As filed with the Securities and Exchange Commission on August 20, 2004
File No. 333-_______
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. _______
Post-Effective Amendment No. ______
(Check appropriate box or boxes)
PIONEER VARIABLE CONTRACTS TRUST
(on behalf of its Portfolios:
Pioneer Bond VCT Portfolio
Pioneer Fund VCT Portfolio
Pioneer Growth Opportunities VCT Portfolio
Pioneer Mid Cap Value VCT Portfolio
Pioneer Money Market VCT Portfolio
Pioneer Small Cap Value II VCT Portfolio)
(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.
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.
COMBINED PROXY STATEMENT OF
SAFECO RESOURCE SERIES TRUST
SAFECO BOND PORTFOLIO
SAFECO CORE EQUITY PORTFOLIO
SAFECO GROWTH OPPORTUNITIES PORTFOLIO
SAFECO MONEY MARKET PORTFOLIO
SAFECO MULTI CAP CORE PORTFOLIO
SAFECO SMALL CAP VALUE PORTFOLIO
(each a series of Safeco Resource Series Trust, and each "your Safeco Portfolio"
and collectively, the "Safeco Portfolios")
[address]
PROSPECTUS
FOR CLASS I SHARES OF
PIONEER BOND VCT PORTFOLIO
PIONEER FUND VCT PORTFOLIO
PIONEER GROWTH OPPORTUNITIES VCT PORTFOLIO
PIONEER MONEY MARKET VCT PORTFOLIO
PIONEER MID CAP VALUE VCT PORTFOLIO
PIONEER SMALL CAP VALUE II VCT PORTFOLIO
(each a "Pioneer Portfolio")
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR [ ], 2004
To the owners of variable annuity or life insurance contracts:
You are being asked to vote on the proposals listed below on the enclosed voting
instruction card. Your vote will instruct the insurance company that issued your
contract how to vote the shares of the portfolio attributable to your contract
at the special meeting of shareholders.
A joint special meeting of shareholders (the "Meeting") for each of the
Portfolios will be held at the offices of [address] on [ ], 2004 at [ : ]
[a/p].m., local time, to consider the following:
1. With respect to each Safeco Portfolio, a proposal to approve an Agreement
and Plan of Reorganization. Under the Agreement and Plan of Reorganization,
your Safeco Portfolio will transfer all of its assets to an investment
company (each a "Pioneer Portfolio") managed by Pioneer Investment
Management, Inc. ("Pioneer") in exchange for Class I shares of the Pioneer
Portfolio. Some of the Pioneer Portfolios are existing mutual funds with
substantially similar investment objective and policies as your Safeco
Portfolio. In the case of certain Safeco Portfolios, the Pioneer Portfolio
is a newly organized investment company with investment objective and
policies substantially the same as your Safeco Portfolio. Class I shares of
the applicable Pioneer Portfolio will be distributed to your Safeco
Portfolio's shareholders in proportion to the relative net asset value of
their share holdings on the closing date of the reorganization. The Pioneer
Portfolio also will assume your Safeco Portfolio's liabilities that are
included in the calculation of your Safeco Portfolio's net assets at the
closing. Your Safeco Portfolio will then be dissolved. As a result of the
reorganization you will become shareholders of the Pioneer Portfolio. Your
board of trustees recommends that you vote FOR this proposal.
2. With respect to each Safeco Portfolio, a proposal to approve an interim
investment advisory agreement between your Safeco Portfolio and Pioneer.
This agreement provides for the management of your Safeco Portfolio's
assets from August 2, 2004, when the advisory agreement between your Safeco
Portfolio and Safeco Asset Management, Inc., each Portfolio's investment
adviser, ("SAM") terminated. This interim investment advisory agreement has
the same terms, other than its duration, as the agreement between your
Safeco Portfolio and SAM. Your board of trustees recommends that you vote
FOR this proposal.
3. Any other business that may properly come before the Meeting.
Shareholders of record as of the close of business on [ ], 2004 are
entitled to vote at the Meeting and any related follow-up meetings.
Whether or not you expect to attend the Meetings, please complete and return the
enclosed proxy card. If shareholders do not return their proxies in sufficient
numbers, your Safeco Portfolio may be required to make additional solicitations.
By order of the Board of Trustees,
[Name]
[Title]
[ ], 2004
COMBINED PROXY STATEMENT OF
SAFECO RESOURCE SERIES TRUST
SAFECO BOND PORTFOLIO
SAFECO CORE EQUITY PORTFOLIO
SAFECO GROWTH OPPORTUNITIES PORTFOLIO
SAFECO MONEY MARKET PORTFOLIO
SAFECO MULTI CAP CORE PORTFOLIO
SAFECO SMALL CAP VALUE PORTFOLIO
(each a series of Safeco Resource Series Trust, and each "your Safeco Portfolio"
and collectively, the "Safeco Portfolios")
The address and telephone number of each Portfolio is [address] and [telephone].
PROSPECTUS
FOR CLASS I SHARES OF
PIONEER BOND VCT PORTFOLIO
PIONEER FUND VCT PORTFOLIO
PIONEER GROWTH OPPORTUNITIES VCT PORTFOLIO
PIONEER MONEY MARKET VCT PORTFOLIO
PIONEER MID CAP VALUE VCT PORTFOLIO
PIONEER SMALL CAP VALUE II VCT PORTFOLIO
(each a "Pioneer Portfolio")
The address and telephone number of each Pioneer Portfolio is 60 State Street,
Boston, Massachusetts 02109 and 1-800-622-3265 or 1-800-225-6292.
This combined proxy statement and prospectus (the "Proxy Statement/Prospectus")
dated [____], 2004 is being furnished to shareholders of the Portfolios listed
above (each a "Safeco Portfolio") of Safeco Resource Series Trust in connection
with the solicitation by the respective board of trustees (the "Board, or the
"Trustees") of the Trust of proxies to be used at a joint meeting of
shareholders (the "Meeting") to be held at [INSERT ADDRESS] on [___], 2004 at
[time]. The Proxy Statement/Prospectus contains information you should know
before voting on (i) the approval of a proposed Agreement and Plan of
Reorganization (each a "Plan") between each Safeco Portfolio and a corresponding
investment company in the Pioneer family of funds listed above (each a "Pioneer
Portfolio") providing for the reorganization of each Safeco Portfolio into a
corresponding Pioneer Portfolio (each a "Reorganization"), and (ii) the approval
of an interim advisory agreement for each Safeco Portfolio. The following table
indicates the corresponding Pioneer Portfolio that each Safeco Portfolio
shareholder would receive shares of if each Plan is approved, which Safeco
Portfolio shareholders may vote on which proposals and on what page of this
Proxy Statement/Prospectus the discussion regarding each proposal begins.
Although each Reorganization is similar in structure, you should read carefully
the specific discussion regarding your Safeco Portfolio's Reorganization.
====================================================================================================================================
Acquired Portfolio Pioneer Portfolio Shareholders Entitled to Vote Page
====================================================================================================================================
Proposal 1 Safeco Bond Portfolio Pioneer Bond VCT Portfolio Safeco Bond Portfolio shareholders
====================================================================================================================================
Proposal 2 Safeco Core Equity Pioneer Fund VCT Portfolio Safeco Core Equity Portfolio
Portfolio shareholders
====================================================================================================================================
Proposal 3 Safeco Growth Pioneer Growth Safeco Growth Opportunities Portfolio
Opportunities Portfolio Opportunities VCT Portfolio shareholders
====================================================================================================================================
Proposal 4 Safeco Money Market Pioneer Money Market VCT Safeco Money Market Portfolio
Portfolio Portfolio shareholders
====================================================================================================================================
Proposal 5 Safeco Multi-Cap Core Pioneer Mid Cap Value VCT Safeco Multi-Cap Core Portfolio
Portfolio Portfolio shareholders
====================================================================================================================================
Proposal 6 Safeco Small-Cap Value Pioneer Small Cap Value II Safeco Small-Cap Value Portfolio
Portfolio VCT Portfolio shareholders
====================================================================================================================================
Proposal 7(a)-(f) Each Portfolio Not applicable Shareholders of each Portfolio voting
separately as to the proposal that
affects their Portfolio
====================================================================================================================================
3
====================================================================================================================================
Where to Get More Information
====================================================================================================================================
The Safeco Portfolios' prospectuses dated April 30, 2004. Available to you free of charge by calling 1-800-528-6501. Each
prospectus, which is also on file with the SEC, is incorporated by
reference into this proxy statement and prospectus.
The Safeco Portfolios' annual report dated December 31, Available to you free of charge by calling 1-800-528-6501. Also on
2003 and semiannual report dated June 30, 2004. file with the SEC. See "Available Information." These reports are
incorporated by reference into this proxy statement and prospectus.
====================================================================================================================================
Each Pioneer Portfolios' current prospectus and each Available to you free of charge by calling 1-800-225-6292. These
Pioneer Portfolio's most recent annual and semi-annual prospectuses are also on file with the SEC.
reports to shareholders
====================================================================================================================================
A statement of additional information for this joint Available to you free of charge by calling 1-800-225-6292. Also on
proxy statement and prospectus (the "SAI"), dated file with the SEC. This SAI is incorporated by reference into this
September , 2004. It contains additional information proxy statement and prospectus.
about your Safeco Portfolios and the Pioneer Portfolios.
====================================================================================================================================
To ask questions about this proxy statement and Call your Safeco Portfolio's toll-free telephone number:
prospectus. 1-800-[________].
====================================================================================================================================
An investment in any Pioneer Portfolio is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
Shares of the Pioneer Portfolios have not been approved or disapproved by the
Securities and Exchange Commission (the "SEC"). The SEC has not passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
Background to the Reorganizations
Safeco Asset Management Company ("SAM"), the Safeco Portfolios' investment
adviser until August 1, 2004, was a subsidiary of Safeco Corporation, a
multi-line insurance company. On August 2, 2004, Symetra Financial Corporation
("Symetra") acquired certain assets from Safeco Corporation, including all of
the capital stock of SAM. While reviewing the operations of SAM in anticipation
of that transaction, Symetra determined that engaging in the business of
investment adviser to the Safeco Portfolios was not a core business that it
intended to continue. After investigating and discussing several alternatives
for ongoing investment management of the Safeco Portfolios with the Trustees,
Symetra conducted a search for a new investment adviser for the Safeco
Portfolios. Ultimately Symetra decided to recommend to the Boards that Pioneer
Investment Management, Inc. ("Pioneer") be hired to manage the Safeco Portfolios
on an interim basis until the reorganizations occur and the Safeco Portfolios be
reorganized into similar mutual funds managed by Pioneer.
The Boards met at a series of meetings in July 2004. At these meetings your
Trustees received and evaluated materials regarding Pioneer and the Pioneer
Portfolios, including the performance record and expense structure of each of
the Pioneer Portfolios, the impact of the proposed Reorganizations on the
Portfolios' shareholders, and the quality of the services offered by Pioneer. At
these meetings, Trustees met with representatives of Pioneer. In addition to
these general factors, the Trustees also considered these and other factors
specifically in the context of each Reorganization. On July 30, 2004, the Boards
of Trustees, including all of the Trustees who are not interested persons of SAM
(the "Independent Trustees"), unanimously voted to approve each of the
Reorganizations.
Pioneer believes that it offers favorable long-term investment performance and
enhanced shareholder services to the Safeco Portfolios' shareholders. The
Reorganizations will, by combining the assets of two mutual funds and, by being
part of a family of funds with greater distribution capabilities, offer the
potential for increased economies of scale. Increased economies of scale have
the potential of benefiting the shareholders of your Safeco Portfolios and the
Pioneer Portfolios by spreading fixed costs over a larger asset base and
reducing expenses on a per share basis. There can be no assurance that such
economies of scale will be realized.
Why the Trustees are Recommending the Reorganizations
The Trustees believe that reorganizing your Safeco Portfolio into a portfolio
with substantially similar investment objective and policies that is part of the
Pioneer family of funds offers you potential benefits. These potential benefits
and considerations include:
4
o SAM, the investment adviser to each of the Portfolios until August 1,
2004, was acquired by Symetra. Symetra informed the Board that it was
not interested in continuing to provide investment advisor services to
the Safeco Portfolios. Therefore, a change in your Safeco Portfolio's
investment advisor was necessary
o The track record of Pioneer in managing the Pioneer Portfolios as
compared to the historical performance of the Safeco Portfolios;
o The resources of Pioneer, including its infrastructure in shareholder
services;
o The opportunity to be part of a significantly larger family of funds,
with additional product offerings and enhanced shareholder servicing
options;
o Pioneer's commitment until the second anniversary of the closing date
of the Reorganizations to limit the total operating expenses of the
Class I shares of each Pioneer Portfolio.
How Each Reorganization Will Work
o Each Safeco Portfolio will transfer all of its assets to the
corresponding Pioneer Portfolio. Each Pioneer Portfolio will assume
the corresponding Safeco Portfolio's liabilities that are included in
the calculation of such Safeco Portfolio's net asset value at the
closing of the Reorganization (the "Closing Date").
o Each Pioneer Portfolio will issue Class I shares to the corresponding
Safeco Portfolio in amounts equal to the aggregate net asset value of
that Safeco Portfolio's shares. Holders of all share classes of your
Safeco Portfolio will receive Class I shares of the corresponding
Pioneer Portfolio. These shares will be distributed to shareholders in
proportion to the relative net asset value of their share holdings on
the Closing Date. On the Closing Date, you will hold the shares of the
Pioneer Portfolio with the same aggregate net asset value as the
shares of your Safeco Portfolio that you held immediately prior to the
reorganization.
o Each Safeco Portfolio will be dissolved after the Closing Date.
o Pioneer acts as investment adviser to each Pioneer Portfolio. For a
two-year period following the Closing Date, Pioneer has agreed to
limit each Pioneer Portfolio's total operating expenses (other than
extraordinary expenses) for Class I shares. The expense limitation, if
any, applicable to the class of shares of the Pioneer Portfolio into
which your Safeco Portfolio is being reorganized is set forth under
the discussion of the proposal relating to such Reorganization.
Pioneer is not required to limit any expenses after the second
anniversary of the Reorganization.
o The Reorganizations are intended to result in no income, gain or loss
being recognized for federal income tax purposes to any of the Pioneer
Portfolios, the Safeco Portfolios or the shareholders of the Safeco
Portfolios.
Who is Pioneer
Pioneer is registered as an investment adviser under the Investment Advisers Act
of 1940 and acts as investment adviser to mutual fund and institutional
accounts. Pioneer or its predecessors have been managing mutual funds since 1928
and at June 30, 2004 had, together with its affiliates, over $35 billion in
assets under management. Pioneer is an indirect, wholly-owned subsidiary of
UniCredito Italiano S.p.A., an Italian Bank.
5
Who Bears the Expenses Associated with the Reorganizations
Pioneer and Symetra will pay all out of pocket expenses of the Safeco Portfolios
and the Pioneer Portfolios associated with the Reorganizations, including, but
not limited to: (1) the expenses associated with the preparation, printing and
mailing of any shareholder communications, including this joint Proxy
Statement/Prospectus, and any filings with the SEC and other governmental
authorities in connection with the Reorganizations; (2) the fees and expenses of
any proxy solicitation firm retained in connection with the Reorganizations; (3)
the legal fees and expenses incurred by the Safeco Portfolios in connection with
the Reorganizations; and (4) the Trustee fees and out of pocket expenses
incurred as a result of the Reorganizations.
Will Pioneer and Symetra Benefit From the Reorganizations
Pioneer will benefit from managing a larger pool of assets. Pioneer is also
acquiring certain assets associated with SAM's mutual funds and institutional
account advisory business. In consideration of that acquisition of these assets
and certain covenants from Symetra and SAM, including their assistance in
facilitating the Reorganization and their assistance in facilitating the
Reorganizations and their obligation to indemnify Pioneer against certain
liabilities, Pioneer has agreed to pay Symetra up to $30 million. This amount is
subject to downward adjustment if the net assets of the Safeco Portfolios that
approve the Reorganizations (together with assets in certain other accounts) are
less than $2.6 billion.
Why Are Interim Advisory Agreements Being Voted On
Having determined to recommend the Reorganizations, the Trustees elected to
appoint Pioneer as investment adviser to each Portfolio until the closing of the
Reorganization given that Symetra had indicated that it did not wish to continue
to offer investment advisory services to the Safeco Portfolios.
Under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), shareholders must approve any new investment adviser to a Safeco
Portfolio. However, Rule 15a-4 under the Investment Company Act permits your
trustees to appoint an adviser on an interim basis without prior shareholder
approval if the new adviser agrees to provide such services on the same terms as
the previous adviser and approval of the new adviser is submitted to
shareholders within 150 days. Because Pioneer will be making the payment to
Symetra discussed above, any fees that Pioneer would be entitled to under the
interim advisory agreement will be held in escrow until shareholders approval is
obtained. If Pioneer is not approved as investment adviser to a Portfolio,
Pioneer will not receive the fee under the current investment advisory agreement
with SAM but instead would be paid a fee based upon Pioneer's cost in managing
the Portfolio. If the Reorganizations and the appointment of Pioneer as interim
investment adviser is not approved by December [ ], 2004, Pioneer will no longer
provide advisory services to the Portfolios, unless an extension of the 150 day
period is permitted by a Rule or independent position of the staff of the SEC.
What Happens if a Reorganization Is Not Approved
If a Reorganization is not approved, the Board for that Safeco Portfolio will
consider what alternative action to take. Such action could include the
liquidation of the Portfolio.
Who is Eligible to Vote
If you are the owner of a variable annuity or variable life insurance contract
(a "contract owner"), the insurance company that issued your contract is the
record owner of portfolio shares. By completing and returning the enclosed
voting instruction card, you will instruct the insurance company how to vote the
shares of the portfolio attributable to your contract.
Shareholders of record on [ ], 2004 are entitled to attend and vote at the
Meeting or any adjournment of the Meeting. On each proposal, all shareholders of
a Safeco Portfolio will vote together as a single class. 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 and the interim advisory
agreement with Pioneer. If any other business comes before the Meeting, your
shares will be voted at the discretion of the persons named as proxies.
TABLE OF CONTENTS
================================================================================================
Page
================================================================================================
INTRODUCTION
================================================================================================
PROPOSAL 1 - SAFECO BOND PORTFOLIO
================================================================================================
PROPOSAL 2 - SAFECO CORE EQUITY PORTFOLIO
================================================================================================
PROPOSAL 3 - SAFECO GROWTH OPPORTUNITIES PORTFOLIO
================================================================================================
PROPOSAL 4 - SAFECO MONEY MARKET PORTFOLIO
================================================================================================
PROPOSAL 5 - SAFECO MULTI CAP CORE PORTFOLIO
================================================================================================
PROPOSAL 6 - SAFECO SMALL CAP VALUE II PORTFOLIO
================================================================================================
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION
================================================================================================
TAX STATUS OF EACH REORGANIZATION
================================================================================================
PROPOSAL 7(A)-(F)- APPROVAL OF PIONEER AS INVESTMENT ADVISER FOR EACH PORTFOLIO
================================================================================================
VOTING RIGHTS AND REQUIRED VOTE
================================================================================================
ACTIONS TO BE TAKEN IF THE PROPOSALS ARE NOT APPROVED
================================================================================================
ADDITIONAL INFORMATION ABOUT THE PIONEER PORTFOLIOS
================================================================================================
FINANCIAL HIGHLIGHTS
================================================================================================
INFORMATION CONCERNING THE MEETING
================================================================================================
OWNERSHIP OF SHARES OF THE PORTFOLIOS
================================================================================================
EXPERTS
================================================================================================
AVAILABLE INFORMATION
================================================================================================
ANNEX A - AGREEMENT AND PLAN OF REORGANIZATION
================================================================================================
ANNEX B - FORM OF INTERIM ADVISORY AGREEMENT
================================================================================================
ANNEX C - ADDITIONAL INFORMATION REGARDING PIONEER
================================================================================================
6
Safeco Bond Portfolio and
Pioneer Bond VCT Portfolio
PROPOSAL 1
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement and prospectus or incorporated herein. You should read carefully
the entire proxy statement, including the form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Safeco Bond Portfolio to the Pioneer Bond Portfolio
===================================================================================================================================
Safeco Bond Portfolio Pioneer Bond Portfolio
===================================================================================================================================
Business A series of Safeco Resource Series Trust, a A newly created series of Pioneer Variable Contracts
diversified open-end management investment Trust, a diversified open-end management investment
company organized as a Delaware statutory trust. company organized as a Delaware statutory trust.
===================================================================================================================================
Net assets as of $47.8 million None. The Pioneer Bond Portfolio is newly created
June 30, 2004 and does not expect to commence investment
operations until the Reorganization occurs.
===================================================================================================================================
Investment advisers and Investment adviser (until August 1, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (until August 1, 2004): Portfolio Manager:
Greg Card (since 2001)
CFA, Assistant Vice President, SAM Day-to-day management of the Fund's portfolio is the
responsibility of a team of fixed income portfolio
Tim Hokari (since 2000) managers led by Kenneth J. Taubes.
Assistant Vice President, SAM
Mr. Taubes joined Pioneer as a senior vice president
Lesley Fox (since 2000) in 1998 and has been an
investment professional since Assistant Vice
President, SAM 1982.
Nancy McFadden (since 2004)
Currently Pioneer is acting as investment adviser to
the Portfolio. The portfolio managers of the Pioneer
Portfolio, as indicated in the next column, currently
manage your Safeco Portfolio.
===================================================================================================================================
Investment objective Each Portfolio seeks to provide as high a level of current income as is consistent with the relative
stability of capital.
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
===================================================================================================================================
Primary investments Under normal circumstances, each Portfolio invests at least 80% of its net assets (plus any borrowings for
investment purposes) in bonds, most of which are medium-term.
===================================================================================================================================
Investment strategies SAM historically analyzed each security it considers for purchase on a stand-alone basis and on how the
security fits in with other assets of the Portfolio. SAM historically considered:
o The price of the security relative to its rating and market sector
o Structural features, such as an issuer's right to buy the bond back at a stated price (a "call"), or the
Portfolio's right to require the issuer to buy the bond back at a stated price (a "put")
o The effect the security might have on the existing diversification of Portfolio assets and allocation
among various market sectors
o The effect the security might have on the yield and sensitivity to interest rate changes of the
Portfolio's assets overall
Each Portfolio may sell a security if:
o A different sector of the market is more attractive
===================================================================================================================================
===================================================================================================================================
Safeco Bond Portfolio Pioneer Bond Portfolio
===================================================================================================================================
o The adviser is concerned about an issuer's credit
risk
o The security becomes fully valued
o Cash is needed to meet shareholder redemptions
===================================================================================================================================
Other investments Each Portfolio may invest up to 50% of its assets in mortgage-related securities, including GNMA
securities, mortgage pass-through securities issued by governmental and non-governmental issuers and
collateralized mortgage obligations ("CMOs") that are rated in the top four investment grades.
Each Portfolio may invest significantly in debt securities of the following sectors: domestic industrials,
domestic utilities, supranationals, Yankee and foreign. Each Portfolio may also invest in below
investment-grade debt securities.
Each Portfolio may purchase "when-issued" or "delayed-delivery" securities, and may purchase or sell
securities on a "forward commitment" basis.
Each Portfolio may invest up to 20% if its assets in foreign securities which are listed on a national
exchange, including investments in American Depository Receipts.
===================================================================================================================================
Temporary defensive Each Portfolio may hold cash or invest in high-quality, short-term securities issued by an agency or
strategies instrumentality of the U.S. government, high-quality commercial paper, certificates of deposit, shares
of no-load, open-end money market funds, or repurchase agreements as a temporary defensive measure when
market conditions so warrant.
===================================================================================================================================
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act and each Portfolio is subject
to diversification requirements under the Internal Revenue Code of 1986 (the "Code").
===================================================================================================================================
Industry concentration Each Portfolio may not invest more than 25% of its assets in any one industry.
===================================================================================================================================
Restricted and illiquid If immediately after and as a result of such action the value of the following securities, in the
securities aggregate, would exceed 15% of a Portfolio's net assets, each Portfolio will not (i) purchase securities
for which there is no readily available market, (ii) purchase time deposits maturing in more than seven
days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written
by the Portfolio, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in
interests in real estate investment trusts which are not readily marketable or interests in real estate
limited partnerships which are not listed or traded on the NASDAQ Stock Market.
===================================================================================================================================
Borrowing Each Portfolio may borrow money (i) from banks, or (ii) by engaging in reverse repurchase agreements. The
Portfolio will not commit to additional securities purchases if total outstanding borrowings are equal to
5% or more of total assets.
===================================================================================================================================
Lending Each Portfolio may lend securities to qualified institutional investors with a value of up to 33% of the
Portfolio's total assets.
===================================================================================================================================
Derivative instruments Each Portfolio may not purchase securities on margin. However, the Portfolio may (i) obtain short-term
credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in
connection with its use of financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments.
===================================================================================================================================
Other investment As described above, the Portfolios have substantially similar investment strategies and policies. Certain
policies and restrictions of the non-principal investment policies and restrictions are different. For a more complete discussion of
each Portfolio's other investment policies and fundamental and non-fundamental investment restrictions,
see the SAI.
===================================================================================================================================
Buying, Selling and Exchanging Shares
===================================================================================================================================
Sales charges Shares of the Portfolio are not subject to any The Class I shares of Pioneer Bond Portfolio you
sales charges. receive in the Reorganization will not be subject to
any sales charge.
===================================================================================================================================
Management and other Safeco Bond Portfolio pays SAM an investment Pioneer Opportunities Portfolio pays Pioneer a
fees advisory and management fee equal to 0.74% of management fee equal to 0.50% of the Portfolio's
the Portfolio's average daily net assets. average daily net assets.
Pursuant to this arrangement, SAM serves as
administrator and fund accounting agent for the In addition, the Portfolio reimburses Pioneer for
Portfolio. certain fund accounting and legal expenses incurred
on behalf of the
===================================================================================================================================
2
===================================================================================================================================
Safeco Bond Portfolio Pioneer Bond Portfolio
===================================================================================================================================
For the fiscal year ended December 31, 2003, Portfolio and pays a separate shareholder
the Portfolio's annual operating expenses were servicing/transfer agency fee to Pioneer
0.86%, per share. Investment Management Shareholder Services, Inc.
("PIMSS"), an affiliate of Pioneer.
Pioneer has agreed until the second anniversary of
the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses)
of the Class I shares to 0.89% of the average
daily net assets attributable to Class I.
===================================================================================================================================
Distribution and Shares of each Portfolio are not subject to a Rule 12b-1 fee.
service (12b-1) fee
===================================================================================================================================
Buying shares Each Portfolio may sell its shares directly to separate accounts established and maintained by insurance
companies for the purpose of funding variable contracts and to qualified plans. Shares of the Portfolios
are sold at net asset value. Investments in a Portfolio are credited to an insurance company's separate
account or qualified plan account, immediately upon acceptance of the investment by the Portfolio. The
offering of shares of any Portfolio may be suspended for a period of time, and each Portfolio reserves the
right to reject any specific purchase order. Purchase orders may be refused if, in the investment
adviser's opinion, they are of a size or frequency that would disrupt the management of the Portfolio.
===================================================================================================================================
Selling shares Shares of each Portfolio will be sold at net asset value per share next calculated after the Portfolio
receives your request in good order.
You may sell your shares by contacting the insurance company sponsoring your variable contract, as
described in your Portfolio's prospectus. You can also sell your shares by contacting the Portfolio
directly if your account is registered in your name. If the account is established in the shareholder's
own name, shareholders may also redeem shares of the Portfolio by telephone or online.
===================================================================================================================================
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has substantially the same investment objective, primary
investment policies and strategies, the Portfolios are subject to the same
principal risks. Even though each Portfolio seeks a high level of current
income, you could lose money on your investment in either Portfolio or not make
as much as if you invested elsewhere if:
o Interest rates go up, causing the value of debt securities in the Portfolio
to go down
o Below investment grade securities generally have greater volatility,
reduced liquidity and a much higher risk of repayment default
o Prepayment fluctuations during periods of declining interest rates may
decrease the overall investment returns of the Portfolio
o Risks associated with mortgage-backed securities, such as interest rate
risk and prepayment risk may be amplified if the investment is in a
collateralized mortgage obligation
o Yankee sector bonds carry the risk of nationalization of the issuer,
confiscatory taxation by the foreign government and establishment of
controls by the foreign government that would inhibit the remittance due to
the Portfolio
o Eurodollar bonds are subject to the risk that a foreign government might
prevent dollar denominated funds from flowing across its borders
o To the extent the portfolio owns bonds denominated in foreign currencies,
it could lose money as a result of unfavorable currency exchange rates
An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
3
Past Performance
Set forth below is performance information for Safeco Bond Portfolio. The bar
charts show how Safeco Bond Portfolio's total return (not including any
deduction for sales charges) has varied from year to year for each full calendar
year. The tables show average annual total return (before and after sales taxes)
for Safeco Bond Portfolio over time for each class of shares (including
deductions for sales charges) compared with a broad-based securities market
index. Past performance before and after taxes does not indicate future results.
Pioneer Bond Portfolio has not commenced investment operations.
Safeco Bond Portfolio
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART IN THE PRINTED DOCUMENT.]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
- -2.93 17.87 0.54 8.41 8.90 -3.99 11.79 7.28 7.79 3.28
*During the period shown in the bar chart, your Portfolio's highest quarterly
return was 5.96% for the quarter ended June 30, 1995, and the lowest quarterly
return was -3.15% for the quarter ended March 31, 1994.
Safeco Bond Portfolio
Average Annual Total Returns as of December 31, 2003
1 Year 5 Years 10 Years
------ ------- --------
Safeco Bond Portfolio 3.28% 5.09% 5.70%
Lehman Brothers Aggregate Bond Index(1) 4.10% 6.62% 6.95%
(reflects no deduction for fees, expenses or taxes)
- ------------------
(1) The Lehman Brothers Aggregate Bond Index, an unmanaged index of securities
from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed
Securities Index, and Asset-Backed Securities Index, is for reference only,
does not mirror the Portfolio's investments, and reflects no deduction for
fees or expenses.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios 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 Portfolio. The expenses in the tables
appearing below are based on (i) for your Portfolio, the expenses of your
Portfolio for the period ended December 31, 2003 and (ii) for Pioneer Bond
Portfolio, the expenses of Pioneer Bond Portfolio are estimated. Future expenses
for all share classes may be greater or less.
===============================================================================================
Shareholder transaction fees (paid Pioneer Bond Portfolio
directly from your investment) Safeco Bond Portfolio Class I Shares
===============================================================================================
Redemption fees for shares held less None None
than 30 days
===============================================================================================
Sales charge or deferred sales charge None None
===============================================================================================
Annual Portfolio operating expenses
(deducted from Portfolio assets)
(as a % of average net assets)
===============================================================================================
Management fee 0.74% 0.50%
===============================================================================================
Distribution and service (12b-1) fee None None
===============================================================================================
Other expenses 0.12% 0.16%
===============================================================================================
Total Portfolio operating expenses 0.86% 0.66%
===============================================================================================
Expense reduction None None (1)
===============================================================================================
Net Portfolio operating expenses 0.86% 0.66%
===============================================================================================
4
(1) Pioneer has agreed that through the second anniversary of the closing of the
Reorganization, Pioneer will limit the ordinary operating expenses of the Class
I shares (excluding taxes, commissions, interest and extraordinary expenses) of
Pioneer Bond Portfolio to 0.89% of average daily net assets.
The hypothetical example below helps you compare the cost of investing in each
Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for the
time periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) the expense limitations are in effect for two
years for Pioneer Bond Portfolio. The examples are for comparison purposes only
and are not a representation of either Portfolio's actual expenses or returns,
either past or future.
======================================================================
Example
======================================================================
Safeco Bond Portfolio
======================================================================
======================================================================
Year 1 $88
======================================================================
Year 3 $274
======================================================================
Year 5 $477
======================================================================
Year 10 $1,061
======================================================================
Pioneer Bond Portfolio
======================================================================
Class I Shares
======================================================================
Year 1 $68
======================================================================
Year 3 $213
======================================================================
Year 5 $370
======================================================================
Year 10 $828
======================================================================
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Bond Portfolio. The Trustees considered the following matters, among
others, in approving the proposal.
First, SAM, the investment adviser to the Portfolio until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it was not interested in
continuing to provide investment advisery services to the Safeco Funds.
Consequently, a change in your Portfolio's investment management was necessary.
Second, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62
investment companies and accounts with approximately $35 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 June 30, 2004, assets under management by UniCredito Italiano
S.p.A. were approximately $151 billion worldwide. Shareholders of your Portfolio
would become part of a significantly larger family of funds that offers a more
diverse array of investment options and enhanced shareholder account options.
The Pioneer family of mutual funds offers over 62 funds, including domestic and
international equity and fixed income funds and a money market fund that will be
available to your Portfolio's shareholders through exchanges. In addition,
Pioneer offers shareholders additional options for their accounts, including the
ability to transact and exchange shares over the telephone or online and the
ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or online.
Third, Pioneer's commitment until the second anniversary of the Reorganization
to limit the ordinary operating expenses (excluding taxes, commissions, interest
and extraordinary expenses) of Class I shares of the Pioneer Bond Portfolio to
0.89% of average daily net assets. In addition, the estimated expenses of
Pioneer Bond Portfolio are lower than the expenses of your Safeco Portfolio.
Fourth, the Class I shares of Pioneer Bond Portfolio received in the
Reorganization will provide Safeco Bond Portfolio shareholders with exposure to
substantially the same investment product as they currently have.
5
Pioneer and Symetra will pay all expenses of the Safeco Funds and the Pioneer
Funds associated with the Reorganizations, including, but not limited to: (1)
the expenses associated with the preparation, printing and mailing of any
shareholder communications, including this joint Proxy Statement/Prospectus, and
any filings with the SEC and other governmental authorities in connection with
the Reorganizations; (2) the fees and expenses of any proxy solicitation firm
retained in connection with the Reorganizations; (3) the legal fees and expenses
incurred by the Safeco Funds in connection with the Reorganizations; and (4) the
Trustee fees and expenses incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Background to the Reorganization."
The board of trustees of Pioneer Bond Portfolio also considered that the
Reorganization presents an excellent opportunity for the Pioneer Bond Portfolio
to acquire 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 Bond Portfolio and its
shareholders.
Capitalization
The following table sets forth the capitalization of each Portfolio as of
December 31, 2003.
======================================================================================
Pioneer Bond Portfolio
Safeco Bond Portfolio Class I Shares
December 31, 2003 December 31, 2003
======================================================================================
Net Assets (in thousands) $51,565 N/A
======================================================================================
Net Asset Value Per Share $11.24 N/A
======================================================================================
Shares Outstanding 4,587,000 N/A
======================================================================================
It is impossible to predict how many shares of Pioneer Bond Portfolio will
actually be received and distributed by your Portfolio on the Reorganization
date. The table should not be relied upon to determine the amount of Pioneer
Bond Portfolio's shares that will actually be received and distributed.
Board's Evaluation and Recommendation
For the reasons described above, the Trustees, including the Independent
Trustees, approved the Reorganization. In particular, the Trustees determined
that the Reorganization is in the best interests of your Portfolio. Similarly,
the board of trustees of Pioneer Bond Portfolio, including its Independent
Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer Bond Portfolio.
The Trustees recommend that the shareholders of your Portfolio vote FOR the
proposal to approve the Agreement and Plan of Reorganization.
6
Safeco Core Equity Portfolio and
Pioneer Fund VCT Portfolio
PROPOSAL 2
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement and prospectus or incorporated herein. You should read carefully
the entire proxy statement, including the form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Safeco Core Equity Portfolio to the Pioneer Fund Portfolio
===================================================================================================================================
Safeco Core Equity Portfolio Pioneer Fund Portfolio
===================================================================================================================================
Business A series of Safeco Resource Series Trust, a A series of Pioneer Variable Contracts Trust, a
diversified open-end management investment company diversified open-end management investment
organized as a Delaware statutory trust. company organized as a Delaware statutory trust.
===================================================================================================================================
Net assets as of $306.9 million $ million
June 30, 2004
===================================================================================================================================
Investment advisers and Investment adviser (until August 1,2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Managers:
Richard D. Meagley (since 1995 and until August John A. Carey
1, 2004) Executive Vice President, Pioneer
CFA, Vice President, SAM Joined Pioneer in 2001
Investment Professional Since 1979
Darcy McLaren (since 2003 and until August 1,
2004) Walter Hunnewell, Jr.
CFA, Vice President, SAM Vice President, Pioneer
Joined SAM in 1994 Joined Pioneer in 2001
Investment Professional Since 1985
Currently Pioneer is acting as investment adviser to
the Portfolio. The portfolio managers of the Pioneer
Portfolio, as indicated in the next column, currently
manage your Safeco Portfolio.
===================================================================================================================================
Investment objective The Portfolio seeks long-term growth of capital The Portfolio seeks reasonable income and capital
and reasonable current income. growth.
=========================================================================================================
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
===================================================================================================================================
Primary investments Under normal circumstances, the Portfolio The Portfolio invests the major portion of its
invests at least 80% of its net assets (plus assets in equity securities, primarily of U.S.
any borrowings for investment purposes) in issuers. For purposes of the Portfolio's investment
equity securities and, to a much lesser extent, policies, equity securities include common stocks,
invests in equity-related securities. convertible debt and other equity instruments, such
as depositary receipts, warrants, rights, interests
in real estate investment trusts (REITS) and
preferred stocks.
===================================================================================================================================
===================================================================================================================================
Safeco Core Equity Portfolio Pioneer Fund Portfolio
===================================================================================================================================
Investment strategies The Portfolio invests primarily in stocks of Pioneer uses a "value" style of management and
larger, established companies that: seeks securities selling at reasonable prices or
o Are proven performers substantial discounts to their underlying values
o Have predictable earnings growth over and then holds these securities until the market
a three- to five-year outlook values reflect their intrinsic values. Pioneer
o Have food value relative to earnings looks at the following factors in selecting
prospects investments: favorable expected returns relative
to perceived risk; above average potential for
To a lesser extent, the Portfolio buys stocks earnings and revenue growth; low market valuations
the investment adviser believes will benefit relative to earnings forecast, book value, cash
from a specific short-term earnings catalyst, flow and sales; a sustainable competitive
such as a cost-cutting program or company advantage such as a brand name, customer base,
restructure. proprietary technology or economies of scale.
===================================================================================================================================
Other investments The Portfolio may invest in securities The Portfolio may invest up to 25% of its total
convertible into common stock, but less than assets in REITs.
35% of its total assets will be invested in
such securities. The Portfolio may invest up to 10% of its total
assets in equity securities of non-U.S. corporate
The Portfolio may invest up to 20% of its issuers and debt securities of non-U.S. corporate
assets in foreign securities which are listed and government issuers. The Portfolio will not
on a national exchange, including investments invest more than 5% of its total assets in
in American Depository Receipts. securities of emerging markets issuers.
The Portfolio may invest the balances of its
assets in debt securities of corporate and
government issuers. Generally, the Portfolio
acquires debt securities that are rated investment
grade, but the Portfolio may invest up to 5% of
its net assets in below investment grade debt
securities issued by both U.S. and non-U.S.
corporate and government issuers, including below
investment grade convertible debt securities. The
Portfolio invests in debt securities when Pioneer
believes that they are consistent with the
Portfolio's investment objective by offering the
potential for reasonable income and capital
growth, to diversity the Portfolio or for greater
liquidity.
===================================================================================================================================
Temporary defensive The Portfolio may hold cash or invest in The Portfolio may invest all or part of its assets
strategies high-quality, short-term securities issued by in securities with remaining maturities of less than
an agency or instrumentality of the U.S. one year, cash equivalents or may hold cash.
government, high-quality commercial paper,
certificates of deposit, shares of no-load,
open-end money market funds, or repurchase agreements
as a temporary defensive measure when market
conditions so warrant.
===================================================================================================================================
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act, and each Portfolio is subject
to diversification requirements under the Code.
===================================================================================================================================
Industry concentration Each Portfolio may not invest more than 25% of its assets in any one industry.
===================================================================================================================================
Restricted and illiquid If immediately after and as a result of such The Portfolio will not invest more than 15% of its
securities action the value of the following securities, net assets in illiquid and other securities that are
in the aggregate, would exceed 15% of the not readily marketable. Repurchase agreements
Portfolio's net assets, the Portfolio will not maturing in more than seven days will be included
(i) purchase securities for which there is no for purposes of the foregoing limit. Securities
readily available market, (ii) purchase time subject to restrictions on resale under the
deposits maturing in more than seven days, Securities Act of 1933, as amended (the "1933 Act"),
(iii) purchase over-the-counter (OTC) options are considered illiquid unless they are eligible for
or hold assets set aside to cover OTC options resale pursuant to Rule 144A or another exemption
written by the Portfolio, (iv) enter into from the registration requirements of the 1933 Act
repurchase agreements maturing in more than and are determined to be liquid by Pioneer.
seven days, or (v) invest in interests in real
estate investment trusts which are not readily
marketable or interests in real estate limited
partnerships which are not listed or traded on
the NASDAQ Stock Market.
===================================================================================================================================
Borrowing The Portfolio may borrow money (i) from banks, The Portfolio may not borrow money, except the
or (ii) by engaging in reverse repurchase Portfolio may: (a) borrow from banks or through
agreements. The Portfolio will not commit to reverse repurchase agreements in an amount up to 33
additional securities purchases if total 1/3% of the Portfolio's total assets (including the
outstanding borrowings are equal to 5% or more amount borrowed); (b) to the extent permitted by
of total assets. applicable law, borrow up to an additional 5% of the
Portfolio's assets for temporary purposes; (c)
obtain such short-term credits as are necessary
for the clearance of Portfolio transactions; (d)
the Portfolio may 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.
===================================================================================================================================
2
===================================================================================================================================
Safeco Core Equity Portfolio Pioneer Fund Portfolio
===================================================================================================================================
Lending The Portfolio may lend securities to qualified The Portfolio may not make loans, except that the
institutional investors with a value of up to Portfolio may (i) lend portfolio securities in
33% of the Portfolio's total assets. accordance with the Portfolio'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
Portfolio may directly lend to and borrow money
from other affiliated Portfolios 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.
===================================================================================================================================
Derivative instruments The Portfolio may write put or call options if, The Portfolio may use futures and options on
as a result thereof, the aggregate value of the securities, indices and currencies, forward currency
assets underlying all such options does not exchange contracts and other derivatives. The
exceed 25% of the Portfolio's net assets. Portfolio does not use derivatives as a primary
investment technique and generally limits their use
The Portfolio may purchase put or call options to hedging. However, the Portfolio may use
on futures contracts if, as a result thereof, derivatives for a variety of non-principal purposes,
the aggregate premiums paid on all options or including:
options on futures contracts do not exceed 20% o As a hedge against adverse changes in stock
of the Portfolio's net assets. market prices, interest rates or currency
exchange rates
The Portfolio may enter into any futures o As a substitute for purchasing or selling
contract or option on a futures contract, if as securities
a result thereof, the aggregate margin deposits o To increase the Portfolio's return as a
and premiums required on all such instruments non-hedging strategy that may be considered
does not exceed 5% of the Portfolio's net speculative
assets.
The Portfolio may not purchase securities on margin.
However, the Portfolio may (i) obtain short-term
credits as necessary to clear its purchases and sales
of securities, and (ii) make margin deposits in
connection with its use of financial options and
futures, forward and spot currency contracts, swap
transactions and other financial contracts or
derivative instruments.
===================================================================================================================================
Other investment As described above, the Portfolios have substantially similar principal investment strategies and
policies and policies. Certain of the non-principal investment policies and restrictions are different. For a more
restrictions complete discussion of each Portfolio's other investment policies and fundamental and non-fundamental
investment restrictions, see the SAI.
===================================================================================================================================
Buying, Selling and Exchanging Shares
===================================================================================================================================
Sales charges Shares of the Portfolio are not subject to any The Class I shares of Pioneer Fund Portfolio you
sales charges. receive in the Reorganization will not be subject to
any sales charge.
===================================================================================================================================
Management and other Safeco Core Equity Portfolio pays SAM an Pioneer Fund Portfolio pays Pioneer a management fee
fees investment advisory and management fee equal to equal to 0.65% of the Portfolio's average daily net
0.74% of the Portfolio's average daily net assets.
assets. Pursuant to this agreement, SAM serves
as administrator and fund accounting agent for During its most recent fiscal year, Pioneer Fund
the Portfolio. Portfolio paid an advisory fee at an average rate of
0.65% of average daily net assets.
===================================================================================================================================
3
===================================================================================================================================
Safeco Core Equity Portfolio Pioneer Fund Portfolio
===================================================================================================================================
For the fiscal year ended December 31, 2003,
the Portfolio's annual operating expenses were In addition, the Portfolio reimburses Pioneer for
0.80%, per share. certain fund accounting and legal expenses incurred
on behalf of the Portfolio and pays a separate
shareholder servicing/transfer agency fee to
PIMSS, an affiliate of Pioneer.
For the fiscal year ended December 31, 2003, the
Portfolio's annual operating expenses for Class I
shares were 0.76% per share.
Pioneer has agreed until the second anniversary of
the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
commissions, interest and expenses) of the Class I
shares to 0.80% of the average daily net assets
attributable to Class I.
===================================================================================================================================
Distribution and Shares of each Portfolio are not subject to a Rule 12b-1 fee.
service (12b-1) fee
===================================================================================================================================
Buying shares Each Portfolio may sell its shares directly to separate accounts established and maintained by
insurance companies for the purpose of funding variable contracts and to qualified plans. Shares of the
Portfolios are sold at net asset value. Investments in a Portfolio are credited to an insurance
company's separate account or qualified plan account, immediately upon acceptance of the investment by
the Portfolio. The offering of shares of any Portfolio may be suspended for a period of time, and each
Portfolio reserves the right to reject any specific purchase order. Purchase orders may be refused if,
in the investment adviser's opinion, they are of a size or frequency that would disrupt the management
of the Portfolio.
===================================================================================================================================
Selling shares Shares of each Portfolio will be sold at net asset value per share next calculated after the Portfolio
receives your request in good order.
You may sell your shares by contacting the insurance company sponsoring your variable contract, as
described in your Portfolio's prospectus. You can also sell your shares by contacting the Portfolio
directly if your account is registered in your name. If the account is established in the shareholder's
own name, shareholders may also redeem shares of the Portfolio by telephone or online.
===================================================================================================================================
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has a similar investment objective, primary investment
policies and strategies, the Portfolios are subject to the same principal risks.
You could lose money on your investment in either Portfolio or not make as much
as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short term)
o Value stocks fall out of favor with investors
o The Portfolio's assets remain undervalued or do not have the potential
value originally expected
o Stocks selected for income do not achieve the same return as securities
selected for capital growth
Past Performance
Set forth below is performance information for each Portfolio. The bar charts
show how each Portfolio's total return (not including any deduction for sales
charges) has varied from year to year for each full calendar year. The tables
show average annual total return (before and after sales taxes) for each
Portfolio over time for each class of shares (including deductions for sales
charges) compared with a broad-based securities market index. Past performance
before and after taxes does not indicate future results.
4
Safeco Core Equity Portfolio
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
8.94 28.63 24.79 24.85 24.89 9.31 -10.79 -9.38 -25.91 24.78
*During the period shown in the bar chart, your Portfolio's
highest quarterly return was 18.76% for the quarter ended December 31, 1998, and
the lowest quarterly return was -18.21% for the quarter ended September 30,
2002.
Pioneer Fund Portfolio - Class I Shares
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1998 1999 2000 2001 2002 2003
26.12 15.91 1.22 -10.85 -19.03 23.76
*During the period shown in the bar chart, since it's inception on October
31,1997, Pioneer Fund Portfolio's highest quarterly return was 21.04% for the
quarter ended December 31, 1998, and the lowest quarterly return was -17.28% for
the quarter ended September 30, 2002.
Average Annual Total Returns as of December 31, 2003
Since
1 Year 5 Years Inception 10 Years
------ ------- --------- --------
Safeco Core Equity Portfolio 24.78% -3.96% N/A 8.34%
Pioneer Fund Portfolio 23.76% 0.94% 5.93%(1) N/A
S&P 500 Index(2) 28.67% -0.57% 4.73 11.06%
(reflects no deduction for fees, expenses or taxes)
- ------------
(1) The Portfolio commenced operations on October 31, 1997.
(2) The S&P 500 Index, an unmanaged index measuring performance of 500 widely
held common stocks listed on the New York Stock Exchange, American Stock
Exchange and the over-the-counter market, is for reference only and does
not mirror the Portfolios' investments.
5
The Portfolios' Fees and Expenses
Shareholders of both Portfolios 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 Portfolio. The expenses in the tables
appearing below are based on (i) for your Portfolio, the expenses of your
Portfolio for the period ended December 31, 2003 and (ii) for Pioneer Fund
Portfolio, the expenses of Pioneer Fund Portfolio for the period ended December
31, 2003. Future expenses for all share classes may be greater or less.
===============================================================================================
Shareholder transaction fees (paid Safeco Core Equity Pioneer Fund Portfolio
directly from your investment) Portfolio Class I Shares
===============================================================================================
Redemption fees for shares held less None None
than 30 days
===============================================================================================
Sales charge or deferred sales charge None None
===============================================================================================
Annual Portfolio operating expenses
(deducted from Portfolio assets)
(as a % of average net assets)
===============================================================================================
Management fee 0.74% 0.65%
===============================================================================================
Distribution and service (12b-1) fee None None
===============================================================================================
Other expenses 0.06% 0.05%
===============================================================================================
Total Portfolio operating expenses 0.80% 0.70%
===============================================================================================
Expense reduction None None
===============================================================================================
Net Portfolio operating expenses 0.80% 0.70%
===============================================================================================
(1) Pioneer has agreed that through the second anniversary of the closing of the
Reorganization, Pioneer will limit the ordinary operating expenses (excluding
taxes, commissions, interest and extraordinary expenses) of the Class I shares
of Pioneer Fund Portfolio to 0.80% of average daily net assets.
The hypothetical example below helps you compare the cost of investing in each
Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for the
time periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) the expense limitations are in effect for two
years for Pioneer Fund Portfolio. The examples are for comparison purposes only
and are not a representation of either Portfolio's actual expenses or returns,
either past or future.
======================================================================
Example
======================================================================
Safeco Core Equity Portfolio
======================================================================
======================================================================
Year 1 $82
======================================================================
Year 3 $255
======================================================================
Year 5 $444
======================================================================
Year 10 $990
======================================================================
Pioneer Fund Portfolio
======================================================================
Class I Shares
======================================================================
Year 1 $71
======================================================================
Year 3 $224
======================================================================
Year 5 $389
======================================================================
Year 10 $870
======================================================================
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Core Equity Portfolio. The Trustees considered the following matters,
among others, in approving the proposal.
First, SAM, the investment adviser to the Portfolio until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it was not interested in
continuing to provide investment advisory services to the Safeco Portfolios.
Consequently, a change in your Portfolio's investment management was necessary.
Second, the investment performance of Pioneer Fund Portfolio is superior to the
historical investment performance of your Portfolio. For the one and five year
periods ended [June 30], 2004, Class I shares of Pioneer Fund Portfolio had an
average
6
annual return of ___% and ___%, respectively, compared to an average annual
return of your Portfolio's shares of ___% and ___%, respectively, during the
same period. In addition, the Trustees considered the track record of Pioneer in
managing equity and fixed income mutual funds.
Third, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62
investment companies and accounts with approximately $35 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 June 30, 2004, assets under management by UniCredito Italiano
S.p.A. were approximately $151 billion worldwide. Shareholders of your Portfolio
would become part of a significantly larger family of funds that offers a more
diverse array of investment options and enhanced shareholder account options.
The Pioneer family of mutual funds offers over 62 funds, including domestic and
international equity and fixed income funds and a money market fund that will be
available to your Portfolio's shareholders through exchanges. In addition,
Pioneer offers shareholders additional options for their accounts, including the
ability to transact and exchange shares over the telephone or online and the
ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or online.
Fourth, Pioneer Fund Portfolio's lower operating expenses and Pioneer's
commitment until the second anniversary of the Reorganization to limit the
ordinary operating expenses (excluding taxes, commissions, interest and
extraordinary expenses) of Class I shares of the Pioneer Fund Portfolio to 0.80%
of average daily net assets. Pioneer Fund Portfolio's expense ratio and the
expense limitation are no higher than both the gross expenses and expenses net
of expense reimbursement of the shares of your Portfolio.
Fifth, the Class I shares of Pioneer Fund Portfolio received in the
Reorganization will provide Safeco Core Equity Portfolio shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all expenses of the Safeco Funds and the Pioneer
Funds associated with the Reorganizations, including, but not limited to: (1)
the expenses associated with the preparation, printing and mailing of any
shareholder communications, including this joint Proxy Statement/Prospectus, and
any filings with the SEC and other governmental authorities in connection with
the Reorganizations; (2) the fees and expenses of any proxy solicitation firm
retained in connection with the Reorganizations; (3) the legal fees and expenses
incurred by the Safeco Funds in connection with the Reorganizations; and (4) the
Trustee fees and expenses incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Background to the Reorganization."
The board of trustees of Pioneer Fund Portfolio also considered that the
Reorganization presents an excellent opportunity for the Pioneer Fund Portfolio
to acquire 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 Fund Portfolio and its
shareholders.
Capitalization
The following table sets forth the capitalization of each Portfolio as of
December 31, 2003.
======================================================================================
Safeco Core Equity Pioneer Fund Portfolio
Portfolio Class I Shares
December 31, 2003 December 31, 2003
======================================================================================
Net Assets (in thousands) $316,314 $154,839
======================================================================================
Net Asset Value Per Share $22.35 $18.70
======================================================================================
Shares Outstanding 14,152,000
======================================================================================
It is impossible to predict how many shares of Pioneer Fund Portfolio will
actually be received and distributed by your Portfolio on the Reorganization
date. The table should not be relied upon to determine the amount of Pioneer
Fund Portfolio's shares that will actually be received and distributed.
7
Board's Evaluation and Recommendation
For the reasons described above, the Trustees, including the Independent
Trustees, approved the Reorganization. In particular, the board of trustees
determined that the Reorganization is in the best interests of your Portfolio.
Similarly, the board of trustees of Pioneer Fund Portfolio, including its
Independent Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer Fund Portfolio.
The Trustees recommend that the shareholders of your Portfolio vote FOR the
proposal to approve the Agreement and Plan of Reorganization.
8
Safeco Growth Opportunities Portfolio and
Pioneer Growth Opportunities VCT Portfolio
PROPOSAL 3
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement and prospectus or incorporated herein. You should read carefully
the entire proxy statement, including the form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Safeco Opportunities Portfolio to the Pioneer Opportunities Portfolio
===================================================================================================================================
Safeco Opportunities Portfolio Pioneer Opportunities Portfolio
===================================================================================================================================
Business A series of Safeco Resource Series Trust, a A newly created series of Pioneer Variable Contracts
diversified open-end management investment Trust, a diversified open-end management investment
company organized as a Delaware statutory trust. company organized as a Delaware statutory trust.
===================================================================================================================================
Net assets as of $358.3 million None. The Pioneer Opportunities Portfolio is newly
June 30, 2004 created and does not expect to commence investment
operations until the Reorganization occurs.
===================================================================================================================================
Investment advisers and Investment adviser (until August 1, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (since 2003 and until August Portfolio Managers:
1, 2004): John A. Carey
Jeffrey Schwartz Executive Vice President, Pioneer
CFA, Vice President, SAM Joined Pioneer in 2001
Investment Professional Since 1979
Bill Whitlow
CFA, Vice President, SAM Walter Hunnewell, Jr.
Vice President, Pioneer
Currently Pioneer is acting as investment Joined Pioneer in 2001
adviser to the Portfolio. The portfolio Investment Professional Since 1985
managers of the Pioneer Portfolio, as indicated
in the next column, currently manage your Andrew Acheson
Safeco Portfolio. [__________________]
===================================================================================================================================
Investment objective Each Portfolio seeks growth of capital.
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above
=========================================================================================================
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
===================================================================================================================================
Primary investments To achieve its investment objective, under normal circumstances, each Portfolio invests most of its assets
in common stocks of companies its investment adviser considers to be reasonably priced or undervalued,
with above average growth potential
===================================================================================================================================
Investment strategies When evaluating a stock to buy for the Portfolio, SAM historically considered factors such as:
o The strength of the company's balances sheet
o The quality of the management team
o The rate at which the company's earnings are projected to grow
o Whether the company's stock may be trading at a discount relative to its industry peers or the overall
market
Each Portfolio may sell as stock if:
o Any of the above factors or other relative-value indicators have deteriorated
o The stock becomes overvalued, for example, as a result of overly optimistic earnings forecasts
o The stock price reaches a specific target
===================================================================================================================================
===================================================================================================================================
Safeco Opportunities Portfolio Pioneer Opportunities Portfolio
===================================================================================================================================
o Changes in market value cause the Fund to hold a larger position in the stock than its investment
adviser wants
o Other companies present more attractive investment opportunities
o Cash is needed to meet shareholder redemptions
===================================================================================================================================
Other investments Each Portfolio may invest in securities convertible into common stock, but less than 35% of
its total assets will be invested in such securities.
Each Portfolio may invest up to 20% of assets in foreign securities.
Each Portfolio may invest up to 10% of its total assets in debt securities rated below investment grade.
===================================================================================================================================
Temporary defensive The Portfolio may hold cash or invest in The Portfolio may invest all or part of its assets
strategies high-quality, short-term securities issued by in securities with remaining maturities of less than
an agency or instrumentality of the U.S. one year, cash equivalents or may hold cash.
government, high-quality commercial paper,
certificates of deposit, shares of no-load,
open-end money market funds, or repurchase agreements
as a temporary defensive measure when market
conditions so warrant.
===================================================================================================================================
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act, and each Portfolio is subject
to diversification requirements under the Code.
===================================================================================================================================
Industry concentration Each Portfolio may not invest more than 25% of its assets in any one industry.
===================================================================================================================================
Restricted and illiquid If immediately after and as a result of such action the value of the following securities, in the
securities aggregate, would exceed 15% of the Portfolio's net assets, the Portfolio will not (i) purchase
securities for which there is no readily available market, (ii) purchase time deposits maturing in more
than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC
options written by the Portfolio, (iv) enter into repurchase agreements maturing in more than seven days,
or (v) invest in interests in real estate investment trusts which are not readily marketable or interests
in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market.
===================================================================================================================================
Borrowing Each Portfolio may borrow money (i) from banks, or (ii) by engaging in reverse repurchase agreements. The
Portfolio will not commit to additional securities purchases if total outstanding borrowings are equal to
5% or more of total assets.
===================================================================================================================================
Lending Each Portfolio may lend securities to qualified institutional investors with a value of up to 33% of
the Portfolio's total assets.
===================================================================================================================================
Derivative instruments Each Portfolio may write a put or call options if, as a result thereof, the aggregate value of the assets
underlying all such options does not exceed 25% of the Portfolio's net assets.
Each Portfolio may purchase a put or call options or options on a futures contract if, as a result
thereof, the aggregate premiums paid on all options or options on futures contracts held by the Portfolio
do not exceed 20% of the Portfolio's net assets.
Each Portfolio may enter into any futures contract or option on futures contract if, as a result thereof,
the aggregate margin deposits and premiums required on all such instruments do not exceed 5% of the
Portfolio's net assets.
Each Portfolio may not purchase securities on margin. However, the Portfolio may (i) obtain short-term
credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in
connection with its use of financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments.
===================================================================================================================================
Other investment As described above, the Portfolios have substantially similar principal investment strategies and
policies and policies. Certain of the non-principal investment policies and restrictions are different. For a more
restrictions complete discussion of each Portfolio's other investment policies and fundamental and non-fundamental
investment restrictions, see the SAI.
===================================================================================================================================
Buying, Selling and Exchanging Shares
===================================================================================================================================
Sales charges Shares of the Portfolio are not subject to any The Class I shares of Pioneer Opportunities
sales charges. Portfolio you receive in the Reorganization will not
be subject to any sales charge.
===================================================================================================================================
2
===================================================================================================================================
Safeco Opportunities Portfolio Pioneer Opportunities Portfolio
===================================================================================================================================
Management and other Safeco Opportunities Portfolio pays SAM an Pioneer Opportunities Portfolio pays Pioneer a
fees investment advisory and management fee equal to management fee equal to [0.74]% of the Portfolio's
0.74% of the Portfolio's average daily net average daily net assets.
assets. Pursuant to this Agreement, SAM serves
as administrator and fund accounting agent for In addition, the Portfolio reimburses Pioneer for
the Portfolio. certain fund accounting and legal expenses incurred
on behalf of the Portfolio and pays a separate
shareholder servicing/transfer agency fee to PIMSS,
an affiliate of Pioneer.
For the fiscal year ended December 31, 2003,
the Portfolio's annual operating expenses were Pioneer has agreed until the second anniversary of
0.80%, per share. the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses) of
the Class I shares to 0.79% of the average daily net
assets attributable to Class I.
===================================================================================================================================
Distribution and Shares of each Portfolio are not subject to a Rule 12b-1 fee.
service (12b-1) fee
===================================================================================================================================
Buying shares Each Portfolio may sell its shares directly to separate accounts established and maintained by
insurance companies for the purpose of funding variable contracts and to qualified plans. Shares of the
Portfolios are sold at net asset value. Investments in a Portfolio are credited to an insurance
company's separate account or qualified plan account, immediately upon acceptance of the investment by
the Portfolio. The offering of shares of any Portfolio may be suspended for a period of time, and each
Portfolio reserves the right to reject any specific purchase order. Purchase orders may be refused if,
in the investment adviser's opinion, they are of a size or frequency that would disrupt the management
of the Portfolio.
===================================================================================================================================
Selling shares Shares of each Portfolio will be sold at net asset value per share next calculated after the Portfolio
receives your request in good order.
You may sell your shares by contacting the insurance company sponsoring your variable contract, as
described in your Portfolio's prospectus. You can also sell your shares by contacting the Portfolio
directly if your account is registered in your name. If the account is established in the shareholder's
own name, shareholders may also redeem shares of the Portfolio by telephone or online.
===================================================================================================================================
Because each Portfolio has a similar investment objective, primary investment
policies and strategies, the Portfolios are subject to the same principal risks.
You could lose money on your investment in either Portfolio or not make as much
as if you invested elsewhere if:
o The stock market goes down (this risk factor may be greater in the short term)
o Growth stocks fall out of favor with investors
o The Portfolio's investments do not have the growth potential originally
expected
o The Portfolio's shares may be subject to frequent and more significant
changes in value than the stock market in general due to the volatility of
some of the smaller companies in which it invests
o During periods of market concern about inflation or deflation, some securities
in which the Portfolio invests may become more volatile or decline in value
Investing in non-U.S. issuers may involve unique risks compared to investing in
securities of U.S. issuers. These risks may include:
o Inadequate financial information
o Smaller, less liquid and more volatile markets
o Political and economic upheavals
3
Past Performance
Set forth below is performance information for Safeco Opportunities Portfolio.
The bar charts show how Safeco Opportunities Portfolio's total return (not
including any deduction for sales charges) has varied from year to year for each
full calendar year. The tables show average annual total return (before and
after sales taxes) for Safeco Opportunities Portfolio over time for each class
of shares (including deductions for sales charges) compared with a broad-based
securities market index. Past performance before and after taxes does not
indicate future results. Pioneer Opportunities Portfolio has not commenced
investment operations.
Safeco Opportunities Portfolio
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
11.92 41 32.06 44.55 1.83 5.63 -6.16 19.14 -37.67 42.94
*During the period shown in the bar chart, your Portfolio's
highest quarterly return was 33.87% for the quarter ended June 30, 2001, and the
lowest quarterly return was -27.53% for the quarter ended September 30, 2002.
Safeco Opportunities Portfolio
Average Annual Total Returns as of December 31, 2003
1 Year 5 Years 10 Years
------ ------- --------
Safeco Opportunities Portfolio 42.94% 1.02% 12.43%
Russell 2000 Index(1) 47.25% 7.13% 9.48%
(reflects no deduction for fees, expenses or taxes)
- --------------------
(1) The Russell 2000 Index, an unmanaged index of 2,000 small capitalization
U.S. stocks, is for reference only and does not mirror Safeco Opportunities
Portfolio's investments.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios 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 Portfolio. The expenses in the tables
appearing below are based on (i) for your Portfolio, the expenses of your
Portfolio for the period ended December 31, 2003 and (ii) for Pioneer
Opportunities Portfolio, the expenses of Pioneer Opportunities Portfolio are
estimated. Future expenses for all share classes may be greater or less.
===============================================================================================
Pioneer Opportunities
Shareholder transaction fees (paid Safeco Opportunities Portfolio
directly from your investment) Portfolio Class I Shares
===============================================================================================
Redemption fees for shares held less None None
than 30 days
===============================================================================================
Sales charge or deferred sales charge None None
===============================================================================================
Annual Portfolio operating expenses
(deducted from Portfolio assets)
(as a % of average net assets)
===============================================================================================
Management fee 0.74% 0.74%
===============================================================================================
Distribution and service (12b-1) fee None None
===============================================================================================
Other expenses 0.06% 0.06%
===============================================================================================
Total Portfolio operating expenses 0.80% 0.80%
===============================================================================================
Expense reduction None 0.01 (1)
===============================================================================================
Net Portfolio operating expenses 0.80% 0.79%
===============================================================================================
4
(1) Pioneer has agreed that through the second anniversary of the closing of the
Reorganization, Pioneer will limit the ordinary operating expenses (excluding
taxes, commissions, interest and extraordinary expenses) of the Investor Class
shares of Pioneer Opportunities Portfolio to 0.79% of average daily net assets.
The hypothetical example below helps you compare the cost of investing in each
Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for the
time periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) the expense limitations are in effect for two
years for Pioneer Opportunities Portfolio. The examples are for comparison
purposes only and are not a representation of either Portfolio's actual expenses
or returns, either past or future.
======================================================================
Example
======================================================================
Safeco Opportunities Portfolio
======================================================================
======================================================================
Year 1 $82
======================================================================
Year 3 $255
======================================================================
Year 5 $444
======================================================================
Year 10 $990
======================================================================
Pioneer Opportunities Portfolio
======================================================================
Class I Shares
======================================================================
Year 1 $81
======================================================================
Year 3 $254
======================================================================
Year 5 $444
======================================================================
Year 10 $992
======================================================================
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Opportunities Portfolio. The Trustees considered the following
matters, among others, in approving the proposal.
First, SAM, the investment adviser to the Portfolio until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it was not interested in
continuing to provide investment advisory services to the Safeco Portfolios.
Consequently, a change in your Portfolio's investment management was necessary.
Second, the resources of Pioneers. At June 30, 2004, Pioneer managed over 62
investment companies and accounts with approximately $35 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 June 30, 2004, assets under management by UniCredito Italiano
S.p.A. were approximately $151 billion worldwide. Shareholders of your Portfolio
would become part of a significantly larger family of funds that offers a more
diverse array of investment options and enhanced shareholder account options.
The Pioneer family of mutual funds offers over 62 funds, including domestic and
international equity and fixed income funds and a money market fund that will be
available to your Portfolio's shareholders through exchanges. In addition,
Pioneer offers shareholders additional options for their accounts, including the
ability to transact and exchange shares over the telephone or online and the
ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or online.
Third, Pioneer's commitment until the second anniversary of the Reorganization
to limit the ordinary operating expenses (excluding taxes, commissions, interest
and extraordinary expenses) Class I shares of the Pioneer Opportunities
Portfolio to 0.79 % of average daily net assets. This expense ratio is lower
than the expense ratio for your Portfolio.
5
Fourth, the Class I shares of Pioneer Opportunities Portfolio received in the
Reorganization will provide Safeco Opportunities Portfolio shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all expenses of the Safeco Funds and the Pioneer
Funds associated with the Reorganizations, including, but not limited to: (1)
the expenses associated with the preparation, printing and mailing of any
shareholder communications, including this joint Proxy Statement/Prospectus, and
any filings with the SEC and other governmental authorities in connection with
the Reorganizations; (2) the fees and expenses of any proxy solicitation firm
retained in connection with the Reorganizations; (3) the legal fees and expenses
incurred by the Safeco Funds in connection with the Reorganizations; and (4) the
Trustee fees and expenses incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Background to the Reorganization."
The board of trustees of Pioneer Opportunities Portfolio also considered that
the Reorganization presents an excellent opportunity for the Pioneer
Opportunities Portfolio to acquire 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
Opportunities Portfolio and its shareholders.
Capitalization
The following table sets forth the capitalization of each Portfolio as of
December 31, 2003:
======================================================================================
Pioneer Opportunities
Safeco Opportunities Portfolio
Portfolio Class I Shares
December 31, 2003 December, 2003
======================================================================================
Net Assets (in thousands) $337,573 NA
======================================================================================
Net Asset Value Per Share $19.44 NA
======================================================================================
Shares Outstanding 17,364,000 NA
======================================================================================
It is impossible to predict how many shares of Pioneer Opportunities Portfolio
will actually be received and distributed by your Portfolio on the
Reorganization date. The table should not be relied upon to determine the amount
of Pioneer Opportunities Portfolio's shares that will actually be received and
distributed.
Board's Evaluation and Recommendation
For the reasons described above, the Trustees, including the Independent
Trustees, approved the Reorganization. In particular, the board of trustees
determined that the Reorganization is in the best interests of your Portfolio.
Similarly, the board of trustees of Pioneer Opportunities Portfolio, including
its Independent Trustees, approved the Reorganization. They also determined that
the Reorganization is in the best interests of Pioneer Opportunities Portfolio.
The Trustees recommend that the shareholders of your Portfolio vote FOR the
proposal to approve the Agreement and Plan of Reorganization.
6
Safeco Money Market Portfolio and
Pioneer Money Market VCT Portfolio
PROPOSAL 4
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement and prospectus or incorporated herein. You should read carefully
the entire proxy statement, including the form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Safeco Money Market Portfolio to the Pioneer Money Market Portfolio
===================================================================================================================================
Safeco Money Market Portfolio Pioneer Money Market Portfolio
===================================================================================================================================
Business A series of Safeco Resource Series Trust, a A series of Pioneer Variable Contracts Trust, a
diversified open-end management investment diversified open-end management investment company
company organized as a Delaware statutory trust. organized as a Delaware statutory trust.
===================================================================================================================================
Net assets as of $24.9 million $ million
June 30, 2004
===================================================================================================================================
Investment advisers and Investment adviser (until August 1, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Manager:
Lesley Fox (since 2000 and until August 1, 2004) Kenneth J. Taubes
Assistant Vice President, SAM Senior Vice President, Pioneer
Joined SAM in 2000 Joined Pioneer in 1998
Investment Professional Since 1982
Cathleen Beauchamp (since 2003 until August 1,
2004)
CFA
Currently Pioneer is acting as investment adviser to
the Portfolio. The portfolio managers of the Pioneer
Portfolio, as indicated in the next column, currently
manage your Safeco Portfolio.
===================================================================================================================================
Investment objective The Portfolio seeks as high a level of current The Portfolio seeks current income consistent with
income as is consistent with the preservation preservation of capital and providing liquidity.
of capital and liquidity through investment in
high-quality money market instruments maturing in 13
months or less.
=========================================================================================================
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
===================================================================================================================================
===================================================================================================================================
Safeco Money Market Portfolio Pioneer Money Market Portfolio
===================================================================================================================================
Primary investments The Portfolio may invest in: The Portfolio invests in high-quality, U.S. dollar
o Commercial paper of both domestic and denominated money market securities including those
foreign issuers issued by:
o Negotiable and non-negotiable o U.S. and foreign banks and savings and loan
certificates of deposit, bankers' associations with total assets in excess of $10
acceptances, and other short-term billion
obligations of U.S. and foreign banks o Corporate issuers
o Repurchase agreements in which the o The U.S. government and its agencies and
Portfolio buys securities at one price and instrumentalities
simultaneously agrees to sell them back at a o Multinational organizations such as the
higher price World Bank
o Variable and floating rate instruments that change
interest rates periodically to keep their market
value near par
o U.S. government securities
o Taxable municipal bonds
===================================================================================================================================
Investment strategies The Portfolio will purchase only high-quality The Portfolio invests exclusively in securities with
securities with remaining maturities of 397 a maximum remaining maturity of 397 days and
days or less. The portfolio will maintain a maintains a dollar-weighted average portfolio
dollar-weighted average portfolio maturity of maturity of 90 days or less.
no more than 90 days.
Pioneer complies with the rating, maturity and
diversification requirements applicable to money mar
funds. With those limits, Pioneer's assessment of br
economic factors that are expected to affect economi
activity and interest rates influences its securitie
selection.
===================================================================================================================================
Other investments The Portfolio may invest in: The Portfolio may invest more than 25% of its total
o Restricted securities that are exempt assets in U.S. government securities and obligations
from registration requirements and eligible of U.S. banks.
for resale to qualified institutional
investors, such as mutual funds, under Rule The Portfolio may invest in any money market
144A of Section 4(2) instrument that is a permissible investment for a
o Corporate obligations such as publicly money market fund under the rules of the Securities
traded bonds and notes and Exchange Commission, including commercial paper,
o Mortgage-backed securities certificates of deposit, time deposits, bankers'
o When-issued and delayed delivery acceptances, mortgaged-backed and asset-backed
securities whose terms and conditions, securities, repurchase agreements, municipal
including price, are fixed by the issuer, obligations and other short-term debt securities.
but are to be issued and delivered against
payment in the future, typically 30 to 45 The Portfolio may not, except with respect to
days after the date of commitment. investments in obligations of (a) the U.S.
government, its agencies, authorities or
The Portfolio will limit its investment in instrumentalities and (b) domestic banks, purchase
municipal obligations the interest on which is any security if, as a result (i) more than 5% of the
payable from the revenues of similar types of assets of the portfolio would be invested in the
projects to less than 25% of the Portfolio's securities of any one issuer, or (ii) more than 25%
total assets. As a matter of operating policy, of its assets would be invested in a particular
"similar types of projects" may include sports, industry.
convention or trade show facilities; airports or mass
transportation; sewage or solid waste disposal
facilities; or air and water pollution control
projects.
The Portfolio will limit its investment in securities
whose issuers are located in the same state to less
than 25% of the Portfolio's assets.
The Portfolio may invest up to 25% of its total assets
in the "first tier securities" of a single issuer for
up to three business days after purchase.
The Portfolio may not invest more than 5% of its total
assets in second tier securities. In addition, the
Portfolio may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the
second tier securities of a single issuer.
===================================================================================================================================
2
===================================================================================================================================
Safeco Money Market Portfolio Pioneer Money Market Portfolio
===================================================================================================================================
===================================================================================================================================
Temporary defensive The Portfolio may hold cash as a temporary The Portfolio invests all of its assets in money
strategies defensive measure when market conditions so market investments that are eligible investments
warrant. under Rule 2a-7 under the Investment Company
Act.
===================================================================================================================================
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act, and each Portfolio is subject
to diversification requirements under the Code.
===================================================================================================================================
Industry concentration Each Portfolio may not invest more than 25% of its assets in any one industry.
===================================================================================================================================
Restricted and illiquid If immediately after and as a result of such The Portfolio will not invest more than 10% of its
securities action the value of the following securities, net assets in illiquid and other securities that
in the aggregate, would exceed 10% of the are not readily marketable. Repurchase agreements
Portfolio's net assets, the Portfolio will not maturing in more than seven days will be included
(i) purchase securities for which there is no for purposes of the foregoing limit. Securities
readily available market, (ii) purchase time subject to restrictions on resale under the 1933
deposits maturing in more than seven days, Act are considered illiquid unless they are
(iii) purchase over-the-counter (OTC) options eligible for resale pursuant to Rule 144A or
or hold assets set aside to cover OTC options another exemption from the registration
written by the Portfolio, (iv) enter into requirements of the 1933 Act and are determined to
repurchase agreements maturing in more than be liquid by Pioneer.
seven days, or (v) invest in interests in real
estate investment trusts which are not readily
marketable or interests in real estate limited
partnerships which are not listed or traded on
the NASDAQ Stock Market.
===================================================================================================================================
Borrowing The Portfolio may borrow money (i) from banks, The Portfolio may not borrow money, except from
or (ii) by engaging in reverse repurchase banks to meet redemptions in amounts not exceeding
agreements. The Portfolio will not commit to 33 1/3% (taken at the lower of cost or current
additional securities purchases if total value) of itstotal assets (including the amount
outstanding borrowings are equal to 5% or more borrowed). ThePortfolio does not intend to borrow
of total assets. money during the coming year, and will do so only as
a temporary measure for extraordinary purposes or to
facilitate redemptions. The Portfolio will not purch
securities while any borrowings are outstanding.
===================================================================================================================================
Lending The Portfolio may not make loans, provided that The Portfolio may not make loans to any person,
this restriction does not prevent the Portfolio except by (i) the purchase of a debt obligation in
from purchasing debt obligations, entering into which the portfolio is permitted to invest and (ii)
repurchase agreements, loaning its assets to engaging in repurchase agreements.
broker-dealers or institutional investors and
investing in loans, including assignment and
participation interests.
===================================================================================================================================
Derivative instruments The Portfolio may not purchase securities on The Portfolio may not (i) make short sales of
margin. However, the Portfolio may (i) obtain securities; (ii) purchase securities on margin;
short-term credits as necessary to clear its (iii) write, purchase or otherwise invest in any
purchases and sales of securities, and (ii) put, call, straddle or spread option or buy or
make margin deposits in connection with its use sell real estate, commodities or commodity futures
of financial options and futures, forward and contracts or invest in oil, gas or mineral
spot currency contracts, swap transactions and exploration or development programs.
other financial contracts or derivative instruments.
===================================================================================================================================
Other investment As described above, the Portfolios have substantially similar principal investment strategies and
policies and policies. Certain of the non-principal investment policies and restrictions are different. For a more
restrictions complete discussion of each Portfolio's other investment policies and fundamental and non-fundamental
investment restrictions, see the SAI.
===================================================================================================================================
Buying, Selling and Exchanging Shares
===================================================================================================================================
Sales charges Shares of the Portfolio are not subject to any The Class I shares of Pioneer Money Market Portfolio
sales charge. you receive in the Reorganization will not be
subject to any sales charge.
===================================================================================================================================
Management and other Safeco Money Market Portfolio pays SAM an Pioneer Money Market Portfolio pays Pioneer a
fees investment advisory and management fee equal to management fee equal to 0.50% of the Portfolio's
0.65% of the Portfolio's average daily net average daily net assets.
assets. Pursuant to the Agreement, SAM serves
as administrator and fund accounting agent for During its most recent fiscal year, Pioneer Money
the Portfolio. Market Portfolio paid an advisory fee at an average
rate of 0.50% of average daily net assets.
===================================================================================================================================
3
===================================================================================================================================
Safeco Money Market Portfolio Pioneer Money Market Portfolio
===================================================================================================================================
===================================================================================================================================
For the fiscal year ended December 31, 2003,
the Portfolio's annual operating expenses were In addition, the Portfolio reimburses Pioneer for
0.84%, per share. certain fund accounting and legal expenses incurred
on behalf of the Portfolio and pays a separate
shareholder servicing/transfer agency fee to
PIMSS, an affiliate of Pioneer.
For the fiscal year ended December 31, 2003, the
Portfolio's annual operating expenses for Class I
shares were 0.72% per share.
Pioneer has agreed until the second anniversary of
the closing of the Reorganization to limit the
ordinary operating expenses (excluding litigation,
indemnification, taxes and other non-recurring,
non operating expenses) of the Class I shares to
0.90% of the average daily net assets attributable
to Class I.
===================================================================================================================================
Distribution and Shares of each Portfolio are not subject to a Rule 12b-1 fee.
service (12b-1) fee
===================================================================================================================================
Buying shares Each Portfolio may sell its shares directly to separate accounts established and maintained by
insurance companies for the purpose of funding variable contracts and to qualified plans. Shares of the
Portfolios are sold at net asset value. Investments in a Portfolio are credited to an insurance
company's separate account or qualified plan account, immediately upon acceptance of the investment by
the Portfolio. The offering of shares of any Portfolio may be suspended for a period of time, and each
Portfolio reserves the right to reject any specific purchase order. Purchase orders may be refused if,
in the investment adviser's opinion, they are of a size or frequency that would disrupt the management
of the Portfolio.
===================================================================================================================================
Selling shares Shares of each Portfolio will be sold at net asset value per share next calculated after the Portfolio
receives your request in good order.
You may sell your shares by contacting the insurance company sponsoring your variable contract, as
described in your Portfolio's prospectus. You can also sell your shares by contacting the Portfolio
directly if your account is registered in your name. If the account is established in the shareholder's
own name, shareholders may also redeem shares of the Portfolio by telephone or online.
===================================================================================================================================
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has a similar investment objective, primary investment
policies and strategies, the Portfolios are subject to the same principal risks.
You could lose money on your investment in either Portfolio or not make as much
as if you invested elsewhere if:
o Interest rates go up causing the value of the Portfolio's investment to
decline
o The issuer of a security owned by the Portfolio defaults on its obligation
to pay principal and/or interest or has its credit rating downgraded
o Pioneer's judgment about the credit quality, attractiveness or relative
value or a particular security proves to be incorrect
An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency.
Past Performance
Set forth below is performance information for each Portfolio. The bar charts
show how each Portfolio's total return (not including any deduction for sales
charges) has varied from year to year for each full calendar year. The tables
show average annual total return (before and after sales taxes) for each
Portfolio over time for each class of shares (including deductions for sales
charges) compared with a broad-based securities market index. Past performance
before and after taxes does not indicate future results.
4
Safeco Money Market Portfolio
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
3.65 5.56 4.94 5.08 4.95 4.63 5.82 3.75 1.53 0.50
*During the period shown in the bar chart, your Portfolio's
highest quarterly return was 1.53% for the quarter ended December 31, 2000, and
the lowest quarterly return was 0.07% for the quarter ended December 31, 2003.
Pioneer Money Market Portfolio - Class I Shares
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1996 1997 1998 1999 2000 2001 2002 2003
4.51 4.64 4.68 4.38 5.71 3.39 1.19 0.56
*During the period shown in the bar chart, since inception on March 1, 1995,
Pioneer Money Market Portfolio's highest quarterly return was 1.47% for the
quarter ended December 31, 2000, and the lowest quarterly return was 0.10% for
the quarter ended September 30, 2003.
Average Annual Total Returns as of December 31, 2003
Since 7-day
1 Year 5 Years Inception 10 Years Yield
------ ------- --------- -------- -----
Safeco Money Market Portfolio 0.50% 3.23% N/A 4.03% 0.28%
Pioneer Money Market Portfolio, Class I Shares(1) 0.56% 3.03% 3.77% N/A 0.47%
90-day U.S. Treasury Bill 1.03% 3.34% 4.10%
(reflects no deduction for fees, expenses or taxes)
- -------------------
(1) The Pioneer Money Market Portfolio commenced operations on March 1, 1995.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios 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 Portfolio. The expenses in the tables
appearing below are based on (i) for your Portfolio, the expenses of your
Portfolio for the period ended December 31, 2003 and (ii) for Pioneer Money
Market Portfolio, the expenses of Pioneer Money Market Portfolio for the period
ended December 31, 2003. Future expenses for all share classes may be greater or
less.
5
===============================================================================================
Pioneer Money Market
Shareholder transaction fees (paid Safeco Money Market Portfolio
directly from your investment) Portfolio Class I Shares
===============================================================================================
Redemption fees for shares held less None None
than 30 days
===============================================================================================
Sales charge or deferred sales charge None None
===============================================================================================
Annual Portfolio operating expenses
(deducted from Portfolio assets)
(as a % of average net assets)
===============================================================================================
Management fee 0.65% 0.50%
===============================================================================================
Distribution and service (12b-1) fee None None
===============================================================================================
Other expenses 0.19% 0.19%
===============================================================================================
Total Portfolio operating expenses 0.84% 0.69%
===============================================================================================
Expense reduction None None (1)
===============================================================================================
Net Portfolio operating expenses 0.84% 0.69%
===============================================================================================
(1) Pioneer has agreed that through the second anniversary of the closing of the
Reorganization, Pioneer will limit the ordinary operating expenses (excluding
taxes, commissions, interest and extraordinary expenses) of the Class I shares
of Pioneer Money Market Portfolio to 0.90% of average daily net assets.
The hypothetical example below helps you compare the cost of investing in each
Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for the
time periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) the expense limitations are in effect for two
years for Pioneer Money Market Portfolio. The examples are for comparison
purposes only and are not a representation of either Portfolio's actual expenses
or returns, either past or future.
======================================================================
Example
======================================================================
Safeco Money Market Portfolio
======================================================================
======================================================================
Year 1 $86
======================================================================
Year 3 $268
======================================================================
Year 5 $466
======================================================================
Year 10 $1,037
======================================================================
Pioneer Money Market Portfolio
======================================================================
Class I Shares
======================================================================
Year 1 $71
======================================================================
Year 3 $221
======================================================================
Year 5 $384
======================================================================
Year 10 $859
======================================================================
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Money Market Portfolio. The Trustees considered the following matters,
among others, in approving the proposal.
First, SAM, the investment adviser to the Portfolio until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it was not interested in
continuing to provide investment advisory services to the Safeco Portfolios.
Consequently, a change in your Portfolio's investment management was necessary.
Second, the investment performance of Pioneer Money Market Portfolio is
comparable to the historical investment performance of your Portfolio. For the
one and five year periods ended [June 30], 2004, Class I shares of Pioneer Money
Market Portfolio had an average annual return of ___% and ___%, respectively,
compared to an average annual return of your Portfolio's shares of ___% and
___%, respectively, during the same period. In addition, the Trustees considered
the track record of Pioneer in managing equity and fixed income mutual funds.
6
Third, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62
investment companies and accounts with approximately $35 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 June 30, 2004, assets under management by UniCredito Italiano
S.p.A. were approximately $151 billion worldwide. Shareholders of your Portfolio
would become part of a significantly larger family of funds that offers a more
diverse array of investment options and enhanced shareholder account options.
The Pioneer family of mutual funds offers over 62 funds, including domestic and
international equity and fixed income funds and a money market fund that will be
available to your Portfolio's shareholders through exchanges. In addition,
Pioneer offers shareholders additional options for their accounts, including the
ability to transact and exchange shares over the telephone or online and the
ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or online.
Fourth, Pioneer Money Market Portfolio's lower operating expenses and Pioneer's
commitment until the second anniversary of the Reorganization to limit the total
operating expenses of Class I shares of Pioneer Money Market Portfolio to
[0.90]% of average daily net assets. Pioneer Money Market Portfolio's expense
ratio and the expense limitation are below both the gross expenses and expenses
net of expense reimbursement of the shares of your Portfolio.
Fifth, the Class I shares of Pioneer Money Market Portfolio received in the
Reorganization will provide Safeco Money Market Portfolio shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all expenses of the Safeco Funds and the Pioneer
Funds associated with the Reorganizations, including, but not limited to: (1)
the expenses associated with the preparation, printing and mailing of any
shareholder communications, including this joint Proxy Statement/Prospectus, and
any filings with the SEC and other governmental authorities in connection with
the Reorganizations; (2) the fees and expenses of any proxy solicitation firm
retained in connection with the Reorganizations; (3) the legal fees and expenses
incurred by the Safeco Funds in connection with the Reorganizations; and (4) the
Trustee fees and expenses incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Background to the Transaction."
The board of trustees of Pioneer Money Market Portfolio also considered that the
Reorganization presents an excellent opportunity for the Pioneer Money Market
Portfolio to acquire 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 Money
Market Portfolio and its shareholders.
Capitalization
The following table sets forth the capitalization of each Portfolio as of
December 31, 2003.
======================================================================================
Pioneer Money Market
Safeco Money Market Portfolio
Portfolio Class I Shares
December 31, 2003 December 31, 2003
======================================================================================
Net Assets (in thousands) $22,940 $34,736
======================================================================================
Net Asset Value Per Share $1.00 $1.00
======================================================================================
Shares Outstanding 22,940,000 [ ]
======================================================================================
It is impossible to predict how many shares of Pioneer Money Market Portfolio
will actually be received and distributed by your Portfolio on the
Reorganization date. The table should not be relied upon to determine the amount
of Pioneer Money Market Portfolio's shares that will actually be received and
distributed.
Board's Evaluation and Recommendation
For the reasons described above, the Trustees, including the Independent
Trustees, approved the Reorganization. In particular, the board of trustees
determined that the Reorganization is in the best interests of your Portfolio.
Similarly, the board of trustees of Pioneer Money Market Portfolio, including
its Independent Trustees, approved the Reorganization. They also determined that
the Reorganization is in the best interests of Pioneer Money Market Portfolio.
The Trustees recommend that the shareholders of your Portfolio vote FOR the
proposal to approve the Agreement and Plan of Reorganization.
7
Safeco Multi Cap Core Portfolio and
Pioneer Mid Cap Value VCT Portfolio
PROPOSAL 5
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement and prospectus or incorporated herein. You should read carefully
the entire proxy statement, including the form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Safeco MC Core Portfolio to the Pioneer Mid Cap Portfolio
===================================================================================================================================
Safeco MC Core Portfolio Pioneer Mid Cap Portfolio
===================================================================================================================================
Business A series of Safeco Resource Series Trust, a A series of Pioneer Variable Contracts Trust, a
diversified open-end management investment diversified open-end management investment company
company organized as a Delaware statutory trust. organized as a Delaware statutory trust.
===================================================================================================================================
Net assets as of $50 million $ million
June 30, 2004
===================================================================================================================================
Investment advisers and Investment adviser (until August 1, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Managers:
Bill Whitlow (since 1997 and until August 1, J. Rodman Wright
2004) Senior Vice President, Pioneer
CFA, Vice President, SAM Joined Pioneer in 1994
Investment professional since 1988
Brian Clancy (since 2003 and until August 1,
2004) Sean Gavin
CFA, Equity Analyst Vice President, Pioneer
Joined Pioneer in 2002
Currently Pioneer is acting as investment adviser to
the Portfolio. The portfolio managers of the Pioneer
Portfolio, as indicated in the next column, currently
manage your Safeco Portfolio.
===================================================================================================================================
Investment objective The Portfolio seeks long-term growth of capital. The Portfolio seeks capital appreciation by
investing in a diversified portfolio of securities
consisting primarily of common stocks.
=========================================================================================================
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
===================================================================================================================================
Primary investments Under normal circumstances, the Portfolio Normally, the Portfolio invests at least 80% of its
invests in a blend of growth and total assets in equity securities of mid-size
value-orientated stocks of companies of any companies, that is companies with market values
size. within the range of market values of companies
included in the Russell Midcap Value Index.
The Portfolio focuses on issuers with
capitalizations within the $1 billion to $10 billion
range, and that range will change depending on
market conditions.
The equity securities in which the Portfolio
principally invests are common stocks, preferred
stocks, depositary receipts and convertible debt, bu
the Portfolio may invest in other types of equity
securities to a lesser extent, such as warrants and
rights.
===================================================================================================================================
Investment strategies When evaluating a stock to buy for the Pioneer uses a "value" approach to select the
Portfolio, the Portfolio's adviser looks for: Portfolio's investments. Pioneer seeks securities
o Faster earnings growth than their selling at substantial discounts to their underlying
competitors values and then holds these securities until the
market values reflect their intrinsic values.
===================================================================================================================================
===================================================================================================================================
Safeco MC Core Portfolio Pioneer Mid Cap Portfolio
===================================================================================================================================
o Low price-to-earnings ratios when Pioneer evaluates a security's potential value,
compared to competitors including the attractiveness of its market
o A share price that represents good valuation, based on the company's assets and
value prospects for earnings growth. Pioneer evaluates
o Potential for long-term appreciation the issuer based on its financial statements and
operations, employing a bottom-up analytic style.
Factors Pioneer looks for in selecting investments
include:
o Favorable expected returns relative to perceived
risk;
o Management with demonstrated ability and
commitment to the company
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o Turnaround potential for companies that have
been through difficult periods
o Estimated private market value in excess of
current stock price
o Whether the issuer's industry has strong
fundamentals, such as increasing or sustainable
demand and barriers to entry
===================================================================================================================================
Other investments The Portfolio may invest in index futures as a The Portfolio may invest up to 25% of its total
cash management technique in order to keep assets in equity and debt securities of non-U.S.
fully invested. issuers. The Portfolio will not invest more than 5%
of its total assets in the securities of emerging
The Portfolio may invest up to 20% if its markets issuers.
assets in foreign securities which are listed
on a national exchange, including investments The Portfolio may invest up to 20% of its total
in American Depository Receipts. assets in debt securities of corporate and
government issuers. Generally the Portfolio acquires
debt securities that are investment grade, but the
Portfolio may invest up to 5% of its net assets in
below investment grade convertible debt securities
issued by both U.S. and non-U.S. issuers. The Portfo
invests in debt securities when Pioneer believes the
are consistent with the Portfolio's investment
objective by offering the potential for capital
appreciation, to diversify the Portfolio's portfolio
for greater liquidity.
===================================================================================================================================
Temporary defensive The Portfolio may hold cash or invest in The Portfolio invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than
an agency or instrumentality of the U.S. one year, cash equivalents or may hold cash.
government, high-quality commercial paper,
certificates of deposit, shares of no-load,
open-end money market funds, or repurchase agreements
as a temporary defensive measure when market
conditions so warrant.
===================================================================================================================================
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act, and each Portfolio is subject
to diversification requirements under the Code.
===================================================================================================================================
Industry concentration Each Portfolio may not invest more than 25% of its assets in any one industry.
===================================================================================================================================
Restricted and illiquid If immediately after and as a result of such The Portfolio will not invest more than 15% of its
securities action the value of the following securities, net assets in illiquid and other securities that are
in the aggregate, would exceed 15% of a not readily marketable. Repurchase agreements
Portfolio's net assets, each Portfolio will not maturing in more than seven days will be included
(i) purchase securities for which there is no for purposes of the foregoing limit. Securities
readily available market, (ii) purchase time subject to restrictions on resale under the 1933 Act
deposits maturing in more than seven days, are considered illiquid unless they are eligible for
(iii) purchase over-the-counter (OTC) options resale pursuant to Rule 144A or another exemption
or hold assets set aside to cover OTC options from the registration requirements of the 1933 Act
written by the Portfolio, (iv) enter into and are determined to be liquid by Pioneer
repurchase agreements maturing in more than
seven days, or (v) invest in interests in real
estate investment trusts which are not readily
marketable or interests in real estate limited
partnerships which are not listed or traded on
the NASDAQ Stock Market.
===================================================================================================================================
2
===================================================================================================================================
Safeco MC Core Portfolio Pioneer Mid Cap Portfolio
===================================================================================================================================
Borrowing Each Portfolio may borrow money (i) from banks, The Portfolio may not borrow money, except from
or (ii) by engaging in reverse repurchase banks to meet redemptions in amounts not exceeding
agreements. The Portfolio will not commit to 33 1/3% measure (taken at the lower of cost or
additional securities purchases if total current value) of its for total assets (including
outstanding borrowings are equal to 5% or more the amount borrowed). The extraordinary Portfolio
of total assets. does not intend to borrow money during the
purposes coming year, and will do so only as a
temporary or to facilitate redemptions. The
Portfolio will not purchase securities while any
borrowings are outstanding.
===================================================================================================================================
Lending The Portfolio may lend securities to qualified The Portfolio may not make loans to any person,
institutional investors with a value of up to except by (i) the purchase of a debt obligation in
33% of the Portfolio's total assets. which the portfolio is permitted to invest and (ii)
engaging in repurchase agreements
===================================================================================================================================
Derivative instruments The Portfolio may not purchase securities on The Portfolio may not (i) make short sales of
margin. However, the Portfolio may (i) obtain securities; (ii) purchase securities on margin;
short-term credits as necessary to clear its (iii) write, purchase or otherwise invest in any
purchases and sales of securities, and (ii) put, call, straddle or spread option or buy or
make margin deposits in connection with its use sell real estate, commodities or commodity futures
of financial options and futures, forward and contracts or invest in oil, gas or mineral
spot currency contracts, swap transactions and exploration or development programs.
other financial contracts or derivative instruments.
The Portfolio will not write a put or call option if,
as a result thereof, the aggregate value of the assets
underlying all such options would exceed 20% of the
Portfolio's net assets.
The Portfolio will not purchase a put or call option
or option on a futures contract if, as a result
thereof, the aggregate premiums paid on all options or
options on futures contracts held by the Portfolio
would exceed 20% of the Portfolio's net assets.
The Portfolio will not enter into any futures contract
or option on futures contract if, as a result thereof,
the aggregate margin deposits and premiums required on
all such instruments would exceed 5% of the
Portfolio's net assets.
===================================================================================================================================
Other investment As described above, the Portfolios have substantially similar principal investment strategies
and policies and policies. Certain of the non-principal investment policies and restrictions are different. For a more
restrictions complete discussion of each Portfolio's other investment policies and fundamental and non-fundamental
investment restrictions, see the SAI.
===================================================================================================================================
Buying, Selling and Exchanging Shares
===================================================================================================================================
Sales charges Shares of the Portfolio are not subject to any The Class I shares of Pioneer Mid Cap Portfolio you
sales charges. receive in the Reorganization will not be subject to
any sales charge.
===================================================================================================================================
Management and other Safeco MC Core Portfolio pays SAM an investment Pioneer Mid Cap Portfolio pays Pioneer a management
fees advisory and management fee equal to 0.74% of fee equal to 0.65% of the Portfolio's average daily
the Portfolio's average daily net assets. net assets.
Pursuant to this Agreement, SAM serves as
administrator and fund accounting agent for the In addition, the Portfolio reimburses Pioneer for
Portfolio. certain fund accounting and legal expenses incurred
on behalf of the Portfolio and pays a separate
For the fiscal year ended December 31, 2003, shareholder servicing/transfer agency fee to PIMSS,
the Portfolio's annual operating expenses were an affiliate of Pioneer.
0.88%, per share.
Pioneer has agreed until the second anniversary of
the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses)
of the Class I share to 0.88% of the average daily
net assets attributable to Class I.
===================================================================================================================================
3
===================================================================================================================================
Safeco MC Core Portfolio Pioneer Mid Cap Portfolio
===================================================================================================================================
Distribution and Shares of each Portfolio are not subject to a Rule 12b-1 fee.
service (12b-1) fee
===================================================================================================================================
Buying shares Each Portfolio may sell its shares directly to separate accounts established and maintained by
insurance companies for the purpose of funding variable contracts and to qualified plans. Shares of the
Portfolios are sold at net asset value. Investments in a Portfolio are credited to an insurance
company's separate account or qualified plan account, immediately upon acceptance of the investment by
the Portfolio. The offering of shares of any Portfolio may be suspended for a period of time, and each
Portfolio reserves the right to reject any specific purchase order. Purchase orders may be refused if,
in the investment adviser's opinion, they are of a size or frequency that would disrupt the management
of the Portfolio.
===================================================================================================================================
Selling shares Shares of each Portfolio will be sold at net asset value per share next calculated after the Portfolio
receives your request in good order.
You may sell your shares by contacting the insurance company sponsoring your variable contract, as
described in your Portfolio's prospectus. You can also sell your shares by contacting the Portfolio
directly if your account is registered in your name. If the account is established in the shareholder's
own name, shareholders may also redeem shares of the Portfolio by telephone or online.
===================================================================================================================================
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has a similar investment objective, primary investment
policies and strategies, the Portfolios are subject to the same principal risks.
You could lose money on your investment in either Portfolio or not make as much
as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short term)
o Mid-size or value stocks fall out of favor with investors
o The Portfolio's assets remain undervalued or do not have the potential
value originally expected
Each Portfolio 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:
o Be more sensitive to changes in earnings results and investor expectations
o Have more limited product lines and capital resources
o Experience sharper swings in market values
o Be harder to sell at the times and prices the investment adviser thinks
appropriate
o Offer greater potential for gain and loss
Investing in non-U.S. issuers may involve unique risks compared to investing in
securities of U.S. issuers. These risks may include:
o Less information about non-U.S. issuers or markets may be available due to
less rigorous disclosure or accounting standards or regulatory practices
o Many non-U.S. markets are smaller, less liquid and more volatile. In a
changing market, the investment adviser may not be able to sell the
Portfolio's securities at times, in amounts and at prices it considers
reasonable
o Adverse effect of currency exchange rates or controls on the value of the
Portfolio's investments
o The economies of non-U.S. countries may grow at slower rates than expected
or may experience a downturn or recession
o Economic, political and social developments may adversely affect the
securities markets
o Withholding and other non-U.S. taxes may decrease the Portfolio's return
Past Performance
Set forth below is performance information for each Portfolio. The bar charts
show how each Portfolio's total return (not including any deduction for sales
charges) has varied from year to year for each full calendar year. The tables
show average annual total return (before and after sales taxes) for each
Portfolio over time for each class of shares (including deductions for sales
charges) compared with a broad-based securities market index. Past performance
before and after taxes does not indicate future results.
4
Safeco MC Core Portfolio
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
3.65 7.42 12.44 31.02 2.89 54.62 -14.93 -10.64 -24.02 45.46
*During the period shown in the bar chart, your Portfolio's
highest quarterly return was 34.35% for the quarter ended December 31, 1999, and
the lowest quarterly return was -21.06% for the quarter ended September 30,
2001.
Pioneer Mid Cap Portfolio - Class I Shares
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1996 1997 1998 1999 2000 2001 2002 2003
15.03 24.69 -4.02 13.13 18 6.49 -11.21 37.48
*During the period shown in the bar chart, since inception on March 1, 1995,
Pioneer Mid Cap Portfolio's highest quarterly return was 17.33% for the quarter
ended June 30, 2003, and the lowest quarterly return was -20.94% for the quarter
ended September 30, 1998.
Safeco MC Core Portfolio
Average Annual Total Returns as of December 31, 2003
1 Year 5 Years 10 Years
------ ------- --------
Safeco MC Core Portfolio 45.46% 5.37% 8.17%
Russell 3000 Index (as compared with your Portfolio)(1) 31.04% 0.36% 10.77%
(reflects no deduction for fees, expenses or taxes)
S&P 500 Index (1) 28.67% -0.57% 11.06%
(reflects no deduction for fees, expenses or taxes)
- ---------------
(1) The Russell 3000 Index, an unmanaged index of 3,000 largest U.S. companies
based on market capitalization, and the S&P 500 Index, an unmanaged index
of 500 stocks, are for reference only, do not mirror the Portfolio's
investments, and reflect no deduction for fees or expenses.
5
Pioneer Mid Cap Portfolio
Average Annual Total Returns as of December 31, 2003
Since
1 Year 5 Years Inception
------ ------- ---------
Pioneer Mid Cap Portfolio, Class I Shares(1) 37.48% 11.64% 12.34%
Russell Midcap Value Index(2) 38.07% 8.73% 14.17%
(reflects no deduction for fees, expenses or taxes)
(1) Pioneer Mid Cap Portfolio commenced operations on March 1, 1995.
(2) The Russell Midcap Value Index, an unmanaged index measuring the
performance of those Russell Midcap companies with lower price-to-book
ratios and lower forecasted growth values, is for reference only, does not
mirror the Portfolio's investments, and reflects no deduction for fees or
expenses.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios 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 Portfolio. The expenses in the tables
appearing below are based on (i) for your Portfolio, the expenses of your
Portfolio for the period ended December 31, 2003 and (ii) for Pioneer Mid Cap
Portfolio, the expenses of Pioneer Mid Cap Portfolio for the period ended
December 31, 2003. Future expenses for all share classes may be greater or less.
===============================================================================================
Shareholder transaction fees (paid Safeco MC Core Portfolio Pioneer Mid Cap Portfolio
directly from your investment) Class I Shares
===============================================================================================
Redemption fees for shares held less None None
than 30 days
===============================================================================================
Sales charge or deferred sales charge None None
===============================================================================================
Annual Portfolio operating expenses
(deducted from Portfolio assets)
(as a % of average net assets)
===============================================================================================
Management fee 0.74% 0.65%
===============================================================================================
Distribution and service (12b-1) fee None None
===============================================================================================
Other expenses 0.14% 0.18%
===============================================================================================
Total Portfolio operating expenses 0.88% 0.83%
===============================================================================================
Expense reduction None None (1)
===============================================================================================
Net Portfolio operating expenses 0.88% 0.88%
===============================================================================================
(1) Pioneer has agreed that through the second anniversary of the closing of the
Reorganization, Pioneer will limit the ordinary operating expenses (excluding
taxes, commissions, interest and extraordinary expenses) of the Class I shares
of Pioneer Mid Cap Portfolio to 0.88% of average daily net assets.
The hypothetical example below helps you compare the cost of investing in each
Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for the
time periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) the expense limitations are in effect for two
years for Pioneer Mid Cap Portfolio. The examples are for comparison purposes
only and are not a representation of either Portfolio's actual expenses or
returns, either past or future.
======================================================================
Example
======================================================================
Safeco MC Core Portfolio
======================================================================
======================================================================
Year 1 $90
======================================================================
Year 3 $281
======================================================================
Year 5 $488
======================================================================
Year 10 $1,084
======================================================================
6
======================================================================
Pioneer Mid Cap Portfolio
======================================================================
Class I Shares
======================================================================
Year 1 $90
======================================================================
Year 3 $286
======================================================================
Year 5 $503
======================================================================
Year 10 $1,128
======================================================================
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco MC Core Portfolio. The Trustees considered the following matters,
among others, in approving the proposal.
First, SAM, the investment adviser to the Portfolio until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it was not interested in
continuing to provide investment advisory services to the Safeco Portfolios.
Consequently, a change in your Portfolio's investment management was necessary.
Second, the investment performance of Pioneer Mid Cap Portfolio is comparable to
the historical investment performance of your Portfolio. For the one and five
year periods ended [June 30], 2004, Class I shares of Pioneer Fund Portfolio had
an average annual return of ___% and ___%, respectively, compared to an average
annual return of your Portfolio's shares of ___% and ___%, respectively, during
the same period. In addition, the Trustees considered the track record of
Pioneer in managing equity and fixed income mutual funds.
Third, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62
investment companies and accounts with approximately $35 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 June 30, 2004, assets under management by UniCredito Italiano
S.p.A. were approximately $151 billion worldwide. Shareholders of your Portfolio
would become part of a significantly larger family of funds that offers a more
diverse array of investment options and enhanced shareholder account options.
The Pioneer family of mutual funds offers over 62 funds, including domestic and
international equity and fixed income funds and a money market fund that will be
available to your Portfolio's shareholders through exchanges. In addition,
Pioneer offers shareholders additional options for their accounts, including the
ability to transact and exchange shares over the telephone or online and the
ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or online.
Fourth, Pioneer Mid Cap Portfolio's lower operating expenses and Pioneer's
commitment until the second anniversary of the Reorganization to limit the
ordinary operating expenses (excluding taxes, commissions, interest and
extraordinary expenses) of Class I shares of the Pioneer Mid Cap Portfolio to
0.88% of average daily net assets. This expense ratio is the same as the expense
ratio of your Portfolio.
Fifth, the Class I shares of Pioneer Mid Cap Portfolio received in the
Reorganization will provide Safeco MC Core Portfolio shareholders with exposure
to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all expenses of the Safeco Funds and the Pioneer
Funds associated with the Reorganizations, including, but not limited to: (1)
the expenses associated with the preparation, printing and mailing of any
shareholder communications, including this joint Proxy Statement/Prospectus, and
any filings with the SEC and other governmental authorities in connection with
the Reorganizations; (2) the fees and expenses of any proxy solicitation firm
retained in connection with the Reorganizations; (3) the legal fees and expenses
incurred by the Safeco Funds in connection with the Reorganizations; and (4) the
Trustee fees and expenses incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Background to the Reorganization".
The board of trustees of Pioneer Mid Cap Portfolio also considered that the
Reorganization presents an excellent opportunity for the Pioneer Mid Cap
Portfolio to acquire investment assets without the obligation to pay commissions
or other transaction costs that a portfolio normally incurs when purchasing
securities. This opportunity provides an economic benefit to Pioneer Mid Cap
Portfolio and its shareholders.
7
Capitalization
The following table sets forth the capitalization of each Portfolio as of
December 31, 2003.
======================================================================================
Pioneer Mid Cap
Portfolio
Safeco MC Core Portfolio Class I Shares
December 31, 2003 December 31, 2003
======================================================================================
Net Assets (in thousands) $51,368 $170,237
======================================================================================
Net Asset Value Per Share $18.70 $20.47
======================================================================================
Shares Outstanding 2,747,000 [ ]
======================================================================================
It is impossible to predict how many shares of Pioneer Mid Cap Portfolio will
actually be received and distributed by your Portfolio on the Reorganization
date. The table should not be relied upon to determine the amount of Pioneer Mid
Cap Portfolio's shares that will actually be received and distributed.
Board's Evaluation and Recommendation
For the reasons described above, the Trustees, including the Independent
Trustees, approved the Reorganization. In particular, the board of trustees
determined that the Reorganization is in the best interests of your Portfolio.
Similarly, the board of trustees of Pioneer Mid Cap Portfolio, including its
Independent Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer Mid Cap Portfolio.
The Trustees recommend that the shareholders of your Portfolio vote FOR the
proposal to approve the Agreement and Plan of Reorganization.
8
Safeco Small-Cap Value Portfolio and
Pioneer Small Cap Value II VCT Portfolio
PROPOSAL 6
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in this
proxy statement and prospectus or incorporated herein. You should read carefully
the entire proxy statement, including the form of Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Safeco Small Cap Portfolio to the Pioneer Small Cap Portfolio
===================================================================================================================================
Safeco Small Cap Portfolio Pioneer Small Cap Portfolio
===================================================================================================================================
Business A series of Safeco Resource Series Trust, a A newly created series of Pioneer Variable Contracts
diversified open-end management investment Trust, a diversified open-end management investment
company organized as a Delaware statutory trust. company organized as a Delaware statutory trust.
===================================================================================================================================
Net assets as of $46.4 million None. Pioneer Small Cap Portfolio is newly created
June 30, 2004 and does not expect to commence investment
operations until the Reorganization occurs.
===================================================================================================================================
Investment advisers and Investment adviser (until August 1, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Manager: Portfolio Managers:
Greg Eisen (since 1996 and until August 1, 2004) David M. Adams
Assistant vice president, SAM Vice President, Pioneer
Joined Pioneer in 1994
Currently Pioneer is acting as investment Investment Professional Since 1992
adviser to the Portfolio. The portfolio managers of
the Pioneer Portfolio, as indicated John McPherson
in the next column, currently manage your Assistant Portfolio Manager, Pioneer
Safeco Portfolio. Joined Pioneer in 2002
===================================================================================================================================
Investment objective The Portfolio seeks long-term growth of capital The Portfolio seeks reasonable income and capital
through investing primarily in small-sized growth.
companies.
=========================================================================================================
Each Portfolio provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
===================================================================================================================================
Primary investments Under normal circumstances, the Portfolio The Portfolio invests the major portion of its
invests at least 80% of its net assets (plus assets in equity securities, primarily of U.S.
any borrowings for investment purposes) in issuers. For purposes of the Portfolio's
equity and equity-related securities of investment policies, equity securities include
companies with total market capitalization at common stocks, convertible debt and other equity
the time of investment of less than $1.5 instruments, such as depositary receipts,
billion. warrants, rights, interests in real estate
investment trusts (REITS) and preferred stocks.
===================================================================================================================================
Investment strategies When evaluating a stock to buy for the Pioneer uses a "value" approach to select the
Portfolio, SAM looks for companies having one Portfolio's investments. Pioneer seeks securities
or more of the following characteristics: selling at substantial discounts to their underlying
o Long-term potential for above-average values and then holds these securities until the
or improving earnings growth market values reflect their intrinsic values.
o Involvement in new or innovative products or
services Pioneer evaluates a security's potential value,
o A share price that represents good including the attractiveness of its market
relative value as determined by valuation, based on the company's assets and
price-to-earnings ratio or other commonly prospects for earnings and revenue growth. Factors
used valuation measures Pioneer looks for in selecting investments include:
o Above average potential for earnings and
revenue growth
===================================================================================================================================
===================================================================================================================================
Safeco Small Cap Portfolio Pioneer Small Cap Portfolio
===================================================================================================================================
o Favorable expected returns relative to
perceived risks
o Management with demonstrated ability and
commitment to the company
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o Turnaround potential for companies that have
been through difficult periods
o Low debt levels relative to equity
o Issuer's industry has strong fundamentals,
such as increasing or sustainable demand and
barriers to entry
===================================================================================================================================
Other investments The Portfolio may invest in securities The Portfolio may invest up to 25% of its total
convertible into common stock, but less than assets in REITs.
35% of its total assets will be invested in
such securities. The Portfolio may invest in securities of Canadian
issuers to the same extent as securities of U.S.
The Portfolio may invest up to 20% of its issuers.
assets in foreign securities which are listed
on a national exchange, including investments The Portfolio may invest up to 5% of its total
in American Depository Receipts. assets in equity and debt securities of other
non-U.S. issuers, including securities of emerging
market issuers.
The Portfolio may invest up to 20% of its total
assets in debt securities of corporate and
government issuers. The Fund may invest up to 5%
of its net assets in below investment grade debt
securities issued by both U.S. and non-U.S.
issuers, including below investment grade
convertible debt securities.
===================================================================================================================================
Temporary defensive The Portfolio may hold cash or invest in The Portfolio may invest all or part of its assets
strategies high-quality, short-term securities issued by in securities with remaining maturities of less than
an agency or instrumentality of the U.S. one year, cash equivalents or may hold cash.
government, high-quality commercial paper,
certificates of deposit, shares of no-load,
open-end money market funds, or repurchase agreements
as a temporary defensive measure when market
conditions so warrant.
===================================================================================================================================
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act, and each Portfolio is subject
to diversification requirements under the Code.
===================================================================================================================================
Industry concentration Each Portfolio may not invest more than 25% of its assets in any one industry.
===================================================================================================================================
Restricted and illiquid If immediately after and as a result of such The Portfolio will not invest more than 15% of its
securities action the value of the following securities, net assets in illiquid and other securities that are
in the aggregate, would exceed 15% of the not readily marketable. Repurchase agreements
Portfolio's net assets, the Portfolio will not maturing in more than seven days will be included
(i) purchase securities for which there is no for purposes of the foregoing limit. Securities
readily available market, (ii) purchase time subject to restrictions on resale under the 1933 Act
deposits maturing in more than seven days, are considered illiquid unless they are eligible for
(iii) purchase over-the-counter (OTC) options resale pursuant to Rule 144A or another exemption
or hold assets set aside to cover OTC options from the registration requirements of the 1933 Act
written by the Portfolio, (iv) enter into and are determined to be liquid by Pioneer.
repurchase agreements maturing in more than
seven days, or (v) invest in interests in REITs
which are not readily marketable or interests
in real estate limited partnerships which are
not listed or traded on the
NASDAQ Stock Market.
===================================================================================================================================
Borrowing The Portfolio may borrow money (i) from banks, The Portfolio may not borrow money in amounts
or (ii) by engaging in reverse repurchase exceeding 10% of the Portfolio's total assets
agreements. The Portfolio will not commit to (including the amount borrowed) taken at market
additional securities purchases if total value.
outstanding borrowings are equal to 5% or more
of total assets.
===================================================================================================================================
2
===================================================================================================================================
Safeco Small Cap Portfolio Pioneer Small Cap Portfolio
===================================================================================================================================
Lending The Portfolio may lend securities to qualified The Portfolio may not make loans, except that the
institutional investors with a value of up to Portfolio may (i) lend portfolio securities in
33% of the Portfolio's total assets. accordance with the Portfolio'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
Portfolio may directly lend to and borrow money
from other affiliated Portfolios 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.
===================================================================================================================================
Derivative instruments The Portfolio may write put or call options if, The Portfolio may use futures and options on
as a result thereof, the aggregate value of the securities, indices and currencies, forward currency
assets underlying all such options does not exchange contracts and other derivatives. The
exceed 25% of the Portfolio's net assets. Portfolio does not use derivatives as a primary
investment technique and generally limits their use
The Portfolio may purchase put or call options to hedging. However, the Portfolio may use
on futures contracts if, as a result thereof, derivatives for a variety of non-principal purposes,
the aggregate premiums paid on all options or including:
options on futures contracts do not exceed 20% o As a hedge against adverse changes in stock
of the Portfolio's net assets. market prices, interest rates or currency
exchange rates
The Portfolio may enter into any futures o As a substitute for purchasing or selling
contract or option on a futures contract, if as securities
a result thereof, the aggregate margin deposits o To increase the Portfolio's return as a
and premiums required on all such instruments non-hedging strategy that may be considered
does not exceed 5% of the Portfolio's net speculative
assets.
The Portfolio may not purchase securities on margin.
However, the Portfolio may (i) obtain short-term
credits as necessary to clear its purchases and sales
of securities, and (ii) make margin deposits in
connection with its use of financial options and
futures, forward and spot currency contracts, swap
transactions and other financial contracts or
derivative instruments.
===================================================================================================================================
Other investment As described above, the Portfolios have substantially similar principal investment strategies and
policies and policies. Certain of the non-principal investment policies and restrictions are different. For a more
restrictions complete discussion of each Portfolio's other investment policies and fundamental and non-fundamental
investment restrictions, see the SAI.
===================================================================================================================================
Buying, Selling and Exchanging Shares
===================================================================================================================================
Sales charges Shares of the Portfolio are not subject to any The Class I shares of Pioneer Small Cap Portfolio
sales charges. you receive in the Reorganization will not be
subject to any sales charge.
===================================================================================================================================
Management and other Safeco Core Equity Portfolio pays SAM an Pioneer Fund Portfolio will pay Pioneer a management
fees investment advisory and management fee equal to fee equal to 0.75% of the Portfolio's average daily
0.85% of the Portfolio's average daily net net assets.
assets. Pursuant to this Agreement, SAM serves
as administrator and fund accounting agent for In addition, the Portfolio will reimburse Pioneer
the Portfolio. for certain fund accounting and legal expenses
incurred on behalf of the Portfolio and pays a
For the fiscal year ended December 31, 2003, separate shareholder servicing/transfer agency fee
the Portfolio's annual operating expenses were to PIMSS, an affiliate of Pioneer.
1.05%, per share.
Pioneer has agreed until the second anniversary of
the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses)
of the Class I shares to 1.01% of the average
daily net assets attributable to Class I.
===================================================================================================================================
3
===================================================================================================================================
Safeco Small Cap Portfolio Pioneer Small Cap Portfolio
===================================================================================================================================
Distribution and Shares of each Portfolio are not subject to a Rule 12b-1 fee.
service (12b-1) fee
===================================================================================================================================
Buying shares Each Portfolio may sell its shares directly to separate accounts established and maintained by
insurance companies for the purpose of funding variable contracts and to qualified plans. Shares of the
Portfolios are sold at net asset value. Investments in a Portfolio are credited to an insurance
company's separate account or qualified plan account, immediately upon acceptance of the investment by
the Portfolio. The offering of shares of any Portfolio may be suspended for a period of time, and each
Portfolio reserves the right to reject any specific purchase order. Purchase orders may be refused if,
in the investment adviser's opinion, they are of a size or frequency that would disrupt the management
of the Portfolio.
===================================================================================================================================
Selling shares Shares of each Portfolio will be sold at net asset value per share next calculated after the Portfolio
receives your request in good order.
You may sell your shares by contacting the insurance company sponsoring your variable contract, as
described in your Portfolio's prospectus. You can also sell your shares by contacting the Portfolio
directly if your account is registered in your name. If the account is established in the shareholder's
own name, shareholders may also redeem shares of the Portfolio by telephone or online.
===================================================================================================================================
Because each Portfolio has a similar investment objective, primary investment
policies and strategies, the Portfolios are subject to the same principal risks.
Even though each Portfolio seeks capital appreciation, you could lose money on
your investment in either Portfolio or not make as much as if you invested
elsewhere if:
o The stock market goes down (this risk may be greater in the short term)
o Value stocks fall out of favor with investors
o The Portfolio's assets remain undervalued or do not have the potential value
originally expected
Each Portfolio also has risks associated with investing in small companies.
Compared to large companies, small companies, and the market for their equity
securities, are likely to:
o Be more sensitive to changes in the economy, earnings results and investor
expectations
o Have more limited product lines and capital resources
o Experience sharper swings in market values
o Be harder to sell at the time and prices Pioneer thinks appropriate
o Offer greater potential for gain and loss
Past Performance
Set forth below is performance information for Safeco Small Cap Portfolio. The
bar charts show how Safeco Small Cap Portfolio's total return (not including any
deduction for sales charges) has varied from year to year for each full calendar
year. The tables show average annual total return (before and after sales taxes)
for Safeco Small Cap Portfolio over time for each class of shares (including
deductions for sales charges) compared with a broad-based securities market
index. Past performance before and after taxes does not indicate future results.
4
Safeco Small Cap Portfolio
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED DOCUMENT.]
1998 1999 2000 2001 2002 2003
- -19.95 15.4 -6.02 21.15 -4.56 42.78
*During the period shown in the bar chart, your Portfolio's highest quarterly
return since the Portfolio's inception in 1997 was 26.56% for the quarter ended
December 31, 1999, and the lowest quarterly return was -33.79% for the quarter
ended September 30, 1998.
Safeco Small Cap Portfolio
Average Annual Total Returns as of December 31, 2003
1 Year 5 Years Since
------ ------- Inception (1)
---------
Safeco Small Cap Portfolio 42.78% 12.35% 9.57%
Russell 2000 Value Index (2) 46.03% 12.28% 12.35%
(reflects no deduction for fees, expenses or taxes)
- --------------
(1) The Portfolio commenced operations in 1997.
(2) The Russell 2000 Value Index, an unmanaged index measuring the performance
of the value-oriented stocks in the Russell 2000 Index, is for reference
only and does not mirror Pioneer Small Cap Portfolio's investments.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios 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 Portfolio. The expenses in the tables
appearing below are based on (i) for your Portfolio, the expenses of your
Portfolio for the period ended December 31, 2003 and (ii) for Pioneer Small Cap
Portfolio, the expenses of Pioneer Small Cap Portfolio for the period ended
December 31, 2003. Future expenses for all share classes may be greater or less.
===============================================================================================
Pioneer Small Cap
Shareholder transaction fees (paid Portfolio
directly from your investment) Safeco Small Cap Portfolio Class I Shares
===============================================================================================
Redemption fees for shares held less None None
than 30 days
===============================================================================================
Sales charge or deferred sales charge None None
===============================================================================================
Annual Portfolio operating expenses
(deducted from Portfolio assets)
(as a % of average net assets)
===============================================================================================
Management fee 0.85% 0.75%
===============================================================================================
Distribution and service (12b-1) fee None None
===============================================================================================
Other expenses 0.20% [ ]%
===============================================================================================
Total Portfolio operating expenses 1.05% [ ]%
===============================================================================================
Expense reduction None [ ]%(1)
===============================================================================================
Net Portfolio operating expenses 1.05% [ ]%
===============================================================================================
5
(1) Pioneer has agreed that through the second anniversary of the closing of the
Reorganization, Pioneer will limit the ordinary operating expenses (excluding
taxes, commissions, interest and extraordinary expenses) of the Class I shares
of Pioneer Small Cap Portfolio to 1.01% of average daily net assets.
The hypothetical example below helps you compare the cost of investing in each
Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for the
time periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) the expense limitations are in effect for two
years for Pioneer Small Cap Portfolio. The examples are for comparison purposes
only and are not a representation of either Portfolio's actual expenses or
returns, either past or future.
======================================================================
Example
======================================================================
Safeco Small Cap Portfolio
======================================================================
======================================================================
Year 1 $107
======================================================================
Year 3 $334
======================================================================
Year 5 $ 579
======================================================================
Year 10 $1,283
======================================================================
6
======================================================================
Pioneer Small Cap Portfolio
======================================================================
Class I Shares
======================================================================
Year 1 $103
======================================================================
Year 3 $322
======================================================================
Year 5 $560
======================================================================
Year 10 $1,243
======================================================================
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Small Cap Portfolio. The Trustees considered the following matters,
among others, in approving the proposal.
First, SAM, the investment adviser to the Portfolio until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it was not interested in
continuing to provide investment advisory services to the Safeco Portfolios.
Consequently, a change in your Portfolio's investment management was necessary.
Second, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62
investment companies and accounts with approximately $35 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 June 30, 2004, assets under management by UniCredito Italiano
S.p.A. were approximately $151 billion worldwide. Shareholders of your Portfolio
would become part of a significantly larger family of funds that offers a more
diverse array of investment options and enhanced shareholder account options.
The Pioneer family of mutual funds offers over 62 funds, including domestic and
international equity and fixed income funds and a money market fund that will be
available to your Portfolio's shareholders through exchanges. In addition,
Pioneer offers shareholders additional options for their accounts, including the
ability to transact and exchange shares over the telephone or online and the
ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or online.
Third, commitment until the second anniversary of the Reorganization to limit
the ordinary operating expenses (excluding taxes, commissions, interest and
extraordinary expenses) Class I shares of the Pioneer Small Cap Portfolio to
1.01 % of average daily net assets. This expense ratio is lower than the expense
ratio for your Portfolio.
Fourth, the Class I shares of Pioneer Small Cap Portfolio received in the
Reorganization will provide Safeco Small Cap Portfolio shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all expenses of the Safeco Funds and the Pioneer
Funds associated with the Reorganizations, including, but not limited to: (1)
the expenses associated with the preparation, printing and mailing of any
shareholder communications, including this joint Proxy Statement/Prospectus, and
any filings with the SEC and other governmental authorities in connection with
the Reorganizations; (2) the fees and expenses of any proxy solicitation firm
retained in connection with the Reorganizations; (3) the legal fees and expenses
incurred by the Safeco Funds in connection with the Reorganizations; and (4) the
Trustee fees and expenses incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Background to the Reorganization."
The board of trustees of Pioneer Small Cap Portfolio also considered that the
Reorganization presents an excellent opportunity for the Pioneer Small Cap
Portfolio to acquire 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 Small Cap
Portfolio and its shareholders.
7
Capitalization
The following table sets forth the capitalization of each Portfolio as of
December 31, 2003.
======================================================================================
Pioneer Small Cap
Portfolio
Safeco Small Cap Portfolio Class I Shares
December 31, 2003 December 31, 2003
======================================================================================
Net Assets (in thousands) $40,405 N/A
======================================================================================
Net Asset Value Per Share $17.00 N/A
======================================================================================
Shares Outstanding 2,377,000 N/A
======================================================================================
It is impossible to predict how many shares of Pioneer Small Cap Portfolio will
actually be received and distributed by your Portfolio on the Reorganization
date. The table should not be relied upon to determine the amount of Pioneer
Small Cap Portfolio's shares that will actually be received and distributed.
Board's Evaluation and Recommendation
For the reasons described above, the Trustees, including the Independent
Trustees, approved the Reorganization. In particular, the board of trustees
determined that the Reorganization is in the best interests of your Portfolio.
Similarly, the board of trustees of Pioneer Small Cap Portfolio, including its
Independent Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer Small Cap Portfolio.
The Trustees recommend that the shareholders of your Portfolio vote FOR the
proposal to approve the Agreement and Plan of Reorganization.
8
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o The Reorganization is scheduled to occur 4:00 p.m., Eastern time, on [ ],
2004, unless your Safeco Portfolio and the corresponding Pioneer Portfolio
agree in writing to a later date. Your Portfolio will transfer all of its
assets to the corresponding Pioneer Portfolio. The corresponding Pioneer
Portfolio will assume your Safeco Portfolio's liabilities that are included
in the calculation of your Safeco Portfolio's net assets at the closing.
The net asset value of both Portfolios will be computed as of 4:00 p.m.,
Eastern time, on the closing of the Reorganization.
o The corresponding Pioneer Portfolio will issue to your Safeco Portfolio
Class I shares with an aggregate net asset value equal to the net assets
attributable to your Safeco Portfolio's shares. These shares will
immediately be distributed to your Safeco Portfolio's shareholders in
proportion to the relative net asset value of their holdings of your Safeco
Portfolio's shares on the Reorganization date. As a result, your Safeco
Portfolio's shareholders will end up as Class I shareholders of the
corresponding Pioneer Portfolio.
o After the distribution of shares, your Safeco Portfolio will be liquidated
and dissolved.
o The Reorganization is not intended to result in income, gain or loss being
recognized for federal income tax purposes and will not take place unless
both Portfolios receive a satisfactory opinion concerning the tax
consequences of the Reorganization from Wilmer Cutler Pickering Hale and
Dorr LLP, counsel to the Pioneer Portfolios.
Agreement and Plan of Reorganization
The shareholders of your Safeco Portfolio are being asked to approve an
Agreement and Plan of Reorganization, the form of which is attached as Exhibit
A. The description of the Agreement and Plan of Reorganization contained herein
is qualified in its entirety by the attached copy.
Conditions to Closing the Reorganization. The obligation of each Pioneer
Portfolio to consummate the Reorganization is subject to the satisfaction of
certain conditions, including your Safeco Portfolio's performance of all of its
obligations under the Agreement and Plan of Reorganization, the receipt of
certain documents and financial statements from your Safeco Portfolio 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 Portfolios are subject to the approval of the Agreement
and Plan of Reorganization by the necessary vote of the outstanding shares of
your Safeco Portfolio, in accordance with the provisions of your Safeco
Portfolio's trust instrument and by-laws. The Portfolios' 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.
(see Section 8.5 of the Agreement and Plan of Reorganization, attached as
Exhibit A).
Termination of Agreement. The board of either your Safeco Portfolio or the
corresponding Pioneer Portfolio may terminate the Agreement and Plan of
Reorganization (even if the shareholders of your Safeco Portfolio have already
approved it) at any time before the Reorganization date, if that board believes
in good faith that proceeding with the Reorganization would no longer be in the
best interests of shareholders.
8
PROPOSALS 7(a)-(f)
Approval of Appointment of Pioneer as Investment Adviser
Background
Having determined to recommend the Reorganizations, the Trustees elected to
appoint Pioneer as investment adviser to each Portfolio until the closing of the
Reorganization given that Symetra had indicated that it did not wish to continue
to offer investment advisory services to the Safeco Portfolios.
Interim Advisory Agreement
Under the Investment Company Act, shareholders must approve any new investment
adviser to the Portfolios. However, Rule 15a-4 under the Investment Company Act
permits your trustees to appoint an adviser on an interim basis without prior
shareholder approval if the new adviser agrees to provide such services on the
same terms as the previous adviser and approval of the new adviser is submitted
to shareholders within 150 days. Because Pioneer will be making the payment to
Symetra discussed under "Background to the Reorganizations", any fees that
Pioneer would be entitled to under the interim advisory agreement will be held
in escrow by the Portfolio until shareholders approval is obtained. If Pioneer
is not approved as investment adviser to a Portfolio, Pioneer will not receive
the fee under the current investment advisory agreement with SAM but instead
would be paid a fee based upon Pioneer's cost in managing the Portfolio. During
this period prior to the meeting, the Portfolios would be managed as separate
Portfolio and will not be combined with a Pioneer Portfolio. During this period,
you also will not be able to exchange your shares in a Portfolio for shares of a
Pioneer Portfolio. If the appointment of Pioneer as interim investment adviser
is not approved by December [ ], 2004, Pioneer will no longer provide advisory
services to the Portfolios, unless an extension of the 150 day period is
permitted by a Rule or independent position of the staff of the SEC. If both the
Reorganization and appointment of Pioneer are approved, the interim agreement
will continue in effect until the closing of the Reorganization, even if that
occurs after December [ ], 2004.
The interim agreement incorporates the terms of the existing advisory agreements
with SAM, which are discussed below. The form of interim agreement is attached
as Annex B.
Safeco Advisory Agreement
The following is a summary of the material terms of the Portfolios' investment
advisory agreement with SAM (the "Safeco Advisory Agreement").
Services. Under the terms of the Safeco Advisory Agreement, SAM manages the
Portfolios' investments and business affairs, subject to the supervision of the
board of trustees. At its expense, SAM provides office space and all necessary
office facilities, equipment and personnel for managing the investments of the
Portfolios.
Compensation. As compensation under the Safeco Advisory Agreement, each
Portfolio pays SAM a monthly advisory fee at an annual rate as listed the below
table of the Portfolio's average daily net assets. Brokers' commissions and
other charges relative to the purchase and sale of portfolio securities are not
regarded as expenses.
==================================================================================
Portfolio Annual Fee
==================================================================================
Safeco Bond Portfolio 0.74%
==================================================================================
Safeco Core Equity Portfolio 0.74%
==================================================================================
Safeco Growth Opportunities Portfolio 0.74%
==================================================================================
Safeco Money Market Portfolio 0.65%
==================================================================================
Safeco Multi-Cap Core Portfolio 0.74%
==================================================================================
Safeco Small-Cap Value Portfolio 0.85%
==================================================================================
The table below shows gross advisory fees paid by each Portfolio during the
fiscal year ended December 31, 2003:
9
====================================================================================
Safeco Bond Portfolio
Advisory Fee $[ ]
====================================================================================
Safeco Core Equity Portfolio
Advisory Fee $[ ]
====================================================================================
Safeco Growth Opportunities Portfolio
Advisory Fee $[ ]
====================================================================================
Safeco Money Market Portfolio
Advisory Fee $[ ]
====================================================================================
Safeco Multi-Cap Core Portfolio
Advisory Fee $[ ]
====================================================================================
Safeco Small-Cap Value Portfolio
Advisory Fee $[ ]
====================================================================================
Term. The Safeco 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 Safeco Advisory Agreement provides that SAM shall
not be subject to liability to the Portfolios or to any shareholder of the
Portfolios for any loss suffered by Portfolio or its shareholders from or as a
consequence of any act or omission of SAM, or of any of the partners, employees
or agents of SAM in connection with or pursuant to the agreement, except by
reason of willful misfeasance, bad faith or gross negligence on the part of SAM
in the performance of its duties or by reason of reckless disregard by SAM of
its obligations and duties under the agreement.
Termination, Continuance and Amendment. The Safeco 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 Safeco Portfolio's 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 each Portfolio.
The contract may be terminated at any time without penalty on 60 days' written
notice by the trustees, by a vote of a majority of the Portfolio's outstanding
voting securities, or by SAM. The contract terminates automatically in the event
of its assignment.
VOTING RIGHTS AND REQUIRED VOTE
Each share of your Safeco Portfolio is entitled to one vote and each fractional
share shall be entitled to a proportionate fractional vote. A quorum is required
to conduct business at the Meeting. With respect to each Portfolio, the presence
in person or by proxy of a majority of shareholders entitled to cast votes at
the Meeting will constitute a quorum. The favorable vote of a majority of the
outstanding shares (with all classes voting as a single class) of the applicable
Portfolio is required for each of Proposals 1-16. A "majority of the outstanding
voting securities" of the applicable Portfolio is required for each of Proposals
17(a)-(p). Under the Investment company Act, majority of the outstanding voting
securities means the affirmative vote of the lesser of (i) 50% or more of the
shares of the applicable Portfolio represented at the meeting, if at least 67%
of all outstanding shares of the Portfolio are represented at the meeting, or
(ii) 50% or more of the outstanding shares of the Portfolio entitled to vote at
the meeting.
====================================================================================================================================
Shares Quorum Voting
====================================================================================================================================
In General All shares "present" in Shares "present" in person will be voted in person at the Meeting.
person or by proxy are Shares present by proxy will be voted in accordance with
counted towards a quorum. instructions.
====================================================================================================================================
Broker Non-Vote (where the Considered "present" at Broker non-votes do not count as a vote "for" and effectively result
underlying holder has not Meeting for purposes of in a vote "against" Proposals 1-16, and Proposal 17 if less than 67%
voted and the broker does quorum. of the outstanding shares are present at the Meeting
not have discretionary
authority to vote the
shares)
====================================================================================================================================
Proxy with No Voting Considered "present" at Voted "for" the proposal.
Instruction (other than Meeting for purposes of
Broker Non-Vote) quorum.
====================================================================================================================================
Vote to Abstain Considered "present" at Abstentions do not constitute a vote "for" and effectively result in
Meeting for purposes of a vote "against" Proposals 1-16, and Proposal 17 if less than 67% of
quorum. the outstanding shares are present at the Meeting.
====================================================================================================================================
10
ADDITIONAL INFORMATION ABOUT THE PIONEER PORTFOLIOS
Investment Adviser
Pioneer serves as the investment adviser to each Pioneer Portfolio. 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 [June 30], 2004, assets under management
were approximately $151 billion worldwide, including over $35 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 Portfolios is responsible for overseeing
the performance of each of Pioneer Portfolio's investment adviser and subadviser
and determining whether to approve and renew the Portfolio's investment
management agreement and the sub-advisory agreements.
Pioneer has received an order (the "Exemptive Order") from the SEC that permits
Pioneer, subject to the approval of the Pioneer Portfolios' board of trustees,
to hire and terminate a subadviser or to materially modify an existing
subadvisory agreement for a Pioneer Portfolio 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 that would supersede the Exemptive Order, Pioneer and the Pioneer
Portfolios intend to rely on such rule to permit Pioneer, subject to the
approval of the Pioneer Portfolios' 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 Portfolio without
shareholder approval.
Buying, Exchanging and Selling Shares of the Pioneer Portfolios
Net asset values
Each Pioneer Portfolio'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 Pioneer Portfolio 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).
Each Pioneer Portfolio 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 portfolio 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 Pioneer Portfolios'
trustees. The Portfolio 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 Portfolio
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 Portfolio could change on
a day when insurance companies or qualified plans cannot buy or sell shares of
the Portfolio. In connection with making fair valuations of the value of fixed
income securities, the Portfolio'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 estimating market value.
The interests of variable contracts and qualified plans investing in the
portfolios could conflict due to differences of tax treatment and other
considerations. The Pioneer Portfolios currently do not foresee any
disadvantages to investors arising out of the fact that each Portfolio may offer
its shares to insurance company separate accounts that serve as the investment
mediums for their variable contracts or that each Portfolio may offer its shares
to qualified plans. Nevertheless, the Portfolios' trustees intend to monitor
events in order to identify any material irreconcilable conflicts which may
possibly arise and to determine what action, if any, should be taken in response
to such conflicts. If such a conflict were to occur, one or more insurance
companies' separate accounts or qualified plans might be required to withdraw
their investments in one or more portfolios and shares of another Portfolio may
be substituted. This might force a portfolio to sell securities at
disadvantageous prices. In addition, the trustees may refuse to sell shares of
any Portfolio to any separate account or qualified plan or may suspend or
terminate the offering of shares of any Portfolio if such action is required by
law or regulatory authority or is in the best interests of the shareholders of
the Portfolio.
Insurance companies and plan fiduciaries are required to notify a Pioneer
Portfolio if the tax status of their separate account or qualified plan is
revoked or challenged by the Internal Revenue Service. The Portfolio may redeem
any account of any shareholder whose qualification as a diversified segregated
asset account or a qualified plan satisfying the requirements of
11
Treasury Regulation ss.1.817-5 is revoked or challenged. The Portfolio will not
treat an investor as a qualified plan for this purpose unless the investor is
among the categories specifically enumerated in Revenue Ruling 94-62, 1994-2
C.B. 164. An insurance company separate account or qualified plan whose tax
status is revoked or challenged by the Internal Revenue Service may be liable to
the portfolios or the adviser for losses incurred by the portfolios or the
adviser as a result of such action.
Selling
Shares of a Pioneer Portfolio may be sold on any business day. Pioneer Portfolio
shares are sold at net asset value next determined after receipt by the
portfolio of a redemption request in good order from the insurance company as
described in the prospectus of the insurance company's variable contract. Sale
proceeds will normally be forwarded by bank wire to the selling insurance
company on the next business day after receipt of the sales instructions by a
Portfolio but in no event later than 7 days following receipt of instructions.
Each Portfolio may suspend transactions in shares or postpone payment dates when
trading on the New York Stock Exchange is closed or restricted, when the
Securities and Exchange Commission determines an emergency or other
circumstances exist that make it impracticable for the Portfolio to sell or
value its investments.
You can obtain more free information about the portfolios by writing to Pioneer
Investment Management Shareholder Services, Inc., 60 State Street, Boston,
Massachusetts 02109. You may also call 1-800-225-6292.
Taxes
Class I shares of each Pioneer Portfolio are held by life insurance company
separate accounts that fund variable annuity or life insurance contracts or by
certain qualified plans. Owners of variable contracts should read the prospectus
for their insurance company's variable contract for a discussion of the tax
status of a variable contract, including the tax consequences of withdrawals or
other payments, and should keep all statements received from the insurance
company or the Pioneer Portfolios to assist in personal recordkeeping.
Under the Code, a Pioneer Portfolio's dividends and distributions of net
short-term capital gain in excess of net long-term capital loss to insurance
company separate accounts or qualified plans generally are treated as ordinary
income; distributions to those accounts of net long-term capital gain in excess
of net short-term capital loss are generally treated as long-term capital gain.
For U.S. federal income tax purposes, dividends and capital gain distributions
are treated as received by the insurance company or the qualified plan rather
than by the owner of the variable contract or the plan participant. Insurance
companies and qualified plans should consult their own tax advisers regarding
the tax treatment of dividend and capital gain distributions they receive from
any Pioneer Portfolio.
Each Pioneer Portfolio is treated as a separate entity for U.S. federal income
tax purposes and either has elected, or will elect, to be treated and intends to
qualify each year as a regulated investment company under Subchapter M of the
Code. Each Pioneer Portfolio must satisfy certain requirements relating to the
sources of its income, diversification of is assets and distribution of its
income to shareholders to qualify as a regulated investment company. As a
regulated investment company, each Pioneer Portfolio generally will not be
subject to U.S. federal income tax on any net investment income and net realized
capital gains that are distributed to its shareholders as required under the
Code.
In addition, each Pioneer Portfolio also meets certain diversification
requirements imposed by the Code on separate accounts of insurance companies
relating to the tax-deferred status of variable contracts. The failure of a
qualified plan to be or remain qualified could cause the insurance company
separate account to fail to meet such diversification requirements. More
specific information on these diversification requirements is contained in the
insurance company's separate account prospectus and the statement of additional
information for the Pioneer Portfolio.
FINANCIAL HIGHLIGHTS
The following tables show the financial performance for the past five fiscal
years (or the period during which the Portfolio has been in operation, if less
than five years) and for the most recent semi-annual period for each Pioneer
Portfolio which has investment operations. Certain information reflects
financial results for a single Portfolio share. "Total return" shows how much an
investment in a Portfolio would have increased or decreased during each period,
assuming you had reinvested all dividends and other distributions. The financial
highlights for each fiscal year ended on December 31, 2002 has been audited
by Ernst & Young LLP, each Pioneer Portfolio's independent registered public
accounting firm, as stated in their reports incorporated by reference in this
registration statement. For fiscal years prior to December 31, 2002, the
financial highlights of the Pioneer Portfolios were audited by Arthur Anderson
LLP. The information for any semi-annual period has not been audited.
12
PIONEER FUND VCT PORTFOLIO
PIONEER VARIABLE CONTRACTS TRUST
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
CLASS I 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
- ------- -------- -------- -------- -------- --------
Net asset value, beginning of period $15.28 $ 19.08 $ 22.67 $ 22.70 $ 19.76
Increase (decrease) from investment operations:
Net investment income $ 0.20 $ 0.19 $ 0.17 0.18 0.16
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 3.41 (3.81) (2.57) 0.10 2.97
------- ---------- ---------- --------- ---------
Net increase (decrease) from investment
operations $ 3.61 $ (3.62) $ (2.40) $ 0.28 $ 3.13
Distributions to shareholders:
Net investment income (0.19) (0.18) (0.17) (0.18) (0.17)
Net realized gain - - (1.02) (0.13) (0.02)
Net increase (decrease) in net asset value $ 3.42 $ (3.80) $ (3.59) $ (0.03) $ 2.94
------- ---------- ---------- --------- ---------
Net asset value, end of period $18.70 $ 15.28 $ 19.08 $ 22.67 $ 22.70
======= ========== ========== ========= =========
Total return* 23.76% (19.03)% (10.85)% 1.22% 15.91%
======= ========== ========== ========= =========
Ratios/Supplemental Data
Ratio of net expenses to average net assets+ 0.76% 0.80% 0.74% 0.69% 0.70%
Ratio of net investment income to average 1.16% 1.09% 0.83% 0.78% 0.82%
net assets+
Portfolio turnover rate 11% 11% 7% 37% 8%
Net assets, end of period (in thousands) $154,839 $141,892 $199,160 $222,107 $204,927
Ratios with no waiver of management fees and
assumption of expenses by PIM and
no reduction for fees paid indirectly:
Net expenses 0.76% 0.80% 0.74% 0.69% 0.70%
Net investment income (loss) 1.16% 1.09% 0.83% 0.78% 0.82%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
13
PIONEER MID CAP VALUE VCT PORTFOLIO
PIONEER VARIABLE CONTRACTS TRUST
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
CLASS I 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
- ------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 14.94 $ 17.35 $ 17.79 $ 16.26 $ 14.49
--------- ---------- --------- --------- ---------
Increase (decrease) from investment
operations:
Net investment income $ 0.14 $ 0.07 $ 0.07 $ 0.13 $ 0.13
Net realized and unrealized gain
(loss) on investments 5.45 (1.97) 1.06 2.62 1.77
--------- ---------- --------- --------- ---------
Net increase (decrease) from
investment operations $ 5.59 $ (1.90) $ 1.13 $ 2.75 $ 1.90
Distributions to shareowners:
Net investment income (0.06) (0.05) (0.10) (0.13) (0.13)
Net realized gain -- (0.46) (1.47) (1.09) --
--------- ---------- --------- --------- ---------
Net increase (decrease) in net asset
value $ 5.53 $ (2.41) $ (0.44) $ 1.53 $ 1.77
--------- ---------- --------- --------- ---------
Net asset value, end of period $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26
========= ========== ========= ========= =========
Total return* 37.48% (11.21)% 6.49% 18.00% 13.13%
Ratio of net expenses to average net assets+ 0.76% 0.80% 0.79% 0.77% 0.76%
Ratio of net investment income (loss) to
average net assets+ 0.86% 0.46% 0.45% 0.63% 0.77%
Portfolio turnover rate 52% 68% 95% 85% 91%
Net assets, end of period (in thousands) $170,237 $120,687 $128,340 $111,466 $120,526
Ratio with no waiver of management fees and
assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 0.76% 0.80% 0.79% 0.77% 0.76%
Net investment income (loss) 0.86% 0.46% 0.45% 0.63% 0.77%
Ratio with waiver of management fees and
assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 0.76% 0.80% 0.79% 0.77% 0.76%
Net investment income (loss) 0.86% 0.46% 0.45% 0.63% 0.77%
========= ========== ========= ========= =========
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
14
PIONEER MONEY MARKET VCT PORTFOLIO
PIONEER VARIABLE CONTRACTS TRUST
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
CLASS I 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
- ------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Increase (decrease) from investment
operations:
Net investment income (loss) $ 0.006 $ 0.01 $ 0.03 $ 0.06 $ 0.04
Distributions to shareowners:
Net investment income (0.006) (0.01) (0.03) (0.06) (0.04)
Net asset value, end of period $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return* 0.56% 1.19% 3.39% 5.71% 4.38%
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Ratio of net expenses to average net
assets+ 0.72% 0.78% 0.78% 0.76% 0.79%
Ratio of net investment income (loss)
to average net assets+ 0.58% 1.11% 3.16% 5.58% 4.34%
======== ======== ======== ======== ========
Net assets, end of period (in thousands) $34,736 $59,521 $49,545 $36,979 $37,347
======== ======== ======== ======== ========
Ratios with no waiver of management fees and
assumption of expenses by Pioneer and no
reduction for fees paid indirectly:
Net expenses 0.72% 0.78% 0.78% 0.76% 0.79%
Net investment income (loss) 0.58% 1.11% 3.16% 5.58% 4.34%
Ratios with waiver of management fees
and assumption of expenses by Pioneer and
reduction for fees paid indirectly:
Net expenses 0.72% 0.78% 0.78% 0.75% 0.78%
Net investment income (loss) 0.58% 1.11% 3.16% 5.59% 4.35%
======== ======== ======== ======== ========
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
15
INFORMATION CONCERNING THE MEETING
Voting by contract owners
Because the insurance company that issued your variable annuity or variable life
insurance contract is the owner of record of shares of the portfolio, your vote
will instruct the insurance company how to vote the shares of the portfolio
attributable to your contract. The insurance company will vote all of the shares
of the portfolio which it holds that are not attributable to any contract in the
same proportion as the voting instructions received from its contract owners
with respect to the portfolio. The insurance company will also vote those shares
for which no timely voting instruction was received from the contract owner in
the same proportion as the voting instructions timely received from its other
contract owners with respect to the portfolio.
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
Safeco Portfolio; by personnel of your Safeco Portfolio's investment adviser,
SAM, by the Pioneer Portfolios' investment adviser, Pioneer, their transfer
agent, PIMSS, or by broker-dealer firms. Pioneer and its affiliates, together
with a third party solicitation firm, has agreed to provide proxy solicitation
services to the Portfolios at a cost of approximately $[_____]. Pioneer and
Symetra will bear the cost of such solicitation.
Revoking Proxies
A Portfolio shareholder signing and returning a proxy has the power to revoke it
at any time before it is exercised:
o by filing a written notice of revocation with your Safeco Portfolio's
transfer agent, Safeco Services Corporation, at [ ], or
o by returning a duly executed proxy with a later date before the time of the
Meeting, or
o 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 Safeco
Portfolio (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
Only shareholders of record on [ ], 2004 (the "record date") are entitled to
notice of and to vote at the Meetings. The presence in person or by proxy by the
majority of shareholders of your Safeco Portfolio entitled to cast votes at the
Meeting will constitute a quorum.
As of the record date, the following number of shares of each Portfolio were
outstanding.
=============================================================
Portfolio Share Outstanding
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
=============================================================
16
Other Business
Your Portfolio's board of trustees knows of no business to be presented for
consideration at the Meetings other than Proposals 1-17. If other business is
properly brought before a Meeting, proxies will be voted according to the best
judgment of the persons named as proxies.
Adjournments
If, by the time scheduled for a Meeting, a quorum of shareholders of a Portfolio
is not present or if a quorum is present but sufficient votes "for" the
proposals have not been received, the persons named as proxies may propose the
Meeting with respect to one or more of the Portfolios 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 for that Portfolio 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 Safeco Portfolio will set a new record date), your Safeco Portfolio will
give notice of the adjourned meeting to its shareholders.
Telephone Voting
In addition to soliciting proxies by mail, by fax or in person, your Safeco
Portfolio may also arrange to have votes recorded by telephone by officers and
employees of your Safeco Portfolio or by personnel of the adviser or transfer
agent or a third party solicitation firm. The telephone voting procedure is
designed to verify a shareholder's identity, to allow a shareholder to authorize
the voting of shares in accordance with the shareholder's instructions and to
confirm that the voting instructions have been properly recorded. If these
procedures were subject to a successful legal challenge, these telephone votes
would not be counted at the Meeting. Your Portfolio has not obtained an opinion
of counsel about telephone voting, but is currently not aware of any challenge.
o A shareholder will be called on a recorded line at the telephone number in
the Portfolio's account records and will be asked to provide the
shareholder's social security number or other identifying information.
o The shareholder will then be given an opportunity to authorize proxies to
vote his or her shares at the Meeting in accordance with the shareholder's
instructions.
o To ensure that the shareholder's instructions have been recorded correctly,
the shareholder will also receive a confirmation of the voting instructions
by mail.
o A toll-free number will be available in case the voting information
contained in the confirmation is incorrect.
o If the shareholder decides after voting by telephone to attend the Meeting,
the shareholder can revoke the proxy at that time and vote the shares at
the Meeting.
Internet Voting
You will also have the opportunity to submit your voting instructions via the
Internet by utilizing a program provided through a vendor. Voting via the
Internet will not affect your right to vote in person if you decide to attend
the Meeting. Do not mail the proxy card if you are voting via the Internet. To
vote via the Internet, you will need the "control number" that appears on your
proxy card. These Internet voting procedures are designed to authenticate
shareholder identities, to allow shareholders give their voting instructions,
and to confirm that shareholders instructions have been recorded properly. If
you are voting via the Internet you should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, that must be borne by you.
o Read the proxy statement and have your proxy card at hand.
o Go to the Web site listed on your proxy card.
o Enter control number found on your proxy card.
o Follow the simple instructions on the Web site. Please call
[__________________] us at [1-800-________] if you have any problems.
o To insure that your instructions have been recorded correctly you will
receive a confirmation of your voting instructions immediately after your
submission and also by e-mail if chosen.]
17
Shareholders' Proposals
Your Portfolio is not required, and does not intend, to hold meetings of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting for shareholders must submit the proposal in writing, so that
it is received by the your Safeco Portfolio at Two Union Square, 25th Floor,
Seattle, Washington 98101 within a reasonable time before any meeting. If the
Reorganization is completed, your Safeco Portfolio will not hold another
shareholder meeting.
Appraisal Rights
If the Reorganization of your Safeco Portfolio is approved at the Meeting,
shareholders of your Safeco Portfolio will not have the right to dissent and
obtain payment of the fair value of their shares because the exercise of
appraisal rights is subject to the forward pricing requirements of Rule 22c-1
under the Investment Company Act, which supersede state law. Shareholders of
your Safeco Portfolios, however, have the right to redeem their Portfolio shares
at net asset value until the closing date of the Reorganizations. After the
Reorganization, shareholders of your Safeco Portfolios will hold shares of the
Pioneer Portfolios which may also be redeemed at net asset value subject to
deferred sales charges (if any).
OWNERSHIP OF SHARES OF THE PORTFOLIOS
To the knowledge of your Safeco Portfolio, as of [ ], 2004, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
each of the Portfolios.
===================================================================================
Fund/Class Shareholder Name and Address Actual Percentage
owned
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
%
===================================================================================
As of December 31, 2003, the trustees and officers of your Safeco Portfolio, as
a group, owned in the aggregate less than 1% of the outstanding shares of your
Safeco Portfolio. As of December 31, 2003, the trustees and officers of each
Pioneer Portfolio owned less than 1% of the outstanding shares of the Pioneer
Portfolio.
EXPERTS
Safeco Funds
The financial statements and financial highlights of each Safeco Portfolio
incorporated by reference in the Safeco Resource Series Trust's Annual Report at
and for the year ended December 31, 2003, have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth in their report
thereon incorporated by reference into this registration statement. Such
financial statements and financial highlights are incorporated herein by
reference in reliance on such report given the authority of such firm as experts
in accounting and auditing.
Pioneer Funds
The financial statements and financial highlights of each Pioneer Portfolio
incorporated by reference in the Pioneer Variable Contracts Trust's Annual
Report at and for the year ended December 31, 2003, have been audited by Ernst &
Young LLP, independent registered public accounting firm, as set forth in their
report thereon incorporated by reference into this registration statement. Such
financial statements and financial highlights are incorporated herein by
reference in reliance on such report given the authority of such firm as experts
in accounting and auditing.
18
AVAILABLE INFORMATION
The Portfolios and the Pioneer Portfolios are subject to the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company
Act and file reports, proxy statements and other information with the Securities
and Exchange Commission. These reports, proxy statements and other information
filed by the Portfolios 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 http://www.sec.gov.
19
Annex A - Agreement and Plan of Reorganization
- -------
[This is the form of Agreement and Plan of Reorganization for those
reorganizations intended to qualify as under Subsections (C), (D) or (F) of
Section 368(a)(1) of the Internal Revenue Code. Revisions to this form of
Agreement and the Tax Representation Certificates attached to this Agreement
will need to be made for the variable contract fund reorganizations and the Tax
Representation Certificates also will need to be revised for those
reorganizations intended to qualify under Subsections (C) or (D) of Section
368(a)(1)]
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this day of
August, 2004, by and between [Pioneer Trust], a [Delaware
statutory][Massachusetts business] trust (the "Acquiring Trust") on behalf of
its series [name of Pioneer Fund] (the "Acquiring Fund"), with its principal
place of business at 60 State Street, Boston, Massachusetts 02109, and [Safeco
Trust], a Delaware statutory trust (the "Safeco Trust"), on behalf of [name of
Safeco Fund] (the "Acquired Fund"), a series of the Safeco Trust with its
principal place of business at . 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 used in Section 368(a) 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 Investor Class 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 the liabilities of the Acquired Fund that
are included in the calculation of net asset value ("NAV") on the Closing Date
(the "Closing Date") set forth below (collectively, the "Assumed Liabilities"),
and (2) the distribution by the Acquired Fund, on or promptly after the Closing
Date as provided herein, of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in liquidation and dissolution of the Acquired Fund, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquiring Trust and the Safeco Trust are each registered investment
companies classified as management companies of the open-end type.
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of the Safeco 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 and
are not dilutive of the interests of the shareholders of the Acquired Fund.
WHEREAS, the Board of Trustees of the 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 and
are not dilutive of the interests of the shareholders of the Acquiring Fund.
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"),
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, with an aggregate NAV determined in the manner
set forth in Paragraph 2.2 equal to the NAV of the Acquired Fund; 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 or the Safeco 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 Trust and the Acquiring Fund shall also
be entitled to receive (or to the extent agreed upon between the Safeco Trust
and the Acquiring Fund, be provided access to) copies of all records that the
Safeco 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.
20
(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).
1.3 The Acquired Fund will endeavor to discharge all of its 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 the Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Safeco Trust shall liquidate the Acquired Fund and
distribute pro rata to its shareholders of record, determined as of the close of
regular trading on the New York Stock Exchange on the Closing Date (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Each Acquired Fund Shareholder
shall receive such number of Acquiring Fund Shares that have an aggregate NAV
per share equal to the aggregate NAV per share of the shares of beneficial
interest of the Acquired Fund (the "Acquired Fund Shares") held of record by
such Acquired Fund Shareholder on the Closing Date. Such liquidation and
distribution will be accomplished by the Safeco 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 the Acquired
Fund Shareholders. The Safeco Trust shall promptly provide the Acquiring Trust
with evidence of such liquidation and distribution. All issued and outstanding
Acquired Fund Shares will simultaneously be cancelled on the books of the
Acquired Fund and the Acquired Fund will be dissolved. 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 Investor Class shares. The Acquired Fund
Shareholders holding certificates representing their ownership of Acquired Fund
Shares shall surrender such certificates or deliver 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 that remains outstanding on the Closing Date shall be
deemed to be cancelled, shall no longer evidence ownership of the Acquired Fund
Shares, but shall evidence ownership of Acquiring Fund Shares as determined in
accordance with Paragraph 1.4. Unless and until any such certificate shall be so
surrendered or an Affidavit relating thereto shall be delivered by an Acquired
Fund Shareholder, dividends and other distributions payable by the Acquiring
Fund subsequent to the Liquidation Date with respect to Acquiring Fund Shares
shall be paid to such Acquired Fund Shareholder, but such Acquired Fund
Shareholder may not redeem or transfer Acquiring Fund Shares received in the
Reorganization. 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 Any reporting responsibility of the Safeco 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 the Safeco Trust.
2. VALUATION
2.1 The NAV of the Acquiring Fund Shares and the NAV (as computed below) of the
Acquired Fund shall, in each case, be determined as of the close of business
(4:00 p.m., Boston 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 attributable to the 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 Safeco Asset Management, Inc. (the "Acquired Fund Administrator") 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 Paragraph 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 Fund, as determined in accordance with
Paragraph 2.1, by the NAV of each Acquiring Fund Share, as determined in
accordance with Paragraph 2.1.
21
2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring Fund
Adviser and the Acquired Fund Administrator, respectively, to deliver a copy of
its valuation report to the other party at Closing. All computations of value
shall be made by the Acquiring Fund Adviser and the Acquired Fund Administrator
in accordance with its regular practice as pricing agent for the Acquiring Fund
and the Acquired Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be , 2004, or such later date as the parties may
agree to in writing. All acts necessary to consummation the Reorganizations (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 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 held other than in book-entry form in the name
of State Street Bank and Trust Company (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 by the Acquired Fund Custodian through the
Depository Trust Company to the Acquiring Fund Custodian and by the Acquiring
Fund Custodian recording the transfer of beneficial ownership thereof to the
Acquiring Fund on the Acquiring Fund Custodian's records. Any cash shall be
delivered by the Acquired Fund Custodian transmitting immediately available
funds by wire transfer to the Acquiring Fund Custodian the cash balances
maintained by the Acquired Fund Custodian and the Acquiring Fund Custodian
crediting such amount to the account of the Acquiring Fund.
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
has been made in conjunction with the delivery of portfolio securities as part
of the Acquired Assets.
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 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 Acquired
Fund Shares owned by each such Acquired Fund Shareholder as of the Valuation
Time, certified by the President or a Secretary of the Safeco 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
the Safeco Trust's records by such officers or one of the Safeco 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, the Safeco Trust, on behalf of
the Acquired Fund, represents, warrants and covenants to the Acquiring Fund,
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 Acquired Fund is a series of the Safeco Trust. The Safeco Trust is a
statutory trust validly existing and in good standing under the laws of the
State of Delaware and has the power to own all of its properties and assets
and, subject to approval by the Acquired Fund's 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 the Safeco 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) The Safeco 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 in
full force and effect.
(c) The Safeco Trust is not in violation of, and the execution and delivery of
this Agreement and the performance of its
22
obligations under this Agreement in respect of the Acquired Fund will not
result in a violation of, any provision of the Safeco Trust's Trust
Instrument or By-Laws or any material agreement, indenture, instrument,
contract, lease or other undertaking with respect to the Acquired Fund to
which the Safeco Trust is a party or by which the Acquired Fund or any of
its assets are bound;
(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 the Acquired Fund or any of the Acquired Fund's
properties or assets. The Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings. Neither the Safeco 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 contemplated herein or would be binding upon
the Acquiring Fund as the successor to the Acquired Fund;
(e) The Acquired Fund has no material contracts or other commitments (other
than this Agreement 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 operations and changes in net assets as of and for
the period ended [most fiscal year end] have been audited by Ernst & Young
LLP, independent registered public accounting firm, and are in accordance
with U.S. generally accepted accounting principles ("GAAP") consistently
applied and 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, and all known liabilities, whether
actual or contingent, of the Acquired Fund as of the date thereof are
disclosed therein. The Statement of Assets and Liabilities 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. 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-CSR to enable the chief executive officer and chief financial
officer or other officers of the Acquired Fund to make the certifications
required by the Sarbanes-Oxley Act, 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 [most recent fiscal year end], except as specifically disclosed in
the Acquired Fund's prospectus, its statement of additional information as
in effect on the date of this Agreement, or in its semi-annual report for
the period ended [ ], 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), a decline in NAV per Acquired
Fund Share arising out of its normal investment operations or a decline in
market values of securities in the Acquired Fund's portfolio or a decline
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, the
Acquired Fund has met, and for the current taxable year will meet, the
requirements of Subchapter M of the Code for qualification. The Acquired
Fund 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;
(B) Within the times and in the manner prescribed by law, the Acquired
Fund has properly filed on a timely basis all Tax Returns (as defined
below) that it was required to file, and all such Tax Returns were complete
and accurate in all 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;
(D) All Tax Returns filed by the Acquired Fund constitute complete and
accurate reports of the respective Tax liabilities 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;
(E) The Acquired Fund has not waived or extended any applicable statute
of limitations relating to the assessment or collection of Taxes;
23
(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, to its knowledge, 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. 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;
(K) The Acquired Fund has not taken or agreed to take any action, and
is not aware of any agreement, plan or other circumstance, that is
inconsistent with the representations set forth in Annex B;
(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;
(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 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, except as set forth on
Schedule 4.1; and
(R) For purposes of this Agreement, "Taxes" or "Tax" 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.
24
(i) All issued and outstanding Acquired Fund Shares are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid and
nonassessable by the Acquired Fund. All of the issued and outstanding
Acquired Fund Shares 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 Acquired Fund Shares, nor is there outstanding any
security convertible into any of its Acquired Fund Shares;
(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;
(k) The Safeco Trust has the trust power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
action on the part of the Safeco Trust's Board of Trustees, and, subject to
the approval of the Acquired Fund's shareholders, assuming due
authorization, execution and delivery by the Acquiring Fund, this Agreement
will constitute a valid and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(l) 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 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 in writing 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 the Safeco Trust or the Acquired Fund of the
transactions contemplated by this Agreement;
(o) All of the issued and outstanding Acquired Fund Shares 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 [ ] (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 the Safeco 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 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;
(r) [F Reorg only][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
25
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 the Acquired Fund, 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 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, 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 Fund is a series of the Acquiring Trust. The Acquiring Trust
is a [statutory][business] trust duly organized, validly existing and in
good standing under the laws of the [State of Delaware][Commonwealth of
Massachusetts]. The Acquiring Trust 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. Each of the
Acquiring Trust and the Acquiring Fund has all necessary federal, state and
local authorizations to own all of its properties and assets and to carry
on its business as now being conducted;
(b) The Acquiring 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 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 the effective date thereof 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 Registration Statement, the Proxy Statement and statement of additional
information with respect to the Acquiring Fund, each dated [ ], 2004, and
any amendments or supplements thereto in effect on or prior to the Closing
Date included in the Registration Statement (other than written information
furnished in writting 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 or will include 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;
(e) The Acquiring Trust is not 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 the
Acquiring Fund to which the Acquiring Trust is a party or by which the
Acquiring Fund or any of its assets is bound;
(f) No litigation or administrative 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. Neither the Acquiring Trust nor the
Acquiring 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 Acquiring Fund's business or its ability to
consummate the transactions contemplated herein;
(g) The statement of assets and liabilities of the Acquiring Fund, and the
related statements of operations and changes in net assets as of and for
the period ended [most fiscal year end] have been audited by Ernst & Young
LLP, independent registered public accounting firm, and are in accordance
with GAAP consistently applied and fairly reflect, in all material
respects, the financial condition of the Acquiring Fund as of such date and
the results of its operations for the period then ended, and all known
liabilities, whether actual or contingent, of the Acquiring Fund as of the
date thereof are disclosed therein;
26
(h) Since [most recent fiscal year end], except as specifically disclosed in
the Acquiring Fund's prospectus, its statement of additional information as
in effect on the date of this Agreement, or in its semi-annual report for
the period ended [ ], there has not been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities, business or
prospects, or any incurrence by the Acquiring 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 (h) (but not
for any other purpose of this Agreement), a decline in NAV per Acquiring
Fund's shares arising out of its normal investment operations or a decline
in market values of securities in the Acquiring Fund's portfolio or a
decline in net assets of the Acquiring Fund as a result of redemptions
shall not constitute a material adverse change;
(i) [For the "F" Reorgs replace rep below for "C" or "D" reorgs with the
following: "The Acquiring Fund intends to elect to qualify as a regulated
investment company under Section 851 of the Code and will meet on the
Closing Date the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company. [ For "C" or "D" reorgs:
For each taxable year of its operation since its inception (including the
current taxable year), the Acquiring Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company and has elected to be treated as such and will qualify
as such as of the Closing Date 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[refer to 817 requirements in case of
variable contract funds]. ] The Acquiring 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 Acquiring Fund to fail to qualify
as a regulated investment company under the Code.
(B) Within the times and in the manner prescribed by law, the Acquiring
Fund has properly filed on a timely basis all Tax Returns (as defined
below) that it was required to file, and all such Tax Returns were complete
and accurate in all respects. The Acquiring Fund has not been informed by
any jurisdiction that the jurisdiction believes that the Acquiring Fund was
required to file any Tax Return that was not filed; and the Acquiring Fund
does not know of any basis upon which a jurisdiction could assert such a
position;
(C) The Acquiring 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;
(D) All Tax Returns filed by the Acquiring Fund constitute complete and
accurate reports of the respective liabilities for Taxes and all attributes
of the Acquiring 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;
(E) The Acquiring Fund has not waived or extended any applicable
statute of limitations relating to the assessment or collection of Taxes;
(F) The Acquiring Fund has not been notified that any examinations of
the Tax Returns of the Acquiring Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against the
Acquiring Fund as a result of any audit by the Internal Revenue Service or
any state, local or foreign taxing authority, and, to its knowledge, no
such deficiency has been proposed or threatened;
(G) The Acquiring Fund has no actual or potential liability for any Tax
obligation of any taxpayer other than itself. Acquiring 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
Acquiring Fund is not a party to any Tax allocation, sharing, or
indemnification agreement;
(H) The Acquiring Fund has delivered to the Acquired Fund or made
available to the Acquired Fund complete and accurate copies of all Tax
Returns of the Acquiring 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 Acquiring Fund. The Acquiring 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;
(I) The Acquiring 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 Acquiring 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;
27
(J) The Acquiring Fund has not taken or agreed to take any action, and
is not aware of any agreement, plan or other circumstance, that is
inconsistent with the representations set forth in Annex A;
(K) The Acquiring 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;
(L) The Acquiring Fund is not a party to a gain recognition agreement
under Section 367 of the Code; and
(M) The Acquiring Fund's Tax attributes are not limited 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, except as set forth on
Schedule 4.1
(j) The Acquiring Fund currently complies 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 Trust with respect to the Acquiring
Fund. All advertising and sales material used by the Acquiring 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;
(k) The authorized capital of the Acquiring Fund consists of an unlimited
number of shares of beneficial interest, no par value per share. As of the
Closing Date, the Acquiring Fund will be authorized to issue an unlimited
number of shares of beneficial interest, no par value per share. 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. 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
Acquiring Fund shares;
(l) The Acquiring Trust has the trust power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
action on the part of the Acquiring Trust's Board of Trustees, and,
assuming due authorization, execution and delivery by the Acquired Fund,
this Agreement will constitute a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(m) The information to be furnished in writting 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;
(n) No consent, approval, authorization or order of or filing with any court or
governmental authority is required for the execution of this Agreement or
the consummation of the transactions contemplated by the Agreement by the
Acquiring Fund, except for the registration of the Acquiring Fund Shares
under the Securities Act and the Investment Company Act;
(o) All of the issued and outstanding Acquiring Fund Shares 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 Acquiring
Fund, each dated [ ] (collectively, the "Acquiring Fund Prospectus"), and
any amendments or supplements thereto, furnished to the Acquired 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) 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
28
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
(r) The Acquiring Fund tax representation certificate to be delivered by the
Acquiring Fund to the 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 of business 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 other distributions and any other
dividends and other distributions necessary or advisable (except to the extent
dividends or other 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 The Safeco Trust will call a special meeting of theAcquired Fund's
shareholders to consider approval of this Agreement and act upon the matters set
forth in the Proxy Statement.
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, and will promptly prepare and file with the Commission the
Registration Statement. The Safeco Trust will provide the Acquiring Fund with
information reasonably requested 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 Shares.
5.6 Subject to the provisions of this Agreement, each 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 (as computed pursuant to Paragraph 2.1) of the
Acquired Fund as of the Valuation Time, which statement shall be prepared in
accordance with GAAP consistently applied and certified by the Safeco Trust's
Treasurer or Assistant Treasurer. As promptly as practicable, but in any case
within 30 days after the Closing Date, the Safeco Trust shall furnish to the
Acquiring Trust, in such form as is reasonably satisfactory to the Acquiring
Trust, 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 Treasurer of the Safeco Trust.
5.8 Neither 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.
5.9 From and after the date of this Agreement and until the Closing Date, each
of the Funds and the Safeco Trust and the Acquiring 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)[insert (F), (C) or (D), as applicable] of the Code and shall
not take any position inconsistent with such treatment.
5.10 From and after the date of this Agreement and through the time of the
Closing on the Closing Date, the each Fund shall use its commercially reasonable
efforts to cause it 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 it from qualifying as a
regulated investment company under the provisions of Subchapter M of the Code.
5.11 Each of the Acquired Fund and the Acquiring Fund shall prepare, or cause to
be prepared all Tax Returns of the Acquired Fund or the Acquiring Fund, as the
case may be, for taxable periods that end on or before the Closing Date and
shall timely file,
29
or cause to be timely filed, all such Tax Returns. The Acquired Fund and the
Acquiring Fund shall make any payments of Taxes required to be made by such Fund
with respect to any such Tax Returns.
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;
6.2 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;
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;
6.4 The Acquired Fund shall have received at the Closing a favorable opinion of
Wilmer Cutler Pickering Hale and Dorr LLP, dated as of the Closing Date, in a
form reasonably satisfactory to Acquired Fund; and
6.5 The Board of Trustees of the Acquiring Trust shall have approved this
Agreement and the transactions contemplated hereby.
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 the 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 Safeco Trust on behalf of the
Acquired 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;
7.2 The Safeco 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 the
Safeco Trust's Treasurer or Assistant Treasurer;
7.3 The Acquired Fund shall have delivered to the Acquiring Fund on the Closing
Date a certificate of the Safeco Trust on behalf of the Acquired Fund by its
President or Secretary and a Treasurer or Assistant Treasurer, in form and
substance reasonably satisfactory to the Acquiring Fund and dated as of the
Closing Date, to the effect that the representations and warranties 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, that each of the conditions to closing in this Section 7 have
been met, and as to such other matters as the Acquiring Fund shall reasonably
request;
7.4 The Acquired Fund shall have delivered to the Acquiring Fund and Wilmer
Cutler Pickering Hale and Dorr LLP 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; and
7.5 The Acquiring Fund shall have received at the Closing a favorable opinion of
Kirpatrick & Lockhart dated as of the Closing Date, in a form reasonably
satisfactory to Acquiring Fund; and
7.6 With respect to the Acquired Fund, the Board of Directors of the Safeco
Trust shall have determined that the Reorganization is in the best interests of
the Acquired Fund and, based upon such determination, shall have approved this
Agreement and the transactions contemplated hereby.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to either party hereto, the other party to this Agreement
shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
30
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Acquired Fund's shareholders in accordance
with the provisions of the Acquired Trust's Instrument of Trust and By-Laws, 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;
8.2 On the Closing Date, no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein;
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, 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 The Acquiring Trust's Registration Statement on Form N-14 shall have become
effective under the Securities Act and no stop orders suspending the
effectiveness 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 Pickering Hale
and Dorr LLP, satisfactory to the Safeco Trust and the Acquiring Trust 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 common stock 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. [For "C or "D" reorg only:
"and;"]
[For "C" or "D" reorg only: 8.6 The Acquired Fund shall have distributed to its
shareholders, in a distribution or distributions qualifying for the deduction
for dividends paid under Section 561 of the Code, all of its investment company
taxable income (as defined in Section 852(b)(2) of the Code determined without
regard to Section 852(b)(2)(D) of the Code) for its taxable year ending on the
Closing Date, all of the excess of (i) its interest income excludable from gross
income under Section 103(a) of the Code over (ii) its deductions disallowed
under Section 265 and 171(a)(2) of the Code for its taxable year ending on the
Closing Date, and all of its net capital gain (as such term is used in Sections
852(b)(3)(A) and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date.]
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 by Occum Acquisition Corp and Pioneer
Investment Management, Inc. that they will pay all expenses of the Acquired Fund
and the Acquiring Fund associated with the preparation, printing and mailing of
any and all shareholder notices, communications, proxy statements, and necessary
filings with the SEC or any other governmental authority in connection with the
transactions contemplated by this Agreement. Except for the foregoing, 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 and warranties contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith shall not survive
the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring
Trust and the Acquired Trust. 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;
31
(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 the Safeco 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's shareholders; or
(e) if the transactions contemplated by this Agreement shall not have occurred
on or prior to [ ] or such other date as the parties may mutually agree
upon in writing.
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, the Safeco Trust
or the Acquired Fund, or the directors, trustees or officers of the Safeco
Trust, or the Acquired 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 the Acquired Trust
and the Acquiring Trust; provided, however, that following the meeting of the
Acquired Fund's shareholders called by the Acquired 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's 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 ; with copies
to: ., 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.
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 the
Safeco 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
Instrument of Trust of the Safeco Trust, respectively. The execution and
delivery of this Agreement have been authorized by the trustees of the Acquiring
Trust and the directors of the Safeco Trust and this Agreement has been executed
by authorized officers of the Acquiring Trust and the Safeco Trust, acting as
such, and neither such authorization by such trustees or directors nor such
execution and delivery by such officers shall be deemed to have been made by any
of them individually or to 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 Trust and the
Instrument of Trust of the Safeco Trust, respectively.
32
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: [Safeco Trust] on behalf of
[Safeco Fund]
By: By:
--------------------------------- ---------------------------------
Name: Name:
Title: Secretary Title: President
[PIONEER TRUST] on behalf of
Attest: [Pioneer Fund]
By: By:
------------------------ ------------------------
Name: Name:
Title: Title:
33
Annex A
TAX REPRESENTATION CERTIFICATE OF
[PIONEER TRUST ON BEHALF OF PIONEER FUND]
This certificate is being delivered in connection with the transaction, to be
effected pursuant to the Agreement and Plan of Reorganization made as of , 2004
between [Pioneer Trust], a Delaware statutory Trust (the "Acquiring Trust") on
behalf of its series [Pioneer Fund] ("Acquiring Fund") and [Safeco Trust]., a
Delaware statutory trust, on behalf of [Safeco Fund] ("Acquired Fund") (the
"Agreement"). 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][business] trust established under the laws
of the [State of Delaware][Commonwealth of Massachusetts], 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 issued and outstanding
shares of Acquiring Fund 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 series of 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 Treas. Reg. 1.368-1(d)(2) of Acquired Fund or will use a significant
portion of the historic business assets (as defined in Treas. Reg.
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.
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.
34
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 Assumed 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
Assumed 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, 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.
* * * * *
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 to
Wilmer Cutler Pickering Hale and Dorr LLP immediately a written notice to that
effect.
[PIONEER TRUST] ON BEHALF OF
[PIONEER FUND]
By:
---------------------------
Name:
-----------------
Title:
------------------------
Dated:
35
Annex B
TAX REPRESENTATION CERTIFICATE OF
[SAFECO TRUST]
ON BEHALF OF [SAFECO FUND]
This certificate is being delivered in connection with the transaction to be
effected pursuant to the Agreement and Plan of Reorganization made as of , 2004
between [Pioneer Trust], a Delaware statutory Trust on behalf of its series,
[Pioneer Fund] ("Acquiring Fund") and [Safeco Trust]., a Delaware statutory
trust ("Safeco Trust"), on behalf of [Safeco Fund] ("Acquired Fund") (the
"Agreement"). 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 the Safeco 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 the Safeco Trust, a statutory trust organized
under the laws of the state of Delaware, 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 a series of 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 Assumed
Liabilities to Acquiring Fund such that immediately following the transfer,
Acquiring Fund will possess all of the same assets and liabilities (other than
any liabilities not included in Assumed 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.
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 Assumed Liabilities. 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 Assumed
Liabilities and the issuance of such Acquiring Fund Shares.
36
6. The Assumed Liabilities assumed by Acquiring Fund plus the Assumed
Liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Fund in the ordinary course of its business. Acquired Fund is not
aware of any liabilities of any kind other than the Acquired Fund Liabilities
assumed by the Acquiring Fund.
7. As or the Closing Date, the adjusted basis and the fair market value of the
Acquired Fund assets transferred to Acquiring Fund will equal or exceed the
Assumed Liabilities 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, and its other properties, if any, pursuant to the transaction 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.
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.
* * * * *
37
The undersigned officer of the Safeco Trust 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 to
Wilmer Cutler Pickering Hale and Dorr LLP immediately a written notice to that
effect.
SAFECO TRUST, ON BEHALF OF
[SAFECO FUND}
By:
---------------------------------
Name:
-----------------------
Title:
-----------------------
Dated:
38
Annex B - Form of Interim Advisory Agreement
- -------
AGREEMENT dated as of August 2, 2004, between Pioneer Investment
Management, Inc. ("Pioneer"), a Delaware corporation and a member of the
UniCreditio Italiano Banking Group, Register of Banking Groups, and [SAFECO
TRUST], a Delaware statutory trust (the "Trust"), on behalf of its series
[SAFECO FUNDS] (the "Fund").
Whereas, Safeco Asset Management Company has acted as investment advisor to
the Fund pursuant to an Investment Advisory Agreement dated (the "Prior
Agreement").
Whereas, the Prior Agreement has been approved by the Board of Trustees of
the Trust and the shareholders of the Fund.
Whereas, the Prior Agreement is being terminated as a result of assignment.
Whereas, the Board of Trustees has determined to appoint Pioneer as
investment adviser to the Fund.
Whereas, this Agreement is being entered into in reliance upon Rule 15a-4
under the Investment Company Act of 1940, as amended (the "Investment Company
Act").
Now therefore the Trust and Pioneer agree as follow:
Section 1. The Trust appoints Pioneer as investment adviser of the Funds
for the period and on the terms set forth herein. Pioneer accepts such
appointment.
Section 2. Pioneer and the Trust, on behalf of the Fund, hereby agree that
the provisions of the Prior Agreement (other than as to the term of the Prior
Agreement, the identity of the Adviser and the use of the "Safeco" name) are
incorporated herein by reference and made a part hereof as if references to the
Adviser were to Pioneer. Without limiting the forgoing, Pioneer shall be
entitled to the fee for its services provided for in the Prior Agreement from
(but exclusive of) the date hereof until the termination of this Agreement,
except as provided in Section 3 below.
Section 3. In the event that this Agreement is not approved by a majority
of the Trust's outstanding voting securities (as such term is used in the
Investment Company Act), Pioneer shall be entitled to a fee equal to the cost to
Pioneer of performing its services under this Agreement in lieu of the fee
provided for in Section 2. For purposes of this Agreement, Pioneer's costs in
providing the services under this Agreement shall be equal to the pro rata
portion of Pioneer's expenses for the term of this Agreement attributable to its
investment company advisory business, calculated as follows: Pioneer cost in
providing investment advisory services to its investment companies of the same
type (i.e., domestic equity, international, fixed income, money market)
multiplied by a fraction the numerator of which shall be the average daily net
assets of the Fund during the term of this Agreement and the denominator of
which shall be the average month end net assets under Pioneer's management of
all of its investment company clients.
Section 4. The compensation earned by Pioneer under Section 2 of this
Agreement shall be held in an interest bearing escrow account with the Fund's
custodian. If a majority of the outstanding voting securities approves this
Agreement prior to the end of its term, the amount in the escrow account
(including any interest earned) shall be paid to Pioneer. If a majority of the
outstanding voting securities do not approve this Agreement prior to the end of
its term, Pioneer shall be entitled to be paid, out of the escrow account the
lesser of (i) the amount in the escrow account (including any interest earned on
that amount while in escrow) and (ii) the fee provided for in Section 3 (plus
any interest on that amount while in escrow), with any remaining amount in the
escrow account being returned to the Fund.
Section 5. This Agreement shall become effective on August 2, 2004. Unless
terminated as provided below, this Agreement shall remain in full force and
effect until the earliest of (i) the closing of the reorganization of the Fund
into [name of Pioneer Fund], (ii) approval of a Management Contract between the
Fund and Pioneer and (iii) a date that is the later of 150 days after the date
of the termination of the Prior Agreement or such later date as may be
consistent with a rule or interpretive position (formal or informal) of the
staff of the Securities and Exchange Commission. This Agreement may be
terminated at any time without payment of penalty by vote of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Fund.
Pioneer may terminate this Agreement at any time without payment of any penalty
on not less than 60 days written notice to the Fund. This Agreement shall
automatically terminate upon its assignment as defined in the Investment Company
Act.
In witness whereof, the parties hereto have executed this Agreement as
the 2nd(t) day of August 2004.
[SAFECO TRUST]
39
----------------------------------------
By:
-----------------------------------
Its:
----------------------------------
PIONEER INVESTMENT MANAGEMENT, INC.
----------------------------------------
By:
-----------------------------------
Its:
----------------------------------
40
Annex C - ADDITIONAL INFORMATION PERTAINING TO PIONEER
- -------
OWNERSHIP OF PIONEER. Pioneer is an indirect, wholly owned subsidiary of
UniCredito Italiano.
PORTFOLIO TRANSACTION POLICIES
All orders for the purchase or sale of portfolio securities are placed on behalf
of each Portfolio by Pioneer pursuant to authority contained in the Portfolio'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 a Portfolio and/or other investment companies or other accounts
managed by Pioneer. In addition, consistent with Section 28(e) of the Exchange
Act, 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 Portfolio 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 a Portfolio 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 any of the Portfolios as well as other
investment companies or other accounts managed by Pioneer, although not all such
research may be useful to any of the Portfolios. 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
any of the Portfolios. The receipt of such research has not reduced Pioneer's
normal independent research activities; however, it enables Pioneer to avoid the
additional expenses which might otherwise be incurred if it were to attempt to
develop comparable information through its own staff.
In circumstances where two or more broker-dealers offer comparable prices and
executions, preference may be given to a broker-dealer which has sold shares of
a Portfolio as well as shares of other investment companies managed by Pioneer.
This policy does not imply a commitment to execute all portfolio transactions
through all broker-dealers that sell shares of the Portfolio.
None of the Portfolios used any brokers affiliated with Pioneer during its most
recently completed fiscal year in connection with its portfolio transactions.
SIMILAR FUNDS
Pioneer serves as the investment adviser to each Portfolio in the Pioneer Family
of Portfolios. The following table identifies other funds in the Pioneer Family
of Funds that have similar investment objectives to the Portfolios described in
this proxy statement and provides other information regarding the similar funds.
=============================================================================================================
Pioneer Portfolio Amount of Management Net assets of Fund as of Management fee rate (as
Fees waived or expenses June 30, 2004 a percentage of average
reimbursed daily net assets
=============================================================================================================
=============================================================================================================
=============================================================================================================
=============================================================================================================
=============================================================================================================
=============================================================================================================
=============================================================================================================
41
PIONEER BOND VCT PORTFOLIO
PIONEER FUND VCT PORTFOLIO
PIONEER GROWTH OPPORTUNITIES VCT PORTFOLIO
PIONEER MID CAP VALUE VCT PORTFOLIO
PIONEER MONEY MARKET VCT PORTFOLIO
PIONEER SMALL CAP VALUE II VCT PORTFOLIO
(each a "Pioneer Portfolio" and each a separate series of Pioneer Variable
Contracts Trust)
STATEMENT OF ADDITIONAL INFORMATION
__________, 2004
This Statement of Additional Information is not a Prospectus. It should be
read in conjunction with the related Proxy Statement and Prospectus (also dated
_________, 2004) which covers Class I shares of the relevant Pioneer Portfolio,
a series of Pioneer Variable Contracts Trust, to be issued in exchange for
shares of the applicable Safeco Portfolio (as detailed below), each a series of
Safeco Resource Series 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 EACH PIONEER PORTFOLIO..........................3
PORTFOLIO HISTORY.......................................................3
DESCRIPTION OF THE PORTFOLIO AND ITS INVESTMENT RISKS...................3
MANAGEMENT OF THE PORTFOLIO.............................................3
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.....................3
INVESTMENT ADVISORY AND OTHER SERVICES..................................3
BROKERAGE ALLOCATION AND OTHER PRACTICES................................3
CAPITAL STOCK AND OTHER SECURITIES......................................3
PURCHASE, REDEMPTION AND PRICING OF SHARES..............................3
TAXATION OF EACH PORTFOLIO..............................................3
UNDERWRITERS............................................................4
CALCULATION OF PERFORMANCE DATA.........................................4
FINANCIAL STATEMENTS....................................................4
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement and Prospectus dated _______, 2004
(the "Proxy Statement and Prospectus") relating to the proposed reorganizations:
1. Safeco Bond Portfolio into Pioneer Bond VCT Portfolio
2. Safeco Core Equity Portfolio into Pioneer Fund VCT Portfolio
3. Safeco Growth Opportunities Portfolio into Pioneer Growth Opportunities
VCT Portfolio
4. Safeco Money Market Portfolio into Pioneer Money Market VCT Portfolio
5. Safeco Multi-Cap Core Portfolio into Pioneer Mid Cap Value VCT Portfolio
6. Safeco Small-Cap Value Portfolio into Pioneer Small Cap Value II VCT
Portfolio
Each Safeco Portfolio is a separate series of Safeco Resource Series Trust,
and each Pioneer Portfolio is a separate series of Pioneer Variable Contracts
Trust. The Proxy Statement and Prospectus is in connection with the solicitation
by the management of Safeco Resource Series Trust of proxies to be voted at a
Meeting of Shareholders of each Safeco Portfolio to be held on __________, 2004.
EXHIBITS AND DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference, unless
otherwise indicated. Shareholders will receive a copy of each document that is
incorporated by reference upon any request to receive a copy of this Statement
of Additional Information.
1. Statement of additional information of Pioneer Variable Contracts Trust,
dated April 29, 2004 (the "SAI") (File No. 33-84546), as filed with the
Securities and Exchange Commission on April 29, 2004 (Accession No.
0001016964-04-000122) and June 1, 2004 (Post-effective amendment no. 31)
(Accession No. 0001016964-04-000195) are incorporated herein by reference.
2. [Preliminary statement of additional information of Pioneer Bond VCT
Portfolio, Pioneer Growth Opportunities VCT Portfolio and Pioneer Small Cap
Value II VCT Portfolio, each a newly created series of Pioneer Variable
Contracts Trust, dated ________, 2004 (the "SAI") (File No. 33-84546), as
filed with the Securities and Exchange Commission on _________, 2004
(Accession No. ______________) is incorporated herein by reference.]
[To be filed]
3. Safeco Resource Series Trust's statement of additional information, dated
April 30, 2004 (File No. 33-06547), as filed with the Securities and
Exchange Commission on April 29, 2004 (Accession No. 0001047469-04-014236)
is incorporated herein by reference.
3. Safeco Resource Series Trust's Annual Report for the fiscal year ended
December 31, 2003 (File No. 811-04717), as filed with the Securities and
Exchange Commission on February 25, 2004 (Accession No.
0001047469-04-005601) is incorporated herein by reference.
4. [Safeco Resource Series Trust's Semi-Annual Report for the period ended
June 30, 2004] [To be filed]
5. [Pro forma financial statements for the following:] [To be filed]
Safeco Core Equity Portfolio into Pioneer Fund VCT Portfolio
Safeco Money Market Portfolio into Pioneer Money Market VCT Portfolio
-2-
Pro forma financial statements are not included for the following
since the Pioneer Portfolio is a newly created series of Pioneer
Variable Contracts Trust and does not have material assets or
liabilities:
Safeco Bond Portfolio into Pioneer Bond VCT Portfolio
Safeco Growth Opportunities Portfolio into Pioneer Growth
Opportunities VCT Portfolio
Safeco Small-Cap Value Portfolio into Pioneer Small Cap Value
II VCT Portfolio
ADDITIONAL INFORMATION ABOUT
EACH PIONEER PORTFOLIO
PORTFOLIO HISTORY
For additional information about Pioneer Variable Contracts Trust generally
and each Pioneer Portfolio and its histories, see "Fund History" in the SAI.
DESCRIPTION OF EACH PORTFOLIO AND ITS INVESTMENT RISKS
For additional information about each Pioneer Portfolio's investment
objective, policies, risks and restrictions, see "Investment Policies, Risks and
Restrictions" in the SAI.
MANAGEMENT OF THE PORTFOLIO
For additional information about Pioneer Variable Contracts Trust's Board
of Trustees and officers, see "Trustees and Officers" in the SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
For addition information on share ownership of each Pioneer Portfolio, see
"Annual Fee, Expense and Other Information."
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information on each Pioneer Portfolio, see "Investment
Adviser," "Custodian" and "Independent Auditors" in Pioneer Variable Contracts
Trust's SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about Pioneer Variable Contracts Trust and each
Pioneer Portfolio's brokerage allocation practices, see "Portfolio Transactions"
in the SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other
characteristics of shares of beneficial interest of each Pioneer Portfolio and
Pioneer Variable Contracts Trust, see "Description of Shares" in the SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For additional information about purchase, redemption and pricing of shares
of each Pioneer Portfolio, see "Pricing of Shares" in the SAI.
TAXATION OF THE FUND
For additional information about tax matters related to an investment in
each Pioneer Portfolio, see "Tax Status" in the SAI.
-3-
UNDERWRITERS
For additional information about the Pioneer Variable Contracts Trust's
principal, see "Principal Underwriter" in the SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of each Pioneer
Portfolio, see "Investment Results" in the SAI.
FINANCIAL STATEMENTS
For additional information on each Pioneer Portfolio, see "Financial
Statements" in Pioneer Variable Contracts Trust's SAI.
-4-
PART C
OTHER INFORMATION
PIONEER VARIABLE CONTRACTS TRUST
(on behalf of its series,
Pioneer Bond VCT Portfolio
Pioneer Fund VCT Portfolio
Pioneer Growth Opportunities VCT Portfolio
Pioneer Mid Cap Value VCT Portfolio
Pioneer Money Market VCT Portfolio
Pioneer Small Cap Value II VCT Portfolio)
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the most recently filed
Registration Statement of Pioneer Variable Contracts Trust (the "Registrant") on
Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940 (File Nos. 33-84546 and 811-08786) as filed with the Securities and
Exchange Commission on June 6, 2004 (Accession No. 0001016964-04-000195), which
information is incorporated herein by reference.
(1)(a) Agreement and Declaration of Trust (1)
(1)(b) Amendments to Agreement and Declaration of Trust (2)(3)(4)(5)(6)(7)(9)
(10)(11)(12)(13)
(1)(c) Amendment to Agreement and Declaration of Trust to establish
additional series (*)
(2) Amended and Restated By-Laws (8)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization (14)
(5) Reference is made to Exhibits (1) and (2) hereof
(6)(a) Form of Management Contract for Pioneer Bond VCT Portfolio (*)
(6)(b) Management Contract for Pioneer Fund VCT Portfolio (8)
(6)(c) Form of Management Contract for Pioneer Growth Opportunities VCT Portfolio (*)
(6)(d) Management Contract for Pioneer Mid Cap Value VCT Portfolio (8)
(6)(e) Management Contract for Pioneer Money Market VCT Portfolio (8)
(6)(f) Form of Management Contract for Pioneer Small Cap Value II VCT Portfolio (*)
(6)(g) Expense Limitation Agreement (*)
(7) Underwriting Agreement with Pioneer Funds Distributor, Inc. (8)
(8) Not applicable
(9) Custodian Agreement with Brown Brothers Harriman & Co. (*)
(10)(a) Form of Distribution Plan relating to Class II Shares (*)
(10)(b) Form of Multiple Class Plan Pursuant to Rule 18f-3 (*)
(11) Opinion of Counsel (legality of securities being offered) (*)
(12) Form of opinion as to tax matters and consent (*)
(13)(a) Investment Company Service Agreement with Pioneering Services
Corporation (*)
(13)(b) Administration Agreement with Pioneer Investment Management, Inc. (*)
(14) Consents of Independent Registered Public Accounting Firm (*)
(15) Not applicable
(16) Powers of Attorney (*)
(17)(a) Code of Ethics (12)
(17)(b) Form of Proxy Card (*)
(1) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 1 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on August 8, 1995 (Accession no. 0000930709-95-000005).
(2) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 6 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on August 18, 1997 (Accession no. 0000930709-97-000011).
(3) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 8 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on July 16, 1998 (Accession no. 0000930709-98-000013).
(4) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 11 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on June 4, 1999 (Accession no. 0000930709-99-000016).
(5) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 12 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on January 12, 2000 (Accession no. 0000930709-00-000002).
(6) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 15 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on July 6, 2000 (Accession no. 0000930709-00-000018).
(7) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 18 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on January 18, 2001 (Accession no. 0001016964-01-000006).
(8) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 20 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on April 26, 2001 (Accession no. 0001016964-01-500006).
(9) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 22 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on October 22, 2001 (Accession no. 0000930709-01-500036).
(10) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 24 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on May 1, 2002 (Accession no. 0001016964-02-000111).
(11) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 26 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on February 18, 2003 (Accession no. 0001016964-03-000044).
(12) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 28 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on November 18, 2003 (Accession no. 0001016964-03-000241).
(13) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 30 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on April 29, 2004 (Accession no. 0001016964-04-000122).
(14) Filed herewith as Exhibit A to the Proxy Statement and Prospectus included
as Part A of this Registration Statement.
(*) Filed herewith.
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.
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
20th day of August, 2004.
Pioneer Variable Contracts Trust,
on behalf of its series,
Pioneer Bond VCT Portfolio
Pioneer Fund VCT Portfolio
Pioneer Growth Opportunities VCT Portfolio
Pioneer Mid Cap Value VCT Portfolio
Pioneer Money Market VCT Portfolio
Pioneer Small Cap Value VCT Portfolio
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, August 20, 2004
- ---------------------------
John F. Cogan, Jr. Trustee, and President
* Chief Financial Officer and August 20, 2004
- ---------------------------
Vincent Nave Treasurer
*
- ---------------------------
Mary K. Bush Trustee
*
- ---------------------------
Richard H. Egdahl 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 August 20, 2004
--------------------------------------------
Osbert M. Hood, Attorney-in-Fact
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(1)(c) Amendment to Agreement and Declaration of Trust to establish
Investor Class Shares
(6)(a) Form of Management Contract for Pioneer Bond VCT Portfolio
(6)(c) Form of Management Contract for Pioneer Growth Opportunities
VCT Portfolio
(6)(f) Form of Management Contract for Pioneer Small Cap Value II
VCT Portfolio
(6)(g) Expense Limitation Agreement
(9) Custodian Agreement
(10)(a) Form of Distribution Plan relating to Class II Shares
(10)(b) Form of Multiple Class Plan Pursuant to Rule 18f-3
(11) Opinion of Counsel
(12) Form of Opinion as to Tax Matters and Consent
(13)(a) Investment Company Service Agreement
(13)(b) Administration Agreement
(14) Consents of Independent Registered Public Accounting Firm
(16) Powers of Attorney
(17)(b) Form of Proxy Card