
(H) The unpaid Taxes of the Acquired Fund for tax periods
through the Closing Date do not exceed the accruals and reserves for Taxes
(excluding accruals and reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the Statement of
Assets and Liabilities, rather than in any notes thereto (the "Tax Reserves").
All Taxes that the Acquired Fund is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been timely paid to the proper governmental agency;
(I) The Acquired Fund has delivered to the Acquiring Fund or
made available to the Acquiring Fund complete and accurate copies of all Tax
Returns of the Acquired Fund, together with all related examination reports and
statements of deficiency for all periods not closed under the applicable
statutes of limitations and complete and correct copies of all private letter
rulings, revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar
documents submitted by, received by or agreed to by or on behalf of the Acquired
Fund. The Acquired Fund has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the Code;
(J) The Acquired Fund has not undergone, has not agreed to
undergo, and is not required to undergo (nor will it be required as a result of
the transactions contemplated in this Agreement to undergo) a change in its
method of accounting resulting in an adjustment to its taxable income pursuant
to Section 481 of the Code. The Acquired Fund will not be required to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a
result of any (i) change in method of accounting for a taxable period ending on
or prior to the Closing Date under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law);
(ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date; (iii) installment sale or open
transaction disposition made on or prior to the Closing Date; or (iv) prepaid
amount received on or prior to the Closing Date;
6
(K) The Acquired Fund has not taken or agreed to take any action
that would prevent the Reorganization from constituting a reorganization
qualifying under Section 368(a)(1)(F) of the Code. The Acquired Fund is not
aware of any agreement, plan or other circumstance that would prevent the
Reorganization from qualifying as a reorganization under Section 368(a)(1)(F) of
the Code;
(L) There are (and as of immediately following the Closing there
will be) no liens on the assets of the Acquired Fund relating to or attributable
to Taxes, except for Taxes not yet due and payable and those that are being
contested in good faith;
(M) The Tax bases of the assets of the Acquired Fund are
accurately reflected on the Acquired Fund's Tax books and records;
(N) The Acquired Fund has not incurred (or been allocated) an
"overall foreign loss" as defined in Section 904(f)(2) of the Code which has not
been previously recaptured in full as provided in Sections 904(f)(2) and/or
904(f)(3) of the Code;
(O) The Acquired Fund is not a party to a gain recognition
agreement under Section 367 of the Code;
(P) The Acquired Fund does not own any interest in an entity
that is characterized as a partnership for income tax purposes;
(Q) The Acquired Fund's Tax attributes are not limited, and will
not be limited as a result of the Reorganization, under the Code (including but
not limited to any capital loss carry forward limitations under Sections 382 or
383 of the Code and the Treasury Regulations thereunder) or comparable
provisions of state law; and
(R) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other similar assessments or liabilities,
including without limitation income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment, unemployment, insurance, social security, business
license, business organization, environmental, workers compensation, payroll,
profits, license, lease, service, service use, severance, stamp, occupation,
windfall profits, customs, duties, franchise and other taxes imposed by the
United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof; and "Tax Returns" shall mean all reports, returns,
declarations, statements or other information required to be supplied to a
governmental or regulatory authority or agency, or to any other person, in
connection with Taxes and any associated schedules or work papers produced in
connection with such items.
(i) The authorized capital of the Acquired Fund consists of an
unlimited number of shares of beneficial interest, $.001 par value per share.
All issued and outstanding shares of beneficial interest of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and outstanding
and fully paid, and have full voting rights and will be freely transferable. All
of the issued and outstanding shares of beneficial interest of the Acquired Fund
will, at the time of Closing, be held of record by the persons and in the
amounts set forth in the Shareholder List submitted to the Acquiring Fund
pursuant to Paragraph 3.5 hereof. The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of its
shares of the Acquired Fund, nor is there outstanding any security convertible
into any of its shares of beneficial interest of the Acquired Fund;
(j) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Assets, and full right, power and authority to
sell, assign, transfer and deliver the Acquired Assets to the Acquiring Fund,
and, upon delivery and payment for the Acquired Assets, the Acquiring Fund will
acquire good and marketable title thereto, subject to no restrictions on the
full transfer thereof, except such restrictions as might arise under the
Securities Act with respect to privately placed or otherwise restricted
securities that the Acquired Fund may have acquired and such imperfections of
title or encumbrances that do not detract from the value or use of the Acquired
Assets subject thereto;
7
(k) Subject to approval by the Acquired Fund Shareholders, Cullen
Trust has the statutory trust power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action on the part of
Cullen Trust's Board of Trustees, and, subject to the approval of the Acquired
Fund Shareholders, assuming due authorization, execution and delivery by the
Acquiring Fund, this Agreement will constitute a valid and binding obligation of
the Acquired Fund, enforceable in accordance with its terms, subject as to
enforcement, to the effect of bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to general equity
principles;
(l) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection with
the transactions contemplated hereby and any information necessary to compute
the total return of the Acquired Fund shall be accurate and complete and shall
comply in all material respects with federal securities and other laws and
regulations thereunder applicable thereto;
(m) The information included in the proxy statement (the "PROXY
STATEMENT") forming part of the Acquiring Fund's Registration Statement on Form
N-14 filed in connection with this Agreement (the "REGISTRATION STATEMENT") that
has been furnished by the Acquired Fund to the Acquiring Fund for inclusion in
the Registration Statement, on the effective date of that Registration Statement
and on the Closing Date, will conform in all material respects to the applicable
requirements of the Securities Act, the Securities Exchange Act of 1934 as
amended (the "EXCHANGE ACT"), and the Investment Company Act and the rules and
regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
(n) Upon the effectiveness of the Registration Statement, no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by Cullen Trust or the Acquired Fund of the
transactions contemplated by this Agreement;
(o) To Cullen Trust's knowledge, all of the issued and outstanding
shares of beneficial interest of the Acquired Fund have been offered for sale
and sold in conformity with all applicable federal and state securities laws,
except as may have been previously disclosed in writing to the Acquiring Fund;
(p) The prospectus and statement of additional information of the
Acquired Fund, each dated October 28, 2003 (collectively, the "ACQUIRED FUND
PROSPECTUS"), and any amendments or supplements thereto, furnished to the
Acquiring Fund, did not as of their dates or the dates of their distribution to
the public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made, not
misleading;
(q) The Acquired Fund currently complies in all material respects
with and since its organization has complied in all material respects with the
requirements of, and the rules and regulations under, the Investment Company
Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all other
applicable federal and state laws or regulations. The Acquired Fund currently
complies in all material respects with, and since its organization has complied
in all material respects with, all investment objectives, policies, guidelines
and restrictions and any compliance procedures established by Cullen Trust with
respect to the Acquired Fund. All advertising and sales material used by the
Acquired Fund complies in all material respects with and has complied in all
material respects with the applicable requirements of the Securities Act, the
Investment Company Act, the rules and regulations of the Commission, and, to the
extent applicable, the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD") and any applicable state regulatory authority. All
registration statements, prospectuses, reports, proxy materials or other filings
required to be made or filed with the Commission, the NASD or any state
securities authorities by the Acquired Fund have been duly filed and have been
approved or declared effective, if such approval or declaration of effectiveness
is required by law. Such registration statements, prospectuses, reports, proxy
materials and other filings under the Securities Act, the Exchange Act and the
Investment Company Act (i) are or were at the appropriate date in compliance in
all material respects with the requirements of all applicable statutes and the
rules and regulations thereunder and (ii) do not or did not at the appropriate
date contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not false or misleading;
8
(r) The Acquired Fund has previously provided to the Acquiring Fund
(and at the Closing will provide an update through the Closing Date of such
information) data which supports a calculation of the Acquired Fund's total
return for all periods since the organization of the Acquired Fund. Such data
has been prepared in accordance in all material respects with the requirements
of the Investment Company Act and the regulations thereunder and the rules of
the NASD;
(s) Neither the Acquired Fund nor, to the knowledge of Cullen Trust,
any "affiliated person" of the Acquired Fund has been convicted of any felony or
misdemeanor, described in Section 9(a)(1) of the Investment Company Act, nor, to
the knowledge of the Acquired Fund, has any affiliated person of the Acquired
Fund been the subject, or presently is the subject, of any proceeding or
investigation with respect to any disqualification that would be a basis for
denial, suspension or revocation of registration as an investment adviser under
Section 203(e) of the Investment Advisers Act of 1940, as amended (the
"INVESTMENT ADVISERS ACT") or Rule 206(4)-4(b) thereunder or of a broker-dealer
under Section 15 of the Exchange Act, or for disqualification as an investment
adviser, employee, officer or director of an investment company under Section 9
of the Investment Company Act; and
(t) The Acquired Fund Tax Representation Certificate to be delivered
by the Acquired Trust on behalf of the Acquired Fund to the Acquiring Fund and
Wilmer Cutler Pickering Hale and Dorr LLP at the Closing pursuant to Paragraph
7.4 (the "ACQUIRED FUND TAX REPRESENTATION CERTIFICATE") will not on the Closing
Date contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading.
4.2 Except as set forth on Schedule 4.2 hereto, the Acquiring Trust on
behalf of the Acquiring Fund represents, warrants and covenants to the Acquired
Fund and Cullen Trust, which representations, warranties and covenants will be
true and correct on the date hereof and on the Closing Date as though made on
and as of the Closing Date, as follows:
(a) The Acquiring Trust is a Delaware statutory trust duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Acquiring Fund is a duly established and designated series of the Acquiring
Trust and has the power to own all of its properties and assets and to perform
the obligations under this Agreement. The Acquiring Fund is not required to
qualify to do business in any jurisdiction in which it is not so qualified or
where failure to qualify would subject it to any material liability or
disability. The Acquiring Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted. The Acquiring Fund will have no issued or
outstanding shares prior to the Closing Date other than those issued to Pioneer
Investment Management, Inc. (or one of its affiliates) and will have no
investment operations prior to the Closing Date;
(b) The Acquiring Fund is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is and on
the Closing Date will be in full force and effect;
(c) The Acquiring Fund's registration statement on Form N-1A that
will be in effect on the Closing Date, and the prospectus and statement of
additional information of the Acquiring Fund included therein, will conform in
all material respects with the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations of the Commission
thereunder, and did not as of its date and will not as of the Closing Date
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
(d) The statement of assets and liabilities of the Acquiring Fund as
the Valuation Time to be delivered pursuant to Paragraph 5.8 of this Agreement
by the Acquiring Trust for the purpose of determining the number of Acquiring
Fund shares to be issued pursuant to Section 2.2 hereof will fairly and
accurately reflect the net assets of the Acquiring Fund and outstanding shares
of beneficial interest as of such date, in conformity with GAAP applied on such
date;
9
(e) At the Closing, the Acquiring Trust will have good and marketable
title to all of the securities and other assets shown on the statement of assets
and liabilities referred to in Paragraph 5.8 of this Agreement, free and clear
of all liens or encumbrances of any nature whatsoever except such imperfections
of title or encumbrances as do not materially detract from the value or use of
the assets subject thereto or materially affect title thereto;
(f) The Registration Statement, the Proxy Statement and statement of
additional information with respect to the Acquiring Fund and any amendments or
supplements thereto on or prior to the Closing Date included in the Registration
Statement (other than written information furnished by the Acquired Fund for
inclusion therein, as covered by the Acquired Fund's warranty in Paragraph
4.1(m) hereof) will conform in all material respects to the applicable
requirements of the Securities Act and the Investment Company Act and the rules
and regulations of the Commission thereunder. Neither the Registration Statement
nor the Proxy Statement (other than written information furnished by the
Acquired Fund for inclusion therein, as covered by the Acquired Fund's warranty
in Paragraph 4.1(m) hereof) includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(g) Neither the Acquiring Fund nor the Acquiring Trust is in
violation of, and the execution and delivery of this Agreement and performance
of its obligations under this Agreement will not result in a violation of, any
provisions of the Declaration or by-laws of the Acquiring Trust or any material
agreement, indenture, instrument, contract, lease or other undertaking with
respect to which the Acquiring Trust is a party or by which the Acquiring Fund
or any of its assets is bound;
(h) No litigation, administrative or other proceeding or
investigation of or before any court or governmental body is currently pending
or threatened against the Acquiring Fund or any of the Acquiring Fund's
properties or assets. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings. The Acquiring Fund is not a party
to or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially adversely affects the Acquiring Fund's
business or prospects or its ability to consummate the transactions contemplated
herein;
(i) The Acquiring Trust will elect to treat the Acquiring Fund as a
regulated investment company ("RIC") for federal income tax purposes under Part
I of Subchapter M of the Code. The Acquiring Fund currently complies in all
material respects with and since its organization has complied in all material
respects with the requirements of, and the rules and regulations under, the
Investment Company Act, the Securities Act, the Exchange Act, state "Blue Sky"
laws and all other applicable federal and state laws or regulations. The
Acquiring Fund currently complies in all material respects with, and since its
organization has complied in all material respects with, all investment
objectives, policies, guidelines and restrictions and any compliance procedures
established by the Acquiring Fund with respect to the Acquiring Fund. All
advertising and sales material used by the Acquired Fund complies in all
material respects with and has complied in all material respects with the
applicable requirements of the Securities Act, the Investment Company Act, the
rules and regulations of the Commission, and, to the extent applicable, the
Conduct Rules of the NASD and any applicable state regulatory authority. All
registration statements, prospectuses, reports, proxy materials or other filings
required to be made or filed with the Commission, the NASD or any state
securities authorities by the Acquiring Fund have been duly filed and have been
approved or declared effective, if such approval or declaration of effectiveness
is required by law. Such registration statements, prospectuses, reports, proxy
materials and other filings under the Securities Act, the Exchange Act and the
Investment Company Act (i) are or were in compliance in all material respects
with the requirements of all applicable statutes and the rules and regulations
thereunder and (ii) do not or did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not false or misleading;
(j) The authorized capital of the Acquiring Fund consists of an
unlimited number of shares of beneficial interest, no par value per share. On
the Closing Date, the Acquiring Fund will be authorized to issue an unlimited
number of shares of beneficial interest, no par value per share, which will be
divided into Class A, B, C, Y and R shares, each having the characteristics
described in the Acquiring Fund's prospectuses. The Acquiring Fund Shares to be
issued and delivered to the Acquired Fund for the account of the Acquired Fund
Shareholders pursuant to the terms of this Agreement, will have been duly
authorized on the Closing Date and, when so issued and delivered, will be duly
and validly issued, fully paid and non-assessable, and have full voting rights
and be freely transferable. No shareholders of the Acquiring Fund shall have any
statutory or constructive preemptive rights of subscription or purchase in
respect thereto. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Fund Shares,
nor is there outstanding any security convertible into any of the Acquiring Fund
Shares;
10
(k) The Acquiring Fund has the power and authority, trust and
otherwise, to enter into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by the Acquiring Fund has
been duly authorized by all necessary action on the part of the Acquiring Fund
and its Board of Trustees, and, assuming due authorization, execution and
delivery by the Acquired Fund, this Agreement will constitute a valid and
binding obligation of the Acquiring Fund, enforceable in accordance with its
terms, subject as to enforcement, to the effect of bankruptcy, insolvency,
reorganization, moratorium and other laws of general application relating to or
affecting creditors' rights and to general equity principles;
(l) The information to be furnished by the Acquiring Fund or the
Acquiring Fund Adviser for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete in all material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto or the
requirements of any form for which its use is intended, and shall not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading;
(m) No consent, approval, authorization or order of or filing with
any court or governmental authority or any other person is required for the
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement by the Acquiring Fund, except for the registration of the
Acquiring Fund Shares under the Securities Act and the Investment Company Act;
(n) Neither the Acquiring Fund nor, to the knowledge of the Acquiring
Fund, any "affiliated person" of the Acquiring Fund has been convicted of any
felony or misdemeanor, described in Section 9(a)(1) of the Investment Company
Act, nor, to the knowledge of the Acquiring Fund, has any affiliated person of
the Acquiring Fund been the subject, or presently is the subject, of any
proceeding or investigation with respect to any disqualification that would be a
basis for denial, suspension or revocation of registration as an investment
adviser under Section 203(e) of the Investment Advisers Act or Rule 206(4)-4(b)
thereunder or of a broker-dealer under Section 15 of the Exchange Act, or for
disqualification as an investment adviser, employee, officer or director of an
investment company under Section 9 of the Investment Company Act; and
(o) The Acquiring Fund Tax Representation Certificate to be delivered
by the Acquiring Trust on behalf of the Acquiring Fund to Cullen Trust and
Acquired Fund and Wilmer Cutler Pickering Hale and Dorr LLP at Closing pursuant
to Section 6.3 (the "ACQUIRING FUND TAX REPRESENTATION CERTIFICATE") will not on
the Closing Date contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading.
5. COVENANTS OF EACH OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquired Fund will operate the Acquired Fund's business in the
ordinary course as presently conducted between the date hereof and the Closing
Date. It is understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions and any other
dividends and distributions necessary or advisable (except to the extent
dividends or distributions that are not customary may be limited by
representations made in connection with the issuance of the tax opinion
described in Paragraph 8.5 hereof), in each case payable either in cash or in
additional shares.
5.2 Cullen Trust will call a special meeting of Acquired Fund Shareholders
to consider approval of this Agreement and act upon the matters set forth in the
Proxy Statement.
11
5.3 The Acquiring Fund will prepare the notice of meeting, form of proxy
and Proxy Statement (collectively, "PROXY MATERIALS") to be used in connection
with such meeting, such Proxy Materials to be satisfactory to Cullen Trust and
shall comply materially with the requirements of the Securities Act, the
Exchange Act and the Investment Company Act. The Acquiring Trust will promptly
prepare and file with the Commission the Registration Statement on Form N-14
relating to the Reorganization. At the time such Registration Statement becomes
effective, it (i) will comply in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and the Investment Company
Act and the rules and regulations promulgated thereunder; and (ii) will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. At the time the Registration Statement becomes effective, the
prospectus and statement of additional information included in the Registration
Statement will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Cullen Trust will
provide the Acquiring Fund with information reasonably necessary for the
preparation of the Registration Statement in compliance with the Securities Act,
the Exchange Act, and the Investment Company Act.
5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.5 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requires concerning the beneficial
ownership of the Acquired Fund's shares.
5.6 Subject to the provisions of this Agreement, each of the Acquired Fund
and the Acquiring Fund will take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
5.7 The Acquired Fund shall furnish to the Acquiring Fund on the Closing
Date the Statement of Assets and Liabilities of the Acquired Fund as of the
Closing Date setting forth the NAV of the Acquired Assets as of the Valuation
Time, which statement shall be prepared in accordance with GAAP consistently
applied and certified by Cullen Trust's chief financial officer. As promptly as
practicable, but in any case within 30 days after the Closing Date, Cullen Trust
shall furnish to the Acquiring Fund, in such form as is reasonably satisfactory
to the Acquiring Fund, a statement of the earnings and profits of the Acquired
Fund for federal income tax purposes, and of any capital loss carryovers and
other items that will be carried over to the Acquiring Fund under the Code, and
which statement will be certified by the chief financial officer of Cullen
Trust.
5.8 The Acquiring Fund shall furnish to the Acquired Fund on the Closing
Date the statement of assets and liabilities of the Acquiring Fund as of the
Valuation Time to be used for purposes of determining the number of Acquiring
Fund Shares to be issued pursuant to Section 2.2 hereof, which statement shall
be prepared in accordance with GAAP consistently applied and certified by the
Treasurer of the Acquiring Trust.
5.9 Neither the Acquired Fund nor the Acquiring Fund shall take any action
that is inconsistent with the representations set forth in, with respect to the
Acquired Fund, the Acquired Fund Tax Representation Certificate, and with
respect to the Acquiring Fund, the Acquiring Fund Tax Representation
Certificate.
5.10 Cullen Trust shall maintain errors and omissions insurance covering
management of the Acquired Fund prior to and including the Closing Date.
5.11 From and after the date of this Agreement and until the Closing Date,
each of the Funds, the Acquiring Trust and Cullen Trust shall use its
commercially reasonable efforts to cause the Reorganization to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken which action or failure to act
could prevent the Reorganization from qualifying as a reorganization under the
provisions of Section 368(a) of the Code. The parties hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the income tax regulations promulgated under the
Code. Unless otherwise required pursuant to a "determination" within the meaning
of Section 1313(a) of the Code, the parties hereto shall treat and report the
transactions contemplated hereby as a reorganization within the meaning of
Section 368(a)(1)(F) of the Code, and shall not take any position inconsistent
with such treatment.
12
5.12 From and after the date of this Agreement and through the time of the
Closing on the Closing Date, the Acquired Fund shall use its commercially
reasonable efforts to cause the Acquired Fund to qualify, and will not knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken which action or failure to act could prevent the
Acquired Fund from qualifying as a RIC under the provisions of Subchapter M of
the Code.
5.13 The Acquiring Trust shall used its commercially reasonable efforts to
cause the Acquiring Fund, when organized, to qualify, and will not knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken which action or failure to act could prevent the
Acquiring Fund from qualifying as a RIC.
5.14 The Acquired Fund shall prepare, or cause to be prepared all Tax
Returns of the Acquired Fund for taxable periods that end on or before the
Closing Date and shall timely file, or cause to be timely filed, all such Tax
Returns. The Acquired Fund shall pay or provide adequate liability reserves for
payment of Taxes with respect to any such Tax Returns.
5.15 The Acquiring Trust shall cause the Acquiring Fund Shares to be issued
pursuant to this Agreement to be eligible for offering to the public in those
states of the United States and jurisdictions in which the shares of the
Acquired Fund are presently eligible for offering.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions provided for
herein shall be, at its election, subject to the performance by the Acquiring
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date, and, in addition thereto, the following further conditions, unless
waived by the Acquired Fund in writing:
6.1 All representations and warranties by the Acquiring Trust on behalf of
the Acquiring Fund contained in this Agreement shall be true and correct as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date and the Acquiring Trust and
Acquiring Fund shall have performed all obligations required by this Agreement
to be performed at or prior to the Closing;
6.2 The Acquiring Trust on behalf of the Acquiring Fund shall have
delivered to the Acquired Fund a certificate executed in its name by the
Acquiring Trust's President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquired Fund and dated as
of the Closing Date, to the effect that the representations and warranties of
the Acquiring Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, that each of the conditions to closing in this Paragraph 6 have
been met, and as to such other matters as the Acquired Fund shall reasonably
request (it being agreed that such certificate is provided to confirm the
representations and warranties as of the Closing Date and shall not be a source
of liability, separate from this Agreement, to the Acquired Fund);
6.3 The Acquiring Fund shall have delivered to the Acquired Fund and
Wilmer Cutler Pickering Hale and Dorr LLP an Acquiring Fund Tax Representation
Certificate satisfactory to the Acquired Fund and Wilmer Cutler Pickering Hale
and Dorr LLP substantially in the form attached to this Agreement as ANNEX A,
concerning certain tax-related matters with respect to the Acquiring Fund; and
6.4 The Acquired Fund shall have received at the Closing a favorable
opinion of counsel, who may be an employee or officer of Pioneer Investment
Management, Inc. (based upon or subject to such representations, assumptions and
limitations as such counsel may deem appropriate or necessary), dated as of the
Closing Date, in a form reasonably satisfactory to Acquired Fund, including,
without limitation, opinions substantially to the effect that (a) the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders pursuant to this
Agreement are duly registered under the Securities Act on the appropriate form,
and are duly authorized and upon such issuance will be validly issued and
outstanding and fully paid and non-assessable, and no shareholder of the
Acquiring Fund has any preemptive rights to subscription or purchase in respect
thereof, and (b) the Registration Statement has become effective with the
Commission and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or threatened.
13
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions provided for
herein shall be, at its election, subject to the performance by Cullen Trust and
Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Fund in writing:
7.1 All representations and warranties of the Acquired Fund contained in
this Agreement by or on behalf of Cullen Trust and Acquired Fund shall be true
and correct as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 Cullen Trust shall have delivered to the Acquiring Fund the Statement
of Assets and Liabilities of the Acquired Fund pursuant to Paragraph 5.7,
together with a list of its portfolio securities showing the federal income tax
bases and holding periods of such securities, as of the Closing Date, certified
by Cullen Trust's chief financial officer;
7.3 The Acquired Trust on behalf of the Acquired Fund, shall have
delivered to the Acquiring Fund on the Closing Date a certificate of Cullen
Trust on behalf of the Acquired Fund by its President or Secretary and a chief
financial officer, in form and substance reasonably satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Fund contained in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Acquiring Fund shall reasonably request (it being agreed that
such certificate is provided to confirm the representations and warranties as of
the Closing Date and shall not be a source of liability separate from this
Agreement, to the Acquiring Fund.)
7.4 The Acquired Fund shall have delivered to the Acquiring Fund and
Wilmer Cutler an Acquired Fund Tax Representation Certificate satisfactory to
the Acquiring Fund and Wilmer Cutler Pickering Hale and Dorr LLP substantially
in the form attached to this Agreement as ANNEX B, concerning certain
tax-related matters with respect to the Acquired Fund;
7.5 The Acquiring Fund shall have received at the Closing a favorable
opinion of counsel, dated as of the Closing Date, in a form reasonably
satisfactory to Acquiring Fund, including, without limitation, opinions
substantially to the effect that this Agreement has been duly authorized,
executed and delivered by Cullen Trust, on behalf of the Acquired Fund, and
constitutes a valid and legally binding obligation of Cullen Trust, on behalf of
the Acquired Fund; and
7.6 With respect to the Acquired Fund, the Board of Trustees of Cullen
Trust shall have determined that the Reorganization is in the best interests of
the Acquired Fund and that the interests of the existing the Acquired Fund
Shareholders would not be diluted as a result of the Reorganization.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before the Closing
Date with respect to either party hereto, the other party to this Agreement
shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Acquired Fund Shareholders in accordance
with the provisions of the Cullen Trust's Declaration of Trust and By-Laws and
the Investment Company Act and the rules and regulations thereunder, and
certified copies of the resolutions evidencing such approval by the Acquired
Fund's shareholders shall have been delivered by the Acquired Fund to the
Acquiring Fund. Notwithstanding anything herein to the contrary, neither party
hereto may waive the conditions set forth in this Paragraph 8.1;
14
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein or that would
materially and adversely affect the financial condition or business of the other
party;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained and
be in full force and effect, except where failure to obtain any such consent,
order or permit would not involve a risk of a material adverse effect on the
assets or properties of either party hereto, provided that either party may
waive any such conditions for itself;
8.4 Each of the Acquiring Fund's Registration Statement on Form N-14 and
the Registration Statement on Form N-1A (and reflecting the Acquiring Fund as
the accounting successor of the Acquired Fund) shall have become effective under
the Securities Act and no stop orders suspending the effectiveness of either of
such Registration Statements shall have been issued and, to the best knowledge
of the parties hereto, no investigation or proceeding for that purpose shall
have been instituted or be pending, threatened or contemplated under the
Securities Act;
8.5 The parties shall have received an opinion of Wilmer Cutler,
satisfactory to the Acquired Fund and the Acquiring Fund and subject to
customary assumptions and qualifications, substantially to the effect that for
federal income tax purposes the acquisition by the Acquiring Fund of the
Acquired Assets solely in exchange for the issuance of Acquiring Fund Shares to
the Acquired Fund and the assumption of the Assumed Liabilities by the Acquiring
Fund, followed by the distribution by the Acquired Fund, in liquidation of the
Acquired Fund, of Acquiring Fund Shares to the Acquired Fund Shareholders in
exchange for their shares of beneficial interest of the Acquired Fund and the
termination of the Acquired Fund, will constitute a "reorganization" within the
meaning of Section 368(a) of the Code.
9. BROKERAGE FEES AND EXPENSES
9.1 Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2 The parties have been informed in writing by Pioneer Investment
Management, Inc. that it will pay for the expenses and costs of the Funds
associated with the preparation, printing and mailing of any and all shareholder
notices, communications, proxy statements, and necessary filings with the
Securities and Exchange Commission or any other governmental authority in
connection with the reorganization; provided that Pioneer Investment Management
will not be responsible for the costs and expenses associated with amending or
supplementing the Acquired Fund's registration statements or other Securities
and Exchange Commission filings. Such undertaking is attached as Schedule 9.
Except as set forth on Schedule 9, the Acquiring Fund and the Acquired Fund
shall each bear its own expenses in connection with the transactions
contemplated by this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund each agree that neither party
has made any representation, warranty or covenant not set forth herein or
referred to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes
the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall expire with and be terminated by consummation of the Transaction and
neither Cullen Trust nor the Acquiring Trust nor any of their respective
officers, directors, trustees, agents or shareholder shall have any liability
with respect to such representations and warranties after the Closing.
Notwithstanding any other provision of this Agreement to the contrary, neither
the Cullen Trust nor the Acquired Fund nor any of the trustees, officers or
agents thereof shall have any liability for any damages that result from, arise
out of or are connected with any breach of any representation or warranty of the
Cullen Trust made in Paragraph 4.1 of this Agreement. Notwithstanding any other
provision of this Agreement to the contrary, neither the Acquiring Trust nor the
Acquiring Fund nor any of the trustees, officers or agents thereof shall have
any liability for any damages that result from, arise out of or are connected
with any breach of any representation or warranty of the Acquiring Trust made in
Paragraph 4.2 of this Agreement.
15
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Acquired Fund. In addition, either party may at its
option terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or prior to
the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which reasonably
appears will not or cannot be met;
(c) by resolution of the Acquiring Fund's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquiring Fund's
shareholders;
(d) by resolution of Cullen Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquired Fund
Shareholders;
(e) if the transactions contemplated by this Agreement shall not have
occurred on or prior to ____________ , 2005 or such other date as the parties
may mutually agree upon in writing; or
(f) if the Sub-Advisory Agreement by and between Pioneer Investment
Management, Inc. and Cullen Capital Management LLC has not been approved in
accordance with Section 15 of the Investment Company Act and executed or is
otherwise not in full force and effect on the Closing Date.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Fund, the Acquiring Trust, Cullen Trust or
the Acquired Fund, or the Trustees, officers, agents or shareholders of Cullen
Trust, Cullen Trust, but, subject to Paragraph 9.2, each party shall bear the
expenses incurred by it incidental to the preparation and carrying out of this
Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of Cullen Trust and
the Acquiring Trust; provided, however, that following the meeting of the
Acquired Fund Shareholders called by Cullen Trust pursuant to Paragraph 5.2 of
this Agreement, no such amendment may have the effect of changing the provisions
regarding the method for determining the number of Acquiring Fund Shares to be
received by the Acquired Fund Shareholders under this Agreement to the detriment
of the Acquired Fund Shareholders without their further approval; provided that
nothing contained in this Section 12 shall be construed to prohibit the parties
from amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquired Fund, c/o Cullen Funds
Trust, 645 Fifth Avenue, The Olympic Tower 7th Floor, New York, New York 10022],
with copies to: Sidley Austin Brown & Wood LLP, 10 South Dearborn Street,
Chicago, Illinois 60603, Attention: Andrew Shaw, and the Acquiring Fund c/o
Pioneer Investment Management, Inc., 60 State Street, Boston, Massachusetts
02109, Attention: Dorothy E. Bourassa, Esq., with copies to Wilmer Cutler
Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,
Attention: David C. Phelan, Esq.
16
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the prior written consent of the other party hereto.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, or other entity, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Acquiring Trust and
Cullen Trust shall not be binding upon any of their respective directors,
trustees, shareholders, nominees, officers, agents or employees personally, but
bind only to the property of the Acquiring Fund or the Acquired Fund, as the
case may be, as provided in the trust instruments of the Acquiring Trust and the
Declaration of Trust of Cullen Trust, respectively. The execution and delivery
of this Agreement have been authorized by the Trustees of the Acquiring Trust
and the Trustees of Cullen Trust and this Agreement has been executed by
authorized officers of the Acquiring Fund and Cullen Trust, acting as such, and
neither such authorization by such Trustees nor such execution and delivery by
such officers shall be deemed to have been made by any of them individually or
to have imposed any liability on any of them personally, but shall bind only the
property of the Acquiring Fund and the Acquired Fund, as the case may be, as
provided in the trust instruments of the Acquiring Fund and the Declaration of
Trust of Cullen Trust, respectively.
17
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and attested by its Secretary or Assistant Secretary.
Attest: CULLEN FUNDS TRUST on behalf of
CULLEN VALUE FUND
By: By:
------------------------------- -------------------------------------
Name: Name:
Title: Title:
PIONEER SERVICE TRUST III on behalf of
Attest: PIONEER CULLEN VALUE FUND
By: By:
------------------------------- -------------------------------------
Name: Name:
Title: Title:
18
ANNEX A
TAX REPRESENTATION CERTIFICATE OF
PIONEER SERIES TRUST III ON BEHALF OF
PIONEER CULLEN VALUE FUND
This certificate is being delivered in connection with the transaction to be
effected pursuant to the Agreement and Plan of Reorganization (the "Agreement")
made as of February [ ], 2005 between Pioneer Series Trust III, a Delaware
statutory trust ("Acquiring Trust"), on behalf of its series Pioneer Cullen
Value Fund ("Acquiring Fund") and Cullen Funds Trust, a Delaware statutory
trust, on behalf of Cullen Value Fund ("Acquired Fund"). Pursuant to the
Agreement, Acquiring Fund will acquire all of the assets of Acquired Fund in
exchange solely for (i) the assumption by Acquiring Fund of the liabilities of
Acquired Fund (the "Acquired Fund Liabilities") and (ii) the issuance of shares
of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to
Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of
Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired
Fund and the termination of Acquired Fund (the foregoing together constituting
the "transaction").
The undersigned officer of Acquiring Trust, after consulting with its counsel,
auditors and tax advisers regarding the meaning of and factual support for the
following representations on behalf of Acquiring Fund, hereby certifies and
represents that the following statements are true, complete and correct and will
be true, complete and correct on the date of the transaction and thereafter as
relevant. Unless otherwise indicated, all capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Agreement.
1. Acquiring Trust is a statutory trust established under the laws of the
State of Delaware, and Acquiring Fund is, and has been at all times, treated as
a separate corporation for federal income tax purposes. Acquiring Fund was newly
organized solely for the purpose of effecting the transaction and continuing
thereafter to operate as a regulated investment company. Prior to the
transaction, Acquiring Fund did not and will not engage in any business
activities. There shall be no shares of Acquiring Fund issued and outstanding
prior to the Closing Date other than those issued to Pioneer Investment
Management, Inc. or one of its affiliates in connection with the creation of
Acquiring Fund.
2. Neither Acquiring Fund nor any person treated as related to Acquiring
Fund under Treasury Regulation Section 1.368-1(e)(3) nor any partnership of
which Acquiring Fund or any such related person is a partner has any plan or
intention to redeem or otherwise acquire any of the Acquiring Fund Shares
received by shareholders of Acquired Fund in the transaction except in the
ordinary course of Acquiring Fund's business in connection with its legal
obligation under Section 22(e) of the Investment Company Act of 1940, as amended
(the "1940 Act"), as a registered open-end investment company to redeem its own
shares.
3. After the transaction, Acquiring Fund will continue the historic
business (as defined in Treasury Regulation Section 1.368-1(d)(2)) of Acquired
Fund or will use a significant portion of the historic business assets (as
defined in Treasury Regulation Section 1.368-1(d)(3)) acquired from Acquired
Fund in the ordinary course of a business.
4. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any assets of Acquired Fund acquired in the transaction, except for
dispositions made in the ordinary course of its business or to maintain its
qualification as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended ("the "Code").
5. Any expenses of Acquired Fund incurred in connection with the
transaction which are paid or assumed by Acquiring Fund will be expenses of
Acquired Fund solely and directly related to the transaction in accordance with
Rev. Rul. 73-54, 1973-1 C.B. 187. Acquiring Fund will not pay or assume
expenses, if any, incurred by any Acquired Fund Shareholders in connection with
the transaction.
19
6. There is no, and never has been any, indebtedness between Acquiring
Fund and Acquired Fund.
7. Acquiring Fund will properly elect to be treated as a regulated
investment company under Subchapter M of the Code and will qualify for the
special tax treatment afforded regulated investment companies under Subchapter M
of the Code for all taxable years ending after the date of the transaction.
8. Acquiring Fund meets the requirements of a regulated investment
company in Section 368(a)(2)(F) of the Code.
9. Acquiring Fund is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Fund does not now own and has never owned, directly or
indirectly, any shares of Acquired Fund.
11. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund will be approximately equal to the fair market value of the assets
of Acquired Fund received by Acquiring Fund, minus the Acquired Fund Liabilities
assumed by Acquiring Fund. Acquiring Fund will not furnish any consideration in
connection with the acquisition of Acquired Fund's assets other than the
assumption of such Acquired Fund Liabilities and the issuance of such Acquiring
Fund Shares.
12. Immediately following the transaction, Acquired Fund Shareholders will
own all of the outstanding Acquiring Fund Shares other than those issued to
Pioneer Investment Management, Inc. or one of its affiliates in connection with
the creation of the Acquiring Fund, which will represent less than 1% of the
outstanding shares, and will own such shares solely by reason of their ownership
of the Acquired Fund Shares immediately prior to the transaction. Acquiring Fund
has no plan or intention to issue as part of the transaction any shares of
Acquiring Fund other than the Acquiring Fund Shares issued in exchange for
Acquired Fund assets.
13. The transaction is being undertaken for valid and substantive business
purposes, including facilitating the Acquired Fund becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
14. No Acquired Fund Shareholder is acting as agent for Acquiring Fund in
connection with the transaction or approval thereof. Acquiring Fund will not
reimburse any Acquired Fund Shareholder for Acquired Fund Shares such
shareholder may have purchased or for other obligations such shareholder may
have incurred.
15. Acquiring Fund has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in the Acquiring Fund.
* * * * *
20
The undersigned officer of Acquiring Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquiring Fund. The undersigned recognizes that
Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction and rendering its opinion pursuant to Section 8.5 of the
Agreement. If, prior to the date of the transaction, any of the representations
set forth herein ceases to be accurate, the undersigned agrees to deliver
immediately to Wilmer Cutler Pickering Hale and Dorr LLP a written notice to
that effect.
PIONEER SERIES TRUST III ON BEHALF OF
PIONEER CULLEN VALUE FUND
By:
-------------------------------------
Name:
-----------------------
Title:
-----------------------
Dated: February [ ], 2005
21
Annex B
TAX REPRESENTATION CERTIFICATE OF
CULLEN FUNDS TRUST
ON BEHALF OF CULLEN VALUE FUND
This certificate is being delivered in connection with the transaction to be
effected pursuant to the Agreement and Plan of Reorganization (the "Agreement")
made as of February [ ], 2005 between Pioneer Series Trust III, a Delaware
statutory trust on behalf of its series, Pioneer Cullen Value Fund ("Acquiring
Fund") and Cullen Funds Trust, a Delaware statutory trust ("Cullen Trust"), on
behalf of Cullen Value Fund ("Acquired Fund"). Pursuant to the Agreement,
Acquiring Fund will acquire all of the assets of Acquired Fund in exchange
solely for (i) the assumption by Acquiring Fund of the liabilities of Acquired
Fund (the "Acquired Fund Liabilities") and (ii) the issuance of shares of
beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to Acquired
Fund, followed by the distribution by Acquired Fund, in liquidation of Acquired
Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund and the
termination of Acquired Fund (the foregoing together constituting the
"transaction").
The undersigned officer of Cullen Trust, after consulting with its counsel,
auditors and tax advisers regarding the meaning of and factual support for the
following representations, on behalf of Acquired Fund, hereby certifies and
represents that the following statements are true, complete and correct and will
be true, complete and correct on the date of the transaction and thereafter as
relevant. Unless otherwise indicated, all capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Agreement.
1. Acquired Fund is a series of Cullen Funds Trust, a Delaware statutory
trust, and Acquired Fund is, and has been at all times, treated as a separate
corporation for federal income tax purposes.
2. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares received by each shareholder that holds shares of Acquired
Fund (the "ACQUIRED FUND SHARES") will be approximately equal to the fair market
value of the Acquired Fund Shares with respect to which such Acquiring Fund
Shares are received, and the aggregate consideration received by Acquired Fund
Shareholders in exchange for their Acquired Fund Shares will be approximately
equal to the fair market value of all of the outstanding Acquired Fund Shares
immediately prior to the transaction. No property other than Acquiring Fund
Shares will be distributed to shareholders of Acquired Fund in exchange for
their Acquired Fund Shares, nor will any such shareholder receive cash or other
property as part of the transaction.
3. Neither Acquired Fund nor any person "related" to Acquired Fund (as
defined in Treasury Regulation Section 1.368-1(e)(3)) nor any partnership in
which Acquired Fund or any such related person is a partner has redeemed,
acquired or otherwise made any distributions with respect to any shares of the
Acquired Fund as part of the transaction, or otherwise pursuant to a plan of
which the transaction is a part, other than redemptions and distributions made
in the ordinary course of Acquired Fund's business as an open-end investment
company. To the best knowledge of management of Acquired Fund, there is no plan
or intention on the part of shareholders of Acquired Fund to engage in any
transaction with Acquired Fund, the Acquiring Fund, or any person treated as
related to Acquired Fund or Acquiring Fund under Treasury Regulation Section
1.368-1(e)(3) or any partnership in which Acquired Fund, Acquiring Fund, or any
person treated as related to Acquired Fund or Acquiring Fund under Treasury
Regulation Section 1.368-1(e)(3) is a partner involving the sale, redemption or
exchange of any of the Acquired Fund Shares or any of the Acquiring Fund Shares
to be received in the transaction, as the case may be, other than in the
ordinary course of Acquired Fund's business as a series of an open-end
investment company.
4. In the transaction, Acquired Fund will transfer its assets and
Acquired Fund liabilities to Acquiring Fund such that immediately following the
transfer, Acquiring Fund will possess all of the same assets and liabilities as
were possessed by Acquired Fund immediately prior to the transaction, except for
assets used to pay expenses incurred in connection with the transaction and
assets distributed to shareholders in redemption of their shares immediately
preceding, or in contemplation of, the transaction (other than redemptions and
distributions made in the ordinary course of Acquired Fund's business as an
open-end investment company) which assets, constitute less than 1% of the net
assets of Acquired Fund.
22
5. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund will be approximately equal to the fair market value of the assets
of Acquired Fund received by Acquiring Fund, minus the Acquired Fund Liabilities
assumed by Acquiring Fund. Acquired Fund will not receive any consideration from
Acquiring Fund in connection with the acquisition of Acquired Fund's assets
other than the assumption of such Acquired Fund Liabilities and the issuance of
such Acquiring Fund Shares.
6. The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Fund in the ordinary course of its business. Acquired Fund does not
have any liabilities of any kind other than the Acquired Fund Liabilities
assumed by the Acquiring Fund.
7. As of the date of the transaction, the adjusted basis and the fair
market value of the Acquired Fund assets transferred to Acquiring Fund will
equal or exceed the sum of the Acquired Fund Liabilities assumed by Acquiring
Fund within the meaning of Section 357(d) of the Internal Revenue Code of 1986,
as amended (the "Code").
8. Acquired Fund currently conducts its historic business within the
meaning of Treasury Regulation Section 1.368-1(d)(2), which provides that, in
general, a corporation's historic business is the business it has conducted most
recently, but does not include a business that the corporation enters into as
part of a plan of reorganization. The Acquired Fund assets transferred to
Acquiring Fund will be Acquired Fund's historic business assets within the
meaning of Treasury Regulation Section 1.368-1(d)(3), which provides that a
corporation's historic business assets are the assets used in its historic
business.
9. Acquired Fund will distribute to its shareholders the Acquiring Fund
Shares it receives pursuant to the transaction, and its other properties, if
any, and will be liquidated promptly thereafter.
10. The expenses of Acquired Fund incurred by it in connection with the
transaction which are to be assumed by Acquiring Fund, if any, will be only such
expenses that are solely and directly related to the transaction in accordance
with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquired Fund will not pay any expenses
incurred by its shareholders in connection with the transaction.
11. There is no, and never has been any, indebtedness between Acquiring
Fund and Acquired Fund.
12. Acquired Fund has properly elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified for the special
tax treatment afforded regulated investment companies under Subchapter M of the
Code for each taxable year since inception, and qualifies as such as of the time
of the Closing on the Closing Date.
13. Acquired Fund meets the requirements of a regulated investment company
in Section 368(a)(2)(F) of the Code.
14. Acquired Fund is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. Acquired Fund does not pay compensation to any shareholder-employee.
16. Immediately following the transaction, Acquired Fund Shareholders will
own all of the outstanding Acquiring Fund Shares issued to Acquired Fund
pursuant to the transaction and will own such shares solely by reason of their
ownership of the Acquired Fund Shares immediately prior to the transaction.
17. Acquired Fund Shareholders will not have dissenters' or appraisal
rights in the transaction.
23
18. The transaction is being undertaken for valid and substantial business
purposes, including facilitating the Acquired Fund becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
19. Acquired Fund has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in the Acquired Fund.
* * * * *
24
The undersigned officer of Acquired Fund is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquired Fund. The undersigned recognizes that
Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction and rendering its opinion pursuant to Section 8.5 of the
Agreement. If, prior to the date of the transaction, any of the representations
set forth herein ceases to be accurate, the undersigned agrees to deliver
immediately to Wilmer Cutler Pickering Hale and Dorr LLP a written notice to
that effect.
CULLEN FUNDS TRUST, ON BEHALF OF
CULLEN VALUE FUND
By:
---------------------------------
Name:
------------------------
Title:
------------------------
Dated: February [ ], 2005
25
EXHIBIT B - PORTFOLIO MANAGER'S DISCUSSION OF FUND PERFORMANCE
CULLEN VALUE FUND
FUND PERFORMANCE
Date Cullen Value Fund S&P 500
---- ----------------- -------
7/1/2000 $10,000 $10,000
12/31/2000 $10,874 $ 9,130
6/30/2001 $11,366 $ 8,521
12/31/2001 $11,106 $ 8,049
6/30/2002 $11,994 $ 6,991
12/31/2002 $10,227 $ 6,274
6/30/2003 $11,389 $ 7,011
12/31/2003 $14,120 $ 8,071
6/30/2004 $14,150 $ 8,340
AVERAGE ANNUAL TOTAL RETURN
as of June 30, 2004
Since
One Three Inception
Year Year 7/01/00
------ ------- ---------
Cullen Value Fund 24.24% 7.58% 9.07%
S&P 500 19.11% (0.69%) (4.44%)
The Standard & Poor's 500 Stock Index (S&P 500) is a capital-weighted index,
representing the aggregate market value of the common equity of 500 stocks
primarily traded on the New York Stock Exchange.
This chart assumes an initial gross investment of $10,000 made on 7/01/00
(commencement of operations). Investment performance reflects fee waivers in
effect. In the absence of such waivers, total return would be reduced. Returns
shown include the reinvestment of all dividends. Past performance is not
predictive of future performance. Investment return and principal value will
fluctuate, so that your shares, when redeemed, may be worth more or less than
the original cost.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE; PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY
BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE
MOST RECENT MONTH END MAY BE OBTAINED BY VISITING WWW.CULLENFUNDS.COM.
34
August 5, 2004
Dear Shareholders,
So far this year, the market has been relatively flat as it digests the big
gains from last year. However, because stock prices have been relatively
unchanged and earnings have been sharply higher, the market is becoming more
attractive on a valuation basis. We believe that earnings will continue to grow,
even if at a slower rate, which should eventually lead to higher stock prices.
Regarding the election, historically a presidential election year has been a
good one for the market, although more often than not, most of the gains come at
the end of the year. History also shows that the anticipation of a change of
presidential party is often far worse than the change itself. For instance, in
the 1976 and 1992 elections when Democratic challengers beat Republican
incumbents, the market, after being flat all year, rose sharply higher once the
uncertainly of the election was over.
A new concern for investors is the fear of rising interest rates and higher
inflation. With inflation and interest rates near 50-year lows and with the
economy turning up, these fears seem justified. To address these concerns, we
did a study of the relationship between interest rates and the stock market over
the last 40 years.
The study shows that the market (as measured by the S&P 500) did only half as
well in the rising rate period (+7.5%) from 1968-1981, as it did in the falling
rate environment (+15.0%) from 1982-2004. However, in the rising rate period the
performance of the S&P 500 was doubled by the value (+17.8%) and high dividend
(15.0%) stocks.1<F1> The study concluded that a period of rising interest rates
and rising inflation was not necessarily bad for the market and tended to be a
good time for the relative performance of the high dividend and value stocks.
/s/ James P. Cullen
James P. Cullen
President
The above outlook reflects the opinions of James P. Cullen, President of Cullen
Funds Trust, and is subject to change, is not guaranteed and should not be
considered investment advice.
PAST DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE
RESULTS. MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE.
THE FUNDS INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
THE FUNDS MAY ALSO INVEST IN MEDIUM-CAPITALIZATION COMPANIES, WHICH WILL INVOLVE
ADDITIONAL RISKS SUCH AS LIMITED LIQUIDITY AND GREATER VOLATILITY.
35
PIONEER CULLEN VALUE FUND
(a series of Pioneer Series Trust III)
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
January 18, 2005
This Statement of Additional Information is not a Prospectus. It should be
read in conjunction with the related Prospectus/Proxy Statement (also dated
January 18, 2005), which covers Pioneer Cullen Value Fund, to be issued in
exchange for shares of Cullen Value Fund, a series of Cullen Funds Trust. Please
retain this Statement of Additional Information for further reference.
The Prospectus is available to you free of charge (please call
1-800-407-7298).
INTRODUCTION.................................................................................. 2
EXHIBITS...................................................................................... 2
ADDITIONAL INFORMATION ABOUT PIONEER CULLEN VALUE FUND........................................ 2
FUND HISTORY............................................................................ 2
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS........................................ 2
MANAGEMENT OF THE FUND.................................................................. 20
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..................................... 29
INVESTMENT ADVISORY AND OTHER SERVICES.................................................. 29
BROKERAGE ALLOCATION AND OTHER PRACTICES................................................ 32
CAPITAL STOCK AND OTHER SECURITIES...................................................... 33
PURCHASE, REDEMPTION AND PRICING OF SHARES.............................................. 35
TAXATION OF THE FUND.................................................................... 41
UNDERWRITERS............................................................................ 46
CALCULATION OF PERFORMANCE DATA......................................................... 50
FINANCIAL STATEMENTS.................................................................... 52
ANNUAL FEE, EXPENSE AND OTHER INFORMATION............................................... 52
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in the Prospectus/Proxy Statement dated January 18, 2005
(the "Statement") relating to the proposed reorganization of Cullen Value Fund,
into Pioneer Cullen Value Fund, and in connection with the solicitation by the
management of Cullen Value Fund of proxies to be voted at the Special Meeting of
Shareholders of Cullen Value Fund to be held on February 23, 2005.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference, unless
otherwise indicated. Shareholders will receive a copy of each document free of
charge that is incorporated by reference upon any request to receive a copy of
this Statement of Additional Information by calling the toll-free telephone
number 1-800-407-7298.
1. Cullen Value Fund's statement of additional information, dated October 28,
2004 (File No. 811-09871), as filed with the Securities and Exchange
Commission on October 28, 2004 (Accession No. 0000894189-04-002235) is
incorporated herein by reference.
2. Cullen Value Fund's Annual Report for the fiscal year ended June 30, 2004
(File No. 811-09871), as filed with the Securities and Exchange Commission
on September 7, 2004 (Accession No. 0000898531-04-000275) is incorporated
herein by reference.
ADDITIONAL INFORMATION ABOUT
PIONEER CULLEN VALUE FUND
FUND HISTORY
The fund is a diversified series of Pioneer Series Trust III (the "Trust"), an
open-end management investment company. The fund originally was established as
Cullen Value Fund, a series of Cullen Funds Trust, a Delaware statutory trust,
on March 25, 2000. Pursuant to an agreement and plan of reorganization, the fund
was reorganized as a series of Pioneer Series Trust III, a Delaware statutory
trust, on September 23, 2004.
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS
The prospectus presents the investment objectives and the principal investment
strategies and risks of the fund. This section supplements the disclosure in the
fund's prospectus and provides additional information on the fund's investment
policies or restrictions. Restrictions or policies stated as a maximum
percentage of the fund's assets are only applied immediately after a portfolio
investment to which the policy or restriction is applicable (other than the
limitations on borrowing and illiquid securities). Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether the investment
complies with the fund's restrictions and policies.
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 price of equity securities,
particularly common stocks, are sensitive to general movements in the stock
market. A drop in the stock market may depress the price of equity securities
held by the fund.
-2-
ILLIQUID SECURITIES
The fund will not invest more than 15% of its net assets in illiquid and other
securities that are not readily marketable. Repurchase agreements maturing in
more than seven days will be included for purposes of the foregoing limit.
Securities subject to restrictions on resale under the Securities Act of 1933,
as amended (the "1933 Act"), are considered illiquid unless they are eligible
for resale pursuant to Rule 144A or another exemption from the registration
requirements of the 1933 Act and are determined to be liquid by Pioneer
Investment Management, Inc. ("Pioneer"), the fund's investment adviser. 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.
INVESTMENTS IN INITIAL PUBLIC OFFERINGS
To the extent consistent with its investment objective, the fund may invest in
initial public offerings of equity securities. The market for such securities
may be more volatile and entail greater risk of loss than investments in more
established companies. Investments in initial public offerings may represent a
significant portion of the fund's investment performance. The fund cannot assure
that investments in initial public offerings will continue to be available to
the fund or, if available, will result in positive investment performance. In
addition, as the fund's portfolio grows in size, the impact of investments in
initial public offerings on the overall performance of the fund is likely to
decrease.
DEBT SECURITIES SELECTION
In selecting debt securities for the fund, Pioneer gives primary consideration
to the fund's investment objective, the attractiveness of the market for debt
securities given Pioneer's outlook for the equity markets and the fund's
liquidity requirements. Once Pioneer determines to allocate a portion of the
fund's assets to debt securities, Pioneer generally focuses on short-term
instruments to provide liquidity and may invest in a range of fixed income
securities if the fund is investing in such instruments for income or capital
gains. Pioneer selects individual securities based on broad economic factors and
issuer specific factors including the terms of the securities (such as yields
compared to U.S. Treasuries or comparable issues), liquidity and rating, sector
and issuer diversification.
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 of or owned by the issuer. 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.
DEBT SECURITIES RATING CRITERIA
Investment grade debt securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("Standard & Poor's") or the equivalent rating of other
nationally recognized 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. If the rating of an
investment grade debt security falls below investment grade, Pioneer will
consider if any action is appropriate in light of the fund's investment
objectives and policies.
-3-
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 "C" or better.
Below investment grade debt securities or comparable unrated securities are
commonly referred to as "junk bonds" and are considered predominantly
speculative and may be questionable as to principal and interest payments.
Changes in economic conditions are more likely to lead to a weakened capacity to
make principal payments and interest payments. The amount of high yield
securities outstanding has proliferated as an increasing number of issuers have
used high yield securities for corporate financing. An economic downturn could
severely affect the ability of highly leveraged issuers to service their debt
obligations or to repay their obligations upon maturity. Factors having an
adverse impact on the market value of lower quality securities will have an
adverse effect on the fund's net asset value to the extent that it invests in
such securities. In addition, the fund may incur additional expenses to the
extent it is required to seek recovery upon a default in payment of principal or
interest on its portfolio holdings.
The secondary market for high yield securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an
adverse effect on the fund's ability to dispose of a particular security when
necessary to meet its liquidity needs. Under adverse market or economic
conditions, the secondary market for high yield securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the fund could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower than
if such securities were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these circumstances, may be less than
the prices used in calculating the fund's net asset value.
Since investors generally perceive that there are greater risks associated with
lower quality debt securities of the type in which the fund may invest a portion
of its assets, the yields and prices of such securities may tend to fluctuate
more than those for higher rated securities. In the lower quality segments of
the debt securities market, changes in perceptions of issuers' creditworthiness
tend to occur more frequently and in a more pronounced manner than do changes in
higher quality segments of the debt securities market, resulting in greater
yield and price volatility.
Lower rated and comparable unrated debt securities tend to offer higher yields
than higher rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers. However, lower rated securities generally
involve greater risks of loss of income and principal than higher rated
securities. Pioneer will attempt to reduce these risks through portfolio
diversification and by analysis of each issuer and its ability to make timely
payments of income and principal, as well as broad economic trends and corporate
developments.
U.S. GOVERNMENT SECURITIES
U.S. government securities in which the fund invests include debt obligations of
varying maturities issued by the U.S. Treasury or issued or guaranteed by an
agency or instrumentality of the U.S. government, including the Federal Housing
Administration, Federal Financing Bank, Farmers Home Administration,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association ("GNMA"), General Services Administration, Central
Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Student Loan Marketing Association,
Resolution Trust Corporation and various institutions that previously were or
currently are part of the Farm Credit System (which has been undergoing
reorganization since 1987). Some U.S. government securities, such as U.S.
Treasury bills, Treasury notes and Treasury bonds, which differ only in their
interest rates, maturities and times of issuance, are supported by the full
faith and credit of the United States. Others are supported by: (i) the right of
the issuer to borrow from the U.S. Treasury, such as securities of the Federal
Home Loan Banks; (ii) the discretionary authority of the U.S. government to
purchase the agency's obligations, such as securities of the FNMA; or (iii) only
the credit of the issuer. No assurance can be given that the U.S. government
will provide financial support in the future to U.S. government agencies,
authorities or
-4-
instrumentalities that are not supported by the full faith and credit of the
United States. Securities guaranteed as to principal and interest by the U.S.
government, its agencies, authorities or instrumentalities include: (i)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to non-U.S. governments or other entities that are so guaranteed. The
secondary market for certain of these participations is limited and, therefore,
may be regarded as illiquid.
U.S. government securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity. Zero
coupon U.S. government securities are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. government securities do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but generally require a higher rate of return to attract
investors who are willing to defer receipt of cash. These investments may
experience greater volatility in market value than U.S. government securities
that make regular payments of interest. The fund accrues income on these
investments for tax and accounting purposes, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the fund's
distribution obligations, in which case the fund will forego the purchase of
additional income producing assets with these funds. Zero coupon U.S. government
securities include STRIPS and CUBES, which are issued by the U.S. Treasury as
component parts of U.S. Treasury bonds and represent scheduled interest and
principal payments on the bonds.
DEBT OBLIGATIONS OF NON-U.S. GOVERNMENTS
The fund may invest in debt obligations of foreign governments. An investment in
debt obligations of foreign governments and their political subdivisions
(sovereign debt) involves special risks which are not present when investing in
corporate debt obligations. The foreign issuer of the sovereign debt or the
foreign governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due, and the fund may
have limited recourse in the event of a default. During periods of economic
uncertainty, the market prices of sovereign debt may be more volatile than
prices of U.S. debt issues. In the past, certain foreign countries have
encountered difficulties in servicing their debt obligations, withheld payments
of principal and interest and declared moratoria on the payment of principal and
interest on their sovereign debt.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign currency reserves, the availability of
sufficient foreign exchange, the relative size of the debt service burden, the
sovereign debtor's policy toward principal international lenders and local
political constraints. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
to reduce principal and interest arrearages on their debt. The failure of a
sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of third-party commitments to lend funds to the sovereign debtor,
which may further impair such debtor's ability or willingness to service its
debts.
-5-
OTHER ELIGIBLE 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; and (d) fixed income securities of corporate issuers.
These securities may be denominated in any currency and, excluding the fund's
permissible investments in below investment grade debt and convertible debt
securities, will be rated, at the time of investment, Prime-1, Baa or better by
Moody's Investors Service, Inc. ("Moody's"), or A-1, BBB or better by Standard &
Poor's or determined by Pioneer to be of equivalent credit quality. During
normal market conditions, the fund will only invest in the foregoing short-term
investments for cash management purposes to an extent consistent with the fund's
investment objective. When the fund adopts a defensive strategy due to adverse
market, economic or other such conditions, the fund may not be able to achieve
its investment objective.
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 fund's
portfolio securities are quoted or denominated, exchange control regulations and
costs associated with currency exchange. The political and economic structures
in certain countries, particularly emerging markets, are expected to undergo
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of more developed
countries. Unanticipated political or social developments may affect the values
of the fund's investments in such countries. The economies and securities and
currency markets of many emerging markets have experienced significant
disruption and declines. There can be no assurances that these economic and
market disruptions might not occur again.
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 MSCI Emerging Markets Free 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, including securities of emerging market issuers.
NON-U.S. SECURITIES MARKETS AND REGULATIONS. There may be less publicly
available information about non-U.S. markets and issuers than is available with
respect to U.S. securities and issuers. Non-U.S. companies generally are not
subject to accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The trading
markets for most non-U.S. securities are generally less liquid and subject to
greater price volatility than the markets for comparable securities in the U.S.
The markets for securities in certain emerging markets are in the earliest
stages of their development. Even the markets for relatively widely traded
securities in certain non-U.S. markets, including emerging market countries, may
not be able to absorb, without price disruptions, a significant increase in
trading volume or trades of a size customarily undertaken by institutional
investors in the U.S. Additionally, market making and arbitrage activities are
generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity. The less liquid a market, the more difficult
it may be for the fund to price its portfolio securities accurately or to
dispose of such securities at the times determined by Pioneer to be appropriate.
The risks associated with reduced liquidity may be particularly
-6-
acute in situations in which the fund's operations require cash, such as in
order to meet redemptions and to pay its expenses.
ECONOMIC, POLITICAL AND SOCIAL FACTORS. Certain countries, including emerging
markets, may be subject to a greater degree of economic, political and social
instability than is the case in the U.S. and Western European countries. Such
instability may result from, among other things: (i) authoritarian governments
or military involvement in political and economic decision making; (ii) popular
unrest associated with demands for improved economic, political and social
conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious and racial disaffection and conflict. Such
economic, political and social instability could significantly disrupt the
financial markets in such countries and the ability of the issuers in such
countries to repay their obligations. Investing in emerging market countries
also involves the risk of expropriation, nationalization, confiscation of assets
and property or the imposition of restrictions on foreign investments and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation in any emerging country, the fund could
lose its entire investment in that country.
Certain emerging market countries restrict or control foreign investment in
their securities markets to varying degrees. These restrictions may limit the
fund's investment in those markets and may increase the expenses of the fund. In
addition, the repatriation of both investment income and capital from certain
markets in the region is subject to restrictions such as the need for certain
governmental consents. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the fund's operation.
Economies in individual countries may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Many countries have experienced substantial,
and in some cases extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had, and may continue to have,
very negative effects on the economies and securities markets of certain
emerging countries.
Unanticipated political or social developments may also affect the values of the
fund's investments and the availability to the fund of additional investments in
such countries. In the past, the economies and securities and currency markets
of many emerging markets have experienced significant disruption and declines.
There can be no assurances that these economic and market disruptions might not
occur again.
Economies in emerging market countries generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been, and may
continue to be, affected adversely by economic conditions in the countries with
which they trade.
CURRENCY RISKS. The value of the securities quoted or denominated in 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
-7-
fund. In addition, custodial, security settlement and clearance procedures in
some emerging countries may not fully protect the fund against loss or theft of
its assets.
WITHHOLDING AND OTHER TAXES. The fund will be subject to taxes, including
withholding taxes, on income (possibly including, in some cases, capital gains)
that are or may be imposed by certain countries with respect to the fund's
investments in such countries. These taxes will reduce the return achieved by
the fund. Treaties between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.
INVESTMENTS IN DEPOSITARY RECEIPTS
The fund may hold securities of non-U.S. issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("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.
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, 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.
REAL ESTATE INVESTMENT TRUSTS ("REITS") AND ASSOCIATED RISK FACTORS
REITs are companies which invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. REITs are not taxed on income
distributed to shareholders provided they comply with the applicable
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). In
some cases, the fund will indirectly bear its proportionate share of any
management and other expenses paid by REITs in which it invests in addition to
the expenses paid by the fund. Debt securities issued by REITs are, for the most
part, general and unsecured obligations and are subject to risks associated with
REITs.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. An equity REIT
may be affected by changes in the value of the underlying properties owned by
the REIT. A mortgage REIT may be affected by changes in interest rates and the
ability of the issuers of its portfolio mortgages to repay their obligations.
REITs are dependent upon the skills of their managers and are not diversified.
REITs are generally dependent upon maintaining cash flows to repay borrowings
and to make distributions to shareholders and are subject to the risk of default
by lessees or borrowers. REITs whose underlying assets are concentrated in
properties used by a particular industry, such as health care, are also subject
to risks associated with such industry.
-8-
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 and may trade less frequently and in
a more limited volume 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.
OTHER INVESTMENT COMPANIES
The fund may invest in the securities of other investment companies to the
extent that such investments are consistent with the fund's investment objective
and policies and permissible under the Investment Company Act of 1940, as
amended (the "1940 Act"). Under the 1940 Act, the fund may not acquire the
securities of other domestic or non-U.S. investment companies if, as a result,
(i) more than 10% of the fund's total assets would be invested in securities of
other investment companies, (ii) such purchase would result in more than 3% of
the total outstanding voting securities of any one investment company being held
by the fund, or (iii) more than 5% of the fund's total assets would be invested
in any one investment company. These limitations do not apply to the purchase of
shares of any investment company in connection with a merger, consolidation,
reorganization or acquisition of substantially all the assets of another
investment company. The fund may invest in money market funds managed by Pioneer
in reliance on an exemptive order granted by the Securities and Exchange
Commission (the "SEC").
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
Subject to the limitations on investment in other investment companies, the fund
may invest in exchange traded funds (ETFs). ETFs, such as SPDRs, NASDAQ 100
Index Trading Stock (QQQs), iShares and various country index funds, are funds
whose shares are traded on a national exchange or the National Association of
Securities Dealers' Automatic 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.
REPURCHASE AGREEMENTS
The fund may enter into repurchase agreements with broker-dealers, member banks
of the Federal Reserve System and other financial institutions. Repurchase
agreements are arrangements under which the fund purchases securities and the
seller agrees to repurchase the securities within a specific time and at a
specific price. The repurchase price is generally higher than the fund's
purchase price, with the difference being income to the fund. Under the
direction of the Board of Trustees, Pioneer reviews and monitors the
creditworthiness of any institution which enters into a repurchase agreement
with the fund. The
-9-
counterparty's obligations under the repurchase agreement are collateralized
with U.S. Treasury and/or agency obligations with a market value of not less
than 100% of the obligations, valued daily. Collateral is held by the fund's
custodian in a segregated, safekeeping account for the benefit of the fund.
Repurchase agreements afford the fund an opportunity to earn income on
temporarily available cash at low risk. In the event of commencement of
bankruptcy or insolvency proceedings with respect to the seller of the security
before repurchase of the security under a repurchase agreement, the fund may
encounter delay and incur costs before being able to sell the security. Such a
delay may involve loss of interest or a decline in price of the security. If the
court characterizes the transaction as a loan and the fund has not perfected a
security interest in the security, the fund may be required to return the
security to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, the fund would be at risk of losing some or
all of the principal and interest involved in the transaction.
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.
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 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 certain tax consequences of
effecting short sales may limit the extent to which the fund may make short
sales against the box.
ASSET SEGREGATION
The 1940 Act requires that the fund segregate assets in connection with certain
types of transactions that may have the effect of leveraging the fund's
portfolio. If the fund enters into a transaction requiring segregation, such as
a forward commitment, the custodian or Pioneer will segregate liquid assets in
an amount required to comply with the 1940 Act. Such segregated assets will be
valued at market daily. If the aggregate value of such segregated assets
declines below the aggregate value required to satisfy the 1940 Act, additional
liquid assets will be segregated.
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. The fund's obligations with respect to when-issued and delayed
delivery transactions will be fully collateralized by segregating liquid assets
with a value equal to the fund's obligations. See "Asset Segregation."
PORTFOLIO TURNOVER
-10-
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. The fund's annual portfolio
turnover rate may exceed 100%. A high rate of portfolio turnover (100% or more)
involves correspondingly greater transaction costs which must be borne by the
fund and its shareholders.
FOREIGN CURRENCY TRANSACTIONS
The fund may engage in foreign currency transactions. These transactions may be
conducted at the prevailing spot rate for purchasing or selling currency in the
foreign exchange market. The fund also has authority to enter into forward
foreign currency exchange contracts involving currencies of the different
countries in which the fund invests as a hedge against possible variations in
the foreign exchange rates between these currencies and the U.S. dollar. This is
accomplished through contractual agreements to purchase or sell a specified
currency at a specified future date and price set at the time of the contract.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the fund, accrued
in connection with the purchase and sale of its portfolio securities quoted in
foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in such
foreign currencies. There is no guarantee that the fund will be engaged in
hedging activities when adverse exchange rate movements occur. The fund will not
attempt to hedge all of its foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by Pioneer.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the fund to hedge against a devaluation that is so generally
anticipated that the fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The cost to the fund of engaging in foreign currency transactions varies with
such factors as the currency involved, the size of the contract, the length of
the contract period, differences in interest rates between the two currencies
and the market conditions then prevailing. Since transactions in foreign
currency and forward contracts are usually conducted on a principal basis, no
fees or commissions are involved. The fund may close out a forward position in a
currency by selling the forward contract or by entering into an offsetting
forward contract.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. Using forward contracts to
protect the value of the fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which the fund can
achieve at some future point in time. The precise projection of short-term
currency market movements is not possible, and short-term hedging provides a
means of fixing the U.S. dollar value of only a portion of the fund's foreign
assets.
While the fund will enter into forward contracts to reduce currency exchange
rate risks, transactions in such contracts involve certain other risks. While
the fund may benefit from such transactions, unanticipated changes in currency
prices may result in a poorer overall performance for the fund than if it had
not engaged in any such transactions. Moreover, there may be imperfect
correlation between the fund's portfolio holdings of securities quoted or
denominated in a particular currency and forward contracts entered into by the
fund. Such imperfect correlation may cause the fund to sustain losses which will
prevent the fund from achieving a complete hedge or expose the fund to risk of
foreign exchange loss.
Over-the-counter markets for trading foreign forward currency contracts offer
less protection against defaults than is available when trading in currency
instruments on an exchange. Since a forward foreign currency exchange contract
is not guaranteed by an exchange or clearinghouse, a default on the contract
-11-
would deprive the fund of unrealized profits or force the fund to cover its
commitments for purchase or resale, if any, at the current market price.
If the fund enters into a forward contract to purchase foreign currency, the
custodian or Pioneer will segregate liquid assets. See "Asset Segregation."
OPTIONS ON FOREIGN CURRENCIES
The fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are quoted or denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In an
attempt to protect against such decreases in the value of portfolio securities,
the fund may purchase put options on the foreign currency. If the value of the
currency declines, the fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative effect
of currency depreciation on the value of the fund's securities quoted or
denominated in that currency.
Conversely, if a rise in the dollar value of a currency is projected for those
securities to be acquired, thereby increasing the cost of such securities, the
fund may purchase call options on such currency. If the value of such currency
increases, the purchase of such call options would enable the fund to purchase
currency for a fixed amount of dollars which is less than the market value of
such currency. Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency related increase in the price of
securities the fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The fund may also write options on foreign currencies for hedging purposes. For
example, if the fund anticipated a decline in the dollar value of securities
quoted or denominated in a foreign currency because of declining exchange rates,
it could, instead of purchasing a put option, write a covered call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the decrease in value of portfolio securities will be
partially offset by the amount of the premium received by the fund.
Similarly, the fund could write a put option on the relevant currency, instead
of purchasing a call option, to hedge against an anticipated increase in the
dollar cost of securities to be acquired. If exchange rates move in the manner
projected, the put option will expire unexercised and allow the fund to offset
such increased cost up to the amount of the premium. However, as in the case of
other types of options transactions, the writing of a foreign currency option
will constitute only a partial hedge up to the amount of the premium, only if
rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the fund also may be required to 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."
-12-
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 purchase and write over-the-counter options to the extent
consistent with its limitation on investments in illiquid securities. Trading in
over-the-counter options is subject to the risk that the other party will be
unable or unwilling to close out options purchased or written by the fund.
OPTIONS ON SECURITIES AND SECURITIES INDICES
For hedging purposes or to seek to increase total return, the fund may purchase
put and call options on any security in which it may invest or options on any
securities index based on securities in which it may invest. The fund would also
be able to enter into closing sale transactions in order to realize gains or
minimize losses on options it has purchased.
WRITING CALL AND PUT OPTIONS ON SECURITIES. A call option written by the fund
obligates the fund to sell specified securities to the holder of the option at a
specified price if the option is exercised at any time before the expiration
date. All call options written by the fund are covered, which means that the
fund will own the securities subject to the options as long as the options are
outstanding, or the fund will use the other methods described below. The fund's
purpose in writing covered call options is to realize greater income than would
be realized on portfolio securities transactions alone. However, the fund may
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. All put options written by the
fund would be covered, which means that the fund would have segregated assets
with a value at least equal to the exercise price of the put option. The purpose
of writing such options is to generate additional income for the fund. However,
in return for the option premium, the fund accepts the risk that it may be
required to purchase the underlying security at a price in excess of its market
value at the time of purchase.
Call and put options written by the fund will also be considered to be covered
to the extent that the fund's liabilities under such options are wholly or
partially offset by its rights under call and put options purchased by the fund.
In addition, a written call option or put may be covered by entering into an
offsetting forward contract and/or by purchasing an offsetting option or any
other option which, by virtue of its exercise price or otherwise, reduces the
fund's net exposure on its written option position.
WRITING CALL AND PUT OPTIONS ON SECURITIES INDICES. The fund may also write
(sell) covered call and put options on any securities index composed of
securities in which it may invest. Options on securities indices are similar to
options on securities, except that the exercise of securities index options
requires cash payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price
fluctuations in a group of securities or segments of the securities market
rather than price fluctuations in a single security.
The fund may cover call options on a securities index by owning securities whose
price changes are expected to be similar to those of the underlying index, or by
having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional consideration if cash in such
-13-
amount is segregated) upon conversion or exchange of other securities in its
portfolio. The fund may cover call and put options on a securities index by
segregating assets with a value equal to the exercise price.
PURCHASING CALL AND PUT OPTIONS. The fund would normally purchase call options
in anticipation of an increase in the market value of securities of the type in
which it may invest. The purchase of a call option would entitle the fund, in
return for the premium paid, to purchase specified securities at a specified
price during the option period. The fund would ordinarily realize a gain if,
during the option period, the value of such securities exceeded the sum of the
exercise price, the premium paid and transaction costs; otherwise the fund would
realize either no gain or a loss on the purchase of the call option.
The fund would normally purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or in securities
in which it may invest. The purchase of a put option would entitle the fund, in
exchange for the premium paid, to sell specified securities at a specified price
during the option period. The purchase of protective puts is designed to offset
or hedge against a decline in the market value of the fund's securities. Put
options may also be purchased by the fund for the purpose of affirmatively
benefiting from a decline in the price of securities which it does not own. The
fund would ordinarily realize a gain if, during the option period, the value of
the underlying securities decreased below the exercise price sufficiently to
more than cover the premium and transaction costs; otherwise the fund would
realize either no gain or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of the underlying portfolio securities.
The fund may terminate its obligations under an exchange-traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
RISKS OF TRADING OPTIONS. There is no assurance that a liquid secondary market
on an options exchange will exist for any particular exchange-traded option, or
at any particular time. If the fund is unable to effect a closing purchase
transaction with respect to covered options it has written, the fund will not be
able to sell the underlying securities or dispose of its segregated assets until
the options expire or are exercised. Similarly, if the fund is unable to effect
a closing sale transaction with respect to options it has purchased, it will
have to exercise the options in order to realize any profit and will incur
transaction costs upon the purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options; (iv) unusual
or unforeseen circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or the Options Clearing Corporation (the "OCC")
may not at all times be adequate to handle current trading volume; or (vi) one
or more exchanges could, for economic or other reasons, decide or be compelled
at some future date to discontinue the trading of options (or a particular class
or series of options), in which event the secondary market on that exchange (or
in that class or series of options) would cease to exist, although outstanding
options on that exchange, if any, that had been issued by the OCC as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.
The fund may purchase and sell both options that are traded on U.S. and non-U.S.
exchanges and options traded over the counter with broker-dealers who make
markets in these options. The ability to terminate over-the-counter options is
more limited than with exchange-traded options and may involve the risk that
broker-dealers participating in such transactions will not fulfill their
obligations. Until such time as the staff of the 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.
-14-
Transactions by the fund in options on securities and indices will be subject to
limitations established by each of the exchanges, boards of trade or other
trading facilities governing the maximum number of options in each class which
may be written or purchased by a single investor or group of investors acting in
concert. Thus, the number of options which the fund may write or purchase may be
affected by options written or purchased by other investment advisory clients of
Pioneer. An exchange, board of trade or other trading facility may order the
liquidations of positions found to be in excess of these limits, and it may
impose certain other sanctions.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of protective
puts for hedging purposes depends in part on Pioneer's ability to predict future
price fluctuations and the degree of correlation between the options and
securities markets.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price movements
can take place in the underlying markets that cannot be reflected in the options
markets.
In addition to the risks of imperfect correlation between the fund's portfolio
and the index underlying the option, the purchase of securities index options
involves the risk that the premium and transaction costs paid by the fund in
purchasing an option will be lost. This could occur as a result of unanticipated
movements in the price of the securities comprising the securities index on
which the option is based.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices or currency exchange rates or to
seek to increase total return, the fund may purchase and sell various kinds of
futures contracts, and purchase and write (sell) call and put options on any of
such futures contracts. The fund may also enter into closing purchase and sale
transactions with respect to any of such contracts and options. The futures
contracts may be based on various securities (such as U.S. government
securities), securities indices, foreign currencies and other financial
instruments and indices. The fund will engage in futures and related options
transactions for bona fide hedging and non-hedging purposes as described below.
All futures contracts entered into by the fund are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the Commodity Futures Trading
Commission (the "CFTC") or on 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.
-15-
HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to establish
with more certainty the effective price, rate of return and currency exchange
rate on portfolio securities and securities that the fund owns or proposes to
acquire. The fund may, for example, take a "short" position in the futures
market by selling futures contracts in order to hedge against an anticipated
rise in interest rates or a decline in market prices or foreign currency rates
that would adversely affect the value of the fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by the fund or securities with characteristics similar to those of the
fund's portfolio securities. Similarly, the fund may sell futures contracts in a
foreign currency in which its portfolio securities are denominated or in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency if there is an established historical pattern of
correlation between the two currencies. If, in the opinion of Pioneer, there is
a sufficient degree of correlation between price trends for the fund's portfolio
securities and futures contracts based on other financial instruments,
securities indices or other indices, the fund may also enter into such futures
contracts as part of its hedging strategies. Although under some circumstances
prices of securities in the fund's portfolio may be more or less volatile than
prices of such futures contracts, Pioneer will attempt to estimate the extent of
this volatility difference based on historical patterns and compensate for any
such differential by having the fund enter into a greater or lesser number of
futures contracts or by attempting to achieve only a partial hedge against price
changes affecting the fund's portfolio securities. When hedging of this
character is successful, any depreciation in the value of portfolio securities
will be substantially offset by appreciation in the value of the futures
position. On the other hand, any unanticipated appreciation in the value of the
fund's portfolio securities would be substantially offset by a decline in the
value of the futures position.
On other occasions, the fund may take a "long" position by purchasing futures
contracts. This may be done, for example, when the fund anticipates the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency exchange rates then available in the applicable
market to be less favorable than prices or rates that are currently available.
OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options on futures
contracts will give the fund the right (but not the obligation) for a specified
price to sell or to purchase, respectively, the underlying futures contract at
any time during the option period. As the purchaser of an option on a futures
contract, the fund obtains the benefit of the futures position if prices move in
a favorable direction but limits its risk of loss in the event of an unfavorable
price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium which may
partially offset a decline in the value of the fund's assets. By writing a call
option, the fund becomes obligated, in exchange for the premium, to sell a
futures contract (if the option is exercised), which may have a value higher
than the exercise price. Conversely, the writing of a put option on a futures
contract generates a premium which may partially offset an increase in the price
of securities that the fund intends to purchase. However, the fund becomes
obligated to purchase a futures contract (if the option is exercised) which may
have a value lower than the exercise price. Thus, the loss incurred by the fund
in writing options on futures is potentially unlimited and may exceed the amount
of the premium received. The fund will incur transaction costs in connection
with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. The fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
OTHER CONSIDERATIONS. The fund will engage in futures and related options
transactions in accordance with CFTC regulations which permit principals of an
investment company registered under the 1940 Act to engage in such transactions
without registering as commodity pool operators.
-16-
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. In the event of an
imperfect correlation between a futures position and a portfolio position which
is intended to be protected, the desired protection may not be obtained and the
fund may be exposed to risk of loss. It is not possible to hedge fully or
perfectly against the effect of currency fluctuations on the value of non-U.S.
securities because currency movements impact the value of different securities
in differing degrees.
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.
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.
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.
-17-
PREFERRED SHARES
The fund may invest in preferred shares of beneficial interest of trust
instruments. Preferred shares are equity securities, but they have many
characteristics of fixed income securities, such as a fixed dividend payment
rate and/or a liquidity preference over the issuer's common shares. However,
because preferred shares are equity securities, they may be more susceptible to
risks traditionally associated with equity investments than the fund's fixed
income securities.
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
cash, cash equivalents or U.S. Treasury bills maintained on a current basis at
an amount at least equal to the market value of the securities loaned. The fund
continues to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned as well as the benefit of an increase and the
detriment of any decrease in the market value of the securities loaned and would
also receive compensation based on investment of the collateral. The fund may
pay administrative and custodial fees in connection with loans of securities and
may pay a portion of the income or fee earned thereon to the borrower, lending
agent or other intermediary. The fund would not, however, have the right to vote
any securities having voting rights during the existence of the loan, but would
call the loan in anticipation of an important vote to be taken among holders of
the securities or of the giving or withholding of consent on a material matter
affecting the investment.
As with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. The fund will lend portfolio securities only to firms that have
been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the securities
loaned exceed 33 1/3% of the value of the fund's total assets.
MARKET SEGMENTS
The fund may not "concentrate" its assets in securities of companies in a
particular industry. The fund would be concentrating if it invested more than
25% of its assets in the securities of issuers within the same industry. At
times, more than 25% of the fund's assets may be invested in the same market
segment, such as financials or technology. To the extent that the fund
emphasizes its investments in a market segment, the fund may be subject to a
greater degree to the risks particular to such segment and experience greater
market fluctuation than a fund without the same exposure to those industries.
For example, the industries in the financial segment are subject to extensive
government regulation and can be significantly affected by availability and cost
of capital funds, changes in competition among industries in the segment,
changes in interest rates, and the rate of corporate and consumer debt defaults.
The industries in the technology segment can be significantly affected by
rapidly evolving technology, short product lives, rates of corporate
expenditures, falling prices and profits, competition from new market entrants,
and general economic conditions.
FUNDAMENTAL INVESTMENT RESTRICTIONS. The fund has adopted certain fundamental
investment restrictions which, along with the fund's investment objective, may
not be changed without the affirmative vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the fund.
Statements in italics are not part of the restriction. For this purpose, a
majority of the outstanding shares of the fund means the vote of the lesser of:
(i) 67% or more of the shares represented at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or
(ii) more than 50% of the outstanding shares of the fund.
-18-
The fund may not:
(1) Issue senior securities, except to the extent permitted by applicable law,
as amended and interpreted or modified from time to time by any regulatory
authority having jurisdiction. Senior securities that a fund may issue in
accordance with the 1940 Act include borrowing, futures, when-issued and delayed
delivery securities and forward foreign currency exchange transactions.
(2) Borrow money, except on a temporary basis and to the extent permitted by
applicable law, as amended and interpreted or modified from time to time by any
regulatory authority having jurisdiction. Under current regulatory requirements,
a fund may: (a) borrow from banks or through reverse repurchase agreements in an
amount up to 33 1/3% of the fund's total assets (including the amount borrowed);
(b) borrow up to an additional 5% of the fund's assets for temporary purposes;
(c) obtain such short-term credits as are necessary for the clearance of
portfolio transactions; (d) purchase securities on margin to the extent
permitted by applicable law; and (e) engage in transactions in mortgage dollar
rolls that are accounted for as financings.
(3) Invest in real estate, except (a) that the fund may invest in securities of
issuers that invest in real estate or interests therein, securities that are
secured by real estate or interests therein, securities of real estate
investment trusts, mortgage-backed securities and other securities that
represent a similar indirect interest in real estate; and (b) the fund may
acquire real estate or interests therein through exercising rights or remedies
with regard to an instrument or security.
(4) Make loans, except that the fund may (i) lend portfolio securities in
accordance with the fund's investment policies, (ii) enter into repurchase
agreements, (iii) purchase all or a portion of an issue of publicly distributed
debt securities, bank loan participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the securities, (iv)
participate in a credit facility whereby the fund may directly lend to and
borrow money from other affiliated funds to the extent permitted under the 1940
Act or an exemption therefrom, and (v) make loans in any other manner consistent
with applicable law, as amended and interpreted or modified from time to time by
any regulatory authority having jurisdiction.
(5) Invest in commodities or commodity contracts, except that the fund may
invest in currency instruments and currency contracts and financial instruments
and financial contracts that might be deemed to be commodities and commodity
contracts in accordance with applicable law. A futures contract, for example,
may be deemed to be a commodity contract.
(6) Make any investment inconsistent with its classification as a diversified
open-end investment company (or series thereof) under the 1940 Act. Currently,
diversification means that, with respect to 75% of its total assets, the fund
may not purchase securities of an issuer (other than the U.S. government, its
agencies or instrumentalities and securities of investment companies), if
(a) such purchase would cause more than 5% of the fund's total assets,
taken at market value, to be invested in the securities of such issuer, or
(b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the fund.
(7) Act as an underwriter, except insofar as the fund technically may be deemed
to be an underwriter in connection with the purchase or sale of its portfolio
securities.
(8) Concentrate its investments in securities of companies in any particular
industry. In the opinion of the SEC, investments are concentrated in a
particular industry if such investments aggregate 25% or more of the fund's
total assets. When identifying industries for purposes of its concentration
policy, the fund will rely upon available industry classifications. As of the
date of this SAI, the fund relied on MSCI Global Industry Classification
Standards (GICS) Classifications. The fund's policy does not apply to
investments in U.S. government securities.
-19-
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the fund's Board
of Trustees without approval of shareholders.
(1) The fund will not purchase securities during the current fiscal year at any
time that outstanding borrowings exceed 5% of the fund's total assets.
(2) The fund may not engage in short sales, except short sales against the box.
(3) The fund will not invest in any investment company in reliance on Section
12(d)(1)(F) of the 1940 Act, which would allow the fund to invest in other
investment companies, or in reliance on Section 12(d)(1)(G) of the 1940 Act,
which would allow the fund to invest in other Pioneer funds, in each case
without being subject to the limitations discussed above under "Other Investment
Companies" so long as another investment company invests in the fund in reliance
on Section 12(d)(1)(G), such as one of the series of Pioneer Asset Allocation
Series.
(4) The fund does not invest in companies for the purposes of exercising control
or management.
DISCLOSURE OF PORTFOLIO HOLDINGS
The fund's Board of Trustees has adopted policies and procedures relating to
disclosure of the fund's 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 regulations of the federal securities laws and general
principles of fiduciary duty relating to fund shareholders.
Generally, Pioneer will make the 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 the fund's full portfolio
holdings thirty (30) days after the end of each month. Such information shall be
made available on the fund's website (www.pioneerfunds.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 the fund's top ten holdings (including the percentage of the fund's
assets represented by each security), the percentage breakdown of the 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 the 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, plan sponsors, prospective separate account clients and other
financial intermediaries (e.g., a broker-dealers evaluating whether to permit
the fund to be offered by its financial advisers). 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. Although the board will periodically be informed
of exemptions granted, granting exemptions entails the risk that portfolio
holdings information may be provide to entities that use the information in a
manner inconsistent with their obligations and the best interest of the fund.
-20-
Compliance with the fund's 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 increase the purposes for which such disclosure may be made would be subject
to approval by the board of trustees and, reflected, if appropriate, in a
supplement to the fund's Statement of Additional Information.
The fund's portfolio holdings disclosure policy is not intended to prevent the
disclosure of any and all portfolio information to the fund's service providers
who generally need access to such information in the performance of their
contractual duties and responsibilities, such as Pioneer, the fund's custodian,
fund accounting agent, principal underwriter, investment sub-adviser, if any,
auditors or counsel. In approving the policy, the board of trustees considered
that the service providers are subject to duties of confidentiality arising
under law or contract that provide an adequate safeguard for such information.
Neither Pioneer nor the fund receives any compensation or other consideration
from these arrangements for the release of the fund's portfolio holdings
information.
MANAGEMENT OF THE FUND
The fund's Board of Trustees provides broad supervision over the fund's affairs.
The officers of the fund are responsible for the fund's operations. The fund's
Trustees and officers are listed below, together with their principal
occupations during 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 serves as a trustee of each of the 73
U.S. registered investment portfolios for which Pioneer serves as investment
adviser (the "Pioneer Funds"). The address for all Interested Trustees and all
officers of the fund is 60 State Street, Boston, Massachusetts 02109.
-21-
TERM OF OFFICE
NAME, AGE AND POSITION HELD AND LENGTH OF PRINCIPAL OCCUPATION DURING PAST OTHER DIRECTORSHIPS HELD BY
ADDRESS WITH THE FUND SERVICE FIVE YEARS THIS TRUSTEE
------- ------------- ------- ---------- ------------
INTERESTED TRUSTEES:
John F. Cogan, Chairman of the Trustee since Deputy Chairman and a Director Chairman and Director of
Jr. (78)* Board, Trustee 2004. Serves of Pioneer Global Asset ICI Mutual Insurance
and President until a Management S.p.A. ("PGAM"); Company; Director of Harbor
successor Non-Executive Chairman and a Global Company, Ltd.
trustee is Director of Pioneer Investment
elected or Management USA Inc. ("PIM-USA");
earlier Chairman and a Director of
retirement or Pioneer; Director of Pioneer
removal. Alternative Investment
Management Limited
(Dublin); President
and a Director of
Pioneer Alternative
Investment Management
(Bermuda) Limited and
affiliated funds;
President and Director
of Pioneer Funds
Distributor, Inc.
("PFD"); President of
all of the Pioneer
Funds; and Of Counsel
(since 2000, partner
prior to 2000), Wilmer
Cutler Pickering Hale
and Dorr LLP (counsel
to PIM-USA and the
Pioneer Funds)
Osbert M. Hood Trustee and Trustee since President and Chief Executive None
(52)* Executive Vice 2004. Serves Officer, PIM-USA since May, 2003
President until a (Director since January, 2001);
successor President and Director of
trustee is Pioneer since May, 2003;
elected or Chairman and Director of Pioneer
earlier Investment Management
retirement or Shareholder Services, Inc.
removal. ("PIMSS") since May, 2003;
Executive Vice
President of all of
the Pioneer Funds
since June 3, 2003;
Executive Vice
President and Chief
Operating Officer of
PIM-USA, November
2000-May 2003;
Executive Vice
President, Chief
Financial Officer and
Treasurer, John
Hancock Advisers, LLC,
Boston, MA, November
1999-November 2000;
Senior Vice President
and Chief Financial
Officer, John Hancock
Advisers, LLC, April
1997-November 1999
-22-
INDEPENDENT TRUSTEES:
David R. Bock (61) Trustee Trustee since Senior Vice President and Chief Director of The Enterprise
3050 K Street NW, 2005. Serves Financial Officer, I-trax, Inc. Social Investment Company
Washington DC 20007 until a (publicly traded health care (privately-held affordable
successor services company) (2001 - housing finance company);
trustee is present); Managing Partner, Director of New York
elected or Federal City Capital Advisors Mortgage Trust (publicly
earlier (boutique merchant bank)(1995 traded mortgage REIT)
retirement or -2000; 2002 to 2004); Executive
removal. Vice President and Chief
Financial Officer, Pedestal Inc.
(internet-based mortgage trading
company) (2000-2002)
Mary K. Bush (56) Trustee Trustee since President, Bush International Director of Brady
3509 Woodbine Street, 2004. Serves (international financial Corporation (industrial
Chevy Chase, MD 20815 until a advisory firm) identification and
successor specialty coated material
trustee is products manufacturer),
elected or Millennium Chemicals, Inc.
earlier (commodity chemicals),
retirement or Mortgage Guaranty Insurance
removal. Corporation and R.J.
Reynolds Tobacco Holdings,
Inc. (tobacco)
Margaret B.W. Graham Trustee Trustee since Founding Director, The Winthrop None
(57) 2004. Serves Group, Inc. (consulting firm);
1001 Sherbrooke Street until a Professor of Management, Faculty
West, Montreal, successor of Management, McGill University
Quebec, Canada trustee is
elected or
earlier
retirement or
removal.
Marguerite A. Piret Trustee Trustee since President and Chief Executive Director of New America
(56) 2004. Serves Officer, Newbury, Piret & High Income Fund, Inc.
One Boston Place, 28th until a Company, Inc. (investment (closed-end investment
Floor, Boston, MA 02108 successor banking firm) company)
trustee is
elected or
earlier
retirement or
removal.
Stephen K. West (75) Trustee Trustee since Senior Counsel, Sullivan & Director, The Swiss
125 Broad Street, New 2004. Serves Cromwell (law firm) Helvetia Fund, Inc.
York, NY 10004 until a (closed-end investment
successor company) and AMVESCAP PLC
trustee is (investment managers)
elected or
earlier
retirement or
removal.
-23-
John Winthrop (68) Trustee Trustee since President, John Winthrop & Co., None
One North Adgers 2004. Serves Inc. (private investment firm)
Wharf, Charleston, SC until a
29401 successor
trustee is
elected or
earlier
retirement or
removal.
FUND OFFICERS:
OTHER DIRECTORSHIPS HELD BY
THIS OFFICER
Dorothy E. Secretary Since 2004. Secretary of PIM-USA; Senior None
Bourassa (56) Serves at the Vice President - Legal of
discretion of Pioneer; and Secretary/Clerk of
Board most of PIM-USA's subsidiaries
since October 2000;
Secretary of all of
the Pioneer Funds
since September 2003
(Assistant Secretary
from November 2000 to
September 2003); and
Senior Counsel,
Assistant Vice
President and Director
of Compliance of
PIM-USA from April
1998 through October
2000
Christopher J. Assistant Since 2004. Assistant Vice President and None
Kelley (40) Secretary Serves at the Senior Counsel of Pioneer since
discretion of July 2002; Vice President and
Board Senior Counsel of BISYS Fund
Services, Inc. (April 2001 to
June 2002); Senior Vice
President and Deputy General
Counsel of Funds Distributor,
Inc. (July 2000 to April 2001;
Vice President and Associate
General Counsel from July 1996
to July 2000); Assistant
Secretary of all Pioneer Funds
since September 2003
David C. Phelan Assistant Since 2004. Partner, Wilmer Cutler Pickering None
(47) Secretary Serves at the Hale and Dorr LLP; Assistant
discretion of Secretary of all Pioneer Funds
the Board since September 2003
-24-
Vincent Nave (59) Treasurer Since 2004. Vice President-Fund Accounting, None
Serves at the Administration and Custody
discretion of Services of Pioneer (Manager
Board from September 1996 to
February 1999); and
Treasurer of all of
the Pioneer Funds
(Assistant Treasurer
from June 1999 to
November 2000)
Mark E. Bradley Assistant Since 2004. Deputy Treasurer of Pioneer None
(45) Treasurer Serves at the since 2004; Treasurer and Senior
discretion of Vice President, CDC IXIS Asset
Board Management Services from 2002 to
2003; Assistant Treasurer and
Vice President, MFS Investment
management from 1997 to 2002;
and Assistant Treasurer of all
of the Pioneer Funds since
November 2004
Luis I. Presutti Assistant Since 2004. Assistant Vice President-Fund None
(39) Treasurer Serves at the Accounting, Administration and
discretion of Custody Services of Pioneer
Board (Fund Accounting Manager from
1994 to 1999); and Assistant
Treasurer of all of the Pioneer
Funds since November 2000
Gary Sullivan (46) Assistant Since 2004. Fund Accounting Manager - Fund None
Treasurer Serves at the Accounting, Administration and
discretion of Custody Services of Pioneer; and
Board Assistant Treasurer of all of
the Pioneer Funds since May 2002
Katharine Kim Assistant Since 2004. Fund Administration Manager - None
Sullivan (30) Treasurer Serves at the Fund Accounting, Administration
discretion of and Custody Services since June
the Board 2003; Assistant Vice President -
Mutual Fund Operations of State
Street Corporation from June
2002 to June 2003 (formerly
Deutsche Bank Asset Management);
Pioneer Fund Accounting,
Administration and Custody
Services (Fund Accounting
Manager from August 199 to May
2002, Fund Accounting Services
Supervisor from 1997 to July
1999); Assistant Treasurer of
all Pioneer Funds since
September 2003
-25-
Martin J. Wolin Chief Compliance Since 2004. Chief Compliance Officer of None
(37) Officer Serves at the Pioneer (Director of Compliance
discretion of and Senior Counsel from November
the Board 2000 to September 2004); Vice
President and Associate General
Counsel of UAM Fund Services,
Inc. (mutual fund adminstration
company) from February 1998 to
November 2000; and Chief
Compliance Officer of all of the
Pioneer Funds
*Mr. Cogan and Mr. Hood are Interested Trustees because each is an officer or
director of the fund's investment adviser and certain of its affiliates.
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
BOARD COMMITTEES
Because the Trust is newly organized the Board of Trustees of Pioneer Series
Trust III attended three meetings during the current fiscal year.
The Board of Trustees has an Audit Committee, a Nominating Committee, a
Valuation Committee, an Independent Trustees Committee and a Policy
Administration Committee. Committee members are as follows:
AUDIT
Marguerite A. Piret (Chair), Margaret B.W. Graham and David Bock
INDEPENDENT TRUSTEES
David R. Bock, Mary K. Bush, Margaret B.W. Graham (Chair), Marguerite A.
Piret, Stephen K. West and John Winthrop
NOMINATING
Mary K. Bush, Marguerite A. Piret and John Winthrop (Chair)
VALUATION
Marguerite A. Piret (Chair), Stephen K. West and John Winthrop
POLICY ADMINISTRATION
Mary K. Bush (Chair), Stephen K. West and John Winthrop
During the most recent fiscal year, the Audit, Nominating, Valuation,
Independent Trustees and Policy Administration Committees did not hold any
meetings, because the Trust is newly organized.
The Board of Trustees has adopted a charter for the Audit Committee. In
accordance with its charter, the purposes of the Audit Committee are to:
- - act as a liaison between the fund's independent registered public
accounting firm and the full Board of Trustees of the fund;
-26-
- - discuss with the fund's independent registered public accounting firm
their judgments about the quality of the fund's accounting principles and
underlying estimates as applied in the fund's financial reporting;
- - review and assess the renewal materials of all related party contracts and
agreements, including management advisory agreements, underwriting
contracts, administration agreements, distribution contracts, and transfer
agency contracts, among any other instruments and agreements that may be
appropriate from time to time;
- - review and approve insurance coverage and allocations of premiums between
the management and the fund and among the Pioneer Funds;
- - review and approve expenses under the administration agreement between
Pioneer and the fund and allocations of such expenses among the Pioneer
Funds; and
- - receive on a periodic basis a formal written statement delineating all
relationships between the auditors and the fund or Pioneer; to actively
engage in a dialogue with the independent auditors with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the independent registered public accounting firm; and to
recommend that the Trustees take appropriate action in response to the
independent registered public accounting firm's report to satisfy itself
of the independent registered public accounting firm's independence.
The Nominating Committee reviews the qualifications of any candidate recommended
by the Independent Trustees to serve as an Independent Trustee and makes a
recommendation regarding that person's qualifications. The Committee does not
accept nominations from shareholders.
The Valuation Committee reviews the valuation assigned to certain securities by
Pioneer in accordance with the fund's valuation procedures.
The Policy Administration Committee reviews the implementation of certain of the
fund's administrative policies and procedures.
The Independent Trustees Committee reviews the fund's management contract and
other related party contracts annually and is also responsible for any other
action required to be taken, under the 1940 Act, by the Independent Trustees
acting alone.
During the most recent fiscal year, the Audit, Nominating, Valuation,
Independent Trustees and Policy Administration Committees did not hold any
meetings, because the Trust is newly organized.
The fund's Declaration of Trust provides that the fund will indemnify the
Trustees and officers against liabilities and expenses incurred in connection
with any litigation in which they may be involved because of their offices with
the fund, unless it is determined in the manner specified in the Declaration of
Trust that they have not acted in good faith in the reasonable belief that their
actions were in the best interests of the fund or that such indemnification
would relieve any officer or Trustee of any liability to the fund or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her duties.
COMPENSATION OF OFFICERS AND TRUSTEES
The fund pays no salaries or compensation to any of its officers. 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 Officer 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:
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- - each fund with assets less than $250 million pays each Trustee who is not
affiliated with PIM-USA, Pioneer, PFD, PIMSS or UniCredito Italiano (i.e.,
Independent Trustees) an annual fee of $1,000.
- - 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.
- - 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 the
funds for the fees paid to the Interested Trustees.
See "Compensation of Officers and Trustees" in "Annual Fee, Expense and Other
Information".
SALES LOADS. The 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
MATERIAL RELATIONSHIPS OF THE INDEPENDENT TRUSTEES. For purposes of the
statements below:
- the immediate family members of any person are their spouse,
children in the person's household (including step and adoptive
children) and any dependent of the person.
- an entity in a control relationship means any person who controls,
is controlled by or is under common control with the named person.
For example, UniCredito Italiano is an entity that is in a control
relationship with Pioneer.
- a related fund is a registered investment company or an entity
exempt from the definition of an investment company pursuant to
Sections 3(c)(1) or 3(c)(7) of the 1940 Act, for which Pioneer or
any of its affiliates act as investment adviser or for which PFD or
any of its affiliates act as principal underwriter. For example, the
fund's related funds include all of the Pioneer Funds and any
non-U.S. funds managed by Pioneer or its affiliates.
As of December 31, 2003, none of the Independent Trustees, nor any of their
immediate family members, beneficially owned any securities issued by Pioneer,
UniCredito Italiano or any other entity in a control relationship to Pioneer or
PFD. During the calendar years 2002 and 2003, none of the Independent Trustees,
nor any of their immediate family members, had any direct or indirect interest
(the value of which exceeded $60,000), whether by contract, arrangement or
otherwise, in Pioneer, UniCredito Italiano, or any other entity in a control
relationship to Pioneer or PFD. During the calendar years 2002 and 2003, none of
the Independent Trustees, nor any of their immediate family members, had an
interest in a transaction or a series of transactions in which the aggregate
amount involved exceeded $60,000 and to which any of the following were a party
(each a "fund related party"):
- - the fund
- - an officer of the fund
- - a related fund
- - an officer of any related fund
- - Pioneer
- - PFD
- - an officer of Pioneer or PFD
- - any affiliate of Pioneer or PFD
- - an officer of any such affiliate
During the calendar years 2002 and 2003, none of the Independent Trustees, nor
any of their immediate family members, had any relationship (the value of which
exceeded $60,000) with any fund related party, including, but not limited to,
relationships arising out of (i) the payment for property and services, (ii) the
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provision of legal services, (iii) the provision of investment banking services
(other than as a member of the underwriting syndicate) or (iv) the provision of
consulting services, except that Mr. West, an Independent Trustee, is Senior
Counsel to Sullivan & Cromwell and 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 $53,000 and $126,603 in 2002 and 2003, respectively.
During the calendar years 2002 and 2003, none of the Independent Trustees, nor
any of their immediate family members, served as a member of a board of
directors on which an officer of any of the following entities also serves as a
director:
- - Pioneer
- - PFD
- - UniCredito Italiano
- - any other entity in a control relationship with Pioneer or PFD
None of the fund's Trustees or officers has any arrangement with any other
person pursuant to which that Trustee or officer serves on the Board of
Trustees. During the calendar years 2002 and 2003, none of the Independent
Trustees, nor any of their immediate family members, had any position, including
as an officer, employee, director or partner, with any of the following:
- - the fund
- - any related fund
- - Pioneer
- - PFD
- - any affiliated person of the fund, Pioneer or PFD
- - UniCredito Italiano
- - any other entity in a control relationship to the fund, Pioneer or PFD
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN APPROVING THE MANAGEMENT
CONTRACT AND SUBADVISORY AGREEMENT. The 1940 Act requires that the fund's
management contract and the subadvisory agreement be approved annually by both
the Board of Trustees and a majority of the Independent Trustees voting
separately. The Independent Trustees have determined that the terms of the
fund's management contract and the subadvisory agreement are fair and reasonable
and that the contracts are in the fund's best interest. The Independent Trustees
believe that the management contract and the subadvisory agreement will enable
the fund to enjoy high quality investment advisory services at a cost they deem
appropriate, reasonable and in the best interests of the fund and its
shareholders. In making such determinations, the Independent Trustees met
independently from the Interested Trustees of the fund and any officers of
Pioneer, Cullen Capital Management LLC ("Cullen") or their affiliates. The
Independent Trustees also relied upon the assistance of counsel to the
Independent Trustees and counsel to the fund.
In evaluating the management contract and the subadvisory agreement, the
Independent Trustees reviewed materials furnished by Pioneer, including
information regarding Pioneer, UniCredito Italiano, their respective affiliates
and their personnel, operations and financial condition, and materials furnished
by Cullen and its affiliates, personnel, operations and financial condition. The
Independent Trustees discussed with representatives of both firms the fund's
operations and their respective abilities to provide advisory and other services
to the fund. The Independent Trustees also reviewed:
- the investment performance of the fund and other Pioneer Funds with
similar investment strategies and of funds with similar investment
strategies managed by Cullen;
- the fee charged by Pioneer for investment advisory and
administrative services, as well as other compensation received by
PFD and PIMSS, and the fees Pioneer would pay to Cullen;
- the fund's projected total operating expenses;
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- the investment performance, fees and total expenses of investment
companies with similar objectives and strategies managed by other
investment advisers;
- the experience of the investment advisory and other personnel
providing services to the fund and the historical quality of the
services provided by Pioneer and Cullen; and
- the profitability to Pioneer of managing the fund.
The Independent Trustees considered the following as relevant to their
recommendations: (1) the favorable history, reputation, qualification and
background of Pioneer and UniCredito Italiano and Cullen, as well as the
qualifications of their personnel and their respective financial conditions; (2)
that the fee and expense ratios of the fund are reasonable given the quality of
services expected to be provided and are comparable to the fee and expense
ratios of similar investment companies; and (3) the relative performance of
similar funds advised by Pioneer and Cullen since commencement of operations to
comparable investment companies and unmanaged indices. The Independent Trustees
deemed each of these factors to be relevant to their consideration of the fund's
management contract and subadvisory agreement.
SHARE OWNERSHIP. See "Annual Fee, Expense and Other Information" for annual
information on the ownership of fund shares by the Trustees, the fund's officers
and owners in excess of 5% of any class of shares of the fund and a table
indicating the value of shares that each Trustee beneficially owns in the fund
and in all the Pioneer Funds.
CODE OF ETHICS. The fund's Board of Trustees approved a code of ethics under
Rule 17j-1 under the 1940 Act that covers the fund, Pioneer and certain of
Pioneer's affiliates. The code of ethics establishes procedures for personal
investing and restricts certain transactions. Employees subject to the code of
ethics may invest in securities for their personal investment accounts,
including securities that may be purchased or held by the fund.
PROXY VOTING POLICIES. Information regarding how the fund voted proxies relating
to portfolio securities during the most recent 12-month period ended June 30
will be publicly available to shareowners at www.pioneerfunds.com and on the
SEC's website at http://www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Not Applicable.
INVESTMENT ADVISORY AND OTHER SERVICES
The Trust has contracted with Pioneer to act as the fund's investment adviser.
Pioneer is an indirect, wholly owned subsidiary of UniCredito Italiano. Certain
Trustees or officers of the fund are also directors and/or officers of certain
of UniCredito Italiano's subsidiaries (see management biographies above).
Pioneer has entered into an agreement with its affiliate, Pioneer Investment
Management Limited ("PIML"), pursuant to which PIML provides certain services
and personnel to Pioneer.
Pioneer has engaged Cullen Capital Management LLC (as defined above as "Cullen")
to act as the fund's subadviser. As the fund's investment adviser, Pioneer
oversees the fund's operations and supervises Cullen, which is responsible for
the day-to-day management of the fund's portfolio (see "Investment Subadviser"
below). Except as otherwise provided under "Investment Subadviser" below,
Pioneer also maintains books and records with respect to the fund's securities
transactions, and reports to the Trustees on the fund's investments and
performance.
Under the terms of its management contract with the fund, Pioneer pays all the
operating expenses, including executive salaries and the rental of office space,
relating to its services for the fund, with the
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exception of the following, which are paid by the fund: (a) charges and expenses
for fund accounting, pricing and appraisal services and related overhead,
including, to the extent such services are performed by personnel of 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, registrar or other agent 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 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; and (m) any other expense that the fund, Pioneer or any
other agent of the fund may incur (A) as a result of a change in the law or
regulations, (B) as a result of a mandate from the Board of Trustees with
associated costs of a character generally assumed by similarly structured
investment companies or (C) that is similar to the expenses listed above, and
that is approved by the Board of Trustees (including a majority of the
Independent Trustees) as being an appropriate expense of the fund. In addition,
the fund shall pay all brokers' and underwriting commissions chargeable to the
fund in connection with securities transactions to which the fund is a party.
ADVISORY FEE. As compensation for its management services and expenses incurred,
the fund pays Pioneer an annual fee equal to 0.70% of the fund's average daily
net assets up to $1 billion, 0.65% on assets greater than $1 billion and less
than or equal to $2 billion, 0.60% on assets greater than $2 billion and less
than or equal to $3 billion and 0.55% on assets greater than $3 billion. The fee
is computed daily and paid monthly. Pioneer, and not the fund, pays a portion of
the fee it receives from the fund to Cullen as compensation for Cullen's
subadvisory services to the fund.
Cullen Capital Asset Management Company ("Cullen") was the fund's prior
investment adviser. The investment advisory services of Cullen were performed
under an investment advisory agreement, pursuant to which the fund paid Cullen
an annual fee equal to 1.00% of the average daily net assets of the fund. Cullen
agreed to reimburse the fund to the extent the fund's total operating expenses
(excluding taxes) exceed 2.00% of its average daily net asset value through June
30, 2005.
See the table in "Annual Fee, Expense and Other Information" for management fees
paid to Pioneer during recently completed fiscal years.
INVESTMENT SUBADVISER. As described in the prospectus, Cullen serves as the
fund's investment subadviser with respect to a portion of the fund's assets that
Pioneer designates from time to time. With respect to the current fiscal year,
Pioneer anticipates that it will designate Cullen as being responsible for the
management of all the fund's assets, with the exception of the fund's cash
balances, which will be invested by Pioneer. Cullen will, among other things,
continuously review and analyze the investments in the fund's portfolio and,
subject to the supervision of Pioneer, manage the investment and reinvestment of
the fund's assets, with the exception of the fund's cash balances, which will be
invested by Pioneer. Cullen, a Delaware limited liability company, is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"). Cullen was established in 1982 and had approximately $59.3
million in assets under management as of December 31, 2004. Cullen's principal
place of business is located at 645 Fifth Avenue, New York, New York 10022.
Pioneer and Cullen have entered into a subadvisory contract, dated as of
February 23, 2005, pursuant to which Cullen has agreed, among other things, to:
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- comply with the provisions of the fund's Declaration of Trust and
By-laws, the 1940 Act, the Advisers Act and the investment
objectives, policies and restrictions of the fund;
- cause the fund to comply with the requirements of Subchapter M of
the Code for qualification as a regulated investment company;
- comply with any policies, guidelines, procedures and instructions as
Pioneer may from time to time establish;
- be responsible for voting proxies and acting on other corporate
actions;
- maintain separate books and detailed records of all matters
pertaining to the portion of the fund's assets advised by the Cullen
required by Rule 31a-1 under the 1940 Act relating to its
responsibilities provided hereunder with respect to the fund;
- ensure that its Access Persons comply in all respects with Cullen's
Code of Ethics, as in effect from time to time; and
- furnish reports to the Trustees and Pioneer.
SUBADVISORY FEE. For its services, Cullen is entitled to a subadvisory fee from
Pioneer at an annual rate of the fund's average daily net assets as set forth
below. The fee will be paid monthly in arrears. The fund does not pay a fee to
Cullen.
ASSETS RATE
- ------ ----
First $1 Billion 0.35%
Greater than $1 Billion and less than or equal to $2 Billion 0.325%
Greater than $2 Billion and less than or equal to $3 Billion 0.30%
Greater than $3 Billion 0.275%
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 or to materially modify an existing subadvisory
contract for the fund without shareholder approval. Pioneer retains the ultimate
responsibility to oversee and recommend the hiring, termination and replacement
of any subadviser.
CONTINUANCE OF MANAGEMENT CONTRACT AND SUBADVISORY AGREEMENT. The Trustees'
approval of and the terms, continuance and termination of the management
contract are governed by the 1940 Act and the Investment Advisers Act, as
applicable. Pursuant to the management and subadvisory contracts, neither
Pioneer nor 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 Pioneer or the subadviser. Pioneer and the subadviser,
however, are is not protected against liability by reason of willful
misfeasance, bad faith or gross negligence in the performance of its their
duties or by reason of its their reckless disregard of its their obligations and
duties under the management or subadvisory contract. The management contract and
subadvisory agreement terminate 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 the fund's outstanding voting
securities.
EXPENSE LIMIT. Pioneer has agreed to waive all or part of its management fee or
to reimburse the fund for other expenses (other than extraordinary expenses) to
the extent the expenses of the fund's Class A shares exceed 1.25% of average
daily net assets. The portion of fund expenses (including the amount of the
management fee waived) attributable to other share class will be reduced only to
the extent such expenses
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were reduced for the fund's Class A shares. Any differences in the fee waiver
and limitation among classes result from rounding in the daily calculation of a
class' net assets and expense limit, which may exceed 0.01% annually. Pioneer
expects to continue its limitation of expenses from the fund unless the expense
limit agreement with the fund is terminated pursuant to the terms of the expense
limit agreement. However, there can be no assurance that Pioneer will extend the
expense limitation beyond November 1, 2008.
ADMINISTRATION AGREEMENT. The fund has entered into an administration agreement
with Pioneer pursuant to which certain accounting, administration and legal
services which are expenses payable by the fund under the management contract
are performed by Pioneer and pursuant to which Pioneer is reimbursed for its
costs of providing such services. The costs of these services is based on direct
costs and costs of overhead, subject to annual approval by the Board. See
"Annual Fee, Expense and Other Information" for fees the fund paid to Pioneer
for administration and related services.
POTENTIAL CONFLICT OF INTEREST. Pioneer and the subadviser serve as investment
adviser to other Pioneer mutual funds and other accounts with investment
objectives identical or similar to those of the fund. Securities frequently meet
the investment objectives of the fund, the other Pioneer mutual funds and these
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 accounts
or a private account managed by Pioneer or the subadviser, including the fund,
seeks to acquire the same security at about the same time, the fund may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the fund may not be able
to obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if Pioneer or the subadviser decides to sell on
behalf of another account the same portfolio security at the same time. On the
other hand, if the same securities are bought or sold at the same time by more
than one fund or account, the resulting participation in volume transactions
could produce better executions for the fund. In the event more than one account
purchases or sells the same security on a given date, the purchases and sales
will normally be made as nearly as practicable on a pro rata basis in proportion
to the amounts desired to be purchased or sold by each account. Although the
other accounts managed by Pioneer or the subadviser may have the same or similar
investment objectives and policies as the fund, their portfolios do not
generally consist of the same investments as the fund or each other, and their
performance results are likely to differ from those of the fund.
PERSONAL SECURITIES TRANSACTIONS. The fund, Pioneer, and PFD and the subadviser
have each adopted a code of ethics under Rule 17j-1 under the 1940 Act which is
applicable to officers, trustees/directors and designated employees, including,
in the case of Pioneer's code, designated employees of Pioneer and PIML. Each
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. Each code is on public file with and available from the SEC.
The fund has contracted with PIMSS, 60 State Street, Boston, Massachusetts
02109, to act as shareholder servicing and transfer agent for the fund.
Under the terms of its contract with the fund, PIMSS services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the fund; (ii) distributing dividends and capital gains
associated with the fund's portfolio; and (iii) maintaining account records and
responding to shareholder inquiries.
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PIMSS receives an annual fee of $26.60 for each Class A, Class B, Class C and
Class Y shareholder account from the fund as compensation for the services
described above. PIMSS is also reimbursed by the fund for its cash out-of-pocket
expenditures. The fund may compensate entities which have agreed to provide
certain sub-accounting services such as specific transaction processing and
recordkeeping services. Any such payments by the fund would be in lieu of the
per account fee which would otherwise be paid by the fund to PIMSS.
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
the custodian of the fund's assets. The custodian's responsibilities include
safekeeping and controlling the fund's cash and securities, handling the receipt
and delivery of securities, and collecting interest and dividends on the fund's
investments.
Ernst & Young LLP, 200 Clarenden Street, Boston, Massachuseetts 02116, the
fund's independent registered public accounting firm, provides audit services,
tax return review, and assistance and consultation with respect to the
preparation of filings with the SEC.
BROKERAGE ALLOCATION AND OTHER PRACTICES
All orders for the purchase or sale of portfolio securities are placed on behalf
of the fund by Pioneer pursuant to authority contained in the fund's management
contract. Pioneer seeks to obtain the best execution on portfolio trades. The
price of securities and any commission rate paid are always factors, but
frequently not the only factors, in judging best execution. In selecting brokers
or dealers, Pioneer considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character of
the markets for the security to be purchased or sold; the execution efficiency,
settlement capability and financial condition of the dealer; the dealer's
execution services rendered on a continuing basis; and the reasonableness of any
dealer spreads. Transactions in non-U.S. equity securities are executed by
broker-dealers in non-U.S. countries in which commission rates may not be
negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or research
services to the fund and/or other investment companies or other accounts managed
by Pioneer over which it or its 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, the fund may pay
commissions to such broker-dealer in an amount greater than the amount another
firm may charge. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or the purchasers or sellers of securities;
providing stock quotation services, credit rating service information and
comparative fund statistics; furnishing analyses, electronic information
services, manuals and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and performance of accounts and
particular investment decisions; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Pioneer maintains a listing of broker-dealers who provide such services on a
regular basis. However, because many transactions on behalf of the fund and
other investment companies or accounts managed by Pioneer are placed with
broker-dealers (including broker-dealers on the listing) without regard to the
furnishing of such services, it is not possible to estimate the proportion of
such transactions directed to such dealers solely because such services were
provided. Pioneer believes that no exact dollar value can be calculated for such
services.
The research received from broker-dealers may be useful to Pioneer in rendering
investment management services to the fund as well as other investment companies
or other accounts managed by Pioneer, although not all such research may be
useful to the fund. Conversely, such information provided by brokers or dealers
who have executed transaction orders on behalf of such other accounts may be
useful to Pioneer in carrying out its obligations to the fund. The receipt of
such research has not reduced Pioneer's normal independent research activities;
however, it enables Pioneer to avoid the additional expenses which might
otherwise be incurred if it were to attempt to develop comparable information
through its own staff.
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The Pioneer funds have entered into third-party brokerage and/or expense offset
arrangements to reduce the funds' total operating expenses. Pursuant to
third-party brokerage arrangements, certain of the funds that invest primarily
in U.S. equity securities may incur lower custody fees by directing brokerage to
third-party broker-dealers. Pursuant to expense offset arrangements, the funds
incur lower transfer agency expenses by maintaining their cash balances with the
custodian. See "Financial highlights" in the prospectus.
See the table in "Annual Fee, Expense and Other Information" for aggregate
brokerage and underwriting commissions paid by the fund in connection with its
portfolio transactions during recently completed fiscal years. The Board of
Trustees periodically reviews Pioneer's performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of the fund.
CAPITAL STOCK AND OTHER SECURITIES
As an open-end management investment company, the fund continuously offers its
shares to the public and under normal conditions must redeem its shares upon the
demand of any shareholder at the next determined net asset value per share less
any applicable CDSC. See "Sales Charges." When issued and paid for in accordance
with the terms of the prospectus and statement of additional information, shares
of the fund are fully paid and non-assessable. Shares will remain on deposit
with the fund's transfer agent and certificates will not normally be issued.
The Trust's Agreement and Declaration of Trust, dated as of August 3, 2004 (the
"Declaration"), as amended from time to time, permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest which may be divided into such separate series as the
Trustees may establish. Currently, the Trust consists of one series. The
Trustees may, however, establish additional series of shares and may divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the fund. The Declaration
further authorizes the Trustees to classify or reclassify any series of the
shares into one or more classes. Pursuant thereto, the Trustees have authorized
the issuance of five classes of shares of the fund, designated as Class A
shares, Class B shares, Class C shares, Class R shares 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 the fund represents an equal proportionate
interest in the assets of the fund allocable to that class. Upon liquidation of
the fund, shareholders of each class of the fund are entitled to share pro rata
in the fund's net assets allocable to such class available for distribution to
shareholders. The 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 the fund. Each class has equal rights as to voting, redemption,
dividends and liquidation, except that each class bears different distribution
and transfer agent fees and may bear other expenses properly attributable to the
particular class. Class A, Class B and Class C shareholders have exclusive
voting rights with respect to the Rule 12b-1 Plans adopted by holders of those
shares in connection with the distribution of shares.
Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. The fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The shares of each series of the Trust are entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Trust vote together as a
class on matters that affect all series of the Trust in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Declaration without the affirmative vote of a
majority of the
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Trust's shares. Shares have no preemptive or conversion rights, except that
under certain circumstances Class B shares may convert to Class A shares.
As a Delaware statutory trust, the Trust's operations are governed by the
Declaration. Generally, Delaware statutory trust shareholders are not personally
liable for obligations of the Delaware statutory trust under Delaware law. The
Delaware Statutory Trust Act (the "Delaware Act") provides that a shareholder of
a Delaware statutory trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Declaration
expressly provides that the Trust is organized under the Delaware Act and that
the Declaration is to be governed by Delaware law. There is nevertheless a
possibility that a Delaware statutory trust, such as the Trust, might become a
party to an action in another state whose courts refused to apply Delaware law,
in which case the Trust's shareholders could become subject to personal
liability.
To guard against this risk, the Declaration (i) contains an express disclaimer
of shareholder liability for acts or obligations of the Trust and provides that
notice of such disclaimer may be given in each agreement, obligation or
instrument entered into or executed by the Trust or its Trustees, (ii) provides
for the indemnification out of Trust property of any shareholders held
personally liable for any obligations of the Trust or any series of the Trust
and (iii) provides that the Trust shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Trust and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Trust itself would be unable to meet its obligations. In light of Delaware law,
the nature of the Trust's business and the nature of its assets, the risk of
personal liability to a Trust shareholder is remote.
In addition to the requirements under Delaware law, the Declaration provides
that a shareholder of the Trust may bring a derivative action on behalf of the
Trust only if the following conditions are met: (a) shareholders eligible to
bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Trust, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Trust for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
The Declaration further provides that the Trust shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Trust.
The Declaration does not authorize the Trust to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
The Declaration provides that any Trustee who is not an "interested person" of
Pioneer shall be considered to be independent for purposes of Delaware law
notwithstanding the fact that such Trustee receives compensation for serving as
a trustee of the Trust or other investment companies for which Pioneer acts as
investment adviser.
PURCHASE, REDEMPTION AND PRICING OF SHARES
The fund continuously offers four classes of shares designated as Class A, Class
B, Class C and Class Y Shares as described in the prospectus. The fund offers
its shares at a reduced sales charge to investors who
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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 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00 0.00 see below
The schedule of sales charges above is applicable to purchases of Class A shares
of the fund by (i) an individual, (ii) an individual and his or her spouse and
children under the age of 21 and (iii) a trustee or other fiduciary of a trust
estate or fiduciary account or related trusts or accounts including pension,
profit-sharing and other employee benefit trusts qualified under Sections 401 or
408 of the Code although more than one beneficiary is involved; however,
pension, profit-sharing and other employee benefit trusts qualified under
Sections 401 or 408 of the Code which are eligible to purchase Class R shares
may aggregate purchases by beneficiaries of such plans only if the pension,
profit-sharing or other employee benefit trust has determined that it does not
require the services provided under the Class R Service Plan. The sales charges
applicable to a current purchase of Class A shares of the fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would qualify. Pioneer mutual funds include all mutual funds for which PFD
serves as principal underwriter. At the sole discretion of PFD, holdings of
funds domiciled outside the U.S., but which are managed by affiliates of
Pioneer, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1 million
or more, or for purchases by participants in 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 18 months of purchase (one year of purchase
for shares purchased prior to February 1, 2004). PFD may, in its discretion, pay
a commission to broker-dealers who initiate and are responsible for such
purchases as follows:
ACCOUNTS OTHER THAN EMPLOYER-SPONSORED RETIREMENT PLANS
1.00% Up to $4 million
0.50% Next $46 million
0.25% Over $50 million
EMPLOYER-SPONSORED RETIREMENT PLANS
0.50% Up to $50 million
0.25% Over $50 million
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 $10 million in total plan
assets (or that has 1,000 or 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 18 months of purchase.
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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 the fund to sell, the
amount specified in the LOI.
If the total purchases, less redemptions, exceed the amount specified under the
LOI and are in an amount which would qualify for a further quantity discount,
all transactions will be recomputed on the expiration date of the LOI to effect
the lower sales charge. Any difference in the sales charge resulting from such
recomputation will be either delivered to you in cash or invested in additional
shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI.
When the difference is paid, the shares held in escrow will be deposited to your
account. If you do not pay the difference in sales charge within 20 days after
written request from PFD or your dealer, PIMSS, after receiving instructions
from PFD, will redeem the appropriate number of shares held in escrow to realize
the difference and release any excess.
CLASS B SHARES
You may buy Class B shares at the net asset value per share next computed after
receipt of a purchase order without the imposition of an initial sales charge;
however, Class B shares redeemed within six years of purchase will be subject to
a CDSC at the rates shown in the table below. The charge will be assessed on the
amount equal to the lesser of the current market value or the original purchase
cost of the shares being redeemed. No CDSC will be imposed on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of dividends or capital gain distributions.
The amount of the CDSC, if any, will vary depending on the number of years from
the time of purchase until the time of redemption of Class B shares. In
processing redemptions of Class B shares, the fund will first redeem shares not
subject to any CDSC and then shares held longest during the six-year period. As
a result, you will pay the lowest possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be determined
as follows:
CDSC AS A % OF DOLLAR
YEAR SINCE PURCHASE AMOUNT SUBJECT TO CDSC
- ------------------- ----------------------
First 4.0
Second 4.0
Third 3.0
Fourth 3.0
Fifth 2.0
Sixth 1.0
Seventh and thereafter 0.0
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Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares 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 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, the 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 the
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 DEALERS
From time to time, PFD or its affiliates may elect to make payments to
broker-dealers in addition to the commissions described above. PFD may elect to
reallow the entire initial sales charge to participating dealers for all Class A
sales with respect to which orders are placed during a particular period.
Dealers to whom substantially the entire sales charge is reallowed may be deemed
to be underwriters under federal securities laws. Contingent upon the
achievement of certain sales objectives, PFD may pay to Mutual of Omaha Investor
Services, Inc. a fee of up to 0.20% on qualifying sales of the fund's Class A,
Class B or Class C shares through such dealer. In addition, PFD or its
affiliates may elect to pay broker-dealers an additional commission based on the
net asset value of all of the fund's Class B or Class C shares sold by a dealer
during a particular period. PFD may elect to pay, at its own expense, additional
cash or other incentives to dealers that sell or arrange for the sale of shares
of the fund. Such cash or other incentives
-39-
may take the form of payment for attendance at preapproved conferences or
seminars, sales or training programs for invited registered representatives and
other employees, payment for travel expenses, including lodging, incurred by
registered representatives and other employees for such seminars or training
programs, seminars for the public, advertising and preapproved sales campaigns
or dealer-sponsored events. PFD may also elect to make expense reimbursements
for special training of a dealer's registered representatives and other
employees in group meetings or to help pay the expenses of sales contests. PFD
will offer such cash and other incentives only to the extent permitted by
applicable law or by a self-regulatory agency such as the NASD.
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 the fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the fund to fairly determine
the value of the net assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions for shareholders that are
subject to U.S. federal income tax. The net asset value per share received upon
redemption or repurchase may be more or less than the cost of shares to an
investor, depending on the market value of the portfolio at the time of
redemption or repurchase.
SYSTEMATIC WITHDRAWAL PLAN(S) ("SWP"). A SWP is designed to provide a convenient
method of receiving fixed payments at regular intervals from fund share accounts
having a total value of not less than $10,000. You must also be reinvesting all
dividends and capital 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 or Class B shares without a sales charge into Class A shares of a
Pioneer mutual fund. However, the distributor will not pay your investment firm
a commission on any reinvested amount.
TELEPHONE AND ONLINE TRANSACTIONS
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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 1-888-294-4480 between 9:00 a.m. and 6:00
p.m.) Eastern time on 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:
- - For new accounts, complete the online section of the account application
- - For existing accounts, complete an account options form, write to the
transfer agent or complete the online authorization screen on
www.pioneerfunds.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 pioneerfunds.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 pioneerfunds.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
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:
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- - net asset value prices for all Pioneer mutual funds;
- - annualized 30-day yields on Pioneer's fixed income funds;
- - annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market fund; and
- - 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 and Pioneer Tax Free Money Market Fund, which each seek 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.
PRICING OF SHARES
The net asset value per share of each class of the fund is determined as of the
close of regular trading on the Exchange (normally 4:00 p.m. Eastern time) on
each day on which the Exchange is open for trading. As of the date of this
statement of additional information, the Exchange is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. The net asset value per share of each
class of the fund is also determined on any other day on which the level of
trading in its portfolio securities is sufficiently high that the current net
asset value per share might be materially affected by changes in the value of
its portfolio securities. The fund is not required to determine its net asset
value per share on any day on which no purchase orders in good order for fund
shares are received and no shares are tendered and accepted for redemption.
The fund generally values its portfolio securities using closing market prices
or readily available market quotations. Securities which have not traded on the
date of valuation or securities for which sales prices are not generally
reported are valued at the mean between the current bid and asked prices.
Securities quoted in foreign currencies are converted to U.S. dollars utilizing
foreign exchange rates employed by the fund's independent pricing services.
Generally, trading in non-U.S. securities is substantially completed each day at
various times prior to the close of regular trading on the Exchange. The values
of such securities used in computing the net asset value of the fund's shares
are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of regular trading on the Exchange. When
closing market prices or market quotations are not available or are considered
by Pioneer to be unreliable, the fund uses a security's fair value. Fair value
is the valuation of a security determined on the basis of factors other than
market value in accordance with procedures approved by the fund's Trustees. The
fund also may use the fair value of a security, including a non-U.S. security,
when Pioneer determines that the closing market price on the primary exchange
where the security is traded no longer accurately reflects the value of the
security due to factors affecting one or more relevant securities markets or the
specific issuer. The use of fair value pricing by the fund may cause the net
asset value of its shares to differ from the net asset value that would be
calculated using closing market prices. International securities markets may be
open on days when the U.S. markets are closed. For this reason, the value of any
international securities owned by the fund could change on a day you cannot buy
or sell shares of the fund. In connection with making fair value determinations
of the value of fixed income securities, the fund's Trustees may use a pricing
matrix. Debt securities with remaining maturities of 60 days or less are valued
at amortized cost, which is a method of determining a security's fair value.
The net asset value per share of each class of the fund is computed by taking
the value of all of the fund's assets attributable to a class, less the fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of that class. For purposes of determining net asset value,
expenses of the
-42-
classes of the fund are accrued daily and taken into account. The fund's maximum
offering price per Class A share is determined by adding the maximum sales
charge to the net asset value per Class A share. Class B, 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).
TAXATION OF THE FUND
The fund has elected to be treated, has qualified and intends to qualify each
year as a "regulated investment company" under Subchapter M of the Code so that
it will not pay U.S. federal income tax on income and capital gains distributed
to shareholders (provided that the distribution requirements set forth below are
satisfied). In order to qualify as a regulated investment company under
Subchapter M of the Code, the fund must, among other things, derive at least 90%
of its gross income for each taxable year from dividends, interest, payments
with respect to securities loans, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including gains from
options, futures and forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "90% income test") and
satisfy certain quarterly asset diversification requirements. For purposes of
the 90% income test, the character of income earned by certain entities in which
the fund invests that are not treated as corporations for U.S. federal income
tax purposes (e.g., partnerships or trusts) will generally pass through to the
fund. Consequently, the fund may be required to limit its equity investments in
such entities that earn fee income, rental income or other nonqualifying income.
If the 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, if any, over certain disallowed deductions, the fund generally will be
relieved of 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 investment
company taxable income or net capital gain, it generally will be subject to U.S.
federal income tax at regular corporate rates on the amount retained. The fund
intends to distribute at least annually all or substantially all of its
investment company taxable income, net tax-exempt interest, and net capital
gain. If the fund did not qualify as a regulated investment company for any
taxable year, it would 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 at a maximum 35% U.S. federal income tax rate, and when such
income is distributed, to a further tax at the shareholder level.
Under the Code, the 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. The fund intends to make distributions in a timely manner
and accordingly does not expect to be subject to the excise tax.
The fund generally distributes any net short- and long-term capital gains in
November. The fund generally pays dividends from any net investment income in
December. Dividends from income and/or capital gains may also be paid at such
other times as may be necessary for the fund to avoid U.S. federal income or
excise tax.
Unless shareholders specify otherwise, all distributions from the fund will be
automatically reinvested in additional full and fractional shares of the fund.
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 fund. In general, assuming that the fund has sufficient earnings and
profits, dividends from investment company taxable income are taxable either as
ordinary income or, if so designated by the fund and certain other conditions
are met, as "qualified dividend income" taxable to individual shareholders at a
maximum 15% U.S. federal income tax rate.
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Dividend income distributed to individual shareholders will qualify for the
maximum 15% U.S. federal income tax rate on dividends to the extent that such
dividends are attributable to "qualified dividend income" as that term is
defined in Section 1(h)(11)(B) of the Code from the fund's investments in common
and preferred stock of U.S. companies and stock of certain qualified foreign
corporations provided that certain holding period and other requirements are met
by both the fund and the shareholders. Dividends received by the find from REITs
are qualified dividend income only in limited circumstances.
A foreign corporation generally is treated as a qualified foreign corporation 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. A foreign
corporation that does not meet such requirements will be treated as qualifying
with respect to dividends paid by it if the stock with respect to which the
dividends are paid is readily tradable on an established securities market in
the United States. Dividends from foreign personal holding companies, foreign
investment companies, and passive foreign investment companies, however, will
not qualify for the maximum 15% U.S. federal income tax rate.
A dividend that is attributable to qualified dividend income of the fund that is
paid by the fund to an individual shareholder will not be taxable as qualified
dividend income to such shareholder if (1) 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 (that is, when the declared dividend belongs to the seller,
rather than the buyer on or after the ex-dividend date) 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) the shareholder
elects to have the dividend treated as investment income for purposes of the
limitation on deductibility of investment interest.
Dividends from net capital gain, if any, that are designated as capital gain
dividends 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 the fund to individual
shareholders generally will qualify for the maximum 15% U.S. federal income tax
rate on long-term capital gains, subject to certain limited exceptions. A
shareholder should also be aware that the benefits of the favorable tax rate
applicable to long-term capital gains and qualified dividend income may be
impacted by the application of the alternative minimum tax to individual
shareholders. Under current law, the maximum 15% U.S. federal income tax rate on
qualified dividend income and long-term capital gains will cease to apply to
taxable years beginning after December 31, 2008. In connection with tax
reporting to shareholders, the fund will provide shareholders with information
as to the portion of the distributions which may qualify for treatment as
qualified dividend income.
Distributions by the 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. The U.S. federal income tax status of all distributions will
be reported to shareholders annually.
Although dividends generally will be treated as distributed when paid, any
dividend declared by the fund as of a record date in October, November or
December and paid during the following January will be treated for U.S. federal
income tax purposes as received by shareholders on December 31 of the calendar
year in which it is declared. In addition, certain other distributions made
after the close of a taxable year of the fund may be "spilled back" and treated
as paid by the fund (except for purposes of the 4% excise tax) 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.
Foreign exchange gains and losses realized by the fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Under Treasury regulations that may be promulgated in the future,
any gains from such
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transactions that are not directly related to the 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 the net foreign exchange loss for a
year were to exceed the fund's investment company taxable income (computed
without regard to such loss), the resulting ordinary loss for such year would
not be deductible by the fund or its shareholders in future years.
If the fund acquires any equity interest (under 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 that receive at least 75% of their annual gross income from passive
sources (such as interest, dividends, certain rents and royalties, or capital
gains) or that hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the fund could be
subject to U.S. federal income tax and additional interest charges on "excess
distributions" received from such companies or on gain from the sale of stock in
such companies, even if all income or gain actually received by the fund is
timely distributed to its shareholders. The fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. An election
may generally be available that would ameliorate these adverse tax consequences,
but any such election could require the fund to recognize taxable income or gain
(subject to tax distribution requirements) without the concurrent receipt of
cash. These investments could also result in the treatment of capital gains from
the sale of stock of passive foreign investment companies as ordinary income.
The fund may limit and/or manage its holdings in passive foreign investment
companies to limit its tax liability or maximize its return from these
investments.
The fund may invest in debt obligations that are in the lowest rating categories
or are unrated, including debt obligations of issuers not currently paying
interest or who are in default. Investments in debt obligations that are at risk
of or in default present special tax issues for the fund. Tax rules are not
entirely clear about issues such as when the fund may cease to accrue interest,
original issue discount or market discount, when and to what extent deductions
may be taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by the fund, in the event it invests in such
securities, in order to seek to ensure that it distributes sufficient income to
preserve its status as a regulated investment company and does not become
subject to U.S. federal income or excise tax.
If the fund invests in certain pay-in-kind securities, zero coupon securities,
deferred interest securities or, in general, any other securities with original
issue discount (or with market discount if the fund elects to include market
discount in income currently), the fund 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 fund must distribute, at least
annually, all or substantially all of its investment company taxable income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid U.S. federal income and excise
taxes. Therefore, the fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to borrow the cash,
to satisfy distribution requirements.
For U.S. federal income tax purposes, the fund is permitted to carry forward a
net capital loss for any year to offset its capital gains, if any, for up to
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in U.S. federal income
tax liability to the fund and are not expected to be distributed as such to
shareholders. See "Annual Fee, Expense and Other Information" for the fund's
available capital loss carryforwards.
At the time of an investor's purchase of fund shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the fund's
portfolio or undistributed taxable income of the fund. Consequently, subsequent
distributions by the fund with respect to these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
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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 of long-term capital gain with
respect to such shares.
In addition, if Class A or Class B shares that have been held for less than 91
days are redeemed and the proceeds are reinvested in Class A shares of the fund
or in Class A shares of another mutual fund at net asset value pursuant to the
reinstatement privilege, or if Class A shares in the fund that have been held
for less than 91 days are exchanged for the same class of shares in another fund
at net asset value pursuant to the exchange privilege, all or a portion of the
sales charge paid on the shares that are redeemed or exchanged will not be
included in the tax basis of such shares under the Code to the extent a sales
charge that would otherwise apply to the shares received is reduced pursuant to
the reinstatement or exchange privilege. In either case, the portion of the
sales charge not included in the tax basis of the shares redeemed or surrendered
in an exchange is included in the tax basis of the shares acquired in the
reinvestment or exchange. Losses on redemptions or other dispositions of shares
may be disallowed under "wash sale" rules in the event of other investments in
the fund (including those made pursuant to reinvestment of dividends and/or
capital gain distributions) within a period of 61 days beginning 30 days before
and ending 30 days after a redemption or other disposition of shares. In such a
case, the disallowed portion of any loss generally would be included in the U.S.
federal tax basis of the shares acquired in the other investments.
Under Treasury regulations, if a shareholder recognizes a loss with respect to
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 greater amounts
over a combination of years), the shareholder must file with the IRS a
disclosure statement on 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. 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.
Options written or purchased and futures contracts entered into by the fund on
certain securities, indices and foreign currencies, as well as certain forward
foreign currency contracts, may cause the fund to recognize gains or losses from
marking-to-market even though such options may not have lapsed, been closed out,
or exercised, or such futures or forward contracts may not have been performed
or closed out. The tax rules applicable to these contracts may affect the
characterization of some capital gains and losses realized by the fund as
long-term or short-term. Certain options, futures and forward contracts relating
to foreign currency may be subject to Section 988 of the Code, as described
above, and accordingly may produce ordinary income or loss. Additionally, the
fund may be required to recognize gain if an option, futures contract, forward
contract, short sale or other transaction that is not subject to the
mark-to-market rules is treated as a "constructive sale" of an "appreciated
financial position" held by the fund under Section 1259 of the Code. Any net
mark-to-market gains and/or gains from constructive sales may also have to be
distributed to satisfy the distribution requirements referred to above even
though the fund may receive no corresponding cash amounts, possibly requiring
the disposition of portfolio securities or borrowing to obtain the necessary
cash. Losses on certain options, futures or forward contracts and/or offsetting
positions (portfolio securities or other positions with respect to which the
fund's risk of loss is substantially diminished by one or more options, futures
or forward contracts) may also be deferred under the tax straddle rules of the
Code, which may also affect the characterization of capital gains or losses from
straddle positions and certain successor positions as long-term or short-term.
Certain tax elections may be available that would enable the fund to ameliorate
some adverse effects of the tax rules described in this
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paragraph. The tax rules applicable to options, futures, forward contracts and
straddles may affect the amount, timing and character of the fund's income and
gains or losses and hence of its distributions to shareholders.
Dividends received by the fund from U.S. corporations in respect of any share of
stock with a tax holding period of at least 46 days (91 days in the case of
certain preferred stock) extending before and after each dividend held in an
unleveraged position and distributed and designated by the fund (except for
capital gain dividends received from a regulated investment company) may be
eligible for the 70% dividends-received deduction generally available to
corporations under the Code. 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. In
order to qualify for the deduction, corporate shareholders must meet the minimum
holding period requirement stated above with respect to their fund shares,
taking into account any holding period reductions from certain hedging or other
transactions or positions that diminish their risk of loss with respect to their
fund shares, and, if they borrow to acquire or otherwise incur debt attributable
to fund shares, they may be denied a portion of the dividends-received
deduction. The entire dividend, including the otherwise deductible amount, will
be included in determining the excess, if any, of a corporation's adjusted
current earnings over its alternative minimum taxable income, which may increase
a corporation's alternative minimum tax liability.
The fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gains with respect
to its investments in those countries, which would, if imposed, reduce the yield
on or return from those investments. Tax conventions between certain countries
and the U.S. may reduce or eliminate such taxes in some cases. The fund does not
expect to satisfy the requirements for passing through to its shareholders their
pro rata shares of qualified foreign taxes paid by the fund, with the result
that shareholders will not include such taxes in their gross incomes and will
not be entitled to a tax deduction or credit for such taxes on their own tax
returns.
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 acquisition of the fund shares was
debt-financed. However, in the case of fund shares held through a non-qualified
deferred compensation plan, fund dividends and distributions received by the
plan and 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 governing deferred compensation plans.
A plan participant whose retirement plan invests in the fund, whether such plan
is qualified or not, generally is not taxed on fund dividends or distributions
received by the plan or on 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.
Federal law requires that the fund withhold (as "backup withholding") 28% of
reportable payments, including dividends, capital gain distributions and the
proceeds of redemptions and exchanges or repurchases of fund shares, paid to
shareholders who have not complied with IRS regulations. In order to avoid this
withholding requirement, shareholders, other than certain exempt entities, must
certify on their Account Applications, or on separate IRS Forms W-9, that the
Social Security Number or other Taxpayer Identification Number they provide is
their correct number and that they are not currently subject to backup
withholding, or that they are exempt from backup withholding. The fund may
nevertheless be required to 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.
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If, as anticipated, the fund continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, i.e.,
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax 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, or
tax-exempt or 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 at a
lower treaty rate on amounts treated as ordinary dividends from the fund and,
unless an effective IRS Form W-8BEN, or other authorized withholding certificate
is on file, to backup withholding at the rate of 28% on certain other payments
from the fund. Shareholders should consult their own tax advisers on these
matters and on state, local, foreign and other applicable tax laws.
UNDERWRITERS
PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal underwriter
for the fund in connection with the continuous offering of its shares. PFD is an
indirect wholly owned subsidiary of PIM-USA.
The fund entered into an underwriting agreement with PFD which provides that PFD
will bear expenses for the distribution of the fund's shares, except for
expenses incurred by PFD for which it is reimbursed or compensated by the fund
under the distribution plans (discussed below). PFD bears all expenses it incurs
in providing services under the underwriting agreement. Such expenses include
compensation to its employees and representatives and to securities dealers for
distribution-related services performed for the fund. PFD also pays certain
expenses in connection with the distribution of the fund's shares, including the
cost of preparing, printing and distributing advertising or promotional
materials, and the cost of printing and distributing prospectuses and
supplements to prospective shareholders. The fund bears the cost of registering
its shares under federal and state securities law and the laws of certain
non-U.S. countries. Under the underwriting agreement, PFD will use its best
efforts in rendering services to the fund.
See "Sales Charges" for the schedule of initial sales charge reallowed to
dealers as a percentage of the offering price of the fund's Class A shares.
See the tables in "Annual Fee, Expense and Other Information" for commissions
retained by PFD and reallowed to dealers in connection with PFD's offering of
the fund's Class A shares during recently completed fiscal years.
The fund will not generally issue fund shares for consideration other than cash.
At the fund's sole discretion, however, it may issue fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities.
It is the 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. The 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. The selection of such securities will be made in
such manner as the Board of Trustees deems fair and reasonable; however, the
fund will not distribute illiquid securities in kind.
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DISTRIBUTION PLANS
The fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A shares (the "Class A Plan"), a plan of
distribution with respect to its Class B shares (the "Class B Plan") and a plan
of distribution with respect to its Class C shares (the "Class C Plan")
(together, the "Plans"), pursuant to which certain distribution and service fees
are paid to PFD. The fund has not adopted a plan of distribution with respect to
its Class Y shares. Because of the Plans, long-term shareholders may pay more
than the economic equivalent of the maximum sales charge permitted by the
National Association of Securities Dealers, Inc. (the "NASD") regarding
investment companies. The Class A Plan is a reimbursement plan, and distribution
expenses of PFD are expected to substantially exceed the distribution fees paid
by the fund in a given year. The Class B Plan and Class C Plan are compensation
plans, which means that the amount of payments under the plans are not linked to
PFD's expenditures, and, consequently, PFD can make a profit under each of those
plans.
CLASS A PLAN. Pursuant to the Class A Plan the fund reimburses PFD for its
actual expenditures to finance any activity primarily intended to result in the
sale of Class A shares or to provide services to holders of Class A shares,
provided the categories of expenses for which reimbursement is made are approved
by the Board of Trustees. The Board of Trustees has approved the following
categories of expenses that may be reimbursed under the Class A Plan: (i) a
service fee to be paid to qualified broker-dealers in an amount not to exceed
0.25% per annum of the fund's daily net assets attributable to Class A shares;
(ii) reimbursement to PFD for its expenditures for broker-dealer commissions and
employee compensation on certain sales of the fund's Class A shares with no
initial sales charge; and (iii) reimbursement to PFD for expenses incurred in
providing services to Class A shareholders and supporting broker-dealers and
other organizations (such as banks and trust companies) in their efforts to
provide such services. The expenses of the fund pursuant to the Class A Plan are
accrued daily at a rate which may not exceed the annual rate of 0.25% of the
fund's average daily net assets attributable to Class A shares.
The Class A Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the fund is first invoiced for an expense. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the fund in one fiscal year being paid in the subsequent fiscal year
and thus being treated for purposes of calculating the maximum expenditures of
the fund as having been incurred in the subsequent fiscal year. In the event of
termination or non-continuance of the Class A Plan, the fund has 12 months to
reimburse any expense which it incurs prior to such termination or
non-continuance, provided that payments by the fund during such 12-month period
shall not exceed 0.25% of the fund's average daily net assets attributable to
Class A shares during such period. See "Annual Fee, Expense and Other
Information" for the amount, if any, of carryover of distribution expenses as of
the end of the most recent calendar year.
CLASS B PLAN. PFD pays the selling broker-dealer a commission on the sale of
Class B shares equal to 3.75% of the amount invested. This commission is paid at
the time of sale of the Class B shares. In order to be entitled to a commission,
the selling broker-dealer must have entered into a sales agreements with PFD. At
the time of the sale of a Class B share, PFD may also advance to the
broker-dealer, from PFD's own assets, the first-year service fee payable under
the Class B Plan at a rate up to 0.25% of the purchase price of such shares. If
such an advance is made, the broker-dealer would not receive any further service
fee until the 13th month following the purchase of Class B shares. As
compensation for advancing the service fee, PFD may retain the service fee paid
by the fund with respect to such shares for the first year after purchase.
The Class B Plan provides that the fund shall pay to PFD, as the fund's
distributor for its Class B shares:
- a distribution fee equal on an annual basis to 0.75% of the fund's
average daily net assets attributable to Class B shares. The
distribution fee compensates PFD for its distribution services with
respect to Class B shares. PFD pays the commissions to
broker-dealers discussed above and also pays:
the cost of printing prospectuses and reports used for sales purposes and the
preparation and printing of sales literature and
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other distribution-related expenses, including, without limitation, the cost
necessary to provide distribution-related services, or personnel, travel, office
expenses and equipment.
- a service fee equal to 0.25% of the fund's average daily net assets
attributable to Class B shares. PFD in turn pays the service fee to
broker-dealers at a rate of up to 0.25% of the fund's average daily
net assets attributable to Class B shares owned by shareholder for
whom that broker-dealer is the holder or dealer of record. This
service fee compensates the broker-dealer for providing personal
services and/or account maintenance services rendered by the
broker-dealer with respect to Class B shares. PFD may from time to
time require that dealers, in addition to providing these services,
meet certain criteria in order to receive service fees. PFD is
entitled to retain all service fees with respect to Class B shares
for which there is no dealer of record or with respect to which a
dealer is not otherwise entitled to a service fee. Such service fees
are paid to PFD for personal services and/or account maintenance
services that PFD or its affiliates perform for shareholder
accounts.
PFD also receives contingent deferred sales charges ("CDSCs") attributable to
Class B shares to compensate PFD for its distribution expenses. When a
broker-dealer sells Class B shares and elects, with PFD's approval, to waive its
right to receive the commission normally paid at the time of the sale, PFD may
cause all or a portion of the distribution fees described above to be paid to
the broker-dealer.
Since PFD pays commissions to broker-dealers at the time of the sale of Class B
shares but only receives compensation for such expenses over time through the
distribution fee and CDSC, the Class B Plan and underwriting agreement permit
PFD to finance the payment of commissions to broker-dealers. In order to
facilitate such financing, the fund has agreed that the distribution fee will
not be terminated or modified (including a modification in the rules relating to
the conversion of Class B shares into Class A shares) with respect to Class B
shares:
- issued prior to the date of any termination or modification;
- 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
- issued as a dividend or distribution upon Class B shares initially
issued or attributable to Class B shares issued prior to the date of
any such termination or modification.
The foregoing limitation does not apply to Class B shares issued after the
termination or modification. The foregoing limitation on terminating or
modifying the Class B Plan also does not apply to a termination or modification:
- if a change in the 1940 Act, the rules or regulations under the 1940
Act, the Conduct Rules of the NASD or an order of any court or
governmental agency requires such termination or modification (e.g.
if the Conduct Rules were amended to establish a lower limit on the
maximum aggregate sales charges that could be imposed on sales of
fund shares);
- if the fund (or any successor) terminates the Class B Plan and all
payments under the plan and neither the fund (nor any successor)
establishes another class of shares which has substantially similar
characteristics to the Class B Shares of the fund; or
- at any time by the Board of Trustees. However, the Board of Trustees
may terminate or modify the Class B Plan only if the fund and
Pioneer agree that none of the fund, PFD or any of their affiliates
will pay, after the date of termination or modification, a service
fee with respect to the fund's Class B shares and the termination or
modification of the distribution fee applies equally to all Class B
shares outstanding from time to time.
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In the underwriting agreement, the fund agrees that subsequent to the issuance
of a Class B share, the fund will not waive or change any CDSC (including a
change in the rules applicable to conversion of Class B shares into another
class) in respect of such Class B share, except:
- as provided in the fund's prospectus or statement of additional
information; or
- as required by a change in the 1940 Act and the rules and
regulations thereunder, the Conduct Rules of the NASD or any order
of any court or governmental agency.
CLASS C PLAN. Commissions on the sale of Class C shares of up to 0.75% of the
amount invested in Class C shares are paid to broker-dealers who have sales
agreements with PFD. PFD may also advance to dealers the first-year service fee
payable under the Class C Plan at a rate up to 0.25% of the purchase price of
such shares. As compensation for such advance of the service fee, PFD may retain
the service fee paid by the fund with respect to such shares for the first year
after purchase.
The Class C Plan provides that the fund will pay PFD, as the fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers that enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class C shares, dealers will become eligible for additional annual
distribution fees and service fees of up to 0.75% and 0.25%, respectively, of
the net asset value of such shares. Dealers may from time to time be required to
meet certain other criteria in order to receive service fees. PFD or its
affiliates are entitled to retain all service fees payable under the Class C
Plan for which there is no dealer of record or for which qualification standards
have not been met as partial consideration for personal services and/or account
maintenance services performed by PFD or its affiliates for shareholder
accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to Class C shares of
the fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel, office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. When a broker-dealer sells Class C shares and
elects, with PFD's approval, to waive its right to receive the commission
normally paid at the time of the sale, PFD may cause all or a portion of the
distribution fees described above to be paid to the broker-dealer.
GENERAL
In accordance with the terms of each Plan, PFD provides to the fund for review
by the Trustees a quarterly written report of the amounts expended under the
Plan and the purposes for which such expenditures were made. In the Trustees'
quarterly review of the Plans, they will consider the continued appropriateness
and the level of reimbursement or compensation the Plans provide.
No interested person of the fund, nor any Trustee of the fund who is not an
interested person of the fund, has any direct or indirect financial interest in
the operation of the Plans except to the extent that PFD and certain of its
employees may be deemed to have such an interest as a result of receiving a
portion of the amounts expended under the Plans by the fund and except to the
extent certain officers may have an interest in PFD's ultimate parent,
UniCredito Italiano, or in UniCredito Italiano's subsidiaries.
-51-
Each Plan's adoption, terms, continuance and termination are governed by Rule
12b-1 under the 1940 Act. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit the fund and its current and
future shareholders. The Plans may not be amended to increase materially the
annual percentage limitation of average net assets which may be spent for the
services described therein without approval of the shareholders of the fund
affected thereby, and material amendments of the Plans must also be approved by
the Trustees as provided in Rule 12b-1.
See "Annual Fee, Expense and Other Information" for fund expenses under the
Class A Plan, Class B Plan and Class C Plan and CDSCs paid to PFD for the most
recently completed fiscal year.
Upon redemption, Class A shares may be subject to a 1% CDSC, Class B shares are
subject to a CDSC at a rate declining from a maximum 4% of the lower of the cost
or market value of the shares and Class C shares may be subject to a 1% CDSC.
Class Y shares are not subject to a CDSC.
CALCULATION OF PERFORMANCE DATA
PORTFOLIO TURNOVER
Not applicable(1)
SHARE OWNERSHIP
Not applicable(1)
TRUSTEE OWNERSHIP OF SHARES OF THE FUND AND OTHER PIONEER FUNDS
The following table indicates the value of shares that each Trustee beneficially
owned in the fund and Pioneer Funds in the aggregate as of December 31, 2003.
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,
2003. The share value of any open-end Pioneer Fund is based on the net asset
value of the class of shares on December 31, 2003. The dollar ranges in this
table are in accordance with SEC requirements.
AGGREGATE DOLLAR RANGE OF EQUITY
DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT
NAME OF TRUSTEE SECURITIES IN THE FUND COMPANIES IN THE PIONEER FAMILY OF FUNDS
- ------------------- ---------------------- ----------------------------------------
INTERESTED TRUSTEES
John F. Cogan, Jr. None Over $100,000
Osbert M. Hood None Over $100,000
INDEPENDENT TRUSTEES
David R. Bock* N/A N/A
Mary K. Bush None $10,001-$50,000
Richard H. Egdahl, M.D.** None $50,001-$100,000
Margaret B.W. Graham None $10,001-$50,000
Marguerite A. Piret None $50,001-$100,000
Stephen K. West None Over $100,000
John Winthrop None Over $100,000
* Mr. Bock became a Trustee of the fund on January 1, 2005.
** Dr. Egdahl retired as Trustee of the fund on December 31, 2004.
COMPENSATION OF OFFICERS AND TRUSTEES
-52-
The following table sets forth certain information with respect to the
compensation of each Trustee of the fund.
PENSION OR
AGGREGATE RETIREMENT BENEFITS TOTAL COMPENSATION FROM
COMPENSATION FROM ACCRUED AS PART OF THE FUND AND OTHER PIONEER
NAME OF TRUSTEE FUND** FUND EXPENSES FUNDS***
- --------------- ------ ------------- --------------------------
INTERESTED TRUSTEES:
John F. Cogan, Jr* $ 500.00 $0.00 $ 19,200.00
Osbert M. Hood* $ 500.00 11,520.00
INDEPENDENT TRUSTEES:
David R. Bock**** N/A N/A N/A
Mary K. Bush $ 1,760.00 0.00 104,000.00
Richard H. Egdahl, M.D.***** $ 1,710.00 0.00 99,750.00
Margaret B.W. Graham $ 1,875.00 0.00 104,000.00
Marguerite A. Piret $ 1,875.00 0.00 113,562.50
Stephen K. West $ 1,600.00 0.00 99,750.00
John Winthrop $ 1,710.00 0.00 99,750.00
----------
TOTAL: $11,530.00 $0.00 $651,532.50
* Under the management contract, Pioneer reimburses the fund for any
Interested Trustee fees paid by the fund.
** Estimated for the fiscal year ended June 30, 2005.
*** For the calendar year ended December 31, 2003. There are currently 73 U.S.
registered investment portfolios in the Pioneer Family of Funds.
**** Mr. Bock became a Trustee of the fund on January 1, 2005.
***** Dr. Egdahl retired as Trustee of the fund on December 31, 2004.
APPROXIMATE MANAGEMENT FEES THE FUND PAID OR OWED PIONEER
Not applicable(1)
FEES THE FUND PAID TO PIONEER UNDER THE ADMINISTRATION AGREEMENT
Not applicable(1)
CARRYOVERS OF DISTRIBUTION EXPENSES
Not applicable(1)
APPROXIMATE NET UNDERWRITING COMMISSIONS RETAINED BY PFD (CLASS A)
Not applicable(1)
APPROXIMATE COMMISSIONS REALLOWED TO DEALERS (CLASS A)
Not applicable(1)
FUND EXPENSES UNDER THE DISTRIBUTION PLANS
Not applicable(1)
CDSCS
-53-
Not applicable(1)
BROKERAGE AND UNDERWRITING COMMISSIONS (PORTFOLIO TRANSACTIONS)
Not applicable(1)
CAPITAL LOSS CARRYFORWARDS AS OF DECEMBER 31, 2003
Not applicable(1)
AVERAGE ANNUAL TOTAL RETURNS (DECEMBER 31, 2003)
Not applicable(1)
(1) As of December 31, 2003, the fund had not yet commenced operations. As of
the date of this statement of additional information, the fund had not yet
completed a fiscal year.
FINANCIAL STATEMENTS
Cullen Value Fund's (the predecessor to Pioneer Cullen Value Fund) financial
statements and financial highlights for the fiscal year ended June 30, 2003 and
2004 appearing in the fund's annual report, as filed with the SEC on September
5, 2003 (Accession No. 0000894189-03-001363) and September 7, 2004 (Accession
No. 0000898531-04-000275) are incorporated by reference into this statement of
additional information.
Cullen Value Fund's annual reports include the financial statements referenced
above and are available without charge upon request by calling Shareholder
Services at 1-800-225-6292.
-54-
PART C
OTHER INFORMATION
PIONEER SERIES TRUST III
(on behalf of its series
PIONEER CULLEN VALUE FUND)
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 24 of the most recently filed
Registration Statement of Pioneer Cullen Value Fund (the "Registrant") on Form
N-1A under the Securities Act of 1933 and the Investment Company Act of 1940
(File Nos. 333-120144 and 811-21664) as filed with the Securities and Exchange
Commission on November 1, 2004 (Accession No. 0001016964-04-000435), which
information is incorporated herein by reference.
ITEM 16. EXHIBITS
(1)(a) Agreement and Declaration of Trust (1)
(1)(b) Certificate of Trust (1)
(2) By-Laws (1)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization (*)
(5) Reference is made to Exhibits (1) and (2) hereof
(6)(a) Form of Management Contract between the Registrant and Pioneer
Investment Management, Inc. (2)
(6)(b) Form of Expense Limit Agreement (*)
(6)(c) Form of Sub-Advisory Agreement between Pioneer Investment
Management, Inc. and Cullen Capital Management, LLC (2)
(7) Form of Underwriting Agreement between the Registrant and
Pioneer Funds Distributor, Inc. (2)
(8) Not applicable
(9) Custodian Agreement between the Registrant and Brown Brothers
Harriman & Co. (2)
(10)(a) Form of Multiple Class Plan pursuant to Rule 18f-3 (2)
(10)(b) Form of Distribution Plan relating to Class A shares (2)
(10)(c) Form of Distribution Plan relating to Class B shares (2)
(10)(d) Form of Distribution Plan relating to Class C shares (2)
(10)(e) Form of Dealer Sales Agreement (2)
(11) Opinion of Counsel (legality of securities being offered) (2)
(12) Form of opinion as to tax matters and consent (2)
(13)(a) Master Investment Company Service Agreement (2)
(13)(b) Administration Agreement Between the Registrant and Pioneer
Investment Management, Inc. (formerly Pioneering Management
Corporation) (2)
(14) Consent of Independent Registered Public Accounting Firm (*)
(15) Not Applicable
(16) Power of Attorney (*)
(17)(a) Code of Ethics (2)
(17)(b) Form of Proxy Card (*)
(1) Previously filed. Incorporated herein by reference from the exhibits filed
with the Registrant's initial Registration Statement on Form N-1A (File Nos.
333-120144; 811-21664) as filed with the Securities and Exchange Commission (the
"SEC") on November 1, 2004 (Accession No. 0001016964-04-000435).
(2) Previously filed. Incorporated herein by reference from the exhibits filed
with the Registrant's initial Registration Statement on Form N-14 (File No.
333-120226) as filed with the SEC on November 4, 2004 (Accession No.
0001145443-04-00124).
(*) Filed herewith. The form of agreement and plan of reorganization is attached
as Exhibit A to the Registrant'a prospectus/proxy statement.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is part of this
Registration Statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for the reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the Registration
Statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that it shall file a final executed
version of the legal opinion as to tax matters and consent as an exhibit to the
subsequent post-effective amendment to its registration statement on Form N-1A
filed with the SEC after the comsummation of the reorganization contemplated by
this Registration Statement on Form N-14.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-14 has been signed on behalf of the
Registrant, in the City of Boston and the Commonwealth of Massachusetts, on the
18th day of January, 2005.
Pioneer Series Trust III
on behalf of its series
Pioneer Cullen Value Fund
By: /s/ Osbert M. Hood
------------------------------------
Osbert M. Hood
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ----------------------- --------------------------- ----------------
* Chairman of the Board, January 18, 2005
- -----------------------
John F. Cogan, Jr. Trustee, and President
(Principal Executive Officer)
* Chief Financial Officer and January 18, 2005
- ----------------------- Treasurer (Principal Financial
Vincent Nave and Accounting Officer)
*
- -----------------------
David R. Bock Trustee
*
- -----------------------
Mary K. Bush Trustee
*
- -----------------------
Margaret B. W. Graham Trustee
*
- -----------------------
/s/ Osbert M. Hood
- -----------------------
Osbert M. Hood Trustee
*
- -----------------------
Marguerite A. Piret Trustee
*
- -----------------------
Steven K. West Trustee
*
- -----------------------
John Winthrop Trustee
* By: /s/ Osbert M. Hood January 18, 2005
-------------------------------------
Osbert M. Hood, Attorney-in-Fact
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(6)(b) Form of Expense Limit Agreement
(14) Consent of Independent Registered Public Accounting Firm
(16) Power of Attorney
(17)(b) Form of Proxy Card