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 VALUE FUND
(Exact Name of Registrant as Specified in Charter)
(617) 742-7825
(Area Code and Telephone Number)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Dorothy E. Bourassa, Esq.
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copies to: David C. Phelan, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
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 COMMON STOCK TRUST
on behalf of its Series:
Safeco International Stock Fund
Safeco Balanced Fund
Safeco Core Equity Fund
Safeco Large-Cap Growth Fund
Safeco Large-Cap Value Fund
Safeco Small-Cap Value Fund
Safeco Growth Opportunities Fund
Safeco Multi-Cap Core Fund
SAFECO TAXABLE BOND TRUST
on behalf of its Series:
Safeco Intermediate-Term U.S. Government Fund
Safeco High-Yield Bond Fund
SAFECO TAX-EXEMPT BOND TRUST
on behalf of its Series:
Safeco Intermediate-Term Municipal Bond Fund
Safeco California Tax-Free Income Fund
Safeco Municipal Bond Fund
SAFECO MANAGED BOND TRUST
on behalf of its Series:
Safeco Intermediate-Term Bond Fund
SAFECO MONEY MARKET TRUST
on behalf of its Series:
Safeco Money Market Fund
Safeco Tax-Free Money Market Fund
(each, "your Safeco Fund" and collectively, the " Safeco Funds")
The address and telephone number of each Trust is
[INSERT ADDRESS]
[INSERT PHONE NUMBER ]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR [ ], 2004
TO THE SHAREHOLDERS OF THE FUNDS:
A joint special meeting of shareholders (the "Meeting") for each of the Safeco
Funds 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 Fund, a proposal to approve an Agreement
and Plan of Reorganization. Under the Agreement and Plan of
Reorganization, your Safeco Fund will transfer all of its assets to an
investment company (each a
1
"Pioneer Fund") managed by Pioneer Investment Management, Inc.
("Pioneer") in exchange for Investor Class shares of the Pioneer Fund.
The Pioneer Fund also will assume your Safeco Fund's liabilities that
are included in the calculation of your Safeco Fund's net assets at
the closing. Generally, each Pioneer Fund is an existing mutual fund
with substantially similar investment objective and policies as your
Safeco Fund. In the case of certain Safeco Funds, the Pioneer Fund is
a newly organized mutual fund with investment objective and policies
substantially the same as your Safeco Fund. Holders of all share
classes of your Safeco Fund will receive Investor Class shares of the
corresponding Pioneer Fund. Investor Class shares of the applicable
Pioneer Fund will be distributed to shareholders in proportion to the
relative net asset value of their share holdings on the closing date
of the reorganization. Following the reorganization, your Safeco Fund
will then be dissolved. As a result of the reorganization you will
become shareholders of the Pioneer Fund. YOUR BOARD OF TRUSTEES
RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
2. With respect to each Safeco Fund, a proposal to approve an interim
investment advisory agreement between your Safeco Fund and Pioneer.
Pioneer has provided advisory services for your Safeco Funds pursuant
to this agreement since August 2, 2004, when the advisory agreement
between your Safeco Fund and Safeco Asset Management Company
terminated. Approval of the interim investment advisory agreement will
enable Pioneer to receive advisory fees currently held in escrow. 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 MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD. IF SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT
NUMBERS, YOUR SAFECO FUND MAY BE REQUIRED TO MAKE ADDITIONAL SOLICITATIONS.
By order of the Boards of Trustees,
[Name]
[Title]
[ ], 2004
2
COMBINED PROXY STATEMENT OF
SAFECO COMMON STOCK TRUST
on behalf of its Series:
Safeco International Stock Fund
Safeco Balanced Fund
Safeco Core Equity Fund
Safeco Large-Cap Growth Fund
Safeco Large-Cap Value Fund
Safeco Small-Cap Value Fund
Safeco Growth Opportunities Fund
Safeco Multi-Cap Core Fund
SAFECO TAXABLE BOND TRUST
on behalf of its Series:
Safeco Intermediate-Term U.S. Government Fund
Safeco High-Yield Bond Fund
SAFECO TAX-EXEMPT BOND TRUST
on behalf of its Series:
Safeco Intermediate-Term Municipal Bond Fund
Safeco California Tax-Free Income Fund
Safeco Municipal Bond Fund
SAFECO MANAGED BOND TRUST
on behalf of its Series:
Safeco Intermediate-Term Bond Fund
SAFECO MONEY MARKET TRUST
on behalf of its Series:
Safeco Money Market Fund
Safeco Tax-Free Money Market Fund
(each, "your Safeco Fund" and collectively, the " Safeco Funds")
The address and telephone number of each Trust is
[INSERT ADDRESS]
[INSERT PHONE NUMBER ]
PROSPECTUS
FOR INVESTOR CLASS SHARES OF
PIONEER AMERICA INCOME TRUST
PIONEER BALANCED FUND
PIONEER BOND FUND
PIONEER CALIFORNIA TAX FREE INCOME FUND
PIONEER CASH RESERVES FUND
PIONEER FUND
PIONEER GROWTH OPPORTUNITIES FUND
3
PIONEER GROWTH SHARES
PIONEER HIGH YIELD FUND
PIONEER INTERNATIONAL EQUITY FUND
PIONEER MID CAP VALUE FUND
PIONEER MUNICIPAL BOND FUND
PIONEER SMALL CAP VALUE FUND
PIONEER TAX FREE INCOME FUND
PIONEER TAX FREE MONEY MARKET FUND
PIONEER VALUE FUND
(each a "Pioneer Fund")
The address and telephone number of each Pioneer Fund is 60 State Street,
Boston, Massachusetts 02109 and 1-800-622-3265 or 1-800-225-6292.
This combined proxy statement and prospectus ( "Proxy Statement/Prospectus")
dated [____], 2004 is being furnished to shareholders of the series listed above
(each a "Safeco Fund") of Safeco Common Stock Trust, Safeco Taxable Bond Trust,
Safeco Tax-Exempt Bond Trust, Safeco Money Market Trust and Safeco Managed Bond
Trust (each a "Safeco Trust," and collectively, the "Safeco Trusts") in
connection with the solicitation by the respective boards of trustees (the
"Boards, or the "Trustees") of the Safeco Trusts of proxies to be used at a
joint meeting of shareholders of the Safeco Funds (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") that provides for
the reorganization of each Safeco Fund into a corresponding Pioneer Fund (each a
"Reorganization"), and (ii) the approval of an interim advisory agreement for
each Safeco Fund. The following table indicates the corresponding Pioneer Fund
shares that each Safeco Fund shareholder would receive if each Plan is approved,
which Safeco Fund shareholders may vote on which proposals and on what page of
this Proxy Statement/Prospectus the discussion regarding each proposal begins.
Shareholders of each class of shares of a Safeco Fund will vote together as a
single class on each proposal. Although each Reorganization is similar in
structure, you should read carefully the specific discussion regarding your
Safeco Fund's Reorganization.
SAFECO FUND PIONEER FUND SHAREHOLDERS ENTITLED TO VOTE PAGE
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PROPOSAL 1 Safeco Balanced Fund Pioneer Balanced Fund Safeco Balanced Fund shareholders
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PROPOSAL 2 Safeco California Tax-Free Pioneer California Tax Free Safeco California Tax-Free Income Fund
Income Fund Income Fund shareholders
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PROPOSAL 3 Safeco Core Equity Fund Pioneer Fund Safeco Core Equity Fund shareholders
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PROPOSAL 4 Safeco Growth Pioneer Growth Safeco Growth Opportunities Fund
Opportunities Fund Opportunities Fund shareholders
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PROPOSAL 5 Safeco High-Yield Bond Pioneer High Yield Fund Safeco High-Yield Bond Fund
Fund
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PROPOSAL 6 Safeco Intermediate-Term Pioneer Bond Fund Safeco Intermediate-Term Bond Fund
Bond Fund shareholders
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PROPOSAL 7 Safeco Intermediate-Term Pioneer Tax Free Income Safeco Intermediate-Term Municipal Bond
Municipal Bond Fund Fund Fund shareholders
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PROPOSAL 8 Safeco Intermediate-Term Pioneer America Income Safeco Intermediate-Term U.S. Government
U.S. Government Fund Trust Fund shareholders
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PROPOSAL 9 Safeco International Stock Pioneer International Equity Safeco International Stock Fund
Fund Fund shareholders
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PROPOSAL 10 Safeco Large-Cap Growth Pioneer Growth Shares Safeco Large-Cap Growth Fund
Fund shareholders
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PROPOSAL 11 Safeco Large-Cap Value Pioneer Value Fund Safeco Large-Cap Value Fund shareholders
Fund
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PROPOSAL 12 Safeco Money Market Fund Pioneer Cash Reserves Fund Safeco Money Market Fund shareholders
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PROPOSAL 13 Safeco Multi-Cap Core Fund Pioneer Mid Cap Value Fund Safeco Multi-Cap Core Fund shareholders
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PROPOSAL 14 Safeco Municipal Bond Pioneer Municipal Bond Fund Safeco Municipal Bond Fund shareholders
Fund
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4
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PROPOSAL 15 Safeco Small-Cap Value Pioneer Small Cap Value Safeco Small-Cap Value Fund shareholders
Fund Fund
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PROPOSAL 16 Safeco Tax-Free Money Pioneer Tax Free Money Safeco Tax-Free Money Market Fund
Market Fund Market Fund shareholders
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PROPOSAL 17(a) - Each Fund Not applicable Shareholders of each Fund voting separately
(p) as to the proposal that affects their Fund
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WHERE TO GET MORE INFORMATION
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The Safeco Funds' 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 Funds' annual report dated December 31, 2003
and semiannual report dated June 30, 2004. Available to you free of charge by calling 1-800-528-6501. Also on
file with the SEC. See "Available Information." These reports are
incorporated by reference into this Proxy Statement and Prospectus.
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Each Pioneer Funds' current prospectus and each Pioneer Available to you free of charge by calling 1-800-225-6292. These
Fund's most recent annual and semi-annual reports to prospectuses are also on file with the SEC.
shareholders
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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 Funds and the Pioneer Funds.
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To ask questions about this proxy statement and Call your Safeco Fund's toll-free telephone number: 1-800-[________].
prospectus.
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AN INVESTMENT IN ANY PIONEER FUND 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 FUNDS 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 Funds' 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 Funds was not a core business that it intended to
continue. After investigating and discussing several alternatives for ongoing
investment management of the Safeco Funds with the Trustees, Symetra conducted a
search for a new investment adviser for the Safeco Funds. Ultimately Symetra
decided to recommend to the Boards that Pioneer Investment Management, Inc.
("Pioneer") be hired to manage the Safeco Funds on an interim basis until the
reorganizations occur and the Safeco Funds 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
Funds, including the performance record and expense structure of each of the
Pioneer Funds, the impact of the proposed Reorganizations on the Funds'
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 Funds' 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 Funds and the
Pioneer Funds 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.
5
WHY THE TRUSTEES ARE RECOMMENDING THE REORGANIZATIONS
The Trustees believe that reorganizing your Safeco Fund 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:
o SAM, the investment adviser to each of the Funds 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 Funds.
Therefore, a change in your Safeco Fund's investment advisor was necessary;
o The track record of Pioneer in managing the Pioneer Funds as compared to
the historical performance of the Safeco Funds;
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 Investor
Class shares of each Pioneer Fund; and
o Shareholders who own shares in their name as of the closing of the
reorganization (i.e., not in the name of a broker) and maintain their
account may purchase Class A shares of the corresponding Pioneer fund
through such account in the future or may exchange those shares for Class A
shares of another Pioneer Fund or purchase Class A share of another Pioneer
Fund without paying any sales charge. Investor Class shares will not be
offered after the Reorganizations.
HOW EACH REORGANIZATION WILL WORK
o Each Safeco Fund will transfer all of its assets to the corresponding
Pioneer Fund. Each Pioneer Fund will assume the corresponding Safeco Fund's
liabilities that are included in the calculation of such Safeco Fund's net
asset value at the closing of the Reorganization (the "Closing Date").
o Each Pioneer Fund will issue Investor Class shares to the corresponding
Safeco Fund in amounts equal to the aggregate net asset value of that
Safeco Fund's shares. Holders of all share classes of your Safeco Fund will
receive Investor Class shares of the corresponding Pioneer Fund. 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 Fund with the same aggregate
net asset value as the shares of your Safeco Fund that you held immediately
prior to the reorganization.
o Each Safeco Fund will be dissolved after the Closing Date.
o Shares of the Investor Class of a Pioneer Fund will automatically convert
to Class A shares of the Pioneer Fund at the end of the calendar month that
is two years after the Closing Date.
o Pioneer acts as investment adviser to each Pioneer Fund. For a two-year
period following the Closing Date, Pioneer has agreed to limit each Pioneer
Fund's total operating expenses (other than extraordinary expenses) for
Investor Class shares. The expense limitation, if any, applicable to the
class of shares of the Pioneer Fund into which your Safeco Fund 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 Funds, the
Safeco Funds or the shareholders of the Safeco Funds.
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.
6
WHO BEARS THE EXPENSES ASSOCIATED WITH THE REORGANIZATIONS
Pioneer and Symetra will pay all out of pocket 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 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 the 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 Funds that
approve the Reorganizations (together with assets in certain other accounts) are
less than $2.6 billion. Under this agreement, Pioneer and Symetra have also
agreed, among other things, that (i) once the Investor Class converts to Class A
shares, Pioneer Funds Distributor, Inc. ("PFD"), the principal underwriter of
the Pioneer Funds, shall make payments to Safeco Securities pursuant to a Rule
12b-1 plan equal to 0.25% of the average daily net assets attributable to
accounts maintained by former shareholders of the Safeco Funds; (ii) PFD will
make additional continuing payments out of its own resources to Safeco
Securities, following Pioneer's acquisition of assets from SAM, at an annual
rate of 0.5% of the average daily net assets of any Pioneer Fund held by or for
the account of any former shareholders of the Safeco Funds (including assets
invested in any Pioneer Fund as a result of the Reorganization or otherwise)
and, in connection with purchases of shares of the Pioneer Funds by former
shareholders of the Funds after the acquisition, PFD will pay out of its own
resources to Safeco Securities an amount equal to 0.20% of the amount of such
purchases; and (iii) Symetra and SAM will be subject to certain non-competition
provisions.
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 Safeco Fund 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 Funds.
Under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), shareholders must approve any new investment adviser to a Safeco Fund.
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 Fund, 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 Fund. 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
Funds, 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 Fund will
consider what alternative action to take. Such action could include the
liquidation of the Fund.
WHO IS ELIGIBLE TO VOTE
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 Fund, regardless of the class of shares held, 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.
7
TABLE OF CONTENTS
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PAGE
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INTRODUCTION
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Proposal 1 - Safeco Balanced Fund
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Proposal 2 - Safeco California Tax-Free Income Fund
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Proposal 3 - Safeco Core Equity Fund
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Proposal 4 - Safeco Growth Opportunities Fund
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Proposal 5 - Safeco High-Yield Bond Fund
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Proposal 6 - Safeco Intermediate-Term Bond Fund
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Proposal 7 - Safeco Intermediate-Term Municipal Bond Fund
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Proposal 8 - Safeco Intermediate-Term U.S. Government Fund
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Proposal 9 - Safeco International Stock Fund
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Proposal 10 - Safeco Large-Cap Growth Fund
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Proposal 11 - Safeco Large-Cap Value Fund
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Proposal 12 - Safeco Money Market Fund
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Proposal 13 - Safeco Multi-Cap Core Fund
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Proposal 14 - Safeco Municipal Bond Fund
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Proposal 15 - Safeco Small-Cap Value Fund
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Proposal 16 - Safeco Tax-Free Money Market Fund
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TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION
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TAX STATUS OF EACH REORGANIZATION
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PROPOSAL 17(A)-(P) - APPROVAL OF PIONEER AS INVESTMENT ADVISER FOR
EACH FUND
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VOTING RIGHTS AND REQUIRED VOTE
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ACTIONS TO BE TAKEN IF THE PROPOSALS ARE NOT APPROVED
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ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS
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FINANCIAL HIGHLIGHTS
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INFORMATION CONCERNING THE MEETING
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OWNERSHIP OF SHARES OF THE FUNDS
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EXPERTS
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AVAILABLE INFORMATION
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ANNEX A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION
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ANNEX B - FORM OF INTERIM ADVISORY AGREEMENT
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ANNEX C - ADDITIONAL INFORMATION REGARDING PIONEER
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8
SAFECO BALANCED FUND AND
PIONEER BALANCED FUND
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 BALANCED FUND TO THE PIONEER BALANCED FUND
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SAFECO BALANCED FUND PIONEER BALANCED FUND
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Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company
diversified open-ended management investment organized as a Delaware statutory trust.
company organized as a Delaware statutory
trust.
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Net assets as of $19.5 million $132 million
June 30, 2004
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Investment advisers Investment adviser (until August 2, 2004): Investment adviser
and portfolio managers SAM Pioneer
Portfolio Managers (until August 2, 2004): Portfolio Managers:
Rex L. Bently (since 1996) Day-to-day management of the Fund's portfolio is the
Lynette D. Sagvold (since 1996) responsibility of co-managers Timothy Mulrenan
Greg Card (since 2001) (equity securities) and Richard Schlanger (fixed
Tim Hokari (since 2000) income securities).
Lesley Fox (since 2000)
Nancy McFadden (since 2004) Mr. Mulrenan joined Pioneer in 1997 and has managed
portfolios since 1998. Mr. Schlanger joined Pioneer
Currently Pioneer is acting as investment in 1988.
adviser to the Fund. The Portfolio Managers of
the Pioneer Fund, as indicated in the next
column, currently manage your Safeco Fund.
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Investment objective The Fund seeks growth and income consistent The Fund seeks capital growth and current income by
with the preservation of capital. actively managing a diversified portfolio of equity
securities and bonds.
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The investment objective of each Fund is fundamental and cannot be changed without shareholder
approval.
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Primary investments Under normal market conditions, the Fund Under normal market conditions, the Fund invests in a
invests from 50% to 70% of its net assets (plus diversified portfolio of equity securities and
any borrowing for investment purposes) in bonds. Pioneer allocates the Fund's assets between
common stocks and at least 25% of its assets in equity and debt securities based on its assessment of
debt securities. current business, economic and market conditions.
Normally, equity and debt securities each represent
25% to 75% of the Fund's net assets.
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Investment strategies The Fund seeks growth and income consistent The Fund uses a blended value/growth style of
with the preservation of capital through a management. In selecting equity securities, the Fund
"disciplined value" approach. seeks securities selling at reasonable prices and
then holds these securities until the market values
When evaluating a stock to purchase for the reflect their intrinsic values. In selecting debt
Fund, SAM historically looked for companies securities, the Fund considers both broad economic
having one or more of the following factors and issuer specific factors.
characteristics:
o Undervalued stock price as measured by
price-to-earnings ratios and dividend
potential relative to comparable companies
o Potential to beat the S&P 500 Index
average for
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SAFECO BALANCED FUND PIONEER BALANCED FUND
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risk adjusted returns over the next three-
to five-year outlook
o Good long-term growth potential.
When evaluating a debt security to buy for the
Fund, SAM historically considered factors such
as:
o The issuer's creditworthiness
o The sensitivity of the security to changes
in interest rates
o The level to which that market sector is
already represented by the Fund's assets
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Other investments The Fund may invest up to 10% of its total The Fund may invest up to 10% of its total assets in
assets in debt securities rated below debt securities rated below investment grade,
investment grade. including convertible debt.
The Fund may invest up to 25% of its total assets in
real estate investment trusts.
Up to 25% of the Fund's total assets may be invested
in equity and debt securities of non-U.S. issuers.
The Fund will not invest more than 5% of its total
assets in the securities of emerging markets
issuers.
The Fund may invest in U.S. government securities,
mortgage-backed and asset-backed securities.
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Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- ---------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ---------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund 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 Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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.
- ---------------------------------------------------------------------------------------------------------------------------------
2
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO BALANCED FUND PIONEER BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may:
(ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase
agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's
additional securities purchases if total total assets (including the amount borrowed); (b) to
outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to
of total assets. an additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) the Fund 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.
- ---------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may make both short-term (nine months or
institutional investors with a value of up to less) and long-term loans of its portfolio securities
33% of the Fund's total assets. to the extent of 30% of the value of the Fund's total
assets computed at the time of making such loans.
- ---------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities,
a result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options does not contracts and other derivatives. The Fund does not
exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may purchase a put or call option or Fund may use derivatives for a variety of
option on a futures contract if, as a result non-principal purposes, including:
thereof, the aggregate premiums paid on all
options or options on futures contracts held by o As a hedge against adverse changes in stock
the fund do not exceed 20% of the Fund's net marketprices, interest rates or currency
assets. exchange rates
o As a substitute for purchasing or selling
securities
The Fund may enter into any futures contract or o To increase the Fund's return as a non-hedging
option on futures contract if, as a result strategy that may be considered speculative
thereof, the aggregate margin deposits and
premiums required on all such instruments do
not exceed 5% of the Fund's net assets.
The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ---------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGE SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Balanced Fund
the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be subject
charge. to any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. Balanced Fund and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of 1% if you future without paying any sales charge.
redeem Class A shares within one year of
purchase. Except as described above, Class A shares of Pioneer
Balanced Fund are subject to a front-end sales charge
Purchases of Investor Class shares of the Fund of up to 4.50%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ---------------------------------------------------------------------------------------------------------------------------------
3
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO BALANCED FUND PIONEER BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco Balanced Fund pays an advisory fee on a Pioneer Balanced Fund pays Pioneer a management fee
fees monthly basis at an annual rate as follows: equal to Pioneer's annual fee is equal to:
$0 - $250,000,000: 0.70 of 1% 0.65% of average daily net assets up to $1 billion;
$250,000,001 - $750,000,000: 0.65 of 1% 0.60% of the next $4 billion;
$750,000,001 - $1,250,000,000: 0.60 of 1% 0.55% on assets over $5 billion.
Over $1,250,000,000: 0.55 of 1%
During its most recent fiscal year, Pioneer Balanced
SAM serves as administrator and Fund accounting Fund paid an advisory fee at an average rate of 0.65%
agent for the Fund. The Fund pays SAM an of average daily net assets.
administrative services fee of 0.05% of the
Fund's average daily net assets up to the first In addition, the Fund reimburses Pioneer for certain
$200,000,000 and 0.01% of its net assets fund accounting and legal expenses incurred on behalf
thereafter, and an accounting fee of 0.04% of of the Fund and pays a separate shareholder
the Fund's average daily net assets up to the servicing/transfer agency fee to Pioneer Investment
first $200,000,000 and 0.01% of its net assets Management Shareholder Services, Inc. ("PIMSS"), an
thereafter. affiliate of Pioneer.
During its most recent fiscal year, Safeco For the fiscal year ended April 30, 2004, the Fund's
Balanced Fund paid aggregate advisory and annual operating expenses for Class A shares were
administration fees at an average rate of [xx]% 1.38% per share.
of average daily net assets.
Pioneer has agreed until the second anniversary of
SAM had contractually agreed until April 30, the closing of the Reorganization to limit the
2009, to pay certain fund operating expenses ordinary operating expenses (excluding taxes,
(but not all of the operating expenses of the commissions, interest and extraordinary expenses) of
Fund) that exceeded the rate of 0.40% per annum the Investor Class to 1.10% of the average daily net
of the Fund's average daily net assets. This assets attributable to the Investor Class.
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.35%, and without giving
effect to the expense limitation, were 1.93%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 2.10%, and without giving
effect to the expense limitation, were 2.75%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 2.10%, and without giving
effect to the expense limitation, were 42.09%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation were 1.10%, and without
giving effect to the expense limitation, were
1.43% per share.
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ---------------------------------------------------------------------------------------------------------------------------------
4
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO BALANCED FUND PIONEER BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD. Existing shareholders of
underwriter or through brokers, registered Safeco Balanced Fund who own shares in their own name
investment advisers, banks and other financial as of the closing date of the Reorganization and who
institutions that have entered into selling maintain their accounts may buy shares of any fund in
agreements with the Fund's principal the Pioneer family of funds through such accounts in
underwriter, as described in the Fund's the future without paying sales charges.
prospectus.
If the account is established in the shareholder's
own name, shareholders may also purchase additional
Certain account transactions may be done by shares of Pioneer Balanced Fund by telephone or
telephone. online.
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Balanced Fund
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
fund distributions or for shares that you have more than 62 other Pioneer Funds. Your exchange would
exchanged for shares of the same class of be for Class A shares, which would be subject to a
another Fund. Rule 12b-1 fee. An exchange generally is treated as a
sale and a new purchase of shares for federal income
Certain account transactions may be done by tax purposes.
telephone.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Balanced Fund for shares of other Pioneer
Funds by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
-------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Balanced Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund 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 The Fund's equity investments do not have the growth potential originally
expected
o Stocks selected for income do not achieve the same return as securities
selected for capital growth
Each Fund also has risks associated with investing in debt securities. Each Fund
could underperform other investments if:
o Interest rates go up causing the value of the Fund's portfolio to decline
o The issuer of a debt security owned by the Fund defaults on its obligation
to pay principal or interest or has its credit rating downgraded
o During periods of declining interest rates, the issuer of a security may
exercise its option to repay earlier than scheduled, forcing the Fund to
reinvest in lower yielding securities. This is known as a call prepayment
risk
o During periods of rising interest rates, the average life of certain types
of securities may be extended because of slower than expected principal
payments. This may lock in a below market interest rate, increase the
security's duration (the estimated period until the security is paid in
full) and reduce the value of the security. This is known as an extension
risk
5
o Pioneer's judgment about the attractiveness, relative value or potential
appreciation of a particular sector, security or investment strategy proves
to be incorrect
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money by investing in either Fund.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
SAFECO BALANCED FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1997 16.64
1998 12.56
1999 1.05
2000 5.09
2001 -0.29
2002 -8.74
2003 16.9
* During the period shown in the bar chart, your Fund's highest quarterly return
was 11.10% for the quarter ended June 30, 2003, and the lowest quarterly return
was -10.04% for the quarter ended September 30, 2002.
PIONEER BALANCED FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -4.31
1995 22.00
1996 9.89
1997 13.92
1998 1.14
1999 3.15
2000 5.38
2001 -2.87
2002 -11.2
2003 15.99
* During the period shown in the bar chart, Pioneer Balanced Fund's highest
quarterly return was 8.99% for the quarter ended June 30, 2003, and the lowest
quarterly return was -11.66% for the quarter ended September 30, 2002.
6
SAFECO BALANCED FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1)
------ ------- -------------------
SAFECO BALANCED FUND, CLASS A SHARES
Return Before Taxes 9.96% 1.00% 5.48%
Return After Taxes on Distributions(2) 9.45% 0.03% 4.12%
Return After Taxes on Distributions and 6.70% 0.27% 3.94%
Sale of Fund Shares(2)
SAFECO BALANCED FUND, CLASS B SHARES
Return Before Taxes 10.79% 1.08% 5.66%
SAFECO BALANCED FUND, CLASS C SHARES
Return Before Taxes 14.76% 1.45% 5.53%
SAFECO BALANCED FUND, INVESTOR CLASS SHARES
Return Before Taxes 16.90% 2.47% 6.55%
Return After Taxes on Distributions(2) 16.29% 1.37% 5.06%
Return After Taxes on Distributions and 11.26% 1.45% 4.79%
Sale of Fund Shares(2)
S&P 500 INDEX(3) 28.67% -0.57% 9.02%
(reflects no deduction for fees, expenses or taxes)
60% RUSSELL 1000 VALUE/40% LEHMAN BROTHERS 19.66% 4.79% 9.11%
AGGREGATE BOND INDEX(3)
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on January 31, 1996.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The S&P 500 Index, an unmanaged index of 500 stocks, and the 60/40
combination of the Russell 1000 Value Index and the Lehman Brothers
Aggregate Bond Index, are for reference only, do not mirror the Fund's
investments, and reflect no deduction for fees, expenses, or taxes.
PIONEER BALANCED FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS (1)
------ ------- ------------
PIONEER BALANCED FUND, CLASS A SHARES
Return Before Taxes 10.78% 0.76% 4.38%
Return After Taxes on Distributions(2) 10.19% -0.11% 2.40%
Return After Taxes on Distributions and 6.98% 0.10% 2.56%
Sale of Fund Shares(2)
S&P 500 INDEX(3) 28.67% -0.57% 11.06%
(reflects no deduction for fees, expenses or taxes)
LEHMAN BROTHERS AGGREGATE 4.10% 6.62% 6.95%
BOND INDEX(4)
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on May 17, 1968.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The S&P 500 Index, an unmanaged index of 500 stocks, is for reference only,
does not mirror the Fund's investments, and reflects no deduction for fees,
expenses, or taxes.
7
(4) The Lehman Brothers Aggregate Bond Index is for reference only, does not
mirror the Fund's investments, and reflects no deduction for fees,
expenses, or taxes.
Pioneer Balanced Fund's Investor Class shares will not be outstanding prior to
the closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A shares due to the lower expenses applicable to
the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Balanced Fund, the
expenses of Pioneer Balanced Fund for the period ended December 31, 2003. Future
expenses for all share classes may be greater or less.
----------------------------------------------------------------------------------------------------------
PIONEER
SHAREHOLDER BALANCED
TRANSACTION FEES SAFECO BALANCED SAFECO BALANCED SAFECO BALANCED SAFECO BALANCED FUND
(PAID DIRECTLY FROM FUND FUND FUND FUND INVESTOR
YOUR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
----------------------------------------------------------------------------------------------------------
Maximum sales 5.75% None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
----------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00% 1.00% None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
----------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% None
shares held less
than 30 days
----------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) $ 10
----------------------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) None
fee
----------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING
EXPENSES
(DEDUCTED FROM
FUND ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
----------------------------------------------------------------------------------------------------------
Management fee 0.70% 0.70% 0.70%(9) 0.70% 0.65%
----------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00%(9) None None
service
(12b-1) fee
----------------------------------------------------------------------------------------------------------
Other expenses 0.98% 1.05% 40.39%(9) 0.73% 0.50%
----------------------------------------------------------------------------------------------------------
Total fund 1.93% 2.75% 42.09%(9) 1.43% 1.15%
operating expenses
----------------------------------------------------------------------------------------------------------
Expense reduction 0.58%(2) 0.65%(2) 39.99%(2) (9) 0.33%(2) 0.05% (3)
----------------------------------------------------------------------------------------------------------
Net fund operating 1.35% 2.10% 2.10%(9) 1.10% 1.10%
expenses
----------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Balanced
Fund through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the
8
Reorganization may purchase Class A Shares of Pioneer Balanced Fund or of any
fund in the Pioneer family of funds through such account in the future without
paying this sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco
Balanced Fund to the extent the Fund's total ordinary operating expenses
exceeded 0.40% of the Fund's average daily net asset value in a fiscal year.
This arrangement included all fund operating expenses except management fees,
Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 Balanced Fund to 1.10% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco Balanced
Fund and two years for Pioneer Balanced Fund and (e) and the Investor Class
shares of Pioneer Balanced Fund convert to Class A shares after two years. The
examples are for comparison purposes only and are not a representation of either
Fund's actual expenses or returns, either past or future.
------------------------------------------------------------
EXAMPLE
------------------------------------------------------------
SAFECO BALANCED FUND
------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------
Year 1 $ 705
------------------------------------------------------------
Year 3 $ 978
------------------------------------------------------------
Year 5 $ 1,272
------------------------------------------------------------
Year 10 $ 2,105
------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 713 $ 213
------------------------------------------------------------
Year 3 $ 958 $ 658
------------------------------------------------------------
Year 5 $ 1,329 $ 1,129
------------------------------------------------------------
Year 10 $ 2,064 $ 2,064
------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 313 $ 213
------------------------------------------------------------
Year 3 $ 658 $ 658
------------------------------------------------------------
Year 5 $ 1,129 $ 1,129
------------------------------------------------------------
Year 10 $ 2,431 $ 2,431
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 112
------------------------------------------------------------
Year 3 $ 350
------------------------------------------------------------
Year 5 $ 606
------------------------------------------------------------
Year 10 $ 1,340
------------------------------------------------------------
PIONEER BALANCED FUND
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 112
------------------------------------------------------------
Year 3 $ 374
------------------------------------------------------------
Year 5 $ 679
------------------------------------------------------------
Year 10 $ 1,548
------------------------------------------------------------
9
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Balanced Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the investment performance of Pioneer Balanced Fund is comparable to the
investment performance of your Fund. For the five year period ended June 30,
2004, Class A shares of Pioneer Balanced Fund had an average annual return of
[xx]% compared to an average annual of the Class A shares and Investor shares of
your Fund of [xx]% and [xx]%, 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 Fund
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 Fund'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 Balanced Fund's lower gross 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 the Investor Class of Pioneer Balanced Fund to 1.10%
of average daily net assets. This expense ratio is below the gross expenses of
each class of shares of your Fund and is the same or lower than expenses net of
expense reimbursement of each class of shares of your Fund.
FIFTH, the substantially larger size of Pioneer Balanced Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer Balanced Fund received in the
Reorganization will provide Safeco Balanced Fund shareholders with exposure to
substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Balanced Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Balanced Fund
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 Balanced Fund and its
shareholders.
10
CAPITALIZATION
The following table sets forth the capitalization of each fund as of December
31, 2003 for Safeco Balanced Fund and December 31, 2003 for Pioneer Balanced
Fund.
- ------------------------------------------------------------------------
SAFECO BALANCED FUND PIONEER BALANCED FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
- ------------------------------------------------------------------------
NET ASSETS (IN MILLIONS) $ 20.164 $ 131.849
- ------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 11.88 $ 9.47
Class B shares $ 11.84 $ 9.37
Class C shares $ 11.84 $ 9.45
Investor Class shares $ 11.83 N/A
- ------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 141,000 11,325,991
Class B shares 151,000 1,724,616
Class C shares 9,000 890,865
Investor Class shares 1,402,000 N/A
- ------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Balanced Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer Balanced
Fund'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 Fund. Similarly, the
board of trustees of Pioneer Balanced Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of Pioneer Balanced Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
SAFECO CALIFORNIA TAX-FREE INCOME FUND AND
PIONEER CALIFORNIA TAX FREE INCOME FUND
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 CALIFORNIA TF INCOME FUND TO THE PIONEER CALIFORNIA TF INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Tax-Exempt Bond Trust, a A newly organized series of Pioneer Series Trust II,
diversified open-end management investment an open-end management investment company organized
company organized as a Delaware statutory trust. as a Delaware statutory trust.
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Net assets as of $82.4 million None. The Pioneer California TF Income Fund is newly
June 30, 2004 organized and does not expect to commence investment
operations until the Reorganization occurs.
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Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (until August 2, 2004): Portfolio Managers:
Stephen C. Bauer (since 1983) Day-to-day management of the Fund's portfolio will be
President and Director, SAM the responsibility of a team of fixed income
portfolio managers led by Kenneth J. Taubes.
Mary Metastasio (since 2003)
Mr. Taubes joined Pioneer as a senior vice president
in September 1998 and has been an investment
Currently Pioneer is investment adviser to the professional since 1982.
Fund. The Portfolio Managers of the Pioneer
Fund, as indicated in the next column,
currently manage your Safeco Fund.
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Investment objective Each Fund seeks to provide as high a level of current interest income exempt from federal income tax
and California state personal income tax as is consistent with the relative stability of capital.
During normal market conditions, each Fund will not invest less than 80% of its net assets in
obligations the interest on which is exempt from federal income tax and from California state personal
income tax.
The investment objective of each Fund is fundamental and cannot be changed without shareholder approval.
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments To achieve its investment objective, each Fund invests primarily in investment-grade municipal bonds
issued by the state of California or its political subdivisions and having average maturities of 15
years or longer. Under normal circumstances, each Fund invests:
o At least 80% of its assets in securities the interest on which is exempt from federal income tax and
California personal income tax
o At least 65% of its assets in investment-grade municipal bonds with a maturity of more than one year
o Up to 20% of its assets in unrated municipal bonds, as long as Pioneer determines they are of
comparable quality to investment-grade securities
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SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND
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Investment strategies When evaluating a bond to buy, each Fund's advisor considers among other things:
o Yield
o Maturity
o Structural features such as an issuer's right to buy the bond back at a stated price (a "call") or
the Fund's right to require the issuer to buy the bond back at a stated price (a "put")
o Credit quality (including the underlying rating of insured bonds)
o The project the issuer is financing
o The original offering price
o Any state or local tax exemption
o The amount of discount off or premium on the stated principal amount of the bond represented by the
price offered
o Whether the bond appears to offer the best overall value when compared to other available bonds
Each Fund's advisor favors long-term maturity bonds in essential services that offer a significant
degree of protection against issuer repurchase rights prior to maturity and good value relative to
their peers. Each Fund's advisor may use the rating services provided by Moody's, S&P, or Fitch. Bond
ratings indicate an issuer's financial strength and ability to meet its debt obligations.
Each Fund may sell bonds when:
o They become fully valued
o More attractively valued bonds become available; or
o Cash is needed to meet shareholder redemptions.
Because it often takes years for attractive relative valuations to be recognized by the municipal
securities market, turnover of each Fund's portfolio can be low.
- -----------------------------------------------------------------------------------------------------------------------------------
Other investments Each Fund will limit its investment in municipal obligations the interest on which is payable from the
revenues of similar types of projects to less than 25% of each Funds' total assets. As a matter of
operating policy, "similar types of projects" may include sports, convention or trade show facilities;
airports or mass transportation; sewage or solid waste disposal facilities; or air and water pollution
control projects.
Each Fund may invest in any of the following short-term, tax-exempt obligations: municipal notes of
issuers rated, at the time of the purchase, within one of the three highest grades assigned by a
nationally recognized statistical rating organization ("NRSRO"); unrated municipal notes offered by
issuers having outstanding municipal bonds rated within one of the three highest grades assigned by an
NRSRO; notes issued by or on behalf of municipal issuers that are guaranteed by the U.S. government;
tax-exempt commercial paper assigned one of the two highest grades by an NRSRO; certificates of deposit
issued by banks with assets of $1,000,000,000 or more; and municipal obligations that have a maturity
of one year or less from the date of purchase.
Each Fund may invest in obligations of the U.S. government, its agencies or instrumentalities or in
qualified repurchase agreements, the net interest on which is taxable for federal income tax purposes.
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or as a temporary The Fund may invest all or part of its assets in
strategies defensive measure when market conditions so securities with remaining maturities of less than one
warrant. year, cash equivalents or may hold cash.
- -----------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- -----------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined
in the 1940 Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments
in the securities of issuers primarily engaged in the same industry, provided that this restriction
does not limit each Fund from investing in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
- -----------------------------------------------------------------------------------------------------------------------------------
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 10% of the Fund's net assets, the Fund 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 Fund, (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.
- -----------------------------------------------------------------------------------------------------------------------------------
2
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Borrowing The Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. The Fund
will not commit to additional securities purchases if total outstanding borrowings are equal to 5% or
more of total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified institutional investors with a value of up to 33% of the
Fund's total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGE SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer California TF
the Fund are subject to a 4.50% front-end sales Income Fund you receive in the Reorganization will
charge. not be subject to any sales charge. Moreover, if you
own shares in your own name as of the closing of the
A contingent deferred sales charge of up to Reorganization (i.e., not in the name of a broker)
5.00% if you redeem Class B shares within six and maintain your account, you may purchase Class A
years of purchase. shares of Pioneer California TF Income Fund and Class
A shares of any fund in the Pioneer family of funds
A contingent deferred sales charge of up to through such account in the future without paying any
1.00% if you redeem Class C shares within one sales charge.
year of purchase.
Except as described above, Class A shares of Pioneer
Purchases of Investor Class shares of the Fund California TF Income Fund are subject to a front-end
are not subject to a sales load. sales charge of up to 4.50%.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Investor Class shares held less
than 30 days.
- -----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco California TF Income Fund pays an Pioneer California TF Income Fund will pay Pioneer a
fees advisory fee on a monthly basis at an annual management fee equal to 0.50% of the Fund's average
rate as follows: daily net assets.
$0 - $250,000,000: 0.50 of 1%
$250,000,001 - $750,000,000: 0.45 of 1% In addition, the Fund will reimburse Pioneer for
Over $750,000,000: 0.40 of 1% certain Fund accounting and legal expenses incurred
on behalf of the Fund and pays a separate shareholder
servicing/transfer agency fee to PIMSS, an affiliate
SAM serves as administrator and Fund accounting of Pioneer.
agent for the Fund. The Fund pays SAM an
administrative services fee of 0.05% of the Pioneer has agreed until the second anniversary of
Fund's average daily net assets up to the first the closing of the Reorganization to limit the
$200,000,000 and 0.01% of its net assets ordinary operating expenses (excluding taxes,
thereafter, and an accounting fee of 0.04% of commissions, interest and extraordinary expenses) of
the Fund's average daily net assets up to the the Investor Class to 0.63% of the average daily net
first $200,000,000 and 0.01% of its net assets assets attributable to the Investor Class.
thereafter.
During its most recent fiscal year, Safeco
California TF Income Fund paid aggregate
advisory and administration fees at an average
rate of 0.59% of average daily net assets.
SAM had contractually agreed until April 30,
2009, to pay certain fund operating expenses
(but not all of the operating expenses of the
Fund) that exceeded the rate of 0.40% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
- -----------------------------------------------------------------------------------------------------------------------------------
3
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares were 1.06%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares were 1.76%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 1.90%, and without given effect
to the expense limitation were 4.09%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares after giving effect to
the expense limitation were 0.75%.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee.
service (12b-1) fee
- -----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer California TF
underwriter or through brokers, registered Income Fund's distributor. Existing shareholders of
investment advisers, banks and other financial Safeco California TF Income Fund who own shares in
institutions that have entered into selling their own name as of the closing date of the
agreements with the Fund's principal Reorganization and who maintain their accounts may
underwriter, as described in the Fund's buy shares of any fund in the Pioneer family of funds
prospectus. through such accounts in the future without paying
sales charges.
Certain account transactions may be done by If the account is established in the shareholder's
telephone own name, shareholders may also purchase additional
shares of Pioneer California TF Income Fund by
telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer California TF
acquire through dividend reinvestment or other Income Fund without incurring any fee on the exchange
fund distributions. with the more than 62 other Pioneer Funds. Your
exchange would be for Class A shares, which would be
Certain account transactions may be done by subject to a Rule 12b-1 fee. An exchange generally is
telephone. treated as a sale and a new purchase of shares for
federal income tax purposes.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer California TF Income Fund for shares of other
Pioneer Funds by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives
your request in good order.
---------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer California TF Income Fund by telephone or
online.
- -----------------------------------------------------------------------------------------------------------------------------------
4
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment or not make as much as if you invested
elsewhere if:
o Interest rates go up, causing the value of the Fund's investments to
decline
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest or has its credit rating downgraded
o The investment adviser's judgment about the credit quality, attractiveness
or relative value of a particular security proves to be incorrect
Investing in mutual fund shares is not the same as making a bank deposit. Your
investment is not insured or guaranteed by the Federal Deposit Insurance
Corporation.
PAST PERFORMANCE
Set forth below is performance information for Safeco California TF Income Fund.
The bar charts show how Safeco California TF Income Fund'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 California TF Income Fund 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. Because Pioneer California TF Income Fund is a newly
organized mutual fund, it has no past performance.
SAFECO CALIFORNIA TF INCOME FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -9.20
1995 26.14
1996 2.53
1997 11.55
1998 6.19
1999 -9.18
2000 18.79
2001 4.12
2002 8.76
2003 4.97
* During the period shown in the bar chart, Safeco California TF Income Fund's
highest quarterly return was 10.59% for the quarter ended March 31, 1995, and
the lowest quarterly return was -6.16% for the quarter ended March 31, 1994.
5
SAFECO CALIFORNIA TF INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS (1)
------ ------- ------------
SAFECO CALIFORNIA TF INCOME FUND, CLASS A SHARES
Return Before Taxes 0.05% 3.84% 5.25%
Return After Taxes on Distributions (2) -0.01% 3.74% 5.07%
Return After Taxes on Distributions and 1.51% 3.85% 5.07%
Sale of Fund Shares (2)
SAFECO CALIFORNIA TF INCOME FUND, CLASS B SHARES
Return Before Taxes -1.04% 3.68% 5.26%
SAFECO CALIFORNIA TF INCOME FUND, CLASS C SHARES
Return Before Taxes 2.97% 4.02% 5.16%
SAFECO CALIFORNIA TF INCOME FUND, INVESTOR CLASS
SHARES
Return Before Taxes 4.97% 5.10% 5.96%
Return After Taxes on Distributions (2) 4.91% 5.00% 5.78%
Return After Taxes on Distributions and 4.87% 4.99% 5.74%
Sale of Fund Shares (2)
LEHMAN BROTHERS LONG MUNICIPAL 6.13% 5.95% 6.40%
BOND INDEX (3)
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on September 30, 1996.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Lehman Brothers Long Municipal Bond Index, an unmanaged index of bonds
with a minimum credit rating of BAA3 issued as part of a deal of at least
$50 million, having an amount of at least $5 million and maturing in 22 or
more years, is for reference only, is not limited to California issuers,
does not mirror the Fund's investments and reflects no deduction of fees,
expenses or taxes.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for Safeco California TF Income Fund, the
expenses of Safeco California TF Income Fund for the period ended December 31,
2003 and (ii) for Pioneer California TF Income Fund, estimated expenses of
Pioneer California TF Income Fund. Future expenses for all share classes may be
greater or less.
6
----------------------------------------------------------------------------------------------------------------
PIONEER
SHAREHOLDER CALIFORNIA
TRANSACTION FEES TF INCOME
(PAID DIRECTLY SAFECO CALIFORNIA SAFECO CALIFORNIA SAFECO CALIFORNIA SAFECO CALIFORNIA FUND
FROM YOUR TF INCOME FUND TF INCOME FUND TF INCOME FUND TF INCOME FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
----------------------------------------------------------------------------------------------------------------
Maximum sales 4.50%(6) None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
----------------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
----------------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
----------------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
----------------------------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
fee
----------------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
----------------------------------------------------------------------------------------------------------------
Management fee 0.50% 0.50% 0.50% 0.50% 0.50%
----------------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service (12b-1) fee
----------------------------------------------------------------------------------------------------------------
Other expenses 0.31% 0.26% 2.59% 0.25% 0.42%
----------------------------------------------------------------------------------------------------------------
Total fund 1.06% 1.76% 4.09% 0.75% 0.92%
operating expenses
----------------------------------------------------------------------------------------------------------------
Expense reduction None (2) None (2) 2.19%(2) None (2) 0.29% (3)
----------------------------------------------------------------------------------------------------------------
Net fund operating 1.06% 1.76% 1.90% 0.75% 0.63%
expenses
----------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer
California TF Income Fund through the Reorganization. In addition, shareholders
of your Fund who own shares in their own name (I.E., not in the name of a broker
or other intermediary) and maintain such account as of the closing of the
Reorganization may purchase Class A Shares of Pioneer California TF Income Fund
or of any fund in the Pioneer family of funds through such account in the future
without paying this sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco
California TF Income Fund to the extent the Fund's total ordinary operating
expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal
year. This arrangement included all fund operating expenses except management
fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 operating expenses) of the
Investor Class shares of Pioneer California TF Income Fund to 0.63% of average
daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco California
TF Income Fund and two years for Pioneer California TF Income Fund and (e) and
the Investor Class shares of Pioneer
7
California TF Income Fund convert to Class A shares after two years. The
examples are for comparison purposes only and are not a representation of either
Fund's actual expenses or returns, either past or future.
------------------------------------------------------------
EXAMPLE
------------------------------------------------------------
SAFECO CALIFORNIA TF INCOME FUND
------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------
Year 1 $ 553
------------------------------------------------------------
Year 3 $ 772
------------------------------------------------------------
Year 5 $ 1,008
------------------------------------------------------------
Year 10 $ 1,686
------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 679 $ 179
------------------------------------------------------------
Year 3 $ 854 $ 554
------------------------------------------------------------
Year 5 $ 1,154 $ 954
------------------------------------------------------------
Year 10 $ 1,719 $ 1,719
------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 293 $ 193
------------------------------------------------------------
Year 3 $ 597 $ 597
------------------------------------------------------------
Year 5 $ 1,026 $ 1,026
------------------------------------------------------------
Year 10 $ 2,222 $ 2,222
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 77
------------------------------------------------------------
Year 3 $ 240
------------------------------------------------------------
Year 5 $ 417
------------------------------------------------------------
Year 10 $ 930
------------------------------------------------------------
PIONEER CALIFORNIA TF INCOME FUND
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 64
------------------------------------------------------------
Year 3 $ 233
------------------------------------------------------------
Year 5 $ 449
------------------------------------------------------------
Year 10 $ 1,072
------------------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco California TF Income Fund. The Trustees considered the following
matters, among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund'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 Fund
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 Fund'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 the Investor Class of Pioneer California TF
Income Fund to 0.63% of average daily net assets. This expense ratio is no
higher than both the gross expenses and expenses net of expense reimbursement of
the Class A shares and Investor Class shares of your Fund. Although you will
experience higher expenses once
8
the Investor Class shares convert to Class A shares after two years, your
expenses will remain the same until the second anniversary of the
Reorganization.
FOURTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
FIFTH, the Investor Class shares of Pioneer California TF Income Fund received
in the Reorganization will provide Safeco California TF Income Fund shareholders
with exposure to substantially the same investment product as they currently
have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer California TF Income Fund also considered that
the Reorganization presents an excellent opportunity for the Pioneer California
TF Income Fund 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
California TF Income Fund.
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003.
------------------------------------------------------------------------
SAFECO CALIFORNIA TF PIONEER CALIFORNIA TF
INCOME FUND INCOME FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
------------------------------------------------------------------------
NET ASSETS (in thousands) $ 87,594 N/A
------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 12.69 N/A
Class B shares $ 12.66
Class C shares $ 12.66
Investor Class shares $ 12.68
------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 58,000 N/A
Class B shares 81,000
Class C shares 8,000
Investor Class shares 6,760,000
------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer California TF Income Fund
will actually be received and distributed by your Fund on the Reorganization
date. The table should not be relied upon to determine the amount of Pioneer
California TF Income Fund'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 Fund. Similarly, the
board of trustees of Pioneer California TF Income Fund, including its
Independent Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer California TF Income Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
9
SAFECO CORE EQUITY FUND AND
PIONEER FUND
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 Agreement and Plan of Reorganization
attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO CORE EQUITY FUND TO THE PIONEER FUND
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SAFECO CORE EQUITY FUND PIONEER FUND
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Business A series of Safeco Common Stock Trust, a 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 $ 694.6 million $6,321 million
June 30, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (until August 2, 2004): Portfolio Managers:
Richard D. Meagley (since 1995) Day-to-day management of the Fund's portfolio is the
Darcy MacLaren (since 2003) responsibility of John A. Carey and Walter Hunnewell,
Jr. Mr. Carey joined Pioneer in 1979 and Mr.
Currently Pioneer is acting as investment hunnewell joined pioneer in 2001.
adviser to the Fund. The Portfolio Managers of
the Pioneer Fund, as indicated in the next
column, currently manage your Safeco Fund.
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Investment objective The Fund seeks long-term growth of capital and The Fund seeks reasonable income and capital growth
reasonable current income. through investments primarily in equity securities of
U.S. issuers.
-------------------------------------------------------------------------------------------------------
The investment objective of each Fund is fundamental and cannot be changed without shareholder approval.
- ---------------------------------------------------------------------------------------------------------------------------------
Primary investments Under normal market conditions, the Fund The Fund invests a major portion of its assets in
invests at least 80% of net assets (plus any equity securities, primarily of U.S. issuers. For
borrowings for investment purposes) in equity purposes of the Fund's investment policies, equity
securities and, to a much lesser extent, securities include common stocks, convertible debt
invests in equity related securities. and other equity instruments such as depositary
receipts, warrants, rights and preferred stock.
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Investment strategies The Fund seeks investments in fundamentally The Fund uses a "value" style of management and seeks
sound companies with good long-term potential. securities selling at reasonable prices or
SAM historically evaluated numerous measures substantial discounts to their underlying values and
such as current valuation, profitability, then holds these securities until the market values
management, competitive position and financial reflect their intrinsic values. Pioneer looks at the
soundness. following factors in selecting investments: favorable
expected returns relative to perceived risk; above
average potential for earnings and revenue growth;
low market valuations relative to earnings forecast,
book value, cash flow and sales; a sustainable
competitive advantage such as a brand name, customer
base, proprietary technology or economies of scale.
- ---------------------------------------------------------------------------------------------------------------------------------
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SAFECO CORE EQUITY FUND PIONEER FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 20% of its assets in The Fund may invest up to 10% of its total assets in
foreign securities which are listed on a equity and debt securities of non-U.S. corporate
national exchange, including investments in issuers and debt securities of non-U.S. government
American Depository Receipts. issuers.
The Fund may invest in securities convertible The Fund will not invest more than 5% of its total
into common stock, but less than 35% of its assets in securities of emerging market issuers.
total assets will be invested in such
securities. 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. corporate and government issuers.
- ---------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
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Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ---------------------------------------------------------------------------------------------------------------------------------
Industry Concentration Each Fund 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 Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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 The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may:
(ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase
agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's
additional securities purchases if total total assets (including the amount borrowed); (b) to
outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to
of total assets. an additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) the Fund 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.
- ---------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its
33% of the Fund's total assets. assets.
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2
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SAFECO CORE EQUITY FUND PIONEER FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may write put or call options if, as a The Fund may use futures and options on securities,
result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options does not contracts and other derivatives. The Fund does not
exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may purchase put or call options on Fund may use derivatives for a variety of
futures contracts if, as a result thereof, the non-principal purposes, including:
aggregate premiums paid on all options or o As a hedge against adverse changes in stock
options on futures contracts do not exceed 20% market prices, interest rates or currency
of the Fund's net assets. exchange rates
o As a substitute for purchasing or selling
The Fund may enter into any futures contract or securities
option on a futures contract, if as a result o To increase the Fund's return as a
thereof, the aggregate margin deposits and non-hedging strategy that may be considered
premiums required on all such instruments does speculative
not exceed 5% of the Fund's net assets.
The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
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BUYING, SELLING AND EXCHANGE SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Fund you receive
the Fund are subject to a 5.75% front-end sales in the Reorganization will not be subject to any
charge. sales charge. Moreover, if you own shares in your
own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. Fund and Class A shares of any fund in the Pioneer
family of funds through such account in the future
Contingent deferred sales charge of 1% if you without paying any sales charge.
redeem Class A shares within one year of
purchase. Except as described above, Class A shares of Pioneer
Fund are subject to a front-end sales charge of up to
Purchases of Investor Class shares of the Fund 5.75%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ---------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco Core Equity Fund pays an advisory fee on Pioneer Fund pays Pioneer an annual basic fee of
fees a monthly basis at an annual rate as follows: 0.60% of the Fund's average daily net assets. The
$0 - $250,000,000: 0.70 of 1% basic fee can increase to a maximum of 0.70% or
$250,000,001 - $750,000,000: 0.65 of 1% decrease to a minimum of 0.50%, depending on the
$750,000,001 - $1,250,000,000: 0.60 of 1% performance of the Fund's Class A shares relative to
Over $1,250,000,000: 0.55 of 1% the S&P 500 Index.
SAM serves as administrator and Fund accounting During its most recent fiscal year, Pioneer Fund paid
agent for the Fund. The Fund pays SAM an an advisory fee at an average rate of 0.50% of
administrative services fee of 0.05% of the average daily net assets.
Fund's average daily net assets up to the first
$200,000,000 and 0.01% of its net assets In addition, the fund reimburses Pioneer for certain
thereafter, and an accounting fee of 0.04% of fund accounting and legal expenses incurred on behalf
the Fund's average daily net assets up to the of the fund and pays a separate shareholder
first $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate
thereafter. of Pioneer.
During its most recent fiscal year, Safeco Core For the fiscal year ended April 30, 2004, the Fund's
Equity Fund paid aggregate advisory and annual operating expenses for Class A shares were
1.09% per share.
- ---------------------------------------------------------------------------------------------------------------------------------
3
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SAFECO CORE EQUITY FUND PIONEER FUND
- ---------------------------------------------------------------------------------------------------------------------------------
administration fees at an average rate of 0.79% Pioneer has agreed until the second anniversary of
of average daily net assets. the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
SAM had contractually agreed until April 30, commissions, interest and extraordinary expenses) of
2009, to pay certain Fund operating expenses the Investor Class to 1.02% of the average daily net
(but not all of the operating expenses of the assets attributable to the Investor Class.
Fund) that exceeded the rate of 0.40% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.32%, and without giving
effect to the expense limitation, were 3.40%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 2.07%, and without giving
effect to the expense limitation, were 2.38%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 2.07%, and without giving
effect to the expense limitation, were 2.41%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares were 1.05% per share.
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ---------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco Core
investment advisers, banks and other financial Equity Fund who own shares in their own name as of
institutions that have entered into selling the closing date of the Reorganization and who
agreements with the Fund's principal maintain their accounts may buy shares of any fund in
underwriter, as described in the Fund's the Pioneer family of funds through such accounts in
prospectus. the future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Fund without
acquire through dividend reinvestment or other incurring any fee on the exchange with the more than
fund distributions or for Class A shares that 62 other Pioneer Funds. Your exchange would be for Class
you have exchanged for Class A shares of A shares, which would be subject to Rule 12b-1 fees. An
another Fund. exchange generally is treated as a sale and a new
purchase of shares for federal income tax purposes.
Certain account transactions may be done by
telephone. If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Fund for shares of other Pioneer Funds by
telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
4
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO CORE EQUITY FUND PIONEER FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Selling shares Class of shares is sold at the net asset value per share next calculated after the Fund receives your
request in good order.
-------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund 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 Fund'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 Fund. The bar charts show
how each Fund'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 Fund 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.
SAFECO CORE EQUITY FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 9.93
1995 25.26
1996 25.01
1997 24.21
1998 24.93
1999 9.37
2000 -10.97
2001 -9.72
2002 -26.33
2003 24.68
* During the period shown in the bar chart, your Fund's highest quarterly return
was 18.72% for the quarter ended December 31, 1998, and the lowest quarterly
return was -18.37% for the quarter ended September 30, 2002.
5
PIONEER FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -0.57
1995 26.64
1996 19.70
1997 38.47
1998 29.09
1999 15.63
2000 0.12
2001 -11.13
2002 -20.26
2003 24.58
* During the period shown in the bar chart Pioneer Fund's highest quarterly
return was 22.33% for the quarter ended December 31, 1998, and the lowest
quarterly return was -18.18% for the quarter ended September 30, 2002.
SAFECO CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO CORE EQUITY FUND, CLASS A SHARES
Return Before Taxes 17.23% -5.61% 7.12%
Return After Taxes on Distributions(1) 17.15% -6.09% 5.51%
Return After Taxes on Distributions and 11.29% -4.83% 5.36%
Sale of Fund Shares(1)
SAFECO CORE EQUITY FUND, CLASS B SHARES
Return Before Taxes 18.53% -5.54% 7.23%
SAFECO CORE EQUITY FUND, CLASS C SHARES
Return Before Taxes 22.42% -5.17% 7.14%
SAFECO CORE EQUITY FUND, INVESTOR CLASS SHARES
Return Before Taxes 24.68% -4.19% 7.99%
Return After Taxes on Distributions(1) 24.55% -4.78% 6.28%
Return After Taxes on Distributions and 16.19% -3.72% 6.08%
Sale of Fund Shares(1)
S&P 500 INDEX(2) 28.67% -0.57% 11.06%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The S&P 500 Index, an unmanaged index of 500 stocks, is for reference only,
does not mirror the Fund's investments, and reflects no deduction for fees,
expenses or taxes.
6
PIONEER FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS(1)
------ ------- -----------
PIONEER FUND, CLASS A SHARES
Return Before Taxes 17.40% -0.76% 10.00%
Return After Taxes on Distributions(2) 17.06% -1.46% 8.47%
Return After Taxes on Distributions and 11.28% -0.87% 8.01%
Sale of Fund Shares(2)
S&P 500 INDEX(3) 28.67% -0.57% 11.06%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on February 13, 1928.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The S&P 500 Index, an unmanaged index of 500 stocks, is for reference only,
does not mirror the Fund's investments, and reflects no deduction for fees,
expenses or taxes.
Pioneer Fund's Investor Class shares will not be outstanding prior to the
closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A shares due to the lower expenses applicable to
the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the Safeco Core Equity Fund, the expenses
of Safeco Core Equity Fund for the period ended December 31, 2003 and (ii) for
Pioneer Fund, the expenses of Pioneer Fund for the period ended December 31,
2003. Future expenses for all share classes may be greater or less.
---------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES SAFECO CORE SAFECO CORE SAFECO CORE SAFECO CORE PIONEER FUND
(PAID DIRECTLY FROM EQUITY FUND EQUITY FUND EQUITY FUND EQUITY FUND INVESTOR
YOUR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
---------------------------------------------------------------------------------------------
Maximum sales 5.75% None None None None(1)
charge (load) when
you buy shares as a
percentage of
offering price
---------------------------------------------------------------------------------------------
Maximum deferred None 5.00% 1.00% None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
---------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
---------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
---------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
fee
---------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
---------------------------------------------------------------------------------------------
Management fee 0.67% 0.67% 0.67% 0.67% 0.52%
---------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service
(12b-1) fee
---------------------------------------------------------------------------------------------
Other expenses 2.48% 0.71% 0.74% 0.38% 0.35%
---------------------------------------------------------------------------------------------
Total fund 3.40% 2.38% 2.41% 1.05% 0.87%
operating expenses
---------------------------------------------------------------------------------------------
Expense reduction 2.08%(2) 0.31%(2) 0.34%(2) None(2) None(3)
---------------------------------------------------------------------------------------------
Net fund operating 1.32% 2.07% 2.07% 1.05% 0.87%
expenses
---------------------------------------------------------------------------------------------
7
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Fund
through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Fund or of any fund in the Pioneer family
of funds through such account in the future without paying this sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco Core
Equity Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 Fund to 1.02% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
The hypothetical example below helps you compare the cost of investing in each
fund. It assumes that: (a) you invest $10,000 in each fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco Core Equity
Fund and two years for Pioneer Fund and (e) and the Investor Class shares of
Pioneer Fund convert to Class A shares after two years. The examples are for
comparison purposes only and are not a representation of either fund's actual
expenses or returns, either past or future.
------------------------------------------------------------
EXAMPLE
------------------------------------------------------------
SAFECO CORE EQUITY FUND
------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------
Year 1 $ 702
------------------------------------------------------------
Year 3 $ 969
------------------------------------------------------------
Year 5 $ 1,257
------------------------------------------------------------
Year 10 $ 2,074
------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 710 $ 210
------------------------------------------------------------
Year 3 $ 949 $ 649
------------------------------------------------------------
Year 5 $ 1,314 $ 1,114
------------------------------------------------------------
Year 10 $ 2,032 $ 2,032
------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 310 $ 210
------------------------------------------------------------
Year 3 $ 649 $ 649
------------------------------------------------------------
Year 5 $ 1,114 $ 1,114
------------------------------------------------------------
Year 10 $ 2,400 $ 2,400
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 107
------------------------------------------------------------
Year 3 $ 334
------------------------------------------------------------
Year 5 $ 579
------------------------------------------------------------
Year 10 $ 1,283
------------------------------------------------------------
PIONEER FUND
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 89
------------------------------------------------------------
Year 3 $ 298
------------------------------------------------------------
Year 5 $ 545
------------------------------------------------------------
Year 10 $ 1,125
------------------------------------------------------------
8
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Core Equity Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the historical strong investment performance of Pioneer Fund is superior
to your Fund's investment performance. For the one, five and 10 year periods
ended June 30, 2004, Class A shares of Pioneer Fund had an average annual return
of ___%; ___%; and __% compared to an average annual return of the Class A
shares and Investor share of ___% and __% (one year), __% and __% (five years)
and __% and __% (ten years), 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 Fund
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 Fund'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'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
the Investor Class of Pioneer Fund to 1.02% of average daily net assets. This
expense ratio is below both the gross expenses and expenses net of expense
reimbursement of the class shares of your Fund. While you will experience higher
expenses once the Investor Class shares convert to Class A shares after two
years, the Class A expense ratio for the most recent fiscal year, was 1.09% of
average daily net assets, which was below the net expenses of the Class A shares
of your Fund and only four basis point above the net expenses of the Investor
Class of your Fund.
FIFTH, the substantially larger size of Pioneer Fund offers greater opportunity
for diversification of the investment portfolio, which should help to reduce
risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer Fund received in the
Reorganization will provide Safeco Core Equity Fund shareholders with exposure
to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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
9
Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Fund also considered that the Reorganization
presents an excellent opportunity for the Pioneer Fund 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 and its shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of December
31, 2003.
- -----------------------------------------------------------------------
SAFECO CORE EQUITY FUND PIONEER FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
- -----------------------------------------------------------------------
NET ASSETS (IN MILLIONS) $ 743.101 $ 6,361.349
- -----------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 16.78 $ 38.00
Class B shares $ 16.38 $ 37.18
Class C shares $ 16.39 $ 36.84
Investor Class shares $ 16.76 N/A
- -----------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 960,000 141,350,188
Class B shares 653,000 14,945,460
Class C shares 11,000 7,940,601
Investor Class shares 42,735,000 N/A
- -----------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Fund will actually be
received and distributed by your Fund on the Reorganization date. The table
should not be relied upon to determine the amount of Pioneer Fund'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 Fund. Similarly, the
board of trustees of Pioneer Fund, including its Independent Trustees, approved
the Reorganization. They also determined that the Reorganization is in the best
interests of Pioneer Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
10
SAFECO GROWTH OPPORTUNITIES FUND AND
PIONEER GROWTH OPPORTUNITIES FUND
PROPOSAL 4
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BETWEEN
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 FUND TO THE PIONEER OPPORTUNITIES FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO OPPORTUNITIES FUND PIONEER OPPORTUNITIES FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Common Stock Trust, a A newly organized series of Pioneer Series Trust II,
diversified open-end management investment an open-end management investment company organized as
company organized as a Delaware statutory trust. a Delaware statutory trust.
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets as of $545.5 million None. The Pioneer Opportunities Fund is newly
June 30, 2004 organized and does not expect to commence investment
operations until the Reorganization occurs.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment advisers Investment adviser (until August 2, 2004): Investment adviser
and portfolio managers SAM Pioneer
Portfolio Managers (since 2003 until August 2, Portfolio Managers:
2004): Day-to-day management of the Fund's portfolio will be
Jeffrey Schwartz the responsibility of John A. Carey and Walter
CFA, Vice President, SAM Hunnewell, Jr. Mr. Carey joined Pioneer in 1979 and
Mr. Hunnewell joined Pioneer in 2001.
Bill Whitlow
CFA, Vice President, SAM Mr. Acheson is Vice President and joined Pioneer as a
portfolio manager in 2001 and has been an investment
Currently Pioneer is acting as investment professional since 1994.
adviser to the Fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks growth of capital.
The Fund seeks growth of capital.
The Fund 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 Fund invests most of its assets in
common stocks of companies Pioneer considers to be reasonably priced or undervalued, with above average
growth potential.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment strategies When evaluating a stock to buy for each Fund, Pioneer considers factors such as:
o The strength of the company's balance 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 markets
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
The Fund may sell as stock if: The Fund may sell a security when Pioneer believes
that the security no longer offers above average
o Any of the above factors or other growth potential based on the criteria used to
relative-value indicators have
deteriorated
o The stock becomes overvalued, for example,
select securities. as a result of overly
optimistic earnings forecasts
o The stock price reaches a specific target
o Changes in market value cause the Fund to
hold a larger position in the stock than
Pioneer wants;
o Other companies present more attractive
investment opportunities; and
o Cash is needed to meet shareholder
redemptions
- ----------------------------------------------------------------------------------------------------------------------------------
Other investments Each Fund may invest in securities convertible into common stock, but less than 35% of its total assets
will be invested in such securities.
Each Fund may invest up to 20% of assets in foreign securities.
Each Fund may invest up to 10% of its total assets in debt securities rated below investment grade.
Each Fund may write a put or call option if, as a result thereof, the aggregate value of the assets
underlying all such options does not exceed 25% of the Fund's net assets.
Each Fund may 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 Fund do not exceed 20%
of the Fund's net assets.
Each Fund 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 Fund's
net assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in high-quality, The Fund may invest all or part of its assets in
strategies short-term securities issued by an agency or securities with remaining maturities of less than one
instrumentality of the U.S. government, year, cash equivalents or may hold cash.
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 Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ----------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined in
the 1940 Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments in
the securities of issuers primarily engaged in the same industry, provided that this restriction does not
limit the Fund from investing in obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or governmental issuers of special or general tax-exempt securities, or certain bank
instruments issued by domestic banks.
- ----------------------------------------------------------------------------------------------------------------------------------
Restricted and If immediately after and as a result of such action the value of the following securities, in the
illiquid securities aggregate, would exceed 15% of the Fund's net assets, the Fund 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
Fund, (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 The Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. The Fund
will not commit to additional securities purchases if total outstanding borrowings are equal to 5% or
more of total assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified institutional investors with a value of up to 33% of the Fund's
total assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. However, the Fund 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.
- ----------------------------------------------------------------------------------------------------------------------------------
2
- ----------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Opportunities
the Fund are subject to a 5.75% front-end sales Fund you receive in the Reorganization will not be
charge. subject to any sales charge. Moreover, if you own
shares in your own name as of the closing of the
Contingent deferred sales charge of up to 5% if Reorganization(i.e., not in the name of a broker) and
you redeem Class B shares within six years of maintain your account, you may purchase Class A shares
purchase. of Pioneer Opportunities Fund and Class A shares of
any fund in the Pioneer family of funds through such
Contingent deferred sales charge of 1% if you account in the future without paying any sales charge.
redeem Class C shares within one year of
purchase.
Purchases of Investor Class shares of the Fund Except as described above, Class A shares of Pioneer
are not subject to a sales load. Opportunities Fund are subject to a front-end sales
charge of up to 4.50%.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco Opportunities Fund pays an advisory fee Pioneer Opportunities Fund will pay Pioneer a
fees ona monthly basis at an annual rate as follows: management fee equal to 0.68% of the Fund's average
$0 - $250,000,000: 0.70 of 1% daily net assets.
$250,000,001 - $750,000,000: 0.65 of 1%
$750,000,001 - $1,250,000,000: 0.60 of 1% In addition, the Fund will reimburse Pioneer for
Over $1,250,000,000: 0.55 of 1% certain Fund accounting and legal expenses incurred on
behalf of the Fund and pays a separate shareholder
SAM serves as administrator and Fund accounting servicing/transfer agency fee to PIMSS, an affiliate
agent for the Fund. The Fund pays SAM an of Pioneer.
administrative services fee of 0.05% of the
Fund's average daily net assets up to the first Pioneer has agreed until the second anniversary of the
$200,000,000 and 0.01% of its net assets closing of the Reorganization to limit the ordinary
thereafter, and an accounting fee of 0.04% of operating expenses (excluding taxes, commissions,
the Fund's average daily net assets up to the interest and extraordinary expenses) of the Investor
first $200,000,000 and 0.01% of its net assets Class to 1.05% of the average daily net assets
thereafter. attributable to the Investor Class.
During its most recent fiscal year, Safeco
Opportunities Fund paid aggregate advisory and
administration fees at an average rate of 0.79%
of average daily net assets.
SAM had contractually agreed until April 30,
2009, to pay certain fund operating expenses (but
not all of the operating expenses of the Fund)
that exceeded the rate of 0.40% per annum of the
Fund's average daily net assets. This arrangement
included all Fund operating expenses except
management fees, Rule 12b-1 fees, brokerage
commissions, taxes, interest, and extraordinary
expenses.
For the fiscal year ended December 31, 2003, the
Fund's annual operating expenses for Class A
shares, after giving effect to the expense
limitation were 1.33%, and without giving effect
to the expense limitation, were 2.38% per share.
For the fiscal year ended December 31, 2003, the
Fund's annual operating expenses for Class B
shares, after giving effect to the expense
limitation were 2.08%, and without giving effect
to the expense limitation, were 2.45% per share.
For the fiscal year ended December 31, 2003, the
Fund's annual operating expenses for Class C
shares, after giving effect to the expense
limitation were 2.08%, and without giving effect
to the expense
- ----------------------------------------------------------------------------------------------------------------------------------
3
- ----------------------------------------------------------------------------------------------------------------------------------
limitation, were 2.48% per share.
For the fiscal year ended December 31, 2003, the
Fund's annual operating expenses for Investor
Class shares, after giving effect to the expense
limitation were 1.08%, and without giving effect
to the expense limitation, were 1.14% per share
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee
equal to 0.25% annually of average daily net assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has a
Safeco Securities, Inc., the Fund's principal sales agreement with PFD, Pioneer Opportunities Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco
investment advisers, banks and other financial Opportunities Fund who own shares in their own name as
institutions that have entered into selling of the closing date of the Reorganization and who
agreements with the Fund's principal underwriter, maintain their accounts may buy shares of any fund in
as described in the Fund's prospectus. the Pioneer family of funds through such accounts in
the future without paying sales charges.
Certain account transactions may be done by If the account is established in the shareholder's own
telephone name, shareholders may also purchase additional shares
of Pioneer Opportunities Fund by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you acquire You may exchange shares of Pioneer Opportunities Fund
through dividend reinvestment or other fund without incurring any fee on the exchange with the
distributions or for Class A shares that you more than 62 other Pioneer Funds. Your exchange would be
have exchanged for Class A shares of another for Class A shares, which would be subject to Rule 12b-1
fund. fees. An exchange generally is treated as a sale and a
new purchase of shares for federal income tax purposes.
Certain account transactions may be done by
telephone. If the account is established in the shareholder's own
name, shareholders may also exchange shares of Pioneer
Opportunities Fund for shares of other Pioneer Funds
by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives
your request in good order.
---------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a financial to sell shares to PIMSS. You can also sell your
intermediary as described in the Fund's shares by contacting the Fund directly if your account
prospectus. is registered in your name.
If the account is established in the shareholder's own
name, shareholders may also redeem shares of Pioneer
Opportunities Fund by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. Even
though each Fund seeks capital growth, you could lose money on your investment
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 Fund's investments do not have the growth potential originally expected
o The Fund'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 Fund invests may become more volatile or decline in
value
4
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
PAST PERFORMANCE
Set forth below is performance information for Safeco Opportunities Fund. The
bar chart shows how Safeco Opportunities Fund'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 Fund 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.
Since Pioneer Opportunities Fund has not yet commenced investment operations, it
has no prior performance.
SAFECO OPPORTUNITIES FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -1.62
1995 26.1
1996 22.9
1997 49.96
1998 4.37
1999 2.64
2000 -4.16
2001 22.03
2002 -36.92
2003 43.98
* During the period shown in the bar chart, your Fund's highest quarterly return
was 34.64% for the quarter ended June 30, 2001, and the lowest quarterly return
was -26.84% for the quarter ended September 30, 2002.
SAFECO OPPORTUNITIES FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO OPPORTUNITIES, CLASS A SHARES
Return Before Taxes 35.37% 0.28% 9.23%
Return After Taxes on Distributions (1) 35.37% 0.28% 6.93%
Return After Taxes on Distributions and
Sale of Fund Shares (1) 22.99% 0.24% 6.62%
SAFECO OPPORTUNITIES FUND, CLASS B SHARES
Return Before Taxes 37.64% 0.35% 9.38%
SAFECO OPPORTUNITIES FUND, CLASS C SHARES
Return Before Taxes 41.64% 0.75% 9.28%
SAFECO OPPORTUNITIES FUND, INVESTOR CLASS SHARES
Return Before Taxes 43.98% 1.74% 10.03%
Return After Taxes on Distributions (1) 43.98% 1.74% 7.72%
Return After Taxes on Distributions and
Sale of Fund Shares (1) 28.59% 1.49% 7.34%
RUSSELL 2000 INDEX (2) 47.25% 7.13% 9.48%
(reflects no deduction for fees, expenses or taxes)
(1) After-tax returns are calculated using the historical h ighest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after- tax returns depend on your situation and may differ
from those shown. Furthermore, the after-tax returns shown are not relevant to
those who hold their shares through tax-deferred arrangements such as 401(k)
plans or IRA accounts, or to investors that are tax-exempt.
5
(2) The Russell 2000 Index, an unmanaged index of 2,000 small capitalization
stocks, is for reference only and does not mirror Safeco Opportunities Fund's
investments.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the table
appearing below are based on (i) for your Fund, the expenses of your Fund for
its fiscal year ended December 31, 2003 and (ii) for the Pioneer Opportunities
Fund, the estimated annual expenses of the Pioneer Opportunities Fund. The
Pioneer Opportunities Fund's actual expenses may be greater or less.
-----------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES SAFECO SAFECO SAFECO SAFECO PIONEER
(PAID DIRECTLY OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES
FROM YOUR FUND FUND FUND FUND FUND
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS INVESTOR CLASS
-----------------------------------------------------------------------------------------------------
Maximum sales 5.75%(6) None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
-----------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
-----------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% None
shares held less
than 30 days
-----------------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) $ 10
-----------------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) None
fee
-----------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
-----------------------------------------------------------------------------------------------------
Management fee 0.68% 0.68% 0.68% 0.68% 0.68%
-----------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service (12b-1) fee
-----------------------------------------------------------------------------------------------------
Other expenses 1.45% 0.77% 0.80% 0.46% 0.27%
-----------------------------------------------------------------------------------------------------
Total fund 2.38% 2.45% 2.48% 1.14% 0.95%
operating expenses
-----------------------------------------------------------------------------------------------------
Expense reduction 1.05%(2) 0.37%(2) 0.40%(2) 0.06%(2) None (3)
-----------------------------------------------------------------------------------------------------
Net fund operating 1.33% 2.08% 2.08% 1.08% 0.95%
expenses
-----------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer
Opportunities Fund through the Reorganization. In addition, shareholders of your
Fund who own shares in their own name (I.E., not in the name of a broker or
other intermediary) and maintain such account as of the closing of the
Reorganization may purchase Class A Shares of Pioneer Tax Free Fund or of any
fund in the Pioneer family of funds through such account in the future without
paying this sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco
Opportunities Fund to the extent the Fund's total ordinary operating expenses
exceeded 0.40% of the Fund's average daily net asset value in a fiscal year.
This arrangement
6
included all fund operating expenses except management fees,
Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 Fund to 1.05% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's and Pioneer Opportunities Fund's gross
operating expenses remain the same, (e) the expense limitations are in effect
for five years for Safeco Opportunities Fund and two years for Pioneer
Opportunities Fund and (f) and the Investor Class shares of Pioneer
Opportunities Fund convert to Class A shares after two years. The examples are
for comparison purposes only and are not a representation of either fund's
actual expenses or returns, either past or future.
------------------------------------------------------------
EXAMPLE
------------------------------------------------------------
SAFECO OPPORTUNITIES FUND
------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------
Year 1 $ 703
------------------------------------------------------------
Year 3 $ 972
------------------------------------------------------------
Year 5 $ 1,262
------------------------------------------------------------
Year 10 $ 2,084
------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 711 $ 211
------------------------------------------------------------
Year 3 $ 952 $ 652
------------------------------------------------------------
Year 5 $ 1,319 $ 1,119
------------------------------------------------------------
Year 10 $ 2,043 $ 2,043
------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 311 $ 211
------------------------------------------------------------
Year 3 $ 652 $ 652
------------------------------------------------------------
Year 5 $ 1,119 $ 1,119
------------------------------------------------------------
Year 10 $ 2,410 $ 2,410
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 110
------------------------------------------------------------
Year 3 $ 343
------------------------------------------------------------
Year 5 $ 595
------------------------------------------------------------
Year 10 $ 1,317
------------------------------------------------------------
PIONEER OPPORTUNITIES FUND
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 97
------------------------------------------------------------
Year 3 $ 304
------------------------------------------------------------
Year 5 $ 528
------------------------------------------------------------
Year 10 $ 1,171
------------------------------------------------------------
7
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Opportunities Fund. The Trustees considered the following matters,
among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund'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 Fund
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 Fund'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 the Investor Class of Pioneer Opportunities Fund
to 1.05% of average daily net assets. This expense ratio is no higher than both
the gross expenses and expenses net of expense reimbursement of the Investor
Class shares of your Fund. Although you will experience higher expenses once the
Investor Class shares convert to Class A shares after two years, your expenses
will remain the same until the second anniversary of the Reorganization.
FOURTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
FIFTH, the Investor Class shares of Pioneer Opportunities Fund received in the
Reorganization will provide Safeco Opportunities Fund shareholders with exposure
to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The Trustees of Pioneer Opportunities Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Opportunities
Fund 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 Fund and
its shareholders.
8
CAPITALIZATION
The following table sets forth the capitalization of each fund, as of December
31, 2003.
-----------------------------------------------------------------------------
PIONEER OPPORTUNITIES
SAFECO OPPORTUNITIES FUND FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
-----------------------------------------------------------------------------
NET ASSETS (in millions) $ 526 N/A
-----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE N/A
Class A shares $ 24.38
Class B shares $ 23.05
Class C shares $ 23.05
Investor Class shares $ 24.75
-----------------------------------------------------------------------------
SHARES OUTSTANDING N/A
Class A shares 881,000
Class B shares 483,000
Class C shares 8,000
Investor Class shares 19,928,000
-----------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Opportunities Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer
Opportunities Fund'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 Fund. Similarly, the
board of trustees of Pioneer Opportunities Fund, including its Independent
Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer Opportunities Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
9
SAFECO HIGH-YIELD BOND FUND AND
PIONEER HIGH YIELD FUND
PROPOSAL 5
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BETWEEN
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 HIGH YIELD FUND TO THE PIONEER HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Taxable Bond Trust, a 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 $37.8 million $7,665 million
June 30, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Managers:
Greg Card (since July 2003 and until August 2, Margaret D. Patel (since inception)
2004) Joined Pioneer in 1999
Assistant Vice President, SAM Investment professional for over 25 years
Joined SAM in 2001
Beverly Denny (since July 2003)
Assistant Vice President, SAM
Associated with SAM since 1991
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks to provide a high level of The Fund seeks to maximize total return through a
current interest income through the purchase of combination of income and capital appreciation.
high-yield debt securities.
--------------------------------------------------------------------------------------------------------
Each Fund provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
- ----------------------------------------------------------------------------------------------------------------------------------
Primary investments Under normal market conditions, the Fund Under normal market conditions, the Fund invests at
invests at least 80% of net assets (plus any least 80% of net assets (plus any borrowings for
borrowings for investment purposes) in investment purposes) in below investment grade (high
high-yield debt securities. yield) debt securities and preferred stocks.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment strategies The Fund uses a "value" style of management and The Fund uses a "value" style of management and seeks
seeks to invest in an issuer that is a good securities selling at reasonable prices or
value relative to its peers. Pioneer evaluates substantial discounts to their underlying values and
an issuer's creditworthiness, liquidity and then holds these securities for their incremental
prospects for growing earnings and cash flow. yields or until the market values reflect their
intrinsic values.
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 20% of its assets in The Fund's investments may have fixed or variable
unrated securities. In addition, the Fund may principal payments and all types of interest rate and
invest up to 5% of its total assets in dividend payment and reset terms, including ?xed
securities which are in default. rate, adjustable rate, zero coupon, contingent,
deferred, payment in kind and auction rate features.
The Fund may invest in restricted securities The Fund invests in securities with a broad range of
that are exempt from registration requirements maturities.
and eligible for resale to qualified
institutional investors under Rule 144A or The Fund may invest in mortgage-backed and
Section 4(2). asset-backed securities. To the extent the Fund
invests significantly in asset-backed and
The Fund may invest in Yankee sector debt mortgage-related securities, its exposure to
securities. Yankee debt securities are prepayment and extension risks may be greater than if
securities issued in the U.S. by foreign it invested in other fixed income securities.
issuers. These bonds involve investment risks
that are different from those of domestic The Fund may invest in mortgage derivatives and
issuers. structured securities. Mortgage derivatives can
become illiquid and hard to value in declining
The Fund may invest in securities that are markets.
direct obligations of the U.S. Treasury and
supported by the full faith and credit of the Consistent with its objective, the Fund may invest in
U.S. government. The Fund may invest in other equity securities issued by both U.S. and non-U.S.
U.S. Government Securities, including (a) issuers, including common stocks, depositary
securities supported by the full faith and receipts, warrants, rights and other equity interests
credit of the U.S. government but that are not when Pioneer believes they offer the potential for
direct obligations of the U.S. Treasury, (b) capital appreciation or to diversity the Fund's
securities that are not supported by the full portfolio.
faith and credit of the U.S. government but are
supported by the issuer's ability to borrow The Fund may invest in securities of Canadian issuers
from the U.S. Treasury, and (c) securities to the same extent as U.S. issuers. The Fund may
supported solely by the creditworthiness of the invest up to 15% of its total assets in securities of
issuer. non-U.S. and non-Canadian issuers, including debt and
equity securities of corporate issuers and debt
The Fund may invest up to 20% of assets in securities of government issuers in developed and
foreign securities. emerging markets.
- ----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- ----------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ----------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund 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 Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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.
- ----------------------------------------------------------------------------------------------------------------------------------
2
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may:
(ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase
agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's
additional securities purchases if total total assets (including the amount borrowed); (b) to
outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to
of total assets. an additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) the Fund 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.
- ----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its
33% of the Fund's total assets. assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. The Fund may use futures and options on securities,
However, the Fund may (i) obtain short-term indices and currencies, forward currency exchange
credits as necessary to clear its purchases and contracts and other derivatives. The Fund does not
sales of securities, and (ii) make margin use derivatives as a primary investment technique and
deposits in connection with its use of generally limits their use to hedging. However, the
financial options and futures, forward and spot Fund may use derivatives for a variety of
currency contracts, swap transactions and other non-principal purposes, including:
financial contracts or derivative instruments. o As a hedge against adverse changes in stock
market prices, interest rates or currency
exchange rates
o As a substitute for purchasing or selling
securities
o To increase the Fund's return as a non-hedging
strategy that may be considered speculative
- ----------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer High Yield Fund
the Fund are subject to a 4.50% front-end sales you receive in the Reorganization will not be subject
charge. to any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. High Yield Fund and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of 1% if you future without paying any sales charge.
redeem Class C shares within one year of
purchase. Except as described above, Class A shares of Pioneer
High Yield Fund are subject to a front-end sales
Purchases of Investor Class shares of the Fund charge of up to 4.50%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco High Yield Fund pays an advisory fee on Pioneer High Yield Fund pays Pioneer a management fee
fees a monthly basis at an annual rate as follows: equal to:
$0 - $250,000,000: 0.65 of 1% 0.70% of average daily net assets up to $500 million;
$250,000,001 - $750,000,000: 0.55 of 1% 0.65% of the next $500 million;
Over $750,000,000: 0.50 of 1% 0.60% of the next $4 billion;
0.55% of the next $1 billion;
SAM serves as administrator and Fund accounting 0.50% of the next $1 billion;
agent for the Fund. The Fund pays SAM an 0.45% of the next $1 billion;
administrative services fee of 0.05% of the 0.40% of the next $1 billion;
Fund's average daily net assets up to the first 0.35% of the next $1 billion; and
$200,000,000 and 0.01% of its net assets 0.30% on assets over $10 billion.
thereafter, and an accounting fee of 0.04% of
the Fund's average daily
- ----------------------------------------------------------------------------------------------------------------------------------
3
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
net assets up to the first $200,000,000 and During its most recent fiscal year, Pioneer High
0.01% of its net assets thereafter. Yield Fund paid an advisory fee at an average rate of
0.61% of average daily net assets.
During its most recent fiscal year, Safeco
High-Yield Fund paid aggregate advisory and In addition, the Fund reimburses Pioneer for certain
administration fees at an average rate of 0.74% fund accounting and legal expenses incurred on behalf
of average daily net assets. of the Fund and pays a separate shareholder
servicing/transfer agency fee to PIMSS, an affiliate
SAM had contractually agreed until April 30, of Pioneer.
2009, to pay certain fund operating expenses
(but not all of the operating expenses of the Through October 31, 2005, Pioneer may recover
Fund) that exceeded the rate of 0.40% per annum expenses that it incurred under a prior expense
of the Fund's average daily net assets. This limitation (within three years of being incurred)
arrangement included all Fund operating from the Fund if the expense ratio of the Class A
expenses except management fees, Rule 12b-1 shares is less than 1.00%. Each class will reimburse
fees, brokerage commissions, taxes, interest, Pioneer no more than the amount by which that class'
and extraordinary expenses. expenses were reduced.
For the fiscal year ended December 31, 2003, For the fiscal year ended October 31, 2003, the
the Fund's annual operating expenses for Class Fund's annual operating expenses for Class A shares
A shares, after giving effect to the expense were 1.06% per share.
limitation were 1.30%, and without giving
effect to the expense limitation, were 1.41% Pioneer has agreed until the second anniversary of
per share. the closing of the Reorganization to limit the
ordinary operating expenses (excluding taxes,
For the fiscal year ended December 31, 2003, commissions, interest and extraordinary expenses) of
the Fund's annual operating expenses for Class the Investor Class to 0.90% of the average daily net
B shares, after giving effect to the expense assets attributable to the Investor Class.
limitation were 2.05%, and without giving
effect to the expense limitation, were 2.88%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 2.05%, and without giving
effect to the expense limitation, were 2.45%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation were 1.05%, and without
giving effect to the expense limitation, were
1.27% per share.
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer High Yield Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco High
investment advisers, banks and other financial Yield Fund who own shares in their own name as of the
institutions that have entered into selling closing date of the Reorganization and who maintain
agreements with the Fund's principal their accounts may buy shares of any fund in the
underwriter, as described in the Fund's Pioneer family of funds through such accounts in the
prospectus. future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer High Yield Fund by telephone or
online.
- ----------------------------------------------------------------------------------------------------------------------------------
4
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer High Yield Fund
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would
you have exchanged for Class A shares of be for Class A shares, which would be subject to Rule
another fund. 12b-1 fees. An exchange generally is treated as a sale
and a new purchase of shares for federal income tax
Certain account transactions may be done by purposes.
telephone.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer High Yield Fund for shares of other Pioneer
Funds by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
Selling Shares Class of shares is sold at the net asset value per share next calculated after the Fund receives your
request in good order.
--------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer High Yield Fund by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund or not make as much as if you
invested elsewhere if:
o Interest rates go up, causing the value of debt securities in the Fund's
portfolio to decline
o The issuer of a security owned by a Fund defaults on its obligation to pay
principal and/or interest or has its credit rating downgraded
o During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing the
Fund to reinvest in lower yielding securities. This is known as call or
prepayment risk
o During periods of rising interest rates, the average life of certain types
of securities may be extended because of slower than expected principal
payments. This may lock in a below market interest rate, increase the
security's duration (the estimated period until the security is paid in
full) and reduce the value of the security. This is known as extension risk
o The investment adviser's judgment about the attractiveness, relative value
or potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
o A downturn in equity markets causes the price of convertible securities to
drop even when the prices of below investment grade bonds otherwise would
not go down
Investment in high yield securities involves substantial risk of loss. High
yield securities are considered speculative with respect to the issuer's ability
to pay interest and principal and are susceptible to default or decline in
market value due to adverse economic and business developments. The market
values for high yield securities tend to be very volatile, and these securities
are less liquid than investment grade debt securities. For these reasons, an
investment in either Fund is subject to the following specific risks:
o Increased price sensitivity to changing interest rates and deteriorating
economic environment
o Greater risk of loss due to default or declining credit quality
o Adverse company-specific events are more likely to render the issuer unable
to make interest and/or principal payments
o A negative perception of the high yield market develops, depressing the
price and liquidity of high yield securities. This negative perception
could last for a significant period of time
5
In addition, each Fund holds a material percentage of the outstanding debt
securities of certain high yield issuers, which practice may adversely impact
the liquidity and market value of those investments. Investments in the Funds
are not bank deposits and are not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. You could lose money by
investing in either Fund.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
SAFECO HIGH YIELD FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -2.25
1995 15.14
1996 10.39
1997 12.79
1998 4.45
1999 3.74
2000 -5.52
2001 -2.05
2002 -17.47
2003 30.5
* During the period shown in the bar chart, your Fund's highest quarterly return
was 10.53% for the quarter ended June 30, 2003, and the lowest quarterly return
was -12.38% for the quarter ended June 30, 2002.
PIONEER HIGH YIELD FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1999 27.09
2000 12.81
2001 16.74
2002 -2.7
2003 32.13
* During the period shown in the bar chart, since the Fund's inception on
February 12, 1998, Pioneer High Yield Fund's highest quarterly return was 11.10%
for the quarter ended December 31, 1999, and the lowest quarterly return was
- -8.97% for the quarter ended September 30, 2002.
6
SAFECO HIGH YIELD FUND
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO HIGH YIELD FUND, CLASS A SHARES
Return Before Taxes 24.55% -0.45% 3.65%
Return After Taxes on Distributions(2) 20.85% -3.67% 0.20%
Return After Taxes on Distributions and
Sale of Fund Shares(2) 15.68% -2.35% 0.95%
SAFECO HIGH YIELD FUND, CLASS B SHARES
Return Before Taxes 24.21% -0.58% 3.66%
SAFECO HIGH YIELD FUND, CLASS C SHARES
Return Before Taxes 28.35% -.027% 3.59%
SAFECO HIGH YIELD FUND, INVESTOR CLASS SHARES
Return Before Taxes 30.50% 0.67% 4.28%
Return After Taxes on Distributions(1) 26.51% -2.68% 0.75%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 19.53% -1.49% 1.44%
MERRILL LYNCH HIGH-YIELD MASTER II INDEX(2) 28.15% 5.02% 7.05%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Merrill Lynch High-Yield Master II Index, an unmanaged index of
outstanding debt of domestic market issuers rater below investment grade,
but not in default, is for reference only and does not mirror Safeco High
Yield Fund's investments.
PIONEER HIGH YIELD FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED OCTOBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION(1)
------ ------- ------------------
PIONEER HIGH YIELD FUND, CLASS A SHARES
Return Before Taxes 26.15% 15.49% 11.71%
Return After Taxes on Distributions(2) 23.09% 11.39% 7.99%
Return After Taxes on Distributions and
Sale of Fund Shares(2) 16.78% 10.72% 7.63%
MERRILL LYNCH HIGH-YIELD MASTER II INDEX(3) 28.15% 5.02% 4.45%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on February 12, 1998.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Merrill Lynch High-Yield Master II Index, an unmanaged index of
outstanding debt of domestic market issuers rater below investment grade,
but not in default, is for reference only and does not mirror Pioneer High
Yield Fund's investments.
Pioneer High Yield Fund's Investor Class shares will not be outstanding prior to
the closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A shares due to the lower expenses applicable to
the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for Safeco High Yield Fund, the expenses of
Safeco High Yield Fund for the year ended December 31, 2003 and
7
(ii) for Pioneer High Yield Fund, the expenses of Pioneer High Yield Fund for
the year ended October 31, 2003. Future expenses for all share classes may be
greater or less.
-----------------------------------------------------------------------------------------------------------------
SHAREHOLDER PIONEER
TRANSACTION FEES HIGH YIELD
(PAID DIRECTLY SAFECO HIGH YIELD SAFECO HIGH YIELD SAFECO HIGH YIELD SAFECO HIGH YIELD FUND
FROM YOUR FUND FUND FUND FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
-----------------------------------------------------------------------------------------------------------------
Maximum sales 4.50%(6) None None None None(1)
charge (load) when
you buy shares as a
percentage of
offering price
-----------------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
-----------------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
-----------------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A
-----------------------------------------------------------------------------------------------------------------
Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A
fee
-----------------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
-----------------------------------------------------------------------------------------------------------------
Management fee 0.65% 0.65% 0.65% 0.65% 0.58%
-----------------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service (12b-1) fee
-----------------------------------------------------------------------------------------------------------------
Other expenses 0.51% 1.23% 0.80% 0.62% 0.39%
-----------------------------------------------------------------------------------------------------------------
Total fund 1.41% 2.88% 2.45% 1.27% 0.97%
operating expenses
-----------------------------------------------------------------------------------------------------------------
Expense reduction 0.11%(2) 0.83%(2) 0.40%(2) 0.22%(2) None(3)
-----------------------------------------------------------------------------------------------------------------
Net fund operating 1.30% 2.05% 2.05% 1.05% 0.90%
expenses
-----------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer High
Yield Fund through the Reorganization. In addition, shareholders of your Fund
who own shares in their own name (i.e., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer High Yield Fund or of any fund in the
Pioneer family of funds through such account in the future without paying this
sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco High
Yield Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 High Yield Fund to 0.90% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
8
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco High Yield
Fund and two years for Pioneer High Yield Fund and (f) and the Investor Class
shares of Pioneer High Yield Fund convert to Class A shares after two years. The
examples are for comparison purposes only and are not a representation of either
Fund's actual expenses or returns, either past or future.
-----------------------------------------------------
EXAMPLE
-----------------------------------------------------
SAFECO HIGH YIELD FUND
-----------------------------------------------------
CLASS A SHARES
-----------------------------------------------------
Year 1 $ 576
-----------------------------------------------------
Year 3 $ 844
-----------------------------------------------------
Year 5 $ 1,131
-----------------------------------------------------
Year 10 $ 1,947
-----------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
-----------------------------------------------------
Year 1 $ 708 $ 208
-----------------------------------------------------
Year 3 $ 943 $ 643
-----------------------------------------------------
Year 5 $ 1,303 $ 1,103
-----------------------------------------------------
Year 10 $ 2,010 $ 2,010
-----------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
-----------------------------------------------------
Year 1 $ 308 $ 208
-----------------------------------------------------
Year 3 $ 643 $ 643
-----------------------------------------------------
Year 5 $ 1,103 $ 1,103
-----------------------------------------------------
Year 10 $ 2,379 $ 2,379
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INVESTOR CLASS SHARES
-----------------------------------------------------
Year 1 $ 107
-----------------------------------------------------
Year 3 $ 334
-----------------------------------------------------
Year 5 $ 579
-----------------------------------------------------
Year 10 $ 1,283
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PIONEER HIGH YIELD FUND
-----------------------------------------------------
INVESTOR CLASS SHARES
-----------------------------------------------------
Year 1 $ 92
-----------------------------------------------------
Year 3 $ 299
-----------------------------------------------------
Year 5 $ 536
-----------------------------------------------------
Year 10 $ 1,217
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REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco High Yield Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the investment performance of Pioneer High Yield Fund, which has one of
the best performance records of any mutual fund specializing high yield
securities. For the one and five year periods ended June 30, 2004, Class A
shares of Pioneer High Yield Fund had an average annual return of ___% and ___%
compared to an average annual of the Class A shares and Investor
9
Class shares of ___% and ___% (one year) and ___% and ___% (five years),
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 Fund
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 Fund'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 High Yield Fund'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 the Investor Class of Pioneer High Yield Fund to
0.90% of average daily net assets. The estimated expenses of the Investor Class
shares of Pioneer High Yield Fund are below both the gross expenses and expenses
net of expense reimbursement of each class of shares of your Fund. Although you
will experience higher expenses once the Investor Class shares convert to Class
A shares after two years, based upon the Class A expense ratio for the most
recent fiscal year, were 1.06% of average daily net assets, which was below the
net expenses of the Class A shares of your Fund and only one basis point above
the net expenses of the Investor Class of your Fund.
FIFTH, the substantially larger size of Pioneer High Yield Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer High Yield Fund received in the
Reorganization will provide Safeco High Yield Fund shareholders with exposure to
substantially the same investment product as they currently have.
Pioneer and Symetra will pay all of out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra".
The board of trustees of Pioneer High Yield Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer High Yield Fund
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 High Yield Fund and its
shareholders.
10
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003 for Safeco High Yield Fund and October 31, 2003 for Pioneer High Yield
Fund.
----------------------------------------------------------------------------
SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND
DECEMBER 31, 2003 OCTOBER 31, 2003
----------------------------------------------------------------------------
NET ASSETS (in millions) $ 43 $ 8,693.4
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 5.85 $ 11.59
Class B shares $ 5.84 $ 11.63
Class C shares $ 5.86 $ 11.73
Investor Class shares $ 5.84 N/A
----------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 489,000 282,113,431
Class B shares 112,000 160,751,979
Class C shares 27,000 205,806,601
Investor Class shares 6,726,000 N/A
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It is impossible to predict how many shares of Pioneer High Yield Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer High
Yield Fund'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 Fund. Similarly, the
board of trustees of Pioneer High Yield Fund, including its Independent
Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer High Yield Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
SAFECO INTERMEDIATE-TERM BOND FUND AND
PIONEER BOND FUND
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 IT BOND FUND TO THE PIONEER BOND FUND
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SAFECO IT BOND FUND PIONEER BOND FUND
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Business A series of Safeco Managed Bond Trust, a 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.
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Net assets as of $9.6 million $259 million
June 30, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (since 2004 and until August Portfolio Managers:
2, 2004): Day-to-day management of the fund's portfolio is the
Greg Card responsibility of a team of fixed income portfolio
Assistant Vice President, SAM managers led by Kenneth J. Taubes.
Joined SAM in 2001 Mr. Taubes joined Pioneer as a senior vice president
in September 1998 and has been an investment
Tim Hokari professional since 1982.
Assistant Vice President, SAM
Joined SAM in 2000
Lesley Fox
Assistant Vice President, SAM
Joined SAM in 2000
Nancy McFadden
Fixed Income Analyst, SAM
Joined SAM in 2001
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Managers of
the Pioneer Fund, as indicated in the next
column, are currently managing your Safeco Fund.
- ---------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks a high level of current income The Fund seeks current income by investing primarily
as is consistent with the preservation of in an investment-grade portfolio, consistent with
capital. capital preservation and prudent investment risk.
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Each Fund provides written notice to shareholders at least 60 days prior to any change to its
investment objective as described above.
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SAFECO IT BOND FUND PIONEER BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Primary investments Under normal circumstances, the Fund invests at Under normal market conditions, the Fund invests at
least 80% of net assets (plus any borrowings least 80% of total assets in
for investment purposes) in bonds, including o Debt securities issued or guaranteed by the
but not limited to corporate, government and U.S. government or its agencies and
mortgage bonds, most of which will be instrumentalities
investment-grade quality, whether rated or o Debt securities, including convertible debt,
unrated. of corporate and other issuers rated at least
investment grade at the time of investment, and
The dollar weighted average maturity of the comparably rated commercial paper
Fund generally ranges between three and ten o Cash and cash equivalents, certificates of
years deposit, repurchase agreements maturing in one
week or less and bankers' acceptances
- ---------------------------------------------------------------------------------------------------------------------------------
Investment strategies In managing the portfolio and selecting Pioneer considers both broad economic and issuer
securities, SAM historically considered: specific factors in selecting a portfolio designed to
o The price of the security relative to achieve the fund's investment objective. In assessing
its rating and market sector the appropriate maturity, rating and sector weighting
o Structural features, such as an of the fund's portfolio, Pioneer considers a variety
issuer's right to buy the bond back at a of factors that are expected to influence economic
stated price or the Fund's right to activity and interest rates. These factors include
require the issuer to buy the bond back at fundamental economic indicators, such as the rates of
a stated price economic growth and inflation, Federal Reserve
o The effect the security might have on monetary policy and the relative value of the U.S.
existing diversification of Fund assets dollar compared to other currencies. Once Pioneer
and allocation among various market determines the preferable portfolio characteristics,
sectors it selects individual securities based upon the terms
o The effect the security might have on of the securities (such as yields compared to U.S.
the yield and sensitivity to interest rate Treasuries or comparable issuers), liquidity and
changes of the Fund's overall portfolio rating, sector and issuer diversification.
The Fund may engage in short-term trading to
achieve its objective.
- ---------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 20% of its assets in The Fund may invest up to 20% of its total assets in
high yield debt securities rated below debt securities rated below investment grade or, if
investment grade ("junk" or "high-risk" bonds) unrated, of equivalent quality as determined by
and may invest in Yankee sector bonds and Pioneer.
Eurodollar bonds.
Up to 15% of its total assets in equity and debt
The Fund may also invest in mortgage-backed or securities of non-U.S. corporate issuers and in debt
asset-backed securities. securities of non-U.S. government issuers.
The Fund may invest up to 20% of assets in The Fund will not invest more than 5% of its total
foreign securities. assets in the securities of emerging markets issuers.
The Fund may invest a substantial portion of its
assets in mortgage-related securities, which
represent interests in pools of mortgage loans
assembled for sale to investors by various U.S.
governmental agencies, government-related
organizations and private issuers. These investments
may include mortgage-related derivative securities
such as collateralized mortgage obligations.
The Fund may invest in securities of Canadian issuers
to the same extent as securities of U.S. issuers.
- ---------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- ---------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ---------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund may not invest more than 25% of its assets in any one industry.
- ---------------------------------------------------------------------------------------------------------------------------------
2
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SAFECO IT BOND FUND PIONEER BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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 The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may:
(ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase
agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's
additional securities purchases if total total assets (including the amount borrowed); (b) to
outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to
of total assets. an additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on margin to
the extent permitted by applicable law; and (e)
engage in transactions in mortgage dollar rolls that
are accounted for as financings.
- ---------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its total
33% of the Fund's total assets. assets.
- ---------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. The Fund may use futures and options on securities,
However, the Fund may (i) obtain short-term indices and currencies, forward currency exchange
credits as necessary to clear its purchases and contracts and other derivatives. The Fund does not
sales of securities, and (ii) make margin use derivatives as a primary investment technique and
deposits in connection with its use of generally limits their use to hedging. However, the
financial options and futures, forward and spot Fund may use derivatives for a variety of
currency contracts, swap transactions and other non-principal purposes, including:
financial contracts or derivative instruments. o As a hedge against adverse changes in stock
market prices, interest rates or currency
exchange rates
o As a substitute for purchasing or selling
securities
o To increase the Fund's return as a non-hedging
strategy that may be considered speculative
- ---------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ---------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Bond Fund you
the Fund are subject to a 3.50% front-end sales receive in the Reorganization will not be subject to
charge. any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 4% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. Bond Fund and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of 1% if you future without paying any sales charge.
redeem Class C shares within one year of
purchase. Except as described above, Class A shares of Pioneer
Bond Fund are subject to a front-end sales charge of
Purchases of Investor Class shares of the Fund up to 4.50%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ---------------------------------------------------------------------------------------------------------------------------------
3
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO IT BOND FUND PIONEER BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco IT Bond Fund pays an advisory fee on a Pioneer Bond Fund pays Pioneer a management fee equal
fees monthly basis at an annual rate as follows: to 0.50% of the Fund's average daily net assets.
$0 - $750,000,000: 0.50 of 1%
$750,000,001 - $1,250,000,000: 0.45 of 1% During its most recent fiscal year, Pioneer Bond Fund
Over $1,250,000,000: 0.40 of 1% paid an advisory fee at an average rate of 0.50% of
average daily net assets.
SAM serves as administrator and Fund accounting
agent for the Fund. The Fund pays SAM an In addition, the fund reimburses Pioneer for certain
administrative services fee of 0.05% of the fund accounting and legal expenses incurred on behalf
Fund's average daily net assets up to the first of the fund and pays a separate shareholder
$200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate
thereafter, and an accounting fee of 0.04% of of Pioneer.
the Fund's average daily net assets up to the
first $200,000,000 and 0.01% of its net assets For the fiscal year ended June 30, 2003, the Fund's
thereafter. annual operating expenses for Class A shares were
1.20% per share.
During its most recent fiscal year, Safeco IT
Bond Fund paid aggregate advisory and Pioneer has agreed until the second anniversary of
administration fees at an average rate of 0.59% the closing of the Reorganization to limit the
of average daily net assets. ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses) of
SAM had contractually agreed until April 30, the Investor Class to 0.74% of the average daily net
2009, to pay certain fund operating expenses assets attributable to the Investor Class.
(but not all of the operating expenses of the
Fund) that exceeded the rate of 0.40% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.15%, and without giving
effect to the expense limitation, were 2.05%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 1.90%, and without giving
effect to the expense limitation, were 2.78%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 1.90%, and without giving
effect to the expense limitation, were 42.54%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation, were 0.90%, and without
giving effect to the expense limitation, were
1.53% per share.
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ---------------------------------------------------------------------------------------------------------------------------------
4
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO IT BOND FUND PIONEER BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Bond Fund's
underwriter, or through brokers, registered distributor. Existing shareholders of Safeco IT Bond
investment advisers, banks and other financial Fund who own shares in their own name as of the
institutions that have entered into selling closing date of the Reorganization and who maintain
agreements with the Fund's principal their accounts may buy shares of any fund in the
underwriter, as described in the Fund's Pioneer family of funds through such accounts in the
prospectus. future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer Bond Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Bond Fund without
acquire through dividend reinvestment or other incurring any fee on the exchange with the more than
fund distributions or for Class A shares that 62 other Pioneer Funds. Your exchange would be for Class
you have exchanged for Class A shares of A shares, which would be subject to Rule 12b-1 fees. An
another fund. exchange generally is treated as a sale and a new
purchase of shares for federal income tax purposes.
Certain account transactions may be done by
telephone. If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Bond Fund for shares of other Pioneer Funds
by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
-------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Bond Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. The
market value of fixed income securities tends to be more volatile the longer the
maturity of such security. Since Pioneer Bond Fund may invest in securities of
longer maturity than your Fund, an investment in Pioneer Bond Fund may have
correspondingly greater risk. You could lose money on your investment in either
Fund or not make as much as if you invested elsewhere if:
o Interest rates go up, causing the value of debt securities in the Fund's
portfolio to decline
o The issuer of a security owned by a Fund defaults on its obligation to pay
principal and/or interest or has its credit rating downgraded
o During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing the
Fund to reinvest in lower yielding securities. This is known as call or
prepayment risk
o During periods of rising interest rates, the average life of certain types
of securities may be extended because of slower than expected principal
payments. This may lock in a below market interest rate, increase the
security's duration (the estimated period until the security is paid in
full) and reduce the value of the security. This is known as extension risk
o The investment adviser's judgment about the attractiveness, relative value
or potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
o A downturn in equity markets causes the price of convertible securities to
drop even when the prices of below investment grade bonds otherwise would
not go down
5
o To the extent that the Fund invests significantly in high yield securities,
its exposure to the credit risks associated with such securities may be
greater, its income and net asset value may be more volatile, and it may be
more difficult to achieve preservation of principal
Government sponsored entities such as the Federal Home Loan Mortgage Corporation
(Freddie Mac), the Federal National Mortgage Association (FNMA) and the Federal
Home Loan Banks (FHLB), although chartered or sponsored by Congress, are not
funded by congressional appropriations and the debt and mortgage-backed
securities issued by them are neither guaranteed nor issued by the U.S.
government. To the extent the Funds invest significantly in mortgaged-backed
securities, its exposure to prepayment and extension risks may be greater than
if it invested in other fixed income securities.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
SAFECO IT BOND FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1995 17.35
1996 0.02
1997 8.23
1998 8.43
1999 -3.82
2000 11.57
2001 6.95
2002 7.44
2003 3.56
* During the period shown in the bar chart, your Fund's highest quarterly return
since the Fund's inception in 1994 was 5.74% for the quarter ended June 30,
1995, and the lowest quarterly return was -3.27% for the quarter ended March 31,
1996.
PIONEER BOND FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1993 11.43
1994 -4.2
1995 18.16
1996 1.96
1997 9.16
1998 7.69
1999 -3.2
2000 8.45
2001 7.54
2002 8.77
* During the period shown in the bar chart, Pioneer Bond Fund's highest
quarterly return was 6.11% for the quarter ended June 30, 1995, and the lowest
quarterly return was -3.03% for the quarter ended March 31, 1994.
6
SAFECO IT BOND FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS LIFE OF Fund(1)
------ ------- ---------------
SAFECO IT BOND FUND, CLASS A SHARES
Return Before Taxes -0.31% 3.96% 4.95%
Return After Taxes on Distributions (2) -1.67% 2.01% 2.81%
Return After Taxes on Distributions and
Sale of Fund Shares (2) -0.21% 2.14% 2.87%
SAFECO IT BOND FUND, CLASS B SHARES
Return Before Taxes -1.33% 3.77% 4.80%
SAFECO IT BOND FUND, CLASS C SHARES
Return Before Taxes 1.47% 3.90% 4.69%
SAFECO IT BOND FUND, INVESTOR CLASS SHARES
Return Before Taxes 3.56% 5.01% 5.58%
Return After Taxes on Distributions (2) 2.05% 2.94% 3.34%
Return After Taxes on Distributions and
Sale of Fund Shares (2) 2.30% 2.97% 3.35%
LEHMAN BROTHERS AGGREGATE BOND INDEX (3) 4.10% 6.62% 7.11%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on February 28, 1994.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) 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
and does not mirror Safeco IT Bond Fund's investments.
PIONEER BOND FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2002
1 YEAR 5 YEARS 10 YEARS (1)
------ ------- -----------
PIONEER BOND FUND, CLASS A SHARES
Return Before Taxes 3.93% 4.78% 5.89%
Return After Taxes on Distributions (2) 1.79% 2.27% 3.17%
Return After Taxes on Distributions and
Sale of Fund Shares (2) 2.35% 2.52% 3.30%
LEHMAN BROTHERS AGGREGATE BOND INDEX (3) 10.25% 7.55% 7.51%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on October 31, 1978.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) 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
and does not mirror Pioneer Bond Fund's investments.
7
Pioneer Bond Fund's Investor Class shares will not be outstanding prior to the
closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A, B and C shares due to the lower expenses
applicable to the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Bond Fund, the expenses
of Pioneer Bond Fund for the period ended June 30, 2003. Future expenses for all
share classes may be greater or less.
- --------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION SAFECO IT BOND FUND SAFECO IT BOND FUND SAFECO IT BOND SAFECO IT BOND PIONEER BOND
FEES (PAID DIRECTLY FROM CLASS A CLASS B FUND FUND FUND
YOUR INVESTMENT) CLASS C INVESTOR CLASS INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------------------------
Maximum sales charge (load) 3.50%(6) None None None None (1)
when you buy shares as a
percentage of offering
price
- ------------------------------------------------------------------------------------------------------------------------
Maximum deferred sales None 4.00%(7) 1.00%(8) None None
charge (load) as a % of
purchase price or the
amount you receive when you
sell shares, whichever is
less
- ------------------------------------------------------------------------------------------------------------------------
Redemption fees for shares 2.00% None None 2.00% N/A
held less than 30 days
- ------------------------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
- ------------------------------------------------------------------------------------------------------------------------
Annual low balance fee $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
- ------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES (DEDUCTED FROM
FUND ASSETS)
(AS A % OF AVERAGE NET
ASSETS)
- ------------------------------------------------------------------------------------------------------------------------
Management fee 0.50% 0.50% 0.50% .50% 0.50%
- ------------------------------------------------------------------------------------------------------------------------
Distribution and service 0.25% 1.00% 1.00% None None
(12b-1) fee
- ------------------------------------------------------------------------------------------------------------------------
Other expenses 1.30% 1.28% 41.04% 1.03% 0.38%
- ------------------------------------------------------------------------------------------------------------------------
Total fund operating 2.05% 2.78% 42.54% 1.53% 0.88%
expenses
- ------------------------------------------------------------------------------------------------------------------------
Expense reduction 0.90%(2) 0.88%(2) 40.64%(2) 0.63%(2) 0.14% (3)
- ------------------------------------------------------------------------------------------------------------------------
Net fund operating expenses 1.15% 1.90% 1.90% 0.90% 0.74%
- ------------------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Bond Fund
through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Bond Fund or of any fund in the Pioneer
family of funds through such account in the future without paying this sales
charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco IT Bond
Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40%
of the Fund's average daily net asset value in a fiscal year. This arrangement
included all fund operating expenses except management fees, Rule 12b-1 fees,
brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 Bond Fund to 0.74% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
8
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for one year for Safeco IT Bond Fund
and two years for Pioneer Bond Fund and (f) and the Investor Class shares of
Pioneer Bond Fund convert to Class A shares after two years. The examples are
for comparison purposes only and are not a representation of either Fund's
actual expenses or returns, either past or future.
------------------------------------------------------------
EXAMPLE
------------------------------------------------------------
SAFECO IT BOND FUND
------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------
Year 1 $ 463
------------------------------------------------------------
Year 3 $ 703
------------------------------------------------------------
Year 5 $ 961
------------------------------------------------------------
Year 10 $ 1,699
------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 593 $ 193
------------------------------------------------------------
Year 3 $ 797 $ 597
------------------------------------------------------------
Year 5 $ 1,126 $ 1,026
------------------------------------------------------------
Year 10 $ 1,764 $ 1,764
------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
------------------------------------------------------------
Year 1 $ 293 $ 193
------------------------------------------------------------
Year 3 $ 597 $ 597
------------------------------------------------------------
Year 5 $ 1,026 $ 1,026
------------------------------------------------------------
Year 10 $ 2,222 $ 2,222
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 92
------------------------------------------------------------
Year 3 $ 287
------------------------------------------------------------
Year 5 $ 498
------------------------------------------------------------
Year 10 $ 1,108
------------------------------------------------------------
PIONEER BOND FUND
------------------------------------------------------------
INVESTOR CLASS SHARES
------------------------------------------------------------
Year 1 $ 76
------------------------------------------------------------
Year 3 $ 282
------------------------------------------------------------
Year 5 $ 554
------------------------------------------------------------
Year 10 $ 1,328
------------------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco IT Bond Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
9
SECOND, the investment performance of Pioneer Bond Fund, which has outperformed
your Fund over the most recent one, five and ten year periods (one year), ___%
and ___% (five years) and ___%, and ___% (ten years). For the one, five and ten
year periods ended June 30, 2004, Class A shares of Pioneer Bond Fund had an
average annual return of ___%, ___% and ___% compared to an average annual of
the Class A shares and Investor Class shares of [xx]% and [xx]%, 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 Fund
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 Fund'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 Bond Fund's lower gross expenses and Pioneer's commitment until
the second anniversary of the Reorganization to limit the operating expenses
(excluding taxes, commissions, interest and extraordinary expenses) of the
Investor Class of Pioneer Bond Fund to 0.74 % of average daily net assets. The
gross expense ratio of Pioneer Bond Fund's Class A shares is lower than the
gross expense ratio of each class of shares of your Fund. In addition, the next
expense ratio of the investor class of Pioneer Bond Fund is lower than the net
expenses of the Class A, Class B and Class C shares of your Fund and the same as
the net expense of the Investor class. The trustees also considered the
difference in the investment policies of the two Funds, particularly by Pioneer
Bond Fund's ability to invest in securities with longer maturity than your Fund.
While this may result in the Prime Bond Fund having greater risk of volatility
of net asset value than your Fund, the trustees believe this then functions in
favor of the Reorganization mitigated this risk. This expense ratio is no higher
than both the gross expenses and expenses net of expense reimbursement of the
Class A and Investor Class shares of your Fund. Although you will experience
higher expenses once the Investor Class shares convert to Class A shares after
two years, your expenses will remain the same until the second anniversary of
the Reorganization.
FIFTH, the substantially larger size of Pioneer Bond Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the trustees also considered the differences in the investment policies
of the two Funds, particularly Pioneer Bond Fund's ability to invest in
securities with longer maturities than your Fund. While this may result in
Pioneer Bond Fund having greater volatility of net asset value than your Fund,
the trustees believe that the factors in favor of the Reorganization mitigate
this risk.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Bond Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Bond Fund 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 Fund and its
shareholders.
10
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003 for Safeco IT Bond Fund and June 30, 2003 for Pioneer Bond Fund.
-------------------------------------------------------------------
SAFECO IT BOND FUND PIONEER BOND FUND
DECEMBER 31, 2003 JUNE 30, 2003
-------------------------------------------------------------------
NET ASSETS (in millions) $ 9.7 $ 298
-------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 8.51 $ 9.41
Class B shares $ 8.51 $ 9.37
Class C shares $ 8.50 $ 9.31
Investor Class shares $ 8.52 N/A
-------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 137,000
Class B shares 120,000
Class C shares 12,000
Investor Class shares 870,000 N/A
-------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Bond Fund will actually
be received and distributed by your Fund on the Reorganization date. The table
should not be relied upon to determine the amount of Pioneer Bond Fund'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 Fund. Similarly, the
board of trustees of Pioneer Bond Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of Pioneer Bond Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND AND
PIONEER TAX FREE INCOME FUND
PROPOSAL 7
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 Agreement and Plan of Reorganization
attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO IT MUNI BOND FUND TO THE PIONEER TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Tax-Exempt Bond Trust, a 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 $16.4 million $332.1 million
June 30, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (until August 2, 2004): Portfolio Managers:
Mary Metastasio (since 1996) Day-to-day management of the Fund's portfolio is the
Vice President, SAM responsibility of a team of fixed income portfolio
managers led by Kenneth J. Taubes.
Stephen C. Bauer (since 2003) Mr. Taubes joined Pioneer as a senior vice president
President and Director, SAM in September 1998 and has been an investment
Associated with SAM since 1971 professional since 1982.
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Managers of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks to provide a high level of The Fund seeks as high a level of current income
current interest income exempt from federal exempt from federal income taxes as possible
income tax as is consistent with prudent consistent with the preservation of capital.
investment risk.
The investment objective of the Fund may not be
The Fund provides written notice to changed without the affirmative vote of the holders
shareholders at least 60 days prior to any of a "majority of the outstanding voting securities"
change to its investment objective as described (as defined in the Investment Company Act) of the
above. Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments Under normal circumstances, the Fund invests at Normally, the Fund invests at least 80%of its total
least 80% of its net assets (plus any assets in investment grade securities that provide
borrowings for investment purposes) in income that is exempt from regular federal income tax
investment grade municipal bonds with and may not be subject to the alternative minimum
maturities of more than one year and the tax. These investments include bonds, notes and
interest on which is exempt from federal income other debt instruments issued by or on behalf of
tax. states, counties, municipalities, territories and
possessions of the United States and the District of
The Fund will not invest in securities the Columbia and their authorities, political
income interest on which is a tax preference subdivisions, agencies or instrumentalities.
item for purposes of the federal alternative
minimum tax. The Fund may invest in securities the income interest
on which is a tax preference item for purposes of the
The Fund will maintain an average federal alternative minimum tax.
dollar-weighted maturity of between three and
ten years. The Fund may invest in securities of any maturity.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
The Fund may invest 25% or more of its assets in
issuers in any one or more states or securities the
payments on which are derived from gas, electric,
telephone, sewer and water segments of the municipal
bond market. The Fund may also invest up to 20% of
its assets in industrial development bonds.
The Fund's investments may have fixed or variable
principal payments and all types of interest rate
payment and reset terms, including fixed and floating
rates, inverse floating rate, zero coupon,
contingent, deferred and payment in kind and auction
rate features.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment strategies In managing the portfolio and selecting Pioneer considers both broad economic factors and
securities, SAM historically considered, among issuer-specific factors in selecting a portfolio
other things: designed to achieve the Fund's investment objective.
o Yield In assessing the appropriate maturity and rating
o Maturity weighting of the Fund's portfolio, Pioneer considers
o Structural features such as an a variety of factors that are expected to influence
issuer's right to buy the bond back at a economic activity and interest rates. These factors
stated price or the Fund's right to buy include fundamental economic indicators such as the
the bond back at a stated price rates of economic growth and inflation, Federal
o Credit quality (including the Reserve monetary policy and the relative value of the
underlying rating of insured bonds) U.S. dollar compared to other currencies. Once
o The purpose the issuer is financing; Pioneer determines the preferable portfolio
o The original offering price characteristics, Pioneer selects individual
o Any state or local tax exemption securities based upon the terms of the securities
o The amount of discount off or premium (such as yields compared to U.S. Treasuries or
on the stated principal amount of the bond comparable issues), liquidity and rating and issuer
represented by the price offered diversification.
After evaluating a bond, SAM compares the bond
to other available bonds, which may have
different features, and will buy the bond if it
appears to offer the best relative value.
- -----------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 20% of its assets in The Fund may invest 25% or more of its assets in
unrated municipal bonds, as long as the adviser issuers in any one or more states or securities the
determines they are of comparable quality to payments on which are derived from gas, electric,
investment-grade securities. Unrated telephone, sewer and water segments of the municipal
securities are not necessarily lower in quality bond market.
than rated securities but may not be as
attractive to as many investors as rated The Fund may invest up to 20% of its assets in
securities. industrial development bonds.
The Fund will invest no more than 33% of its The Fund may invest up to 20% of its net assets in
total assets in municipal bonds rated in the securities of other investment companies, investment
fourth highest grade (or in comparable unrated grade commercial paper, U.S. government securities,
bonds subject to the 20% limit). Such bonds are U.S. or foreign bank instruments and repurchase
of medium grade, have speculative agreements.
characteristics, and are more likely to have a
weakened capacity to make principal and The Fund may invest up to 10% of its net assets in
interest payments under changing economic debt securities rated below investment grade or, if
conditions or upon deterioration in the unrated, of equivalent quality as determined by
financial condition of the issuer. Pioneer. Debt securities rated below investment
grade are commonly referred to as "junk bonds" and
The Fund will not hold more than 5% of its net are considered speculative. Below investment grade
assets in below investment-grade securities or, debt securities involve greater risk of loss, are
if unrated, in securities that cease to be subject to greater price volatility and are less
comparable to a rated investment-grade security liquid, especially during periods of economic
(such below investment-grade securities are uncertainty or change, than higher quality debt
commonly referred to as "high yield" or "junk" securities.
bonds).
The Fund may invest up to 10% of its net assets in
The Fund may invest up to 20% of assets in inverse floating rate obligations (a type of
foreign securities. derivative instrument). Inverse floating rate
obligations represent interests in tax-exempt bonds.
The interest rate on inverse floating rate
obligations will generally decrease as short-term
interest rates increase, and increase as short-term
rates decrease. Inverse floating rate obligations
may be volatile and involve
- -----------------------------------------------------------------------------------------------------------------------------------
2
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
leverage risk.
The Fund's investments may have fixed or variable
principal payments and all types of interest rate
payment and reset terms, including fixed and floating
rates, inverse floating rate, zero coupon,
contingent, deferred and payment in kind and auction
rate features.
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- -----------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- -----------------------------------------------------------------------------------------------------------------------------------
Industry concentration The Fund may not invest more than 25% of its The Fund will not concentrate its assets in the
assets in any one industry. securities of issuers in any one industry except that
the Fund may invest 25% or more of its assets in
issuers in any one or more states or securities the
payments on which are derived from gas, electric,
telephone, sewer and water segments of the municipal
bond market.
- -----------------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid If immediately after and as a result of such The Fund does not have a policy again investing in
securities action the value of the following securities, illiquid securities.
in the aggregate, would exceed 15% of the
Fund's net assets, the Fund 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 Fund, (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 The Fund may borrow money (i) from banks or The Fund may not borrow money, except from a bank for
(ii) by engaging in reverse repurchase temporary or emergency purposes and not for
agreements. The Fund will not commit to investment purposes, and then only in an amount not
additional securities purchases if total exceeding 5% of the value of the Fund's total assets
outstanding borrowings are equal to 5% or more at the time of borrowing.
of total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may not make loans, except through the
institutional investors with a value of up to purchase of securities, including repurchase
33% of the Fund's total assets. agreements, in accordance with its investment
objective, policies and limitations.
- -----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. The Fund may use futures and options on securities,
However, the Fund may (i) obtain short-term indices and currencies, forward currency exchange
credits as necessary to clear its purchases and contracts and other derivatives. The Fund does not
sales of securities, and (ii) make margin use derivatives as a primary investment technique and
deposits in connection with its use of generally limits their use to hedging. However, the
financial options and futures, forward and spot Fund may use derivatives for a variety of
currency contracts, swap transactions and other non-principal purposes, including:
financial contracts or derivative instruments.
o As a hedge against adverse changes in stock
market prices, interest rates or currency
exchange rates
o As a substitute for purchasing or selling
securities
o To increase the Fund's return as a
non-hedging strategy that may be considered
speculative
- -----------------------------------------------------------------------------------------------------------------------------------
3
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Tax Free Fund
the Fund are subject to a 3.50% front-end sales you receive in the Reorganization will not be subject
charge. to any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 4% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. Tax Free Fund and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of 1% if you future without paying any sales charge.
redeem Class C shares within one year of
purchase. Except as described above, Class A shares of Pioneer
Tax Free Fund are subject to a front-end sales charge
Purchases of Investor Class shares of the Fund of up to 4.50%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- -----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco IT Muni Bond Fund pays an advisory fee Pioneer Tax Free Fund pays Pioneer a management fee
fees on a monthly basis at an annual rate as follows: equal to:
$0 - $250,000,000: 0.50 of 1% 0.50% of average daily net assets up to $250 million;
$250,000,001 - $750,000,000: 0.45 of 1% 0.48% of the next $50 million; and
Over $750,000,000: 0.40 of 1% 0.45% on assets over $300 million.
SAM serves as administrator and Fund accounting During its most recent fiscal year, Pioneer Tax Free
agent for the Fund. The Fund pays SAM an Fund paid an advisory fee at an average rate of 0.49%
administrative services fee of 0.05% of the of average daily net assets.
Fund's average daily net assets up to the first
$200,000,000 and 0.01% of its net assets In addition, the Fund reimburses Pioneer for certain
thereafter, and an accounting fee of 0.04% of Fund accounting and legal expenses incurred on behalf
the Fund's average daily net assets up to the of the Fund and pays a separate shareholder
first $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate
thereafter. of Pioneer.
During its most recent fiscal year, Safeco IT For the fiscal year ended December 31, 2003, the
Muni Bond Fund paid aggregate advisory and Fund's annual operating expenses for Class A shares
administration fees at an average rate of 0.59% were 0.93% per share.
of average daily net assets.
Pioneer has agreed until the second anniversary of
SAM had contractually agreed until April 30, the closing of the Reorganization to limit the
2009, to pay certain Fund operating expenses ordinary operating expenses (excluding taxes,
(but not all of the operating expenses of the commissions, interest and extraordinary expenses) of
Fund) that exceeded the rate of 0.40% per annum the Investor Class to 0.70% of the average daily net
of the Fund's average daily net assets. This assets attributable to the Investor Class.
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.15%, and without giving
effect to the expense limitation, were 7.70%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 1.90%, and without giving
effect to the expense limitation, were 16.43%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares,
- -----------------------------------------------------------------------------------------------------------------------------------
4
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
after giving effect to the expense limitation
were 1.90%, and without giving effect to the
expense limitation, were 20.82% per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation were 0.90%, and without
giving effect to the expense limitation, were
1.04% per share.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Tax Free Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco IT Muni
investment advisers, banks and other financial Bond Fund who own shares in their own name as of the
institutions that have entered into selling closing date of the Reorganization and who maintain
agreements with the Fund's principal their accounts may buy shares of any fund in the
underwriter, as described in the Fund's Pioneer family of funds through such accounts in the
prospectus. future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer Tax Free Fund by telephone or
online.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Tax Free Fund
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
Fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would
you have exchanged for Class A shares of be for Class A shares, which would be subject to Rule
another fund. 12b-1 fees. An exchange generally is treated as a sale
and a new purchase of shares for federal income tax
Certain account transactions may be done by purposes.
telephone.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Tax Free Fund for shares of other Pioneer
Funds by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
---------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Tax Free Fund by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. The
market value of a fixed income security tends to be more volatile the longer the
maturity of such security. Since Pioneer Tax Free Fund can invest in securities
of longer maturity than your Fund, an investment in Pioneer Tax Free Fund may
have correspondingly greater risks. You could lose money on your investment in
either Fund or not make as much as if you invested elsewhere if:
o Interest rates go up, causing the value of debt securities in the Fund's
portfolio to decline
5
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest or has its credit rating downgraded
o New federal or state legislation adversely affects the tax-exempt status of
securities held by the Fund or the financial ability of municipalities to
repay these obligations
o The issuer of a security owned by the Fund may not be able to make timely
payments because of a general economic downturn or increased governmental
costs
o To the extent the Fund concentrates its investments in a single state or
securities the payments on which are dependent upon a single industry, the
Fund will be more susceptible to risks associated with that state or
industry
o The Fund's investment adviser is incorrect in its expectation of changes in
interest rates or the credit quality of an issuer
Although distributions of interest income from the Funds' tax-exempt securities
are generally exempt from regular federal income tax, distributions from other
sources, including capital gain distributions and any gains on the sale of your
shares, are not. You should consult a tax adviser about whether an alternative
minimum tax applies to you and about state and local taxes on Fund
distributions.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
SAFECO IT MUNI BOND FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -5.62
1995 15.22
1996 3.75
1997 7.5
1998 5.33
1999 -0.84
2000 7.44
2001 4.53
2002 8.89
2003 4.78
* During the period shown in the bar chart, your Fund's highest quarterly return
was 6.25% for the quarter ended March 31, 1995, and the lowest quarterly return
was -4.47% for the quarter ended March 31, 1994.
PIONEER TAX FREE FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -6.38
1995 16.83
1996 3.57
1997 8.94
1998 6.2
1999 -4.29
2000 11.63
2001 4.13
2002 7.07
2003 5.8
* During the period shown in the bar chart, Pioneer Tax Free Fund's highest
quarterly return was 7.11% for the quarter ended March 31, 1995, and the lowest
quarterly return was -5.87% for the quarter ended March 31, 1994.
6
SAFECO IT MUNI BOND FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO IT MUNI BOND FUND, CLASS A SHARES
Return Before Taxes 0.94% 4.12% 4.57%
Return After Taxes on Distributions (2) 0.85% 4.01% 4.51%
Return After Taxes on Distributions and
Sale of Fund Shares (2) 1.95% 4.05% 4.49%
SAFECO IT MUNI BOND FUND, CLASS B SHARES
Return Before Taxes -0.11% 4.56% 4.87%
SAFECO IT MUNI BOND FUND, CLASS C SHARES
Return Before Taxes 2.89% 4.73% 4.87%
SAFECO IT MUNI BOND FUND, INVESTOR CLASS SHARES
Return Before Taxes 4.78% 4.91% 4.96%
Return After Taxes on Distributions (1) 4.69% 4.79% 4.90%
Return After Taxes on Distributions and
Sale of Fund Shares (1) 4.56% 4.75% 4.84%
LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX (2) 5.45% 5.92% 5.86%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Lehman Brothers 7-Year Municipal Bond Index, an unmanaged index of
binds rated BAA3 or above, issued as part of a deal of at least $50
million, having an amount of at least $5 million and maturing in six or
more years, is for reference only and does not mirror Safeco IT Muni Bond
Fund's investments.
PIONEER TAX FREE FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
PIONEER TAX FREE FUND, CLASS A SHARES
Return Before Taxes 1.01% 3.77% 4.66%
Return After Taxes on Distributions (1) 1.02% 3.66% 4.43%
Return After Taxes on Distributions and 2.30% 3.83% 4.55%
Sale of Fund Shares (1)
LEHMAN BROTHERS MUNICIPAL BOND INDEX (2) 5.31% 5.83% 6.03%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Lehman Brothers Municipal Bond Index, an unmanaged measure of
approximately 15,000 municipal bonds with a minimum credit rating of BBB,
and that were a part of at least a $50 million issuance made within the
past fives years and have a maturity of at least two years, is for
reference only and does not mirror Pioneer Tax Free Fund's investments.
Pioneer Tax Free Fund's Investor Class shares will not be outstanding prior to
the closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A shares due to the lower expenses applicable to
the Investor Shares class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Tax Free
7
Fund, the expenses of Pioneer Tax Free Fund for the period ended December 31,
2003. Future expenses for all share classes may be greater or less.
-----------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES PIONEER TAX
(PAID DIRECTLY SAFECO IT MUNI SAFECO IT MUNI SAFECO IT MUNI SAFECO IT MUNI FREE FUND
FROM YOUR BOND FUND BOND FUND BOND FUND BOND FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
-----------------------------------------------------------------------------------------------------
Maximum sales 3.50%(6) None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
-----------------------------------------------------------------------------------------------------
Maximum deferred None 4.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
-----------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
-----------------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
-----------------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
fee
-----------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING
EXPENSES
(DEDUCTED FROM
FUND ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
-----------------------------------------------------------------------------------------------------
Management fee 0.50% 0.50% 0.50% 0.50% 0.49%
-----------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service (12b-1) fee
-----------------------------------------------------------------------------------------------------
Other expenses 6.95% 14.93% 19.32% 0.54% 0.21%
-----------------------------------------------------------------------------------------------------
Total fund 7.70% 16.43% 20.82% 1.04% 0.70%
operating expenses
-----------------------------------------------------------------------------------------------------
Expense reduction 6.55%(2) 14.53%(2) 18.92%(2) 0.14%(2) None(3)
-----------------------------------------------------------------------------------------------------
Net fund operating 1.15% 1.90% 1.90% 0.90% 0.70%
expenses
-----------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Tax Free
Fund through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Tax Free Fund or of any fund in the
Pioneer family of funds through such account in the future without paying this
sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco IT Muni
Bond Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all Fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 Tax Free Fund to 0.70% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
8
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco IT Muni Bond
Fund and two years for Pioneer Tax Free Fund and (f) and the Investor Class
shares of Pioneer Tax Free Fund convert to Class A shares after two years. The
examples are for comparison purposes only and are not a representation of either
Fund's actual expenses or returns, either past or future.
----------------------------------------------------------
EXAMPLE
----------------------------------------------------------
SAFECO IT MUNI BOND FUND
----------------------------------------------------------
CLASS A SHARES
----------------------------------------------------------
Year 1 $ 463
----------------------------------------------------------
Year 3 $ 703
----------------------------------------------------------
Year 5 $ 961
----------------------------------------------------------
Year 10 $ 1,699
----------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
----------------------------------------------------------
Year 1 $ 593 $ 193
----------------------------------------------------------
Year 3 $ 797 $ 597
----------------------------------------------------------
Year 5 $ 1,126 $ 1,026
----------------------------------------------------------
Year 10 $ 1,764 $ 1,764
----------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
----------------------------------------------------------
Year 1 $ 293 $ 193
----------------------------------------------------------
Year 3 $ 597 $ 597
----------------------------------------------------------
Year 5 $ 1,026 $ 1,026
----------------------------------------------------------
Year 10 $ 2,222 $ 2,222
----------------------------------------------------------
INVESTOR CLASS SHARES
----------------------------------------------------------
Year 1 $ 92
----------------------------------------------------------
Year 3 $ 287
----------------------------------------------------------
Year 5 $ 498
----------------------------------------------------------
Year 10 $ 1,108
----------------------------------------------------------
PIONEER TAX FREE FUND
----------------------------------------------------------
INVESTOR CLASS SHARES
----------------------------------------------------------
Year 1 $ 71
----------------------------------------------------------
Year 3 $ 248
----------------------------------------------------------
Year 5 $ 466
----------------------------------------------------------
Year 10 $ 1,094
----------------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco IT Muni Bond Fund. The Trustees considered the following matters,
among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the historical investment performance of Pioneer Tax Free Fund and your
Fund are comparable. For the one, five and ten year periods ended June 30, 2004,
Class A shares of Pioneer Tax Free Fund had an average annual return of ___%,
____% and ____% compared to an average annual of the Class A shares and Investor
Class shares of ___% and ___% (one year), and __%
9
(five years) and ____% and ____% (ten years), 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 Fund
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 Fund'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 Tax Free Fund'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 the Investor Class of Pioneer Tax Free Income Fund to
0.70% of average daily net assets. The estimated expenses of the Investor Class
shares of Pioneer Tax Free Fund are below both the gross expenses and expenses
net of expense reimbursement of each class of shares of your Fund. Although you
will experience higher expenses once the Investor Class shares convert to Class
A shares after two years, your expenses will remain the same until the second
anniversary of the Reorganization.
FIFTH, the substantially larger size of Pioneer Tax Free Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
The trustees also considered the difference in the investment policies of the
two Funds, particularly Pioneer Tax Free Fund's ability to invest in securities
with long maturities than your Fund. While the difference in policy may result
in Pioneer Tax Free Fund having greater risks of volatility of net assets value
than your Fund, the trustees believe that the factors in favor of the
reorganizing mitigated the risk.
SEVENTH, the trustees also considered the differences in the investment policies
of the two Funds, particularly Pioneer Tax Free Fund's ability to invest in
securities with longer maturities than your Fund. While this may result in
Pioneer Tax Free Fund having greater volatility of net asset value than your
Fund, the trustees believe that the factors in favor of the Reorganization
mitigate this risk.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra".
The board of trustees of Pioneer Tax Free Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Tax Free Fund
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 Tax Free Fund and its
shareholders.
10
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003.
----------------------------------------------------------------------------
SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
----------------------------------------------------------------------------
NET ASSETS (in millions) $ 16.8 $ 718.4
----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 11.14 $ 11.70
Class B shares $ 11.13 $ 11.59
Class C shares $ 11.13 $ 11.52
Investor Class shares $ 11.14 N/A
----------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 37,000
Class B shares 14,000
Class C shares 9,000
Investor Class shares 1,450,000 N/A
----------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Tax Free Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer Tax Free
Fund'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 Fund. Similarly, the
board of trustees of Pioneer Tax Free Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of Pioneer Tax Free Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
SAFECO INTERMEDIATE-TERM U.S. GOVERNMENT FUND AND
PIONEER AMERICA INCOME TRUST
PROPOSAL 8
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 U.S. GOVERNMENT FUND TO THE PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Taxable Bond Trust, a A diversified open-end management investment company
diversified open-end management investment organized as a Massachusetts business trust.
company organized as a Delaware statutory
trust.
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets as of $66.7 million $208.2 million
June 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (since 2003 and until August Portfolio Manager:
2, 2004): Day-to-day management of the Fund's portfolio is the
Paul Stevenson responsibility of a team of fixed income portfolio
CFA, Vice President, SAM managers led by Kenneth J. Taubes.
Joined SAM in 1988
Mr. Taubes joined Pioneer as a senior vice president
Tim Hokari in September 1998 and has been an investment
Assistant Vice President, SAM professional since 1982.
Joined SAM in 2000
Lesley Fox
Assistant Vice President, SAM
Joined SAM in 2000
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks a high level of current income The Fund seeks as high a level of current income as
as is consistent with the preservation of is consistent with the preservation of capital and
capital by investing in securities issued or prudent investment risk.
guaranteed by the U.S. government or its
agencies or instrumentalities.
----------------------------------------------------------------------------------------------------------
Each Fund 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 Fund invests at The Fund invests exclusively in securities that are
least 80% of its net assets (plus any backed by the full faith and credit of the U.S.
borrowings for investment purposes) in government, and repurchase agreements and
securities issued or guaranteed by the U.S. "when-issued" commitments with respect to these
government or its agencies and securities. These securities include:
instrumentalities.
o U.S. Treasury obligations, which differ only
U.S. government securities in which the Fund in their interest rates, maturities and times of
invests include, but are not limited to: issuance, including U.S. Treasury bills
(maturities of one year or less), U.S. Treasury
o Mortgage-related securities backed by notes (maturities of one to 10 years), and U.S.
pools of mortgages, including modified Treasury bonds (generally maturities greater than
pass-through 10 years)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
certificates and collateralized
mortgage obligations issued by the GNMA, o Obligations issued by or guaranteed as to
the Federal Home Loan Mortgage Corporation principal and interest by the U.S. Treasury and
(FHLMC), and the Federal National Mortgage certain agencies and instrumentalities of the
Association (FNMA) U.S. government, such as Government National
o U.S. Treasury bills, notes, bonds, and Mortgage Association (GNMA) certificates and
interest or principal components of Federal Housing Administration (FHA) debentures,
Separate Trading Registered Interest for which the U.S. Treasury unconditionally
and Principal Securities (STRIPS) guarantees payment of principal and interest
o Other U.S. government securities
guaranteed by the full faith of the U.S. The Fund's investments may have all types of
government b not direct obligations of the interest repayment and reset terms, including fixed
U.S. Treasury. rate, adjustable rate, zero coupon, contingent,
o Government-sponsored agency securities deferred, payment-in-kind and auction rate features.
o Securities issued by the Tennessee
Valley Authority The Fund may invest in securities of any maturity.
Although the average dollar weighted maturity of the
The average dollar weighted maturity of the Fund's portfolio may vary significantly, it
Fund will generally range between three and ten generally will not exceed 20 years.
years, although the maturity of individual
securities may be out of that range.
- ------------------------------------------------------------------------------------------------------------------------------------
Investment strategies The decision to buy or sell securities in the Pioneer considers both broad economic factors and
Fund generally falls into one or more of the issuer-specific factors in selecting a portfolio
following categories: designed to achieve the Fund's investment objective.
o To move in or to of various sectors In assessing the appropriate maturity and rating
based upon their relative values weighting of the Fund 's portfolio, Pioneer considers
o To reduce the Fund's investments in a variety of factors that are expected to influence
sectors viewed as overhauled, which economic activity and interest rates. These factors
increasing the Fund's investment in include fundamental economic indicators such as the
undervalued sectors rates of economic growth and inflation, Federal
o To realign the overall maturity of Reserve monetary policy and the relative value of the
duration of the Fund's portfolio U.S. dollar compared to other currencies. Once
o To raise cash to meet shareholder Pioneer determines the preferable portfolio
redemptions characteristics, Pioneer selects individual
securities based upon the terms of the securities
With each buy/sell decision, the adviser also (such as yields compared to U.S. Treasuries or
considers the effect the transaction may have comparable issues), and sector diversification.
on the performance of the Fund's portfolio as a
whole
- ------------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest in mortgage-backed or The Fund may invest in mortgage-backed securities
asset-backed securities. issued by agencies or instrumentalities of the U.S.
government. These securities represent direct or
The Fund may purchase "when-issued" or indirect participation in, or are collateralized by
"delayed-delivery" securities, and may purchase and payable from, mortgage loans secured by real
or sell securities on a "forward commitment" estate.
basis.
The Fund may purchase and sell securities, including
The Fund may invest up to 20% of assets in GNMA certificates, on a when-issued or delayed
foreign securities. delivery basis. The Fund may engage in these
transactions when it believes they would result in a
favorable price and yield for the security being
purchased or sold.
- ------------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- ------------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ------------------------------------------------------------------------------------------------------------------------------------
Industry concentration The Fund may not invest more than 25% of its The Fund does not have a policy against industry
assets in any one industry. concentration.
- ------------------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid If immediately after and as a result of such The Fund does not have a policy again investing in
securities action the value of the following securities, illiquid securities.
in the aggregate, would exceed 15% of the
Fund's net assets, the Fund 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 Fund, (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 The Fund may borrow money (i) from banks or The Fund may not borrow money, except from banks to
(ii) by engaging in reverse repurchase meet redemptions in amounts not exceeding 33 1/3%
agreements. The Fund will not commit to (taken at the lower of cost or current value) of its
additional securities purchases if total total assets (including the amount borrowed). The
outstanding borrowings are equal to 5% or more Fund does not intend to borrow money during the
of total assets. coming year, and will do so only as a temporary
measure for extraordinary purposes or to facilitate
redemptions. The Fund will not purchase securities
while any borrowings are outstanding.
- ------------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may not make loans, except through the
institutional investors with a value of up to purchase of securities, including repurchase
33% of the Fund's total assets. agreements, in accordance with its investment
objective, policies and limitations.
- ------------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ------------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer America Income
the Fund are subject to a 3.50% front-end sales Trust you receive in the Reorganization will not be
charge. subject to any sales charge. Moreover, if you own
shares in your own name as of the closing of the
Contingent deferred sales charge of up to 4% if Reorganization (i.e., not in the name of a broker)
you redeem Class B shares within six years of and maintain your account, you may purchase Class A
purchase. shares of Pioneer America Income Trust and Class A
shares of any fund in the Pioneer family of funds
Contingent deferred sales charge of 1% if you through such account in the future without paying any
redeem Class C shares within one year of sales charge.
purchase.
Except as described above, Class A shares of Pioneer
Purchases of Investor Class shares of the Fund America Income Trust are subject to a front-end sales
are not subject to a sales load. charge of up to 4.50%.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ------------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco U.S. Government Fund pays an advisory Pioneer America Income Trust pays Pioneer a
fees fee on a monthly basis at an annual rate as management fee equal to 0.50% of the Fund's average
follows: daily net assets.
$0 - $250,000,000: 0.55 of 1%
$250,000,001 - $750,000,000: 0.50 of 1% During its most recent fiscal year, Pioneer America
Income
- ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
$750,000,001 - $1,250,000,000: 0.45 of 1% Trust paid an advisory fee at an average rate
Over $1,250,000,000: 0.40 of 1% of 0.50% of average daily net assets.
SAM serves as administrator and Fund accounting In addition, the Fund reimburses Pioneer for certain
agent for the Fund. The Fund pays SAM an Fund accounting and legal expenses incurred on behalf
administrative services fee of 0.05% of the of the Fund and pays a separate shareholder
Fund's average daily net assets up to the first servicing/transfer agency fee to PIMSS, an affiliate
$200,000,000 and 0.01% of its net assets of Pioneer.
thereafter, and an accounting fee of 0.04% of
the Fund's average daily net assets up to the For the fiscal year ended December 31, 2003, the
first $200,000,000 and 0.01% of its net assets Fund's annual operating expenses for Class A shares
thereafter. were 0.93% per share.
During its most recent fiscal year, Safeco U.S. Pioneer has agreed until the second anniversary of
Government Fund paid aggregate advisory and the closing of the Reorganization to limit the
administration fees at an average rate of 0.64% ordinary operating expenses (excluding taxes,
of average daily net assets. commissions, interest and extraordinary expenses) of
the Investor Class to 0.74% of the average daily net
SAM had contractually agreed until April 30, assets attributable to the Investor Class.
2009, to pay certain Fund operating expenses
(but not all of the operating expenses of the
Fund) that exceeded the rate of 0.40% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.20%, and without giving
effect to the expense limitation, were 1.31%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 1.95%, and without giving
effect to the expense limitation, were 2.10%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 1.95%, and without giving
effect to the expense limitation, were 43.56%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares were 0.94% per share.
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer America Income
underwriter or through brokers, registered Trust's distributor. Existing shareholders of Safeco
investment advisers, banks and other financial U.S. Government Fund who own shares in their own name
institutions that have entered into selling as of the closing date of the Reorganization and who
agreements with the Fund's principal maintain their accounts may buy shares of any fund in
underwriter, as described in the Fund's the Pioneer family of funds through such accounts in
prospectus. the future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer America Income Trust by telephone
or online.
- ------------------------------------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer America Income
acquire through dividend reinvestment or other Trust without incurring any fee on the exchange with
Fund distributions or for Class A shares that the more than 62 other Pioneer Funds. Your exchange
you have exchanged for Class A shares of would be for Class A shares, which would be subject to a
another fund. Rule 12b-1 fee. An exchange generally is treated as a
sale and a new purchase of shares for federal income tax
Certain account transactions may be done by purposes.
telephone.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer America Income Trust for shares of other
Pioneer Funds by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
----------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer America Income Trust by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
While each Fund has a similar investment objective, primary investment policies
and strategies, there are differences which effect the risk of each Fund. The
market value of fixed income securities tends to be more volatile the greater
the maturity of the security. Pioneer America Income Trust can invest in
securities of greater average maturity than your Fund and consequently may have
greater risk. However, your Fund may invest in U.S. government securities that
are not backed by the full faith and credit of the U.S. Treasury, and
consequently have an element of credit risk that is not present in Pioneer
America Income Trust. Generally, however, the Funds are subject to the same
principal risks. You could lose money on your investment in either Fund or not
make as much as if you invested elsewhere if:
o Interest rates go up, causing the value of debt securities in the
Fund's portfolio to decline
o During periods of declining interest rates, the issuer of a security
may exercise its option to prepay principal earlier than scheduled,
forcing the Fund to reinvest in lower yielding securities. This is
known as call or prepayment risk
o During periods of rising interest rates, the average life of certain
types of securities may be extended because of slower than expected
principal payments. This may lock in a below market interest rate,
increase the security's duration (the estimated period until the
security is paid in full) and reduce the value of the security. This
is known as extension risk
o Pioneer's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
To the extent the Fund invests significantly in mortgage-backed securities, its
exposure to prepayment and extension risks may be greater than other investments
in fixed income securities.
Although mortgage pools issued by U.S. agencies are guaranteed with respect to
payments of principal and interest, such guarantee does not apply to losses
resulting from declines in the market value of such securities.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
5
SAFECO U.S. GOVERNMENT FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS(*)
[THE FOLLWING TABLE WAS REPRESENTED BY A BAR GRAPFH IN THE PRINTED MATERIAL.]
1994 -4.27%
1995 15.48
1996 3.98
1997 8.97
1998 6.84
1999 0.16
2000 9.5
2001 7.29
2002 9.84
2003 1.4
(*)During the period shown in the bar chart, your Fund's highest quarterly
return was 4.79% for the quarter ended March 31, 1995, and the lowest quarterly
return was -3.58% for the quarter ended March 31, 1994.
PIONEER AMERICA INCOME TRUST - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS(*)
[THE FOLLWING TABLE WAS REPRESENTED BY A BAR GRAPFH IN THE PRINTED MATERIAL.]
1994 -3.97
1995 16.07
1996 2.29
1997 9.51
1998 7.78
1999 -2.52
2000 11.58
2001 5.92
2002 9.70
2003 1.47
(*)During the period shown in the bar chart, the Fund's highest quarterly return
was 4.72% for the quarter ended June 30, 1995, and the lowest quarterly return
was -3.14% for the quarter ended March 31, 1994.
6
SAFECO U.S. GOVERNMENT FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO U.S. GOVERNMENT FUND, CLASS A SHARES
Return Before Taxes -2.41% 4.60% 5.30%
Return After Taxes on Distributions(2) -3.81% 2.47% 2.93%
Return After Taxes on Distributions and -1.57% 2.58% 2.99%
Sale of Fund Shares(2)
SAFECO U.S. GOVERNMENT FUND, CLASS B SHARES
Return Before Taxes -3.50% 4.62% 5.39%
SAFECO U.S. GOVERNMENT FUND, CLASS C SHARES
Return Before Taxes -0.49% 4.81% 5.40%
SAFECO U.S. GOVERNMENT FUND, INVESTOR CLASS SHARES
Return Before Taxes 1.40% 5.56% 5.78%
Return After Taxes on Distributions(1) -0.14% 3.34% 3.36%
Return After Taxes on Distributions and 0.91% 3.34% 3.39%
Sale of Fund Shares(1)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT INDEX(2) 2.30% 6.16% 6.33%
(reflects no deduction for fees, expenses or taxes)
MERRILL LYNCH U.S. TREASURY/AGENCY MASTER INDEX(2) 2.36% 6.22% 6.71%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Lehman Brothers Intermediate Government Index, an unmanaged index
comprised of U.S. Treasury and U .S. agency issues from its more
comprehensive U.S. Aggregate Index, excluding maturities below one year and
above 9.9 years, and the Merrill Lynch U.S. Treasury/Agency Master Index,
an unmanaged index of U.S. Treasury and U.S. agency securities, are for
reference only and do not mirror your Fund's investments.
PIONEER AMERICA INCOME TRUST - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
PIONEER AMERICA INCOME TRUST, CLASS A SHARES
Return Before Taxes -3.06% 4.14% 5.04%
Return After Taxes on Distributions (1) -4.61% 2.05% 2.65%
Return After Taxes on Distributions and -2.00% 2.20% 2.75%
Sale of Fund Shares (1)
LEHMAN BROTHERS GOVERNMENT BOND INDEX(2) 2.36% 6.26% 6.72%
(reflects no deduction for fees, expenses or taxes)
LEHMAN BROTHERS FIXED RATE MORTGAGE-BACKED
SECURITIES INDEX(2) (reflects no deduction for fees,
expenses or taxes) 3.05% 6.55% 6.89%
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Lehman Brothers Government Bond Index, an unmanaged measure of the
performance of U.S. Treasury debt, all publicly issued debt of U.S.
government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. government, and the Lehman Brothers Fixed Rate
Mortgage-Backed Securities Index, an unmanaged index including 15- and
30-year fixed rate securities backed by mortgage pools of the GNMA, FHLMC
and FNMA, are for reference only and do not mirror the Fund's investments.
7
Pioneer America Income Trust's Investor Class shares will not be outstanding
prior to the closing of the Reorganization and consequently have no performance
history. However, the performance record of the Investor Class would be modestly
higher than the performance of Class A shares due to the lower expenses
applicable to the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer America Income Trust,
the expenses of Pioneer America Income Trust for the period ended December 31,
2003. Future expenses for all share classes may be greater or less.
--------------------------------------------------------------------------------------------
PIONEER
SHAREHOLDER AMERICA
TRANSACTION FEES SAFECO U.S. SAFECO U.S. SAFECO U.S. SAFECO U.S. INCOME
(PAID DIRECTLY GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT TRUST
FROM YOUR FUND FUND FUND FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
--------------------------------------------------------------------------------------------
Maximum sales 3.50%(6) None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
--------------------------------------------------------------------------------------------
Maximum deferred None 4.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
--------------------------------------------------------------------------------------------
Redemption fees 2.00% None None 2.00% N/A
for shares held less
than 30 days
--------------------------------------------------------------------------------------------
Wire redemption $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
fee
--------------------------------------------------------------------------------------------
Annual low $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
balance fee
--------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM
FUND ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
--------------------------------------------------------------------------------------------
Management fee 0.55% 0.55% 0.55% 0.55% 0.50%
--------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service (12b-1) fee
--------------------------------------------------------------------------------------------
Other expenses 0.51% 0.55% 42.01% 0.39% 0.45%
--------------------------------------------------------------------------------------------
Total fund 1.31% 2.10% 43.56% 0.94% 0.95%
operating expenses
--------------------------------------------------------------------------------------------
Expense reduction 0.11%(2) 0.15%(2) 41.61%(2) N/A 0.21% (3)
--------------------------------------------------------------------------------------------
Net fund operating 1.20% 1.95% 1.95% 0.94% 0.74%
expenses
--------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer America
Income Trust through the Reorganization. In addition, shareholders of your Fund
who own shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer America Income Trust or of any fund in
the Pioneer family of funds through such account in the future without paying
this sales charge.
8
(2) As described above, SAM had contractually agreed to reimburse Safeco U.S.
Government Fund to the extent the Fund's total ordinary operating expenses
exceeded 0.40% of the Fund's average daily net asset value in a fiscal year.
This arrangement included all Fund operating expenses except management fees,
Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 America Income Trust to 0.74% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco U.S.
Government Fund and two years for Pioneer America Income Trust and (f) and the
Investor Class shares of Pioneer America Income Trust convert to Class A shares
after two years. The examples are for comparison purposes only and are not a
representation of either Fund's actual expenses or returns, either past or
future.
-------------------------------------------------------------------
EXAMPLE
-------------------------------------------------------------------
SAFECO U.S. GOVERNMENT FUND
-------------------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------------------
Year 1 $ 468
-------------------------------------------------------------------
Year 3 $ 718
-------------------------------------------------------------------
Year 5 $ 978
-------------------------------------------------------------------
Year 10 $ 1,754
-------------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
-------------------------------------------------------------------
Year 1 $ 598 $ 198
-------------------------------------------------------------------
Year 3 $ 812 $ 612
-------------------------------------------------------------------
Year 5 $ 1,152 $ 1,052
-------------------------------------------------------------------
Year 10 $ 1,819 $ 1,819
-------------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
-------------------------------------------------------------------
Year 1 $ 298 $ 198
-------------------------------------------------------------------
Year 3 $ 612 $ 612
-------------------------------------------------------------------
Year 5 $ 1,052 $ 1,052
-------------------------------------------------------------------
Year 10 $ 2,275 $ 2,275
-------------------------------------------------------------------
INVESTOR CLASS SHARES
-------------------------------------------------------------------
Year 1 $ 96
-------------------------------------------------------------------
Year 3 $ 300
-------------------------------------------------------------------
Year 5 $ 520
-------------------------------------------------------------------
Year 10 $ 1,155
-------------------------------------------------------------------
PIONEER AMERICA INCOME TRUST
-------------------------------------------------------------------
INVESTOR CLASS SHARES
-------------------------------------------------------------------
Year 1 $ 76
-------------------------------------------------------------------
Year 3 $ 281
-------------------------------------------------------------------
Year 5 $ 1,311
-------------------------------------------------------------------
Year 10 $ [ ]
-------------------------------------------------------------------
9
COMPARISON OF DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST
CHARACTERISTICS OF SAFECO U.S. GOVERNMENT TRUST (A SERIES OF A DELAWARE
STATUTORY TRUST)
o GOVERNANCE AND MANAGEMENT. Safeco U.S. Government Fund is a series of the
Safeco Taxable Bond Trust, a Delaware statutory trust. The governing
instrument of Safeco Taxable Bond Trust is its Trust Instrument (the "Trust
Instrument"). The Trustees of the Safeco Taxable Bond Trust are responsible
for the management and supervision of Safeco U.S. Government Fund.
o SHARE CAPITAL AND CLASSES. The Trust Instrument of Safeco Taxable Bond
Trust permits the Trustees to issue an unlimited number of full and
fractional shares of beneficial interest of Safeco U.S. Government Fund
without par value. As of the date of this prospectus and proxy statement,
the Trustees have authorized shares of Safeco U.S. Government Fund and have
authorized the issuance of four classes of shares of Safeco U.S. Government
Fund, designated as Class A, Class B, Class C and Investor Class Shares.
The shares of each class of Safeco U.S. Government Fund represent an equal
proportionate interest in the aggregate net assets attributable to that
class of the Fund. Holders of each class of shares have certain exclusive
voting rights on matters relating to their respective distribution plans.
The different classes of Safeco U.S. Government Fund may bear different
expenses relating to the cost of holding shareholder meetings necessitated
by the exclusive voting rights of any class of shares. In the event of
liquidation, shareholders of each class are entitled to share pro rata in
the net assets of their Fund available for distribution to these
shareholders. Shares of each class entitle their holders to one vote per
share, are freely transferable and have no preemptive, subscription or
conversion rights.
o MEETINGS. Under Delaware law, Safeco Taxable Bond Trust is not required to
hold annual shareholder meetings for any the Fund. Unless otherwise
required by the 1940 Act, the Fund has have no intention of holding annual
meetings of shareholders. Pursuant to the Trust Instrument, shareholders
have power to vote only on certain matters, including (a) the election and
removal of trustees; (b) approval of any investment management agreement;
(c) termination of the Safeco Taxable Bond Trust; (d) certain amendments to
the Trust Instrument; and (e) such additional matters relating to the Trust
as may be required by law or as the Trustees may consider desirable.
o LIABILITY OF SHAREHOLDERS. Delaware law affords shareholders of a Delaware
statutory trust with the same protections afforded stockholders of a
Delaware corporation, which means shareholders are not generally subject to
liability for the debts or obligations of the statutory trust unless the
entity' s trust instrument provides otherwise. The Trust Instrument of the
Safeco Taxable Bond Trust contains an express disclaimer of shareholder
liability for acts, obligations or affairs of Safeco U.S. Government Fund
and provides for indemnification out of the Fund's assets for all losses
and expenses of any shareholder held personally liable for reason of being
or having been a shareholder.
CHARACTERISTICS OF PIONEER AMERICA INCOME TRUST (A MASSACHUSETTS BUSINESS TRUST)
o GOVERNANCE AND MANAGEMENT. Pioneer America Income Trust is a Massachusetts
business trust. The governing instrument of Pioneer America Income Trust is
its Agreement Declaration of Trust ("Declaration of Trust"). The business
of Pioneer America Income Trust is managed under the direction of its Board
of Trustees. The Trustees, in addition to viewing the actions of the
Pioneer America Income Trust's investment adviser, decide upon matters of
general policy at their regular meetings. The officers of Pioneer America
Income Trust supervise its business operations.
o SHARE CAPITAL AND CLASSES. Pioneer America Income Trust is authorized to
issue shares of capital stock and to increase or decrease the aggregate
number of shares of capital stock or the number of shares of stock of any
class that the Fund has authority to issue. Each share is entitled to one
vote on all questions relating to the Fund, and each share is entitled to
participate equally in dividends and capital gains distributions and in the
residual assets of the respective class in the event of liquidation.
o MEETINGS. Under Massachusetts law, Pioneer America Income Trust, as
registered open-end investment companies, are not required to hold annual
shareholder meetings. Unless otherwise required by the 1940 Act, the Papp
Funds have no intention of holding annual meetings of stockholders.
Pursuant to the Declaration of Trust, special meetings of shareholders may
be called at any time by the Chairman, President or by the Board of
Trustees or by the secretary upon the written request of shareholders
entitled to cast at least 25% of the votes entitled to be cast at such
meeting, provided that such request shall state the purposes of such
meeting and the matters proposed to be acted on.
o LIABILITY OF STOCKHOLDERS. Shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable for the
obligations of the trust. However, the Declaration contains an express
disclaimer of shareholder liability for acts or obligations of the Fund or
any series of the Fund and provides that notice of such disclaimer may be
given in each agreement, obligation or instrument entered into or executed
by the Fund or its Trustees. Moreover, the Declaration provides for the
indemnification out of Fund property of any shareholders held personally
liable for any obligations of the Fund or any series of the Fund. The
Declaration also provides that the Fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation
of the Fund and satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss beyond his or her investment because
of shareholder liability would be limited to circumstances in
10
which the fund itself will be unable to meet its obligations. In light of
the nature of the Fund's business and the nature and amount of its assets,
the possibility of the Fund's liabilities exceeding its assets, and
therefore a shareholder's risk of personal liability, is remote.
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco U.S. Government Fund. The Trustees considered the following matters,
among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the performance of Pioneer America Income Trust is generally consistent
with the historical investment performance of your Fund. For the one, five and
ten year periods ended [June 30], 2004, Class A shares of Pioneer America Income
Trust had an average annual return of [xx]% compared to an average annual of the
Class A shares and Investor Class shares of [xx]% and [xx]% (one year), ____%
and ____% (five years) and ___% and ___% (ten years), 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 Fund
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 Fund'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 America Income Trust'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 operating expenses) of the Investor Class of Pioneer America
Income Trust to 0.74% of average daily net assets. The estimated experience of
the Investor class of Pioneer America Income Trust are below both the gross
expenses and expenses net of expense reimbursement of the end class of shares of
your Fund. Although you will experience higher expenses once the Investor Class
shares convert to Class A shares after two years, based upon the Class A expense
ratio of Pioneer America Income Trust for the most recent fiscal year, Pioneer
America Income Trust's expenses were lower than the gross and net expense ratio
of each class of shares of your Fund. While there are some differences between
the policies of the two Funds, the trustees believe that the two Funds represent
substantially equivalent investments.
FIFTH, the substantially larger size of Pioneer America Income Trust offers
greater opportunity for diversification of the investment portfolio, which
should help to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer America Income Trust received in
the Reorganization will provide Safeco U.S. Government Fund shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
11
The board of trustees of Pioneer America Income Trust also considered that the
Reorganization presents an excellent opportunity for the Pioneer America Income
Trust 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 America Income Trust
and its shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003.
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SAFECO U.S. GOVERNMENT PIONEER AMERICA INCOME
FUND TRUST
DECEMBER 31, 2003 DECEMBER 31, 2003
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NET ASSETS (in millions) $ 74.5 $ 247
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NET ASSET VALUE PER SHARE
Class A shares $ 9.94 $ 9.95
Class B shares $ 9.60 $ 9.89
Class C shares $ 9.60 $ 9.92
Investor Class shares $ 9.59 N/A
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SHARES OUTSTANDING
Class A shares 560,000
Class B shares 309,000
Class C shares 11,000
Investor Class shares 6,893,000 N/A
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It is impossible to predict how many shares of Pioneer America Income Trust will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer America
Income Trust'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 Fund. Similarly, the
board of trustees of Pioneer America Income Trust, including its Independent
Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer America Income Trust.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
12
SAFECO INTERNATIONAL STOCK FUND AND
PIONEER INTERNATIONAL EQUITY FUND
PROPOSAL 9
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 INTERNATIONAL STOCK FUND TO THE PIONEER INTERNATIONAL EQUITY FUND
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SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND
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Business A series of Safeco Common Stock Trust, a 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.
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Net assets as of $37.4 million $36.1 million
June 30, 2004
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Investment advisers and Investment adviser (until August 2, 2004): Investment adviser:
portfolio managers SAM Pioneer
Investment sub-advisor (until August 2, 2004): Portfolio Manager:
Bank of Ireland Asset Management Limited Christopher Smart. Mr. Smart is supported by a team
("Sub-advisor") of portfolio managers and analysts.
Portfolio Managers (until August 2, 2004): Mr. Smart, Senior Vice President and Director of
The Fund is managed by a committee of portfolio International Investments, joined Pioneer in 1995 as
managers at the sub-advisor who are jointly and Director of Research of Pioneer First Investments,
primarily responsible for the day-to-day Moscow, Russia.
management of the portfolio.
Currently Pioneer is acting as investment
adviser to the fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
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Investment objective The Fund seeks maximum long-term total return The Fund seeks long-term capital growth.
(capital appreciation and income) by investing
primarily in common stocks of established The Fund may change its investment objective upon
non-U.S. companies. delivery of notice to its shareholders.
This investment objective of the Fund is
fundamental and cannot be changed without
shareholder approval.
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Primary investments Under normal market conditions, the Fund Under normal market conditions, at least 80% of total
invests at least 80% of net assets (plus any assets (plus any borrowings for investment purposes)
borrowings for investment purposes) in stocks are invested in equity securities of non-U.S. issuers.
and at least 65% of its assets in securities
issued by companies domiciled in countries
other than the United States.
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Investment strategies The Fund uses a "value" style of management. The Fund uses a balanced growth-value style of
The sub-advisor that historically managed the management and seeks to invest in issuers with above
Fund focuses on companies that are well average potential for earnings and revenue growth
established with a durable business model and that are also trading at attractive market
proven track record of delivering earnings and valuations.
dividends; undervalued relative to their
intrinsic value and/or future growth potential;
undervalued when compared to their historic
valuations, to competitors, or to companies
with similar growth records; and liquid and
readily traded on established foreign exchanges.
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SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND
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Other investments The Fund may invest up to 20% of its total assets in
debt securities, cash and cash equivalents.
Generally the Fund acquires debt securities that are
investment grade, but the Fund may invest up to 5% of
its net assets in below investment grade convertible
debt securities.
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Temporary defensive The Fund may purchase as temporary investments The Fund may invest all or part of its assets in
strategies for its cash: commercial paper; certificates of securities with remaining maturities of less than one
deposit; shares of no-load, open-end money year, cash equivalents or may hold cash.
market funds; repurchase agreements (subject to
restrictions on the Fund's investment in
illiquid securities), and other short-term
investments.
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Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
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Industry concentration Each Fund may not invest more than 25% of its assets in any one industry.
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Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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.
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Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may
(ii) by engaging in reverse repurchase borrow from banks as a temporary measure to
agreements. The Fund will not commit to facilitate the meeting of redemption requests or for
additional securities purchases if total extraordinary or emergency purposes and except
outstanding borrowings are equal to 5% or more pursuant to reverse purchase agreements and dollar
of total assets. rolls and then only in amounts not exceeding 33 1/3%
of the Fund's total assets (including the amount
borrowed) taken at market value. The Fund will not
use leverage to attempt to increase income. The Fund
will not purchase securities while outstanding
borrowings exceed 10% of the Fund's total assets.
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Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its
33% of the Fund's total assets. assets.
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Derivative instruments The Fund may write put or call options if, as a The Fund may use futures and options on securities,
result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options do not contracts and other derivatives. The Fund does not
exceed 20% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may also purchase put or call options Fund may use derivatives for a variety of
on futures contracts if, as a result thereof, non-principal purposes, including:
the aggregate premiums paid on all options or o As a hedge against adverse changes in stock
options on futures contracts held by the Fund market prices, interest rates or currency
do not exceed 20% of the Fund's net assets. exchange rates
o As a substitute for purchasing or selling
The Fund may enter into any futures contracts securities
or options on futures contracts if, as a result o To increase the Fund's return as a
thereof, the aggregate margin deposits and non-hedging strategy that may be considered
premiums required on all such instruments do speculative
not exceed 5% of the Fund's net assets.
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2
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SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND
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The Fund may not purchase securities on margin.
However, the Fund 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.
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Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
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BUYING, SELLING AND EXCHANGE SHARES
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Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer International
the Fund are subject to a 5.75% front-end sales Equity Fund you receive in the Reorganization will
charge. not be subject to any sales charge. Moreover, if you
own shares in your own name as of the closing of the
Contingent deferred sales charge of up to 5% if Reorganization (i.e., not in the name of a broker)
you redeem Class B shares within six years of and maintain your account, you may purchase Class A
purchase. shares of Pioneer International Equity Fund and Class
A shares of any fund in the Pioneer family of funds
Contingent deferred sales charge of 1% if you through such account in the future without paying any
redeem Class A shares within one year of sales charge.
purchase.
Except as described above, Class A shares of Pioneer
Purchases of Investor Class shares and International Equity Fund are subject to a front-end
Institutional Class shares of the Fund are not sales charge of up to 5.75%.
subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A, Institutional Class and
Investor Class shares held less than 30 days.
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Management and other Safeco International Stock Fund pays an Pioneer International Equity Fund pays Pioneer a
fees advisory fee on a monthly basis at an annual management fee equal to Pioneer's annual fee is equal
rate as follows: to:
$0 - $250,000,000: 1.00 of 1% 1.00% of average daily net assets up to $300 million;
$250,000,001 - $750,000,000: .90 of 1% 0.85% of the next $200 million;
Over $750,000,000: .80 of 1% 0.75% on assets over $500 million.
SAM serves as administrator and Fund accounting During its most recent fiscal year, Pioneer
agent for the Fund. The Fund pays SAM an International Equity Fund paid an advisory fee at an
administrative services fee of 0.05% of the average rate of 1.00% of average daily net assets.
Fund's average daily net assets up to the first
$200,000,000 and 0.01% of its net assets In addition, the fund reimburses Pioneer for certain
thereafter, and an accounting fee of 0.04% of fund accounting and legal expenses incurred on behalf
the Fund's average daily net assets up to the of the fund and pays a separate shareholder
first $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate
thereafter. of Pioneer.
During its most recent fiscal year, Safeco For the fiscal year ended March 31, 2004, the Fund's
International Stock Fund paid aggregate annual operating expenses for Class A shares were
advisory and administration fees at an average 1.75% per share.
rate of 1.09% of average daily net assets.
Pioneer has agreed until the second anniversary of
SAM had contractually agreed until April 30, the closing of the Reorganization to limit the
2009, to pay certain fund operating expenses ordinary operating expenses (excluding taxes,
(but not all of the operating expenses of the commissions, interest and extraordinary expenses) of
Fund) that exceeded the rate of 0.40% per annum the Investor Class to 1.40% of the average daily net
of the Fund's average daily net assets. This assets attributable to the Investor Class.
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for the
Class A shares, after giving effect to the
expense limitation
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3
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SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
were 1.65%, and without giving effect to the
expense limitation, were 2.49% per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for the
Class B shares, after giving effect to the
expense limitation were 2.40%, and without
giving effect to the expense limitation, were
4.16% per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for the
Advisor Class C shares, after giving effect to
the expense limitation were 2.40%, and without
giving effect to the expense limitation, were
3.29% per share.
For the fiscal year ended December 31, 2003,
the Fund's annual net operating expenses for
the Institutional Class shares, after giving
effect to the expense limitation ere 1.40%, and
without giving effect to the expense limitation
were 2.43%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for the
Investor Class, after giving effect to the
expense limitation were 1.40%, and without
giving effect to the expense limitation, were
2.19% per share.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor Class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
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Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer International
underwriter or through brokers, registered Equity Fund's distributor. Existing shareholders of
investment advisers, banks and other financial Safeco International Stock Fund who own shares in
institutions that have entered into selling their own name as of the closing date of the
agreements with the Fund's principal Reorganization and who maintain their accounts may
underwriter, as described in the Fund's buy shares of any fund in the Pioneer family of funds
prospectus. through such accounts in the future without paying
sales charges.
Institutional Class shares have a minimum
investment amount of $250,000. If the account is established in the shareholder's
own name, shareholders may also purchase additional
Certain account transactions may be done by shares of Pioneer International Equity Fund by
telephone telephone or online.
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Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer International
acquire through dividend reinvestment or other Equity Fund without incurring any fee on the exchange
fund distributions or for shares that you have with the more than 62 other Pioneer Funds. Your
exchanged for equivalent shares of another exchange would be for Class A shares, which would be
Fund. A 2% redemption fee will be assessed on subject to Rule 12b-1 fees. An exchange generally is
the value of exchanged shares that are held treated as a sale and a new purchase of shares for
less than 30 days in the Safeco International federal income tax purposes.
Stock Fund.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also exchange shares of
telephone. Pioneer International Equity Fund for shares of other
Pioneer Funds by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling shares Each class of shares will be sold at the net asset value per share next calculated after the Fund
receives your request in good order.
- -----------------------------------------------------------------------------------------------------------------------------------
4
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SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer International Equity Fund by telephone or
online.
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COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund or not make as much as if you
invested elsewhere if:
o The non-U.S. stock markets go down or perform poorly relative to other
investments (this risk may be greater in the short term)
o Equity securities of non-U.S. issuers or growth stocks fall out of favor
with investors
o The Fund's investments do not have the growth potential originally expected
Investing in non-U.S. issuers may involve unique risks compared to investing in
securities of U.S. issuers. Some of these risks do not apply to larger, more
developed markets. These risks are more pronounced to the extent the Fund
invests in issuers in countries with emerging markets or if the fund invests
significantly in one country. 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, Pioneer may not be able to sell the Fund's portfolio
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
Fund'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 Fund's return
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money by investing in either Fund.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
5
SAFECO INTERNATIONAL STOCK FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1997 4.55
1998 14.26
1999 29.00
2000 -10.95
2001 -24.3
2002 -19.12
2003 27.74
* During the period shown in the bar chart, your Fund's highest quarterly return
was 19.79% for the quarter ended December 31, 1999, and the lowest quarterly
return was -21.14% for the quarter ended September 30, 2002.
PIONEER INTERNATIONAL EQUITY FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1997 5.81
1998 7.4
1999 41.10
2000 -17.87
2001 -19.28
2002 -19.61
2003 32.29
* During the period shown in the bar chart, since the fund's inception on
October 31, 1996, Pioneer International Equity Fund's highest quarterly return
was 29.50% for the quarter ended December 31, 1999, and the lowest quarterly
return was -21.25% for the quarter ended September 30, 2002.
6
SAFECO INTERNATIONAL STOCK FUND*
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1)
------ ------- -------------------
SAFECO INTERNATIONAL STOCK FUND, CLASS A SHARES
Return Before Taxes 20.18% -3.53% 1.56%
Return After Taxes on Distributions (2) 19.98% -4.02% 1.08%
Return After Taxes on Distributions and 13.39% -3.14% 1.12%
Sale of Fund Shares (2)
SAFECO INTERNATIONAL STOCK FUND, CLASS B SHARES
Return Before Taxes 21.41% -3.49% 1.71%
SAFECO INTERNATIONAL STOCK FUND, CLASS C SHARES
Return Before Taxes 25.38% -3.15% 1.57%
SAFECO INTERNATIONAL STOCK FUND, INSTITUTIONAL
CLASS SHARES
Return Before Taxes 27.99% -2.07% 2.64%
Return After Taxes on Distributions (2) 27.74% -2.56% 2.13%
Return After Taxes on Distributions and 18.19% -1.92% 2.04%
Sale of Fund Shares (2)
SAFECO INTERNATIONAL STOCK FUND, INVESTOR CLASS
SHARES
Return Before Taxes 27.74% -2.11% 2.61%
Return After Taxes on Distributions (2) 27.51% -2.60% 2.11%
Return After Taxes on Distributions and 18.34% -1.93% 2.03%
Sale of Fund Shares (2)
MSCI EAFE INDEX (3) 38.59% -0.05% 3.29%
(reflects no deduction for fees, expenses or taxes)
- ----------
* Returns have not been restated to reflect Rule 12b-1 fees prior to
September 30, 1996, and would be lower if they were.
(1) The Fund commenced operations on January 31, 1996.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The MSCI EAFE Index (Morgan Stanley Capital International Europe,
Australasia, Far East Index), an unmanaged index comprised of 21 developed
equity markets outside of North America, is for reference only, does not
mirror the Fund's investments, includes reinvested dividends net of tax
withholding, and reflects no deduction of fees or expenses.
PIONEER INTERNATIONAL EQUITY FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1)
------ ------- -------------------
PIONEER INTERNATIONAL EQUITY FUND, CLASS A SHARES
Return Before Taxes 24.69% -1.27% 1.98%
Return After Taxes on Distributions (2) 24.69% -1.54% 1.71%
Return After Taxes on Distributions and 16.05% -1.12% 1.62%
Sale of Fund Shares (2)
MSCI EAFE INDEX (3) 38.59% -0.05% 3.56%
(reflects no deduction for fees, expenses or taxes)
- ----------------
(1) The Fund commenced operations on October 31, 1996.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
7
(3) The MSCI EAFE Index (Morgan Stanley Capital International Europe,
Australasia, Far East Index), an unmanaged index comprised of 21 developed
equity markets outside of North America, is for reference only, does not
mirror the Fund's investments, includes reinvested dividends net of tax
withholding, and reflects no deduction of fees or expenses.
Pioneer International Equity Fund's Investor Class shares will not be
outstanding prior to the closing of the Reorganization and consequently have no
performance history. However, the performance record of the Investor Class would
be modestly higher than the performance of Class A, B and C shares due to the
lower expenses applicable to the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer International Equity
Fund, the expenses of Pioneer International Equity Fund for the period ended
December 31, 2002. Future expenses for all share classes may be greater or less.
--------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES SAFECO SAFECO SAFECO SAFECO SAFECO PIONEER
(PAID DIRECTLY INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL STOCK INTERNATIONAL INTERNATIONAL
FROM YOUR STOCK FUND STOCK FUND STOCK FUND FUND INSTITUTIONAL STOCK FUND EQUITY FUND
INVESTMENT) CLASS A CLASS B CLASS C CLASS INVESTOR CLASS INVESTOR CLASS
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Maximum sales 5.75% None None None None None (1)
charge (load)
when you buy
shares as a
percentage of
offering price
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Maximum deferred None 5.00% 1.00% None None None
sales charge
(load) as a % of
purchase price or
the amount you
receive when you
sell shares,
whichever is less
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Redemption fees 2.00% None None 2.00% 2.00% 2.00%
for shares held
less than 30 days
--------------------------------------------------------------------------------------------------------------------------
Wire redemption $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
fee
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Annual low $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
balance fee
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ANNUAL FUND
OPERATING
EXPENSES
(DEDUCTED FROM
FUND ASSETS)
(AS A % OF
AVERAGE NET
ASSETS)
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Management fee 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
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Distribution and 0.25% 1.00% 1.00% None None None
service
(12b-1) fee
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Other expenses 1.24% 2.16% 1.29% 1.43% 1.19% 1.12%
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Total fund 2.49% 4.16% 3.29% 2.43% 2.19% 2.12%
operating expenses
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Expense reduction 0.84%(2) 1.76%(2) 0.89%(2) 1.03% 0.79%(2) 0.72%(3)
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Net fund 1.65% 2.40% 2.40% 1.40% 1.40% 1.40%
operating
expenses
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8
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer
International Equity Fund through the Reorganization. In addition, shareholders
of your Fund who own shares in their own name (I.E., not in the name of a broker
or other intermediary) and maintain such account as of the closing of the
Reorganization may purchase Class A Shares of Pioneer International Equity Fund
or of any fund in the Pioneer family of funds through such account in the future
without paying this sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco
International Stock Fund to the extent the Fund's total ordinary operating
expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal
year. This arrangement included all fund operating expenses except management
fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 International Equity Fund to 1.40% of average daily net
assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
The hypothetical example below helps you compare the cost of investing in each
fund. It assumes that: (a) you invest $10,000 in each fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco
International Stock Fund and two years for Pioneer International Equity Fund and
(e) and the Investor Class shares of Pioneer International Equity Fund convert
to Class A shares after two years. The examples are for comparison purposes only
and are not a representation of either fund's actual expenses or returns, either
past or future.
---------------------------------------
EXAMPLE
---------------------------------------
SAFECO INTERNATIONAL STOCK FUND
---------------------------------------
CLASS A SHARES
---------------------------------------
Year 1 $ 733
---------------------------------------
Year 3 $ 1,065
---------------------------------------
Year 5 $ 1,420
---------------------------------------
Year 10 $ 2,417
---------------------------------------
CLASS B SHARES WITH REDEMPTION
---------------------------------------
Year 1 $ 743
---------------------------------------
Year 3 $ 1,048
---------------------------------------
Year 5 $ 1,480
---------------------------------------
Year 10 $ 2,380
---------------------------------------
CLASS C SHARES WITH REDEMPTION
---------------------------------------
Year 1 $ 343
---------------------------------------
Year 3 $ 748
---------------------------------------
Year 5 $ 1,280
---------------------------------------
Year 10 $ 2,736
---------------------------------------
INSTITUTIONAL CLASS
SHARES
---------------------------------------
Year 1 $ 143
---------------------------------------
Year 3 $ 443
---------------------------------------
Year 5 $ 766
---------------------------------------
Year 10 $ 1,680
---------------------------------------
INVESTOR CLASS SHARES
---------------------------------------
Year 1 $ 143
---------------------------------------
Year 3 $ 443
---------------------------------------
Year 5 $ 766
---------------------------------------
Year 10 $ 1,680
---------------------------------------
PIONEER INTERNATIONAL EQUITY FUND
---------------------------------------
INVESTOR CLASS SHARES
---------------------------------------
Year 1 $ 137
---------------------------------------
Year 3 $ 554
---------------------------------------
Year 5 $ 1,124
---------------------------------------
Year 10 $ 2,677
---------------------------------------
9
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco International Stock Fund. The Trustees considered the following
matters, among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund'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 Fund
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 Fund'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 the Investor Class of Pioneer International
Equity Fund to 1.40% of average daily net assets. The estimated expenses of the
Investor Class of Pioneer International Equity Fund are lower than both the
gross and net expenses of the expense limits of each class of shares of your
Fund.
FOURTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
FIFTH, the Investor Class shares of Pioneer International Equity Fund received
in the Reorganization will provide Safeco International Stock Fund shareholders
with exposure to substantially the same investment product as they currently
have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer International Equity Fund also considered that
the Reorganization presents an excellent opportunity for the Pioneer
International Equity Fund 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
International Equity Fund and its shareholders.
10
CAPITALIZATION
The following table sets forth the capitalization of Safeco International Stock
Fund as of December 31, 2003 and Pioneer International Equity Fund as of March
31, 2004.
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SAFECO INTERNATIONAL STOCK PIONEER INTERNATIONAL
FUND EQUITY FUND
DECEMBER 31, 2003 MARCH 31, 2004
- ----------------------------------------------------------------------------------
NET ASSETS (IN MILLIONS) $ 35,133,00 $ 30,571,882
- ----------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 10.54 $ 17.55
Class B shares $ 10.32 $ 16.41
Class C shares $ 10.33 $ 16.21
Institutional Class shares $ 10.73 N/A
Investor Class shares $ 10.64 N/A
- ----------------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 137,000 1,045,193
Class B shares 71,000 522,503
Class C shares 10,000 225,379
Institutional Class shares 826,000 N/A
Investor Class shares 2,255,000 N/A
- ----------------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer International Equity Fund
will actually be received and distributed by your Fund on the Reorganization
date. The table should not be relied upon to determine the amount of Pioneer
International Equity Fund'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 Fund. Similarly, the
board of trustees of Pioneer International Equity Fund, including its
Independent Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer International Equity Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
SAFECO LARGE-CAP GROWTH FUND AND
PIONEER GROWTH SHARES
PROPOSAL 10
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 LC GROWTH FUND TO THE PIONEER GROWTH SHARES
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SAFECO LC GROWTH FUND PIONEER GROWTH SHARES
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Business A series of Safeco Common Stock Trust, a A diversified open-end management
diversified open-end management investment investment company organized as a
company organized as a Delaware statutory Delaware statutory trust.
trust.
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets as of $ 6.6 million $ 732.2 million
June 30, 2004
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Investment advisers Investment adviser (until August 2, 2004): Investment adviser
and portfolio managers SAM Pioneer
Sub-advisor (until August 2, 2004): Portfolio Manager:
RCM Capital Management LLC ("Sub-advisor") is Christopher M. Galizio
responsible for the day-to-day management of
the Fund. Mr. Galizio is a vice president and joined Pioneer in
1994
Portfolio Managers:
Seth A. Reicher (joined Sub-advisor in 1993)
Peter A. Goetz (joined Sub-advisor in 1999)
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund
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Investment objective The Fund seeks long-term growth of capital. The Fund seeks capital appreciation primarily through
equity securities of large-cap U.S. companies
believed to have better-than-average earnings
potential.
---------------------------------------------------------------------------------------------------------
The investment objective of each Fund is fundamental and cannot be changed without shareholder approval.
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Primary investments Under normal market conditions, the Fund Under normal market conditions, the Fund invests
invests at least 80% of its net assets (plus primarily in equity securities of U.S. issuers. For
any borrowings for investment purposes) in purposes of the Fund's investment policies, equity
equity and equity-related securities of securities include common stocks, convertible debt
companies whose total market capitalization at and other equity instruments, such as depositary
the time of the investment is within the range receipts, warrants, rights, interests in real estate
of market capitalizations of companies included investment trusts ("REITs") and preferred stocks.
in the Russell 1000 Growth Index.
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- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO LC GROWTH FUND PIONEER GROWTH SHARES
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Investment strategies The Fund uses a "growth" style of management. The fund uses a "growth" style and seeks to invest in
The Sub-advisor historically has aimed to issuers with above average potential for earnings and
generate positive returns over a full market revenue growth.
cycle by investing in companies that show
long-term sustainable growth in revenue, Factors Pioneer looks for in selecting investments
earnings and/or cash flow. include:
The Sub-advisor considered factors such as: o companies with experienced management teams,
strong market positions and the potential to
o the strength of the company's balance support above average earnings growth;
sheet; o a sustainable competitive advantage, such as
o the quality of the management team; a brand name, customer base, proprietary
products or services that differentiate technology or economies of scale;
the company from its competitors; o favorable expected returns relative to
o the company's commitment to research perceived risk.
and development; and
o ongoing new products and services.
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Other investments The Fund may invest in securities convertible The Fund may invest a portion of its assets not
into common stock, but less than 35% of its invested in equity securities in debt securities of
total assets will be invested in such corporate and government issuers.
securities.
Up to 5% of the Funds net assets may be invested in
below investment grade debt securities issued by both
U.S. and non-U.S. corporate and government issuers.
The Fund may invest up to 25% of its total assets in
REITs.
The Fund may invest up to 30% of its total assets in
equity and debt securities of non-U.S. corporate
issuers and debt securities of non-U.S. government
issuers.
The Fund will not invest more than 5% of its total
assets in securities of emerging markets issuers.
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Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
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Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ---------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund may not invest more than 25% of its assets in any one industry.
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Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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.
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2
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO LC GROWTH FUND PIONEER GROWTH SHARES
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Borrowing The Fund may borrow money (i) from banks or Borrow money, except the Fund may: (a) borrow from
(ii) by engaging in reverse repurchase banks or through reverse repurchase agreements in an
agreements. The Fund will not commit to amount up to 33 1/3% of the Fund's total assets
additional securities purchases if total (including the amount borrowed); (b) to the extent
outstanding borrowings are equal to 5% or more permitted by applicable law, borrow up to an
of total assets. additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) the Fund 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.
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Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its
33% of the Fund's total assets. assets.
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Derivative instruments The Fund may write put or call options if, as a The Fund may use futures and options on securities,
result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options does not contracts and other derivatives. The Fund does not
exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may purchase put or call options on Fund may use derivatives for a variety of
futures contracts if, as a result thereof, the non-principal purposes, including:
aggregate premiums paid on all options or o As a hedge against adverse changes in stock
options on futures contracts do not exceed 20% market prices, interest rates or currency
of the Fund's net assets. exchange rates
o As a substitute for purchasing or selling securities
The Fund may enter into any futures contract or option on a futures contract, if as a result
thereof, the aggregate margin deposits and o To increase the Fund's return as a non-hedging
premiums required on all such instruments does strategy that may be considered
not exceed 5% of the Fund's net assets. speculative
The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGE SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Growth Shares
the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be subject
charge. to any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within 6 years of account, you may purchase Class A shares of Pioneer
purchase. Growth Shares and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of up to 1% if future without paying any sales charge.
you redeem Class C shares within one year of
purchase. Except as described above, Class A shares of Pioneer
Growth Shares are subject to a front-end sales charge
Purchases of Investor Class shares of the Fund of up to 5.75%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
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Management and other Safeco LC Growth Fund pays an advisory fee on a Pioneer Growth Shares pays Pioneer a management fee,
- ----------------------------------------------------------------------------------------------------------------------------------
3
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SAFECO LC GROWTH FUND PIONEER GROWTH SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
fees monthly basis at an annual rate as follows: subject to a performance adjustment, equal to
$0 - $250,000,000: 0.80 of 1% Pioneer's annual fee equal to:
$250,000,001 - $750,000,000: 0.75 of 1% 0.70% of average daily net assets up to $500 million;
$750,000,001 - $1,250,000,000: 0.70 of 1% 0.65% of the next $500 million;
Over $1,250,000,000: 0.65 of 1% 0.625% on assets over $1 billion.
SAM paid the Sub-advisor a fee in accordance This basic fee paid to Pioneer also depends on the
with the following schedule: Fund's investment performance compared to the Russell
$0 - $100,000,000: 0.35 of 1% 1000 Growth Index. The basic fee can increase or
$100,000,000 - $250,000,000: 0.25 of 1% decrease by a maximum of 0.10%, depending on the
Over $250,000,000: 0.20 of 1% performance of the Fund's Class A shares relative to
the index.
SAM serves as administrator and Fund accounting
agent for the Fund. The Fund pays SAM an During its most recent fiscal year, Pioneer Growth
administrative services fee of 0.05% of the Shares paid an advisory fee at an average rate of
Fund's average daily net assets up to the first 0.59% of average daily net assets.
$200,000,000 and 0.01% of its net assets
thereafter, and an accounting fee of 0.04% of In addition, the fund reimburses Pioneer for certain
the Fund's average daily net assets up to the fund accounting and legal expenses incurred on behalf
first $200,000,000 and 0.01% of its net assets of the fund and pays a separate shareholder
thereafter. servicing/transfer agency fee to PIMSS, an affiliate
of Pioneer.
During its most recent fiscal year, Safeco LC
Growth Fund paid aggregate advisory and For the fiscal year ended April 30, 2004, the Fund's
administration fees at an average rate of 0.89% annual operating expenses for Class A shares were
of average daily net assets. 1.45% per share.
Until July 31, 2004, SAM voluntarily agreed to Pioneer has agreed until the second anniversary of
pay fund operating expenses that exceeded the the closing of the Reorganization to limit the
rate of 1.15% per annum of the Fund's average ordinary operating expenses (excluding taxes,
daily net assets. commissions, interest and extraordinary expenses) of
the Investor Class to 1.15% of the average daily net
For the fiscal year ended December 31, 2003, assets attributable to the Investor Class.
the Fund's annual operating expenses for Class
A shares were 2.79%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares were 3.55%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares were 3.46%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares were 2.55%.
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Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
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Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Growth Shares'
underwriter or through brokers, registered distributor. Existing shareholders of Safeco LC
investment advisers, banks and other financial Growth Fund who own shares in their own name as of
institutions that have entered into selling the closing date of the Reorganization and who
agreements with the Fund's principal maintain their accounts may buy shares of any fund in
underwriter, as described in the Fund's the Pioneer family of funds through such accounts in
prospectus. the future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer Growth Shares by telephone or
online.
- ---------------------------------------------------------------------------------------------------------------------------------
4
- ---------------------------------------------------------------------------------------------------------------------------------
SAFECO LC GROWTH FUND PIONEER GROWTH SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Growth Shares
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would be
you have exchanged for Class A shares of for Class A shares, which would be subject to Rule 12b-1
another Fund. fees. An exchange generally is treated as a sale and a
a new purchase of shares for federal income tax
Certain account transactions may be done by purposes.
telephone.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Growth Shares for shares of other Pioneer
Funds by telephone or online.
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Selling shares Each class of shares is sold at the net asset value per share next calculated after the Fund receives
your request in good order.
- ---------------------------------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Growth Shares by telephone or online.
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COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund 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 Growth stocks fall out of favor with investors
o The Fund's investments do not have the growth potential originally expected
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 small, less liquid and more volatile. In a changing
market, Pioneer might not be able to sell the Fund's portfolio 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
Fund'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 Fund's return
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money by investing in either Fund.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts
show how each Fund'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 Fund
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.
5
SAFECO LC GROWTH FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 N/A
1995 N/A
1996 N/A
1997 N/A
1998 N/A
1999 N/A
2000 N/A
2001 N/A
2002 26.95
2003 20.16
* During the period shown in the bar chart, your Fund's highest quarterly return
was 10.31% for the quarter ended June 30, 2003, and the lowest quarterly return
was -16.7% for the quarter ended June 30, 2002.
PIONEER GROWTH SHARES - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -2.60
1995 29.82
1996 26.95
1997 43.78
1998 33.54
1999 7.40
2000 -9.57
2001 19.23
2002 -34.89
2003 26.19
* During the period shown in the bar chart, Pioneer Growth Shares' highest
quarterly return was 24.06% for the quarter ended June 30, 1997, and the lowest
quarterly return was -20.20% for the quarter ended June 30, 2002.
6
SAFECO LC GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR SINCE INCEPTION(1)
------ ------------------
SAFECO LC GROWTH FUND, CLASS A SHARES
Return Before Taxes 13.05% -5.94%
Return After Taxes on Distributions(2) 13.05% -5.98%
Return After Taxes on Distributions and 8.48% -5.05%
Sale of Fund Shares(2)
SAFECO LC GROWTH FUND, CLASS B SHARES
Return Before Taxes 4.06% -5.40%
SAFECO LC GROWTH FUND, CLASS C SHARES
Return Before Taxes 18.06% -4.06%
SAFECO LC GROWTH FUND, INVESTOR CLASS SHARES
Return Before Taxes 20.16% -3.11%
Return After Taxes on Distributions(2) 20.16% -3.18%
Return After Taxes on Distributions and 13.10% -2.68%
Sale of Fund Shares(2)
RUSSELL 1000 GROWTH INDEX(3) 29.76% 1.09%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on October 31, 2001.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Russell 1000 Growth Index, an unmanaged index of growth stocks in the
Russell 1000 Index of the 1,000 largest-capitalization U.S. stocks, is for
reference only, does not mirror the Fund's investments, and reflects no
deduction for fees, expenses or taxes.
PIONEER GROWTH SHARES - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
PIONEER GROWTH SHARES, CLASS A SHARES
Return Before Taxes 18.96% -9.49% 6.47%
Return After Taxes on Distributions(1) 18.96% -10.10% 4.23%
Return After Taxes on Distributions and 12.32% -7.87% 4.47%
Sale of Fund Shares(1)
RUSSELL 1000 GROWTH INDEX(2) 29.75% -5.11% 9.21%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Russell 1000 Growth Index, an unmanaged index of growth stocks in the
Russell 1000 Index of the 1,000 largest-capitalization U.S. stocks, is for
reference only, does not mirror the Fund's investments, and reflects no
deduction for fees, expenses or taxes.
7
Pioneer Growth Shares' Investor Class shares will not be outstanding prior to
the closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A shares due to the lower expenses applicable to
the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Growth Shares, the
expenses of Pioneer Growth Shares for the period ended December 31, 2003. Future
expenses for all share classes may be greater or less.
-------------------------------------------------------------------------------------------------------
PIONEER
SHAREHOLDER GROWTH
TRANSACTION FEES SHARES FUND SHARES
(PAID DIRECTLY SAFECO LC SAFECO LC SAFECO LC SAFECO LC FUND
FROM YOUR GROWTH FUND GROWTH FUND GROWTH FUND GROWTH FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
-------------------------------------------------------------------------------------------------------
Maximum sales 5.75% None None None None(1)
charge (load) when
you buy shares as a
percentage of
offering price
-------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00% 1.00% None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
-------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
-------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A
-------------------------------------------------------------------------------------------------------
Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A
fee
-------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
-------------------------------------------------------------------------------------------------------
Management fee 0.80% 0.80% 0.80% 0.80% 0.59%
-------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service
(12b-1) fee
-------------------------------------------------------------------------------------------------------
Other expenses 1.74% 1.75% 1.66% 1.75%(9) 0.53%
-------------------------------------------------------------------------------------------------------
Total fund 2.79% 3.55% 3.46% 2.55%(9) 1.12%
operating expenses
-------------------------------------------------------------------------------------------------------
Expense reduction None(2) None(2) None(2) None(2) None(3)
-------------------------------------------------------------------------------------------------------
Net fund operating 2.79% 3.55% 3.46% 2.55%(9) 1.12%
expenses
-------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Growth
Shares through the Reorganization. In addition, shareholders of your Fund who
own shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Growth Shares or of any fund in the
Pioneer family of funds through such account in the future without paying this
sales charge.
8
(2) As described above, SAM had contractually agreed to reimburse Safeco LC
Growth Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 Growth Shares to 1.15% of average daily net assets
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
(9) [SAM voluntarily reimburses the Fund to the extent that its total expenses
exceed the rate of 1.15% per annum of the Fund's average daily net assets. SAM
does not have the right to recapture waived fees or reimbursed expenses under
this arrangement.]
The hypothetical example below helps you compare the cost of investing in each
fund. It assumes that: (a) you invest $10,000 in each fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for one year for Safeco LC Growth Fund
and two years for Pioneer Growth Shares and (e) and the Investor Class shares of
Pioneer Growth Shares convert to Class A shares after two years. The examples
are for comparison purposes only and are not a representation of either fund's
actual expenses or returns, either past or future.
9
-----------------------------------------------------
EXAMPLE
-----------------------------------------------------
SAFECO LC GROWTH FUND
-----------------------------------------------------
CLASS A SHARES
-----------------------------------------------------
Year 1 $ 841
-----------------------------------------------------
Year 3 $ 1,390
-----------------------------------------------------
Year 5 $ 1,964
-----------------------------------------------------
Year 10 $ 3,514
-----------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
-----------------------------------------------------
Year 1 $ 858 $ 358
-----------------------------------------------------
Year 3 $ 1,388 $ 1,088
-----------------------------------------------------
Year 5 $ 2,040 $ 1,840
-----------------------------------------------------
Year 10 $ 3,496 $ 3,496
-----------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
-----------------------------------------------------
Year 1 $ 449 $ 349
-----------------------------------------------------
Year 3 $ 1,062 $ 1,062
-----------------------------------------------------
Year 5 $ 1,798 $ 1,798
-----------------------------------------------------
Year 10 $ 3,738 $ 3,738
-----------------------------------------------------
INVESTOR CLASS SHARES
-----------------------------------------------------
Year 1 $ 258
-----------------------------------------------------
Year 3 $ 793
-----------------------------------------------------
Year 5 $ 1,355
-----------------------------------------------------
Year 10 $ 2,885
-----------------------------------------------------
PIONEER GROWTH SHARES
-----------------------------------------------------
INVESTOR CLASS SHARES
-----------------------------------------------------
Year 1 $ 114
-----------------------------------------------------
Year 3 $ 385
-----------------------------------------------------
Year 5 $ 708
-----------------------------------------------------
Year 10 $ 1,622
-----------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco LC Growth Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, Pioneer Growth Shares has a strong short term performance record and a
substantially longer performance history. For the one year period ended June 30,
2004, Class A shares of Pioneer Growth Shares had an average annual return of
[xx]% compared to an average annual of the Class A shares and Investor share of
[xx]% and [xx]%, 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 Fund
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 Fund'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 Growth Shares' 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 the Investor Class of Pioneer Growth Shares to 1.15% of average
daily net assets. The estimated expense ratio of the Investor
10
Class of Pioneer Growth Shares is lower than the gross expenses of each class of
shares of your Fund. The expense limitation applicable to Investor Class Shares
of Pioneer Growth Shares is the same as the voluntary expense limit applicable
to your Fund, and Pioneer has contractually agreed to keep that limit in place
for two years while the expense limit applicable to your Fund could be
terminated at any time. While you will experience higher expenses once the
Investor Class shares convert to Class A shares after two years, the Class A
expense ratio for the most recent fiscal year, was 1.45% of average daily net
assets, which was below the expenses of the class of shares of your Fund.
FIFTH, the substantially larger size of Pioneer Growth Shares offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer Growth Shares received in the
Reorganization will provide Safeco LC Growth Fund shareholders with exposure to
substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Growth Shares also considered that the
Reorganization presents an excellent opportunity for the Pioneer Growth Shares
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 Growth Shares and its
shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of December
31, 2003 for Safeco LC Growth Fund and October 31, 2003 for Pioneer Growth
Shares.
- -------------------------------------------------------------------------
SAFECO LC GROWTH FUND PIONEER GROWTH SHARES
DECEMBER 31, 2003 DECEMBER 31, 2003
- -------------------------------------------------------------------------
NET ASSETS (IN MILLIONS) $ 5.832 $ 789.319
- -------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 9.27 $ 11.42
Class B shares $ 9.12 10.54
Class C shares $ 9.12 10.65
Investor Class shares $ 9.30 N/A
- -------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 117,000 45,198,861
Class B shares 105,000 20,249,782
Class C shares 102,000 5,293,516
Investor Class shares 307,000 N/A
- -------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Growth Shares will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer Growth
Shares' 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 Fund. Similarly, the
board of trustees of Pioneer
11
Growth Shares, including its Independent Trustees, approved the Reorganization.
They also determined that the Reorganization is in the best interests of Pioneer
Growth Shares.
The Trustees recommend that the shareholders of your Fund vote FOR the proposal
to approve the Agreement and Plan of Reorganization.
12
SAFECO LARGE-CAP VALUE FUND AND
PIONEER VALUE FUND
PROPOSAL 11
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 LC VALUE FUND TO THE PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO LC VALUE FUND PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Common Stock Trust, a 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 $ 152.7 million $ 3,855 million
June 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers (until August 2, 2004): Portfolio Managers:
Rex L. Bentley Day-to-day management of the Fund's portfolio is the
Vice President, SAM responsibility of J. Rodman Wright, who is assisted
by Sean Gavin. Mr. Wright is a senior vice president
Lynette D. Sagvold and joined Pioneer in 1994 and has been an investment
Vice President, SAM professional since 1988. Mr. Gavin is a vice
president and joined Pioneer in 2002.
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Managers of
the Pioneer Fund, as indicated in the next
column, currently manage your Safeco Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks long-term growth of capital plus The Fund seeks reasonable income and capital growth
current income. primarily through equity securities.
----------------------------------------------------------------------------------------------------------
The Fund provides written notice to The investment objective of the Fund is fundamental
shareholders at least 60 days prior to any and cannot be changed without shareholder approval.
change to its investment objective as described
above.
- ------------------------------------------------------------------------------------------------------------------------------------
Primary investments Under normal circumstances, the Fund invests at Under normal market conditions, the Fund invests the
least 80% of net assets (plus any borrowings major portion of its assets in equity securities,
for investment purposes) in equity and primarily U.S. issuers. For purposes of the Fund's
equity-related securities of companies whose investment policies, equity securities include common
total market capitalization at the time of the stocks, convertible debt and other equity
investment is at least $4 billion. instruments, such as depositary receipts, warrants,
rights and preferred stocks.
Up to 25% of the portfolio may be invested in the
equity securities of non-U.S. companies.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO LC VALUE FUND PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Investment strategies In managing the portfolio and selecting Pioneer uses a "value" approach to select the Fund's
securities, SAM historically analyzed various investments. Pioneer evaluates a security's
valuation measures such as the ratio of a potential value, including the attractiveness of its
company's price-to-cash flow compared to its market valuation, based on the company's assets and
historical ratios, industry comparisons, the prospects for earnings and revenue growth. Factors
ratio for the company's competitors, and Pioneer looks for in selecting investments include:
companies with similar growth rates.
o Above average potential for earnings and
revenue growth
SAM generally sought companies having good o Favorable expected returns relative to
earnings, good value relative to share price, perceived risks
or attractive growth potential. 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 Good prospects for dividend growth
- ------------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 25% of its total assets in
securities of non-U.S. issuers. The Fund will not
invest more than 5% of its total assets in the
securities of emerging market issuers.
The Fund may invest the balance of its 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. corporate and government issuers,
including convertible debt securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- ------------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ------------------------------------------------------------------------------------------------------------------------------------
Industry Concentration Each Fund 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 Fund may not invest more than 15% of its net
securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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.
- ------------------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO LC VALUE FUND PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing The Fund may borrow money (i) from banks or Borrow money, except the Fund may: (a) borrow from
(ii) by engaging in reverse repurchase banks or through reverse repurchase agreements in an
agreements. The Fund will not commit to amount up to 33 1/3% of the Fund's total assets
additional securities purchases if total (including the amount borrowed); (b) to the extent
outstanding borrowings are equal to 5% or more permitted by applicable law, borrow up to an
of total assets. additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on margin to
the extent permitted by applicable law; and (e)
engage in transactions in mortgage dollar rolls that
are accounted for as financings.
- ------------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its total
33% of the Fund's total assets. assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities,
a result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options does not contracts and other derivatives. The Fund does not
exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may purchase a put or call option or Fund may use derivatives for a variety of
option on a futures contract if, as a result non-principal purposes, including:
thereof, the aggregate premiums paid on all o As a hedge against adverse changes in stock
options or options on a futures contracts held market prices, interest rates or currency
by the Fund do not exceed 20% of the Fund's net exchange rates
assets. o As a substitute for purchasing or selling
securities
The Fund may enter into a futures contract or o To increase the Fund's return as a non-hedging
option on futures contract if, as a result strategy that may be considered speculative
thereof, the aggregate margin deposits and
premiums required on all such instruments do
not exceed 5% of the Fund's net assets.
The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ------------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGE SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Value Fund you
the Fund are subject to a 5.75% front-end sales receive in the Reorganization will not be subject to
charge. any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. Value Fund and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of 1% if you future without paying any sales charge.
redeem Class C share within one year of
purchase. Except as described above, Class A shares of Pioneer
Tax Free Income Fund are subject to a front-end sales
Purchases of Investor Class shares of the Fund charge of up to 5.75%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO LC VALUE FUND PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco LC Value Fund pays an advisory fee on a Pioneer Value Fund pays Pioneer a management fee
fees monthly basis at an annual rate as follows: based on the investment performance of the Fund
$0 - $250,000,000: 0.70 of 1% compared to the Russell 1000 Value Index. Pioneer's
$250,000,001 - $750,000,000: 0.65 of 1% annual basic fee is 0.60% of the Fund's average daily
$750,000,001 - $1,250,000,000: 0.60 of 1% net assets. The basic fee can increase to a maximum
Over $1,250,000,000: 0.55 of 1% of 0.70% or decrease to a minimum of 0.50%, depending
on the performance of the Fund's Class A shares
SAM serves as administrator and Fund accounting relative to the index.
agent for the Fund. The Fund pays SAM an
administrative services fee of 0.05% of the During its most recent fiscal year, Pioneer Value
Fund's average daily net assets up to the first Fund paid an advisory fee at an average rate of 0.70%
$200,000,000 and 0.01% of its net assets of average daily net assets.
thereafter, and an accounting fee of 0.04% of
the Fund's average daily net assets up to the In addition, the fund reimburses Pioneer for certain
first $200,000,000 and 0.01% of its net assets fund accounting and legal expenses incurred on behalf
thereafter. of the fund and pays a separate shareholder
servicing/transfer agency fee to PIMSS, an affiliate
During its most recent fiscal year, Safeco LC of Pioneer.
Value High-Yield Fund paid aggregate advisory
and administration fees at an average rate of For the fiscal year ended January 28, 2004, the
[0.xx]% of average daily net assets. Fund's annual operating expenses for Class A shares
were 1.19% per share.
SAM had contractually agreed until April 30,
2009, to pay certain fund operating expenses Pioneer has agreed until the second anniversary of
(but not all of the operating expenses of the the closing of the Reorganization to limit the
Fund) that exceeded the rate of 0.40% per annum ordinary operating expenses (excluding taxes,
of the Fund's average daily net assets. This commissions, interest and extraordinary expenses) of
arrangement included all Fund operating the Investor Class to 1.10% of the average daily net
expenses except management fees, Rule 12b-1 assets attributable to the Investor Class.
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.35%, and without giving
effect to the expense limitation, were 1.71%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 2.10%, and without giving
effect to the expense limitation, were 2.55%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 2.10%, and without giving
effect to the expense limitation, were 2.33%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation were 1.10%, and without
giving effect to the expense limitation, were
1.14% per share.
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------------------------------------
SAFECO LC VALUE FUND PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Value Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco LC
investment advisers, banks and other financial Value Fund who own shares in their own name as of the
institutions that have entered into selling closing date of the Reorganization and who maintain
agreements with the Fund's principal their accounts may buy shares of any fund in the
underwriter, as described in the Fund's Pioneer family of funds through such accounts in the
prospectus. future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer Value Fund by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Value Fund without
acquire through dividend reinvestment or other incurring any fee on the exchange with the more than
fund distributions or for Class A shares that 62 other Pioneer Funds. Your exchange would be for Class
you have exchanged for Class A shares of A shares, which is subject to Rule 12b-1 fees. An
another Fund. exchange generally is treated as a sale and a new
purchase of shares for federal income tax purposes.
Certain account transactions may be done by
telephone. If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Value Fund for shares of other Pioneer Funds
by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
----------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Value Fund by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund or not make as much as if you
invested elsewhere if:
o Stock market goes down (this risk may be greater in the short-term)
o Value stocks fall out of favor with investors
o The Fund'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 appreciation
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money by investing in either Fund.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts
show how each Fund'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 Fund
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.
5
SAFECO LC VALUE FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -1.09
1995 30.36
1996 23.99
1997 26.43
1998 6.31
1999 1.17
2000 -6.36
2001 -7.06
2002 -17.4
2003 24.20
* During the period shown in the bar chart, your Fund's highest quarterly return
was 14.77% for the quarter ended June 30, 2003, and the lowest quarterly return
was -17.60% for the quarter ended September 30, 2002.
PIONEER VALUE FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -1.73
1995 27.15
1996 21.99
1997 23.70
1998 -7.99
1999 1.61
2000 15.95
2001 -3.09
2002 -18.79
2003 28.54
* During the period shown in the bar chart, Pioneer Value Fund's highest
quarterly return was 15.93% for the quarter ended June 30, 2003, and the lowest
quarterly return was -22.31% for the quarter ended September 30, 1998.
6
SAFECO LC VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO LC VALUE FUND, CLASS A SHARES
Return Before Taxes 16.75% -3.39% 5.98%
Return After Taxes on Distributions(1) 16.57% -4.07% 4.11%
Return After Taxes on Distributions and 11.10% -3.20% 4.18%
Sale of Fund Shares(1)
SAFECO LC VALUE FUND, CLASS B SHARES
Return Before Taxes 17.98% -3.36% 6.19%
SAFECO LC VALUE FUND, CLASS C SHARES
Return Before Taxes 22.00% -2.92% 6.11%
SAFECO LC VALUE FUND, INVESTOR CLASS SHARES
Return Before Taxes 24.20% -2.01% 6.86%
Return After Taxes on Distributions(1) 23.94% -2.79% 4.86%
Return After Taxes on Distributions and 16.01% -2.11% 4.87%
Sale of Fund Shares(1)
RUSSELL VALUE 1000 INDEX(2) 30.03% 3.57% 11.87%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns de pend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to thos e who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that a re tax-exempt.
(2) The Russell 1000 Value Index, an unmanaged index of value stocks in the
Russell 1000 Index of 1,000 largest-capitalization U.S. stocks, is for
reference only, does not mirror the Fund's investment s, and reflects no
deduction for fees, expenses or taxes.
PIONEER VALUE FUND - CLASS A S HARES AVERAGE ANNUAL
TOTAL RETURNS AS OF DEC EMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
PIONEER VALUE FUND, CLASS A SHARES
Return Before Taxes 21.13% 2.36% 6.90%
Return After Taxes on Distributions(1) 20.74% 0.96% 4.80%
Return After Taxes on Distributions and 13.76% 1.44% 4.94%
Sale of Fund Shares(1)
LEHMAN BROTHERS AGGREGATE BOND INDEX(2) 30.03% 3.56% 11.88%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Russell 1000 Value Index, an unmanaged index of value stocks in the
Russell 1000 Index of 1,000 largest-capitalization U.S. stocks, is for
reference only, does not mirror the Fund's investments, and reflects no
deduction for fees, expenses or taxes.
Pioneer Value Fund's Investor Class shares will not be outstanding prior to the
closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A, B and C shares due to the lower expenses
applicable to the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Value Fund, the expenses
of Pioneer Value Fund for the period ended June 30, 2003. Future expenses for
all share classes may be greater or less.
7
-------------------------------------------------------------------------------------------------------
SHAREHOLDER PIONEER
TRANSACTION FEES SAFECO LC VALUE SAFECO LC VALUE SAFECO LC VALUE SAFECO LC VALUE VALUE
(PAID DIRECTLY FROM FUND FUND FUND FUND INVESTOR
YOUR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
-------------------------------------------------------------------------------------------------------
Maximum sales 5.75%(6) None None None None(1)
charge (load) when
you buy shares as a
percentage of
offering price
-------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
-------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
-------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A
-------------------------------------------------------------------------------------------------------
Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A
fee
-------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
-------------------------------------------------------------------------------------------------------
Management fee 0.70% 0.70% 0.70% 0.70% 0.63%
-------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service
(12b-1) fee
-------------------------------------------------------------------------------------------------------
Other expenses 0.76% 0.85% 0.63% 0.44% 0.38%
-------------------------------------------------------------------------------------------------------
Total fund 1.71% 2.55% 2.33% 1.14% 1.01%
operating expenses
-------------------------------------------------------------------------------------------------------
Expense reduction 0.36%(2) 0.45%(2) 0.23%(2) 0.04%(2) None(3)
-------------------------------------------------------------------------------------------------------
Net fund operating 1.35% 2.10% 2.10% 1.10% 1.01%
expenses
-------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Value
Fund through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Value Fund or of any fund in the Pioneer
family of funds through such account in the future without paying this sales
charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco LC
Value Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 Value Fund to 1.10% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
8
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco LC Value
Fund and two years for Pioneer Value Fund and (e) and the Investor Class shares
of Pioneer Value Fund convert to Class A shares after two years. The examples
are for comparison purposes only and are not a representation of either Fund's
actual expenses or returns, either past or future.
-------------------------------------------------------------
EXAMPLE
-------------------------------------------------------------
SAFECO LC VALUE FUND
-------------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------------
Year 1 $ 705
-------------------------------------------------------------
Year 3 $ 978
-------------------------------------------------------------
Year 5 $ 1,272
-------------------------------------------------------------
Year 10 $ 2,105
-------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
-------------------------------------------------------------
Year 1 $ 713 $ 213
-------------------------------------------------------------
Year 3 $ 958 $ 658
-------------------------------------------------------------
Year 5 $ 1,329 $ 1,129
-------------------------------------------------------------
Year 10 $ 2,064 $ 2,064
-------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
-------------------------------------------------------------
Year 1 $ 313 $ 213
-------------------------------------------------------------
Year 3 $ 658 $ 658
-------------------------------------------------------------
Year 5 $ 1,129 $ 1,129
-------------------------------------------------------------
Year 10 $ 2,431 $ 2,431
-------------------------------------------------------------
INVESTOR CLASS SHARES
-------------------------------------------------------------
Year 1 $ 112
-------------------------------------------------------------
Year 3 $ 350
-------------------------------------------------------------
Year 5 $ 606
-------------------------------------------------------------
Year 10 $ 1,340
-------------------------------------------------------------
PIONEER VALUE FUND
PRO FORMA
-------------------------------------------------------------
INVESTOR CLASS SHARES
-------------------------------------------------------------
Year 1 $ 103
-------------------------------------------------------------
Year 3 $ 329
-------------------------------------------------------------
Year 5 $ 579
-------------------------------------------------------------
Year 10 $ 1,279
-------------------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco LC Value Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, Pioneer Value Fund's short and long-term performance record is superior
to the performance record of your Fund. For the one, five and ten year periods
ended June 30, 2004, Class A shares of Pioneer Value Fund had an average annual
return of
9
[xx]% ___%, and ___% compared to an average annual of the Class A shares and
Investor Class shares of 16.75% and 24.20% (one year) -3.39% and -2.01% (five
year) and 5.98% and 6.86% (ten year), 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 Fund
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 Fund'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 Value Fund'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 the Investor Class of Pioneer Value Fund to 1.10% of average daily
net assets. The estimated expense ratio of the Investor Class shares of Pioneer
Value Fund is no lower than both the gross expenses and expenses net of expense
reimbursement of each class of shares of your Fund. Although you will experience
higher expenses once the Investor Class shares convert to Class A shares after
two years, the Class A expense ratio for the most recent fiscal year was 1.19%
of average daily net assets, which was below the total annual expenses of the
Class A shares of your Fund.
FIFTH, the substantially larger size of Pioneer Value Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer Value Fund received in the
Reorganization will provide Safeco LC Value Fund shareholders with exposure to
substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Value Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Value Fund 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 Value Fund and its
shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003 for Safeco LC Value Fund and June 30, 2003 for Pioneer Value Fund.
- ----------------------------------------------------------------------
SAFECO LC VALUE FUND PIONEER VALUE FUND
DECEMBER 31, 2003 MARCH 31, 2004
- ----------------------------------------------------------------------
NET ASSETS (in millions) $ 153.877 $ 3,881.719144
- ----------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 18.84 $ 18.72
Class B shares $ 18.85 $ 17.77
Class C shares $ 18.92 $ 17.81
Investor Class shares $ 18.73 N/A
- ----------------------------------------------------------------------
10
SAFECO LC VALUE FUND PIONEER VALUE FUND
DECEMBER 31, 2003 MARCH 31, 2004
- ----------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 76,000 205,299,646
Class B shares 60,000 1,662,814
Class C shares 6,000 502,240
Investor Class shares 8,072,000 N/A
- ----------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Value Fund will actually
be received and distributed by your Fund on the Reorganization date. The table
should not be relied upon to determine the amount of Pioneer Value Fund'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 Fund. Similarly, the
board of trustees of Pioneer Value Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of Pioneer Value Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
SAFECO MONEY MARKET FUND AND
PIONEER CASH RESERVES FUND
PROPOSAL 12
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 FUND TO THE PIONEER CASH RESERVES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Money Market Trust, a A series of Pioneer Money Market Trust, a diversified
diversified open-end management investment open-end management investment company organized as a
company organized as a Delaware statutory Delaware statutory trust.
trust.
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets as of $286.4 million $509.6 million
June 30, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Manager:
Lesley Fox (since 2000 and until August 2, Day-to-day management of the Fund's portfolio is the
2004) Assistant Vice President, SAM responsibility of a team of fixed income portfolio
Joined SAM in 2000 managers led by Kenneth J. Taubes.
Mr. Taubes, a senior vice president, joined Pioneer
Cathleen Beauchamp (since 2003 until July 31, in 1998 and has been an investment professional since
2004) 1982.
CFA
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks as high a level of current The Fund seeks high current income, preservation of
income as is consistent with the preservation capital and liquidity through investments in
of capital and liquidity through investment in high-quality short-term securities.
high-quality money market instruments maturing
in 13 months or less.
The investment objective of the Fund may not be
The Fund provides written notice to changed without the affirmative vote of the holders
shareholders at least 60 days prior to any of a "majority of the outstanding voting securities"
change to its investment objective as described (as defined in the Investment Company Act) of the
above. Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments To achieve its investment objective, the Fund The Fund seeks to maintain a constant net asset value
will purchase only high-quality securities with of $1.00 per share by investing in high-quality, U.S.
remaining maturities of 397 days or less. The dollar denominated money market securities, including
Fund will maintain a dollar-weighted average those issued by:
portfolio maturity of no more than 90 days. o U.S. and foreign banks
o U.S. and foreign corporate issuers
o The U.S. government and its agencies and
instrumentalities
o Foreign governments
o Multinational organizations such as the World Bank
The Fund invests exclusively in securities with a
maximum remaining maturity of 397 days and maintains
a dollar-weighted average portfolio maturity of 90
days or less.
The Funds investments may have fixed, floating or
variable interest rates.
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Investment strategies When evaluating a security to buy, SAM In selecting the Fund's portfolio, Pioneer complies
historically considered, among other things: with the rating, maturity and diversification
o Yield requirements applicable to money market funds.
o Maturity Within those factors, Pioneer's assessment of broad
o Issuer credit quality economic factors that are expected to affect economic
o Relative value compared with other activity and interest rates influence its securities
alternatives selection.
The Fund may sell a security if:
o The adviser becomes concerned about the
issuer's creditworthiness
o A more attractive alternative is available
o Cash is needed to meet shareholder
redemptions
After evaluating a bond, SAM compares the bond
to other available bonds, which may have
different features, and will buy the bond if it
appears to offer the best relative value.
- -----------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund will limit its investment in municipal The Fund may invest more than 25% of its total assets
obligations the interest on which is payable in U.S. government securities and obligations of U.S.
from the revenues of similar types of projects banks. The Fund may invest in any money market
to less than 25% of the Fund's total assets. As instrument that is a permissible investment for a
a matter of operating policy, "similar types of money market fun under the rules of the Securities
projects" may include sports, convention or and Exchange Commission, including commercial paper,
trade show facilities; airports or mass certificates of deposit, time deposits, bankers'
transportation; sewage or solid waste disposal acceptances, mortgage-backed and asset-backed
facilities; or air and water pollution control securities, repurchase agreements, municipal
projects. obligations and other short-term debt securities.
The Fund will limit its investment in The Fund invests in U.S. government obligations and
securities whose issuers are located in the money market securities rated in one of the two
same state to less than 25% of the Fund's total highest rating categories for short-term debt by a
assets. nationally recognized statistical rating organization
or, if unrated, determined to be of equivalent credit
The Fund may invest up to 25% of its total quality by Pioneer.
assets in the "first tier securities" of a
single issuer for up to three business days
after purchase. First tier securities are
securities (1) rated in the highest short-term
category by two nationally recognized
statistical rating organizations (NRSROs); (2)
rated in the highest short-term rating category
by a single NRSRO if only that NRSRO has
assigned the securities a short-term rating; or
(3) unrated, but determined by SAM to be of
comparable quality.
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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 Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- -----------------------------------------------------------------------------------------------------------------------------------
2
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Industry concentration The Fund will not make investments that will The Fund will not concentrate its assets in the
result in the concentration (as defined in the securities of issuers in any one industry except with
Investment Company Act of 1940, any rule or respect to investments in obligations of (a) the U.S.
order thereunder, or SEC staff interpretation government, its agencies, authorities or
thereof) of its investments in the securities instrumentalities and (b) domestic banks, purchase
of issuers primarily engaged in the same any security if, as a result (i) more than 5% of the
industry, provided that this restriction does assets of the Fund would be in the securities of any
not limit the Fund from investing in one issuer, or (ii) more than 25% of its assets would
obligations issued or guaranteed by the U.S. be in a particular industry.
government, its agencies or instrumentalities,
or certain bank instruments issued
by domestic banks.
- -----------------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid If immediately after and as a result of such The Fund does not have a policy again investing in
securities action the value of the following securities, illiquid securities.
in the aggregate, would exceed 10% of the
Fund's net assets, the Fund 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 Fund, (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 The Fund may borrow money (i) from banks or The Fund may not borrow money, except from banks for
(ii) by engaging in reverse repurchase extraordinary purposes or to meet redemptions in
agreements. The Fund will not commit to amounts not exceeding 33 1/3% of its total assets
additional securities purchases if total (including the amount borrowed). The Fund does not
outstanding borrowings are equal to 5% or more intend to borrow money during the coming year.
of total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may not make loans to any person, except by
institutional investors with a value of up to (a) the purchase of a debt obligation in which the
33% of the Fund's total assets. Fund is permitted to invest and (b) engaging in
repurchase agreements.
- -----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may not purchase securities on margin. The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases of Class A shares of the Fund are not The Investor Class shares of Pioneer Cash Reserves
subject to a sales load. Fund you receive in the Reorganization will not be
subject to any sales charge. Moreover, if you own
A contingent deferred sales charge may apply if shares in your own name as of the closing of the
you redeem Class B shares that were purchased Reorganization (i.e., not in the name of a broker)
by exchange from another fund. and maintain your account, you may purchase Class A
shares of Pioneer Cash Reserves Fund and Class A
A contingent deferred sales charge of 1% if you shares of any fund in the Pioneer family of funds
redeem Class C shares within one year of through such account in the future without paying any
purchase, and the shares were purchased by sales charge.
exchange from another fund.
Except as described above, Class A shares of Pioneer
Purchases of Investor Class shares of the Fund Cash Reserves Fund are subject to a front-end sales
charge of up to 4.50%.
- -----------------------------------------------------------------------------------------------------------------------------------
3
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- -----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco Money Market Fund pays an advisory fee Pioneer Cash Reserves Fund pays Pioneer a management
fees on a monthly basis at an annual rate as follows: fee equal to 0.40% of the Fund's average daily net
$0 - $250,000,000: 0.50 of 1% assets.
$250,000,001 - $750,000,000: 0.45 of 1%
$750,000,001 - $1,250,000,000: 0.40 of 1% During its most recent fiscal year, Pioneer Cash
Over $1,250,000,000: 0.35 of 1% Reserves Fund paid an advisory fee at an average rate
of 0.40% of average daily net assets.
SAM serves as administrator and Fund accounting
agent for the Fund. The Fund pays SAM an In addition, the Fund reimburses Pioneer for certain
administrative services fee of 0.05% of the Fund accounting and legal expenses incurred on behalf
Fund's average daily net assets up to the first of the Fund and pays a separate shareholder
$200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate
thereafter, and an accounting fee of 0.04% of of Pioneer.
the Fund's average daily net assets up to the
first $200,000,000 and 0.01% of its net assets For the fiscal year ended December 31, 2003, the
thereafter. Fund's annual operating expenses for Class A shares
were 1.06% per share.
During its most recent fiscal year, Safeco
Money Market Fund paid aggregate advisory and Pioneer has agreed until the second anniversary of
administration fees at an average rate of 0.59% the closing of the Reorganization to limit the
of average daily net assets. ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses) of
SAM had contractually agreed until April 30, the Investor Class to 0.71% of the average daily net
2009, to pay certain Fund operating expenses assets attributable to the Investor Class.
(but not all of the operating expenses of the
Fund) that exceeded the rate of 0.30% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 0.78%, and without giving
effect to the expense limitation, were 0.98%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 0.78%, and without giving
effect to the expense limitation, were 1.17%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 0.78%, and without giving
effect to the expense limitation, were 1.01%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares were 0.67%.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and Class A shares of your Fund are not currently Class A shares of Pioneer Cash Reserves Fund are
service (12b-1) fee subject to a Rule 12b-1 fee. subject to a 12b-1 fee equal to 0.15% annually of
average daily net assets.
Pioneer Investor Class shares will convert into Class
A shares after two years.
- -----------------------------------------------------------------------------------------------------------------------------------
4
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Investor class shares of each Fund are not subject to a Rule 12b-1 fee.
- -----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Cash Reserves
underwriter or through brokers, registered Fund's distributor. Existing shareholders of Safeco
investment advisers, banks and other financial Money Market Fund who own shares in their own name as
institutions that have entered into selling of the closing date of the Reorganization and who
agreements with the Fund's principal maintain their accounts may buy shares of any fund in
underwriter, as described in the Fund's the Pioneer family of funds through such accounts in
prospectus. the future without paying sales charges.
Certain account transactions may be done by If the account is established in the shareholder's
telephone own name, shareholders may also purchase additional
shares of Pioneer Cash Reserves Fund by telephone or
online.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Cash Reserves Fund
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
Fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would be
you have exchanged for Class A shares of for Class A shares, which is subject to Rule 12b-1 fees.
another fund. An exchange generally is treated as a sale and a new
purchase of shares for federal income tax purposes.
Certain account transactions may be done by
telephone. If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Cash Reserves Fund for shares of other
Pioneer Funds by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
---------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Cash Reserves Fund by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary
investment policies and strategies, the Funds are subject to the same
principal risks. Even though the Funds seek to maintain a $1 share
price, you could lose money on your investment or the Fund could fail
to generate high current income if:
o Interest rates go up, causing the value of the Fund's investments
to decline
o The issuer of a security owned by the Fund defaults on its
obligation to pay principal and/or interest or has its credit
rating downgraded
o The investment adviser's judgment about the credit quality,
attractiveness or relative value of a particular security proves
to be incorrect
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
5
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar
charts show how each Fund'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 Fund 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.
SAFECO MONEY MARKET FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 3.53
1995 5.28
1996 4.75
1997 4.93
1998 5.08
1999 4.65
2000 5.9
2001 3.75
2002 1.32
2003 0.65
* During the period shown in the bar chart, your Fund's highest
quarterly return was 1.52% for the quarter ended December 31, 2000,
and the lowest quarterly return was 0.13% for the quarter ended
September 30, 2003.
PIONEER CASH RESERVES FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 3.57
1995 5.17
1996 4.65
1997 4.78
1998 4.84
1999 4.23
2000 5.53
2001 3.29
2002 1.15
2003 0.26
* During the period shown in the bar chart, Pioneer Cash Reserves Fund's highest
quarterly return was 1.45% for the quarter ended December 31, 2000, and the
lowest quarterly return was 0.01% for the quarter ended December 21, 2003.
6
SAFECO MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO MONEY MARKET FUND, CLASS A SHARES
Return Before Taxes 0.55% 3.20% 3.95%
SAFECO MONEY MARKET FUND, CLASS B SHARES
Return Before Taxes 0.55% 3.21% 3.45%
SAFECO MONEY MARKET FUND, CLASS C SHARES
Return Before Taxes 0.55 0.32% 3.93%
SAFECO MONEY MARKET FUND, INVESTOR CLASS SHARES
Return Before Taxes 0.65% 3.24% 3.97%
PIONEER CASH RESERVES FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
PIONEER CASH RESERVES FUND, CLASS A SHARES
Return Before Taxes 0.26% 2.88% 3.74%
90-DAY U.S. TREASURY BILL 1.03% 3.34% 4.18%
(reflects no deduction for fees, expenses or taxes)
Pioneer Cash Reserves Fund's Investor Class shares will not be
outstanding prior to the closing of the Reorganization and
consequently have no performance history. However, the performance
record of the Investor Class would be modestly higher than the
performance of Class A, B and C shares due to the lower expenses
applicable to the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either
directly or indirectly. The tables below show the fees and expenses
that you would pay if you were to buy and hold shares of each Fund.
The expenses in the tables appearing below are based on (i) for your
Fund, the expenses of your Fund for the period ended December 31, 2003
and (ii) for Pioneer Cash Reserves Fund, the expenses of Pioneer Cash
Reserves Fund for the period ended December 31, 2003. Future expenses
for all share classes may be greater or less.
- -------------------------------------------------------------------------------------------------
SHAREHOLDER PIONEER CASH
TRANSACTION FEES RESERVES
(PAID DIRECTLY SAFECO MONEY SAFECO MONEY SAFECO MONEY SAFECO MONEY FUND
FROM YOUR MARKET FUND MARKET FUND MARKET FUND MARKET FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
- -------------------------------------------------------------------------------------------------
Maximum sales None None None None None(1)
charge (load) when
you buy shares as a
percentage of
offering price
- -------------------------------------------------------------------------------------------------
Maximum deferred None None(6) None(7) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
- -------------------------------------------------------------------------------------------------
Redemption fees for None None None None N/A
shares held less
than 30 days
- -------------------------------------------------------------------------------------------------
Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A
- -------------------------------------------------------------------------------------------------
Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A
fee
- -------------------------------------------------------------------------------------------------
7
- -------------------------------------------------------------------------------------------------
SHAREHOLDER PIONEER CASH
TRANSACTION FEES RESERVES
(PAID DIRECTLY SAFECO MONEY SAFECO MONEY SAFECO MONEY SAFECO MONEY FUND
FROM YOUR MARKET FUND MARKET FUND MARKET FUND MARKET FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
- -------------------------------------------------------------------------------------------------
balance fee
- -------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
- -------------------------------------------------------------------------------------------------
Management fee 0.48% 0.48% 0.48% 0.48% 0.40%
- -------------------------------------------------------------------------------------------------
Distribution and None None None None None
service (12b-1) fee
- -------------------------------------------------------------------------------------------------
Other expenses 0.50% 0.69% 0.53% 0.19% 0.41%
- -------------------------------------------------------------------------------------------------
Total fund 0.98% 1.17% 1.01% 0.67% 0.81%
operating expenses
- -------------------------------------------------------------------------------------------------
Expense reduction 0.20%(2) 0.39%(2) 0.23%(2) N/A 0.10%(3)
- -------------------------------------------------------------------------------------------------
Net fund operating 0.78% 0.78% 0.78% 0.67% 0.71%
expenses
- -------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization
by shareholders of your Fund who become shareholders of record of
Pioneer Cash Reserves Fund through the Reorganization. In addition,
shareholders of your Fund who own shares in their own name (I.E., not
in the name of a broker or other intermediary) and maintain such
account as of the closing of the Reorganization may purchase Class A
Shares of Pioneer Cash Reserves Fund or of any fund in the Pioneer
family of funds through such account in the future without paying this
sales charge.
(2) As described above, SAM had contractually agreed to reimburse
Safeco Money Market Fund to the extent the Fund's total ordinary
operating expenses exceeded 0.30% of the Fund's average daily net
asset value in a fiscal year. This arrangement included all Fund
operating expenses except management fees, Rule 12b-1 fees, brokerage
commissions, taxes, interest, and extraordinary expenses.
(3) 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 Cash
Reserves Fund to 0.71% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which
may vary by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts
with balances under $1,000 in your Fund.
(6) A contingent deferred sales charge may apply if you redeem Class B
shares of your Fund that were purchased by exchange from another fund.
(7) A 1.00% contingent deferred sales charge may apply if, within the
first twelve months of the initial purchase, you redeem Class C shares
that were purchased by exchange from another fund.
The hypothetical example below helps you compare the cost of investing
in each Fund. It assumes that: (a) you invest $10,000 in each Fund for
the time periods shown, (b) you reinvest all dividends and
distributions, (c) your investment has a 5% return each year, (d) each
Fund's gross operating expenses remain the same, (e) the expense
limitations are in effect for five years for Safeco Money Market Fund
and two years for Pioneer Cash Reserves Fund and (f) and the Investor
Class shares of Pioneer Cash Reserves Fund convert to Class A shares
after two years. The examples are for comparison purposes only and are
not a representation of either Fund's actual expenses or returns,
either past or future.
---------------------------------------
EXAMPLE
---------------------------------------
SAFECO MONEY MARKET FUND
---------------------------------------
CLASS A SHARES
---------------------------------------
Year 1 $ 80
---------------------------------------
Year 3 $ 249
---------------------------------------
Year 5 $ 433
---------------------------------------
Year 10 $ 966
---------------------------------------
8
---------------------------------------
EXAMPLE
---------------------------------------
SAFECO MONEY MARKET FUND
---------------------------------------
CLASS B SHARES
---------------------------------------
Year 1 $ 80
---------------------------------------
Year 3 $ 249
---------------------------------------
Year 5 $ 433
---------------------------------------
Year 10 $ 966
---------------------------------------
CLASS C SHARES
---------------------------------------
Year 1 $ 80
---------------------------------------
Year 3 $ 249
---------------------------------------
Year 5 $ 433
---------------------------------------
Year 10 $ 966
---------------------------------------
INVESTOR CLASS SHARES
---------------------------------------
Year 1 $ 68
---------------------------------------
Year 3 $ 214
---------------------------------------
Year 5 $ 373
---------------------------------------
Year 10 $ 835
---------------------------------------
PIONEER CASH RESERVES FUND
---------------------------------------
INVESTOR CLASS SHARES
---------------------------------------
Year 1 $ 73
---------------------------------------
Year 3 $ 256
---------------------------------------
Year 5 $ 484
---------------------------------------
Year 10 $ 1,141
---------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best
interests of Safeco Money Market Fund. The Trustees considered the
following matters, among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004,
was acquired by Symetra. Symetra informed the Trustees that it did not
intend to continue to provide investment advisory services to the
Safeco Funds. Consequently, a change in your Fund's investment
management was necessary.
SECOND, the investment performance of Pioneer Cash Reserves Fund is
comparable to the historical investment performance of your Fund. For
the one, five and ten year periods ended [June 30], 2004, Class A
shares of Pioneer Cash Reserves Fund had an average annual return of
___%, ___%, and ___%, compared to an average annual of the Class A
shares and Investor Class shares of ___% and ___%, (one year) ___% and
___% (five years) and ___% and ___% (ten years) 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 Fund 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 Fund'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's commitment until the second anniversary of the
Reorganization to limit the ordinary operating expenses (excluding
taxes, commissions, interest and extraordinary expenses) of the
Investor Class of Pioneer Cash Reserves Fund to 0.71% of average daily
net assets. This expense ratio is no higher than both the gross
expenses and expenses net of expense reimbursement of the Class A and
Investor Class shares of your Fund. Although you will experience
higher expenses once the Investor Class shares convert to Class A
shares after two years, your expenses will remain the same until the
second anniversary of the Reorganization.
9
FIFTH, shareholders who own shares in their name as of the closing of
the Reorganization (i.e., not in the name of a broker) and maintain
their account may purchase additional Class A shares of the
corresponding Pioneer Fund through such account in the future or may
exchange those shares for Class A shares of another Pioneer Fund or
purchase Class A share of another Pioneer Fund without paying any
sales charge.
SIXTH, the Investor Class shares of Pioneer Cash Reserves Fund
received in the Reorganization will provide Safeco Money Market Fund
shareholders with exposure to substantially the same investment
product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses
incurred as a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Cash Reserves Fund also considered
that the Reorganization presents an excellent opportunity for the
Pioneer Cash Reserves Fund 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 Cash Reserves Fund and its
shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of
December 31, 2003.
SAFECO MONEY MARKET PIONEER CASH RESERVES
FUND FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
- ------------------------------------------------------------------------
NET ASSETS (in millions) $ 357.76 $ 318.54
- ------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 1.00 $ 1.00
Class B shares $ 1.00 $ 1.00
Class C shares $ 1.00 $ 1.00
Investor Class shares $ 1.00 N/A
- ------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 6,641,000
Class B shares 1,173,000
Class C shares 138,000
Investor Class shares 349,808,000 N/A
- ------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Cash Reserves
Fund will actually be received and distributed by your Fund on the
Reorganization date. The table should not be relied upon to determine
the amount of Pioneer Cash Reserves Fund'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 Fund. Similarly, the board of trustees of Pioneer Cash
Reserves Fund, including its Independent Trustees, approved the
Reorganization. They also determined that the Reorganization is in the
best interests of Pioneer Cash Reserves Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE
PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
10
SAFECO MULTI-CAP CORE FUND AND
PIONEER MID CAP VALUE FUND
PROPOSAL 13
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 MULTI CAP FUND TO THE PIONEER MID CAP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO MULTI CAP FUND PIONEER MID CAP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Common Stock Trust, a 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 $90 million $1,820 million
June 30, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Managers:
Bill Whitlow (since 1997 and until August 2, J. Rodman Wright
2004) Senior Vice President, Pioneer
CFA, Vice President, SAM Joined Pioneer in 1994
Joined SAM in 2001 Investment professional since 1988
Brian Clancy (since 2003) Sean Gavin
CFA, Equity Analyst, SAM Vice President, Pioneer
Joined SAM in 1996 Joined Pioneer in 2002
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Managers of
the Pioneer Fund, as indicated in the next
column, currently manage your Safeco Fund.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks long-term growth of capital. The Fund seeks capital appreciation by investing in
a diversified portfolio of securities consisting
primarily of common stocks.
--------------------------------------------------------------------------------------------------------
Each Fund 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 Fund invests in Normally, the Fund invests at least 80% of its total
a blend of growth and value-oriented stocks of assets in equity securities of mid-size companies,
companies of any size. that is companies with market values within the
range of market values of companies included in the
Russell Midcap Value Index.
The Fund 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 Fund principally
invests are common stocks, preferred stocks,
depositary receipts and convertible debt, but the
Fund may invest in other types of equity securities
to a lesser extent, such as warrants and rights.
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO MULTI CAP FUND PIONEER MID CAP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Investment strategies In managing the portfolio and selecting The Fund takes a fundamental, research-driven
securities, SAM considers companies with: approach in seeking to provide superior returns over
o Faster earnings growth than their
competitors time. Pioneer seeks securities selling at
o Low price-to-earnings ratios when compared substantial discounts to their underlying values and
to competitors then holds these securities until the market values
o A share price that represents good value reflect their intrinsic values.
o Potential for long-term appreciation
Pioneer evaluates a security's potential value,
including the attractiveness of its market
valuation, based on the company's assets and
earnings growth. Pioneer evaluates 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 Fund may invest in securities convertible The Fund may invest up to 25% of its total assets in
into common stock, but less than 35% of its equity and debt securities of non-U.S. issuers. The
total assets will be invested in such Fund will not invest more than 5% of its total
securities. assets in the securities of emerging markets
issuers.
The Fund may invest up to 20% of assets in
foreign securities. The Fund may invest up to 20% of its total assets in
debt securities of corporate and government issuers.
Generally the Fund acquires debt securities that are
The Fund may invest up to 10% of its total investment grade, but the Fund may invest up to 5%
assets in debt securities rated below of its net assets in below investment grade
investment grade. convertible debt securities issued by both U.S. and
non-U.S. issuers. The Fund invests in debt
securities when Pioneer believes they are consistent
with the Fund's investment objective by offering the
potential for capital appreciation, to diversify the
Fund's portfolio or for greater liquidity.
- ----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may 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 Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ----------------------------------------------------------------------------------------------------------------------------------
Industry Concentration Each Fund may not invest more than 25% of its assets in any one industry.
- ----------------------------------------------------------------------------------------------------------------------------------
2
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO MULTI CAP FUND PIONEER MID CAP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid If immediately after and as a result of such The Fund will not invest more than 15% of its net
securities action the value of the following securities, assets in illiquid and other securities that are not
in the aggregate, would exceed 15% of the readily marketable. Repurchase agreements maturing
Fund's net assets, the Fund will not (i) in more than seven days will be included for
purchase securities for which there is no purposes of the foregoing limit. Securities subject
readily available market, (ii) purchase time to restrictions on resale under the 1933 Act, are
deposits maturing in more than seven days, 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 Fund, (iv) enter into repurchase and are determined to be liquid by Pioneer.
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 The Fund may borrow money (i) from banks or The Fund may not borrow money in amounts exceeding
(ii) by engaging in reverse repurchase 10% of the Fund's total assets (including the amount
agreements. The Fund will not commit to borrowed) taken at market value.
additional securities purchases if total
outstanding borrowings are equal to 5% or more
of total assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may not make loans, except that the Fund
institutional investors with a value of up to may (i) lend portfolio securities in accordance with
33% of the Fund's total assets. the Fund's investment policies, (ii) enter into
repurchase agreements, (iii) purchase all or a
portion of an issue of publicly distributed debt
securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the
purchase is made upon the original issuance of the
securities, (iv) participate in a credit facility
whereby the Fund may directly lend to and borrow
money from other affiliated funds to the extent
permitted under the 1940 Act or an exemption
therefrom, and (v) make loans in any other manner
consistent with applicable law, as amended and
interpreted or modified from time to time by any
regulatory authority having jurisdiction.
- ----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities,
a result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options does not contracts and other derivatives. The Fund does not
exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may purchase a put or call option or Fund may use derivatives for a variety of
option on a futures contract if, as a result non-principal purposes, including:
thereof, the aggregate premiums paid on all o As a hedge against adverse changes in stock
options or options on futures contracts held by market prices, interest rates or currency
the Fund do not exceed 20% of the Fund's net exchange rates
assets. o As a substitute for purchasing or selling
securities
The Fund may enter into any futures contract or o To increase the Fund's return as a non-hedging
option on futures contract if, as a result strategy that may be considered speculative
thereof, the aggregate margin deposits and
premiums required on all such instruments do
not exceed 5% of the Fund's net assets.
The Fund may not purchase securities on margin.
However, the Fund 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.
- ----------------------------------------------------------------------------------------------------------------------------------
3
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO MULTI CAP FUND PIONEER MID CAP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGING SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Mid Cap Fund
the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be
charge. subject to any sales charge. Moreover, if you own
shares in your own name as of the closing of the
Contingent deferred sales charge of up to 5% if Reorganization (i.e., not in the name of a broker)
you redeem Class B shares within six years of and maintain your account, you may purchase Class A
purchase. shares of Pioneer Mid Cap Fund and Class A shares of
any fund in the Pioneer family of funds through such
Contingent deferred sales charge of 1% if you account in the future without paying any sales
redeem Class C shares within one year of charge.
purchase.
Except as described above, Class A shares of Pioneer
Purchases of Investor Class shares of the Fund Mid Cap Fund are subject to a front-end sales charge
are not subject to a sales load. of up to 5.75%.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- ----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco Multi Cap Fund pays an advisory fee on a Pioneer Mid Cap Fund pays Pioneer a management fee
fees monthly basis at an annual rate as follows: equal to:
$0 - $250,000,000: 0.70 of 1% 0.70% of average daily net assets up to $500 million;
$250,000,001 - $750,000,000: 0.65 of 1% 0.65% of the next $500 million; and
$750,000,001 - $1,250,000,000: 0.60 of 1% 0.625% on assets over $1 billion, based on the Fund's
Over $1,250,000,000: 0.55 of 1% performance and the size of the Fund.
SAM serves as administrator and Fund accounting Pioneer `s fee increases or decreases depending upon
agent for the Fund. The Fund pays SAM an whether the Fund `s performance is up and down more
administrative services fee of 0.05% of the or less than that of the index. Each percentage point
Fund's average daily net assets up to the first of difference between the performance of the Class A
$200,000,000 and 0.01% of its net assets shares and the index (to a maximum of+/-10) is
thereafter, and an accounting fee of 0.04% of multiplied by a performance rate adjustment of 0.01%.
the Fund's average daily net assets up to the As a result, the maximum annualized rate adjustment
first $200,000,000 and 0.01% of its net assets is+/-0.10%. This performance comparison is made at
thereafter. the end of each month. An appropriate percentage of
this rate (based on the number of days in the current
During its most recent fiscal year, Safeco month) is then applied to the Fund `s average net
Multi Cap Fund paid aggregate advisory and assets for the entire performance period, giving
administration fees at an average rate of 0.79% a dollar amount that will be added to (or subtracted
of average daily net assets. from)the basic fee. Because the adjustment to the
basic fee is based on the comparative performance of
SAM had contractually agreed until April 30, the Fund and the performance record of the index, the
2009, to pay certain Fund operating expenses controlling factor is not whether Fund performance is
(but not all of the operating expenses of the up or down, but whether it is up or down more or less
Fund) that exceeded the rate of 0.40% per annum than the performance record of the index, regardless
of the Fund's average daily net assets. This of general market performance.
arrangement included all Fund operating
expenses except management fees, Rule 12b-1 During its most recent fiscal year, Pioneer Mid Cap
fees, brokerage commissions, taxes, interest, Fund paid an advisory fee at an average rate of 0.76%
and extraordinary expenses. of average daily net assets.
For the fiscal year ended December 31, 2003, In addition, the Fund reimburses Pioneer for certain
the Fund's annual operating expenses for Class Fund accounting and legal expenses incurred on behalf
A shares, after giving effect to the expense of the Fund and pays a separate shareholder
limitation were 1.35%, and without giving servicing/transfer agency fee to PIMSS, an affiliate
effect to the expense limitation, were 1.78% of Pioneer.
per share.
For the fiscal year ended October 31, 2003, the
For the fiscal year ended December 31, 2003, Fund's annual operating expenses for Class A shares
the Fund's annual operating expenses for Class were 1.37% per share.
B shares, after giving effect to the expense
limitation were 2.10%, and without giving Pioneer has agreed until the second anniversary of
effect to the expense limitation, were 2.54% the closing of the Reorganization to limit the
per share. ordinary operating expenses (excluding taxes,
commissions, interest and extraordinary expenses) of
For the fiscal year ended December 31, 2003, the the Investor Class to 1.10% of
- ----------------------------------------------------------------------------------------------------------------------------------
4
- ----------------------------------------------------------------------------------------------------------------------------------
SAFECO MULTI CAP FUND PIONEER MID CAP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Fund's annual operating expenses for Class the average daily net assets attributable to the
C shares, after giving effect to the expense Investor Class.
limitation were 2.10%, and without giving
effect to the expense limitation, were 2.46%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation were 1.10%, and without
giving effect to the expense limitation, were
1.23% per share.
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- ----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Mid Cap Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco Multi
investment advisers, banks and other financial Cap Fund who own Investor Class shares in their own
institutions that have entered into selling name as of the closing date of the Reorganization and
agreements with the Fund's principal who maintain their accounts may buy shares of any
underwriter, as described in the Fund's fund in the Pioneer family of funds through such
prospectus. accounts in the future without paying sales charges.
Certain account transactions may be done by If the account is established in the shareholder's
telephone own name, shareholders may also purchase additional
shares of Pioneer Mid Cap Fund by telephone or
online.
- ----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Mid Cap Fund
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
Fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would
you have exchanged for Class A shares of be for Class A shares, which is subject to Rule 12b-1
another fund. fees. An exchange generally is treated as a sale and a
new purchase of shares for federal income tax purposes.
Certain account transactions may be done by
telephone. If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Mid Cap Fund for shares of other Pioneer
Funds by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
--------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Mid Cap Fund by telephone or online.
- ----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. Even
though each Fund seeks capital appreciation, you could lose money on your
investment 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 Fund's assets remain undervalued or do not have the potential value
originally expected
5
Each Fund also has risks associated with investing in mid-size companies.
Compared to large companies, mid-size companies, and the market for their equity
securities, are likely to:
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 Pioneer 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, Pioneer may not be able to sell the Fund's portfolio
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
Fund'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 Fund's return
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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 Fund 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.
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
SAFECO MULTI CAP FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
1994 -1.55
1995 20.17
1996 15.04
1997 31.12
1998 3.5
1999 54.25
2000 -16.11
2001 -11.25
2002 -24.13
2003 45.18
* During the period shown in the bar chart, your Fund's highest quarterly return
was 34.90% for the quarter ended December 31, 1999, and the lowest quarterly
return was -21.03 for the quarter ended September 30, 2001.
6
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
PIONEER MID CAP FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
1994 14.83
1995 30.73
1996 11.66
1997 17.45
1998 -4.11
1999 12.6
2000 17.64
2001 5.56
2002 11.99
2003 36.87
* During the period shown in the bar chart, Pioneer Mid Cap Fund's highest
quarterly return was 17.27% for the quarter ended June 30, 2003, and the lowest
quarterly return was -24.42% for the quarter ended September 30, 1998.
SAFECO MULTI CAP FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
SAFECO MULTI CAP FUND, CLASS A SHARES
Return Before Taxes 36.47% 3.34% 7.99%
Return After Taxes on Distributions(1) 36.47% 2.92% 7.03%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 23.70% 2.27% 6.53%
SAFECO MULTI CAP FUND, CLASS B SHARES
Return Before Taxes 38.77% 3.46 8.20%
SAFECO MULTI CAP FUND, CLASS C SHARES
Return Before Taxes 42.74% 3.82% 8.09%
SAFECO MULTI CAP FUND, INVESTOR CLASS SHARES
Return Before Taxes 45.18% 4.81% 8.86%
Return After Taxes on Distributions(1) 45.18% 4.39% 7.89%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 29.38% 4.00% 7.32%
RUSSELL 3000 INDEX(2) 31.04% 0.36% 10.77%
(reflects no deduction for fees, expenses or taxes)
S&P 500 INDEX(2) 28.67% -0.57% 11.06%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Russell 3000 Index, an unmanaged index of the 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 and do not mirror
Safeco Multi Cap Fund's investments.
7
PIONEER MID CAP FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
PIONEER MID CAP FUND, CLASS A SHARES
Return Before Taxes 28.98% 9.68% 11.53%
Return After Taxes on Distributions(1) 28.59% 8.04% 9.51%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 19.16% 7.58% 9.05%
RUSSELL MIDCAP VALUE INDEX(2) 38.07% 8.73% 13.04%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(2) The Russell Midcap Value Index, an unmanaged index that measures the
performance of those companies in the Russell Midcap Value Index with lower
price-to-book ratios and lower forecasted growth values, is for reference
only and does not mirror Pioneer Mid Cap Fund's investments.
Pioneer Mid Cap Fund's Investor Class shares will not be outstanding prior to
the closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A, B and C shares due to the lower expenses
applicable to the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Mid Cap Fund, the
expenses of Pioneer Mid Cap Fund for the period ended October 31, 2003. Future
expenses for all share classes may be greater or less.
-------------------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES PIONEER MID
(PAID DIRECTLY SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP CAP FUND
FROM YOUR FUND FUND FUND FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
-------------------------------------------------------------------------------------------------------------
Maximum sales 5.75%(6) None None None None(1)
charge (load) when
you buy shares as a
percentage of
offering price
-------------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
-------------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
-------------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A
-------------------------------------------------------------------------------------------------------------
Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A
fee
-------------------------------------------------------------------------------------------------------------
8
-------------------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES PIONEER MID
(PAID DIRECTLY SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP CAP FUND
FROM YOUR FUND FUND FUND FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
-------------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM FUND
ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
-------------------------------------------------------------------------------------------------------------
Management fee 0.70% 0.70% 0.70% 0.70% 0.74%
-------------------------------------------------------------------------------------------------------------
Distribution and
service (12b-1) fee 0.25% 1.00% 1.00% None None
-------------------------------------------------------------------------------------------------------------
Other expenses 0.83% 0.84% 0.76% 0.53% 0.46%
-------------------------------------------------------------------------------------------------------------
Total fund
operating expenses 1.78% 2.54% 2.46% 1.3% 1.20%
-------------------------------------------------------------------------------------------------------------
Expense reduction 0.43%(2) 0.44%(2) 0.36%(2) 0.123%(2) 0.10% (3)
-------------------------------------------------------------------------------------------------------------
Net fund operating
expenses 1.35% 2.10% 2.10% 1.10% 1.10%
-------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Mid Cap
Fund through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Mid Cap Fund or of any fund in the
Pioneer family of funds through such account in the future without paying this
sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco Multi
Cap Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all Fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 Mid Cap Fund to 1.10% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco Multi Cap
Fund and two years for Pioneer Mid Cap Fund and (f) and the Investor Class
shares of Pioneer Mid Cap Fund convert to Class A shares after two years. The
examples are for comparison purposes only and are not a representation of either
Fund's actual expenses or returns, either past or future.
-----------------------------------------------------
EXAMPLE
-----------------------------------------------------
SAFECO MULTI CAP FUND
-----------------------------------------------------
CLASS A SHARES
-----------------------------------------------------
Year 1 $ 705
-----------------------------------------------------
9
-----------------------------------------------------
EXAMPLE
-----------------------------------------------------
SAFECO MULTI CAP FUND
-----------------------------------------------------
Year 3 $ 978
-----------------------------------------------------
Year 5 $ 1,272
-----------------------------------------------------
Year 10 $ 2,105
-----------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
-----------------------------------------------------
Year 1 $ 713 $ 213
-----------------------------------------------------
Year 3 $ 958 $ 658
-----------------------------------------------------
Year 5 $ 1,329 $ 1,129
-----------------------------------------------------
Year 10 $ 2,064 $ 2,064
-----------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
-----------------------------------------------------
Year 1 $ 313 $ 213
-----------------------------------------------------
Year 3 $ 658 $ 658
-----------------------------------------------------
Year 5 $ 1,129 $ 1,129
-----------------------------------------------------
Year 10 $ 2,431 $ 2,431
-----------------------------------------------------
INVESTOR CLASS SHARES
-----------------------------------------------------
Year 1 $ 112
-----------------------------------------------------
Year 3 $ 350
-----------------------------------------------------
Year 5 $ 606
-----------------------------------------------------
Year 10 $ 1,340
-----------------------------------------------------
PIONEER MID CAP FUND
-----------------------------------------------------
INVESTOR CLASS SHARES
-----------------------------------------------------
Year 1 $ 112
-----------------------------------------------------
Year 3 $ 360
-----------------------------------------------------
Year 5 $ 639
-----------------------------------------------------
Year 10 $ 1,433
-----------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Multi Cap Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the performance of Pioneer Mid Cap Fund is generally consistent with the
historical investment performance of your Fund. For the one and five year
periods ended June 30, 2004, Class A shares of Pioneer Mid Cap Fund had an
average annual return of ___% and ___% compared to an average annual of the
Class A shares and Investor Class shares of ___% and ___% (one year) and ___%
and ____% (five years), 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 Fund
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 Fund'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's commitment until the second anniversary of the Reorganization
to limit the ordinary operating expenses (excluding taxes, commissions, interest
and extraordinary expenses) of the Investor Class of Pioneer Mid Cap Fund to
1.10% of average daily net assets. The estimated expenses of the Investor Class
shares of Pioneer Mid Cap Fund are below both the gross expenses and expenses
net of expense reimbursement of each class of shares of your Fund. Although you
will experience higher
10
expenses once the Investor Class shares convert to Class A shares after two
years, your expenses will remain the same until the second anniversary of the
Reorganization.
FIFTH, the substantially larger size of Pioneer Mid Cap Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer Mid Cap Fund received in the
Reorganization will provide your Fund's shareholders with exposure to
substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Mid Cap Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Mid Cap Fund 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 Mid Cap Fund and its
shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003 for Safeco Multi Cap Fund and October 31, 2003 for Pioneer Mid Cap
Fund.
-------------------------------------------------------------------------
SAFECO MULTI CAP FUND PIONEER MID CAP FUND
DECEMBER 31, 2003 OCTOBER 31, 2003
-------------------------------------------------------------------------
NET ASSETS (in millions) $ 89.66 $ 1,512
-------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 20.32 $ 22.25
Class B shares $ 19.28 $ 20.48
Class C shares $ 19.29 $ 20.34
Investor Class shares $ 20.77 N/A
-------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 275,000
Class B shares 228,000
Class C shares 9,000
Investor Class shares 3,829,000 N/A
-------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Mid Cap Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer Mid Cap
Fund'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 Fund. Similarly, the
board of trustees of Pioneer Mid Cap Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of Pioneer Mid Cap Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
12
SAFECO MUNICIPAL BOND FUND AND
PIONEER MUNICIPAL BOND FUND
PROPOSAL 14
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 MUNICIPAL BOND FUND TO THE PIONEER MUNICIPAL BOND FUND
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SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND
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Business A series of Safeco Tax-Exempt Bond Trust, a A newly organized diversified open-end management
diversified open-end management investment investment company organized as a Delaware statutory
company organized as a Delaware statutory trust. trust.
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Net assets as of $550 million None. The Pioneer Municipal Bond Fund is newly
June 30, 2004 organized and does not expect to commence investment
operations until the Reorganization occurs.
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Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Managers:
Stephen C. Bauer (since 1981 and until August Day-to-day management of the Fund's portfolio is the
2, 2004) responsibility of a team of fixed income portfolio
President and Director, SAM managers led by Kenneth J. Taubes.
Mary Metastasio (since 2003 and until July 31, Mr. Taubes joined Pioneer as a senior vice president
2004) in September 1998 and has been an investment
professional since 1982.
Currently Pioneer is acting as investment
adviser to the Fund. The Portfolio Manager of
the Pioneer Fund, as indicated in the next
column, currently manages your Safeco Fund.
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Investment objective Each Fund seeks to provide as high a level of current interest income exempt from federal income tax as
is consistent with the relative stability of capital. During normal market conditions, each Fund will
not invest less than 80% of its net assets in obligations the interest on which is exempt from federal
income tax.
The investment objective of each Fund is fundamental and cannot be changed without shareholder approval.
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Primary investments To achieve its investment objective, each Fund invests primarily in municipal bonds rated investment
grade or better with average maturities of 15 years or longer. Under normal circumstances, each Fund
invests:
o at least 80% of its assets in investment-grade municipal bonds with a maturity of more than one
year and the interest on which is exempt from federal income tax; and
o up to 20% of its assets in unrated municipal bonds, as long as the advisor determines they are of
comparable quality to investment-grade securities.
Each Fund will not invest in securities the interest on which is a tax preference item for purposes of
the federal alternative minimum tax.
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SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND
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Investment strategies When evaluating a bond to buy, each Fund's advisor considers among other things:
o Yield
o Maturity
o Structural features such as an issuer's right to buy the bond back at a stated price (a "call") or
the Fund's right to require the issuer to buy the bond back at a stated price (a "put")
o Credit quality (including the underlying rating of insured bonds)
o The project the issuer is financing
o The original offering price
o Any state or local tax exemption
o The amount of discount off or premium on the stated principal amount of the bond represented by the
price offered
Each Fund's advisor may use the rating services provided by Moody's, S&P, or Fitch. Bond ratings
indicate an issuer's financial strength and ability to meet its debt obligations.
Each Fund may sell bonds when:
o They become fully valued
o More attractively valued bonds become available
o Cash is needed to meet shareholder redemptions
Because it often takes years for attractive relative valuations to be recognized by the municipal
securities market, turnover of each Fund's portfolio can be low.
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Other investments Each Fund will limit its investment in municipal obligations the interest on which is payable from the
revenues of similar types of projects less than 25% of each Funds' total assets. As a matter of
operating policy, "similar types of projects" may include sports, convention or trade show facilities;
airports or mass transportation; sewage or solid waste disposal facilities; or air and water pollution
control projects.
Each Fund may invest in any of the following short-term, tax-exempt obligations: municipal notes of
issuers rated, at the time of the purchase, within one of the three highest grades assigned by a
nationally recognized statistical rating organization ("NRSRO"); unrated municipal notes offered by
issuers having outstanding municipal bonds rated within one of the three highest grades assigned by an
NRSRO; notes issued by or on behalf of municipal issuers that are guaranteed by the U.S. government;
tax-exempt commercial paper assigned one of the two highest grades by an NRSRO; certificates of deposit
issued by banks with assets of $1,000,000,000 or more; and municipal obligations that have a maturity
of one year or less from the date of purchase.
Each Fund may invest in obligations of the U.S. government, its agencies or instrumentalities or in
qualified repurchase agreements, the net interest on which is taxable for federal income tax purposes.
Each Fund will limit its investment in securities whose issuers are located in the same state to less
than 25% of each Fund's total assets.
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Temporary defensive The Fund may hold cash or as a temporary The Fund may invest all or part of its assets in
strategies defensive measure when market conditions so securities with remaining maturities of less than one
warrant. year, cash equivalents or may hold cash.
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Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
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Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined
in the 1940 Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments
in the securities of issuers primarily engaged in the same industry, provided that this restriction
does not limit each Fund from investing in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
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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 10% of the Fund's net assets, the Fund 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 Fund, (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.
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2
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SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND
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Borrowing Each Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. Each
Fund will not commit to additional securities purchases if total outstanding borrowings are equal to 5%
or more of total assets.
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Lending Each Fund may lend securities to qualified institutional investors with a value of up to 33% of the
Fund's total assets.
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Derivative instruments Each Fund may not purchase securities on margin. However, the Fund 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.
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Other investment As described above, the Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
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BUYING, SELLING AND EXCHANGE SHARES
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Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Municipal Bond
the Fund are subject to a 4.50% front-end sales Fund you receive in the Reorganization will not be
charge. subject to any sales charge. Moreover, if you own
shares in your own name as of the closing of the
A contingent deferred sales charge of up to Reorganization (i.e., not in the name of a broker)
5.00% if you redeem Class B shares within six and maintain your account, you may purchase Class A
years of purchase. shares of Pioneer Municipal Bond Fund and Class A
shares of any fund in the Pioneer family of funds
A contingent deferred sales charge of up to through such account in the future without paying any
1.00% if you redeem Class C shares within one sales charge.
year of purchase.
Except as described above, Class A shares of Pioneer
Purchases of Investor Class shares of the Fund Municipal Bond Fund are subject to a front-end sales
are not subject to a sales load. charge of up to [x.xx]%.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Investor Class shares held less
than 30 days.
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Management and other Safeco Municipal Bond Fund pays an advisory fee Pioneer Municipal Bond Fund pays Pioneer a management
fees on a monthly basis at an annual rate as follows: fee equal to [x.xx]% of the Fund's average daily net
$0 - $250,000,000: 0.50 of 1% assets.
$250,000,001 - $750,000,000: 0.45 of 1%
Over $750,000,000: 0.40 of 1% In addition, the Fund reimburses Pioneer for certain
Fund accounting and legal expenses incurred on behalf
of the Fund and pays a separate shareholder
SAM serves as administrator and Fund accounting servicing/transfer agency fee to PIMSS, an affiliate
agent for the Fund. The Fund pays SAM an of Pioneer.
administrative services fee of 0.05% of the
Fund's average daily net assets up to the first Pioneer has agreed until the second anniversary of
$200,000,000 and 0.01% of its net assets the closing of the Reorganization to limit the
thereafter, and an accounting fee of 0.04% of ordinary operating expenses (excluding taxes,
the Fund's average daily net assets up to the commissions, interest and extraordinary expenses) of
first $200,000,000 and 0.01% of its net assets the Investor Class to 0.62% of the average daily net
thereafter. assets attributable to the Investor Class.
During its most recent fiscal year, Safeco
Municipal Bond Fund paid aggregate advisory and
administration fees at an average rate of 0.59%
of average daily net assets.
SAM had contractually agreed until April 30,
2009, to pay certain fund operating expenses
(but not all of the operating expenses of the
Fund) that exceeded the rate of 0.40% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
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3
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SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND
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For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares were 0.87%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares were 1.66%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 1.87%, and without given effect
to the expense limitation, were 43.13%.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares were 0.61%.
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Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee.
service (12b-1) fee
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Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Municipal Bond
underwriter or through brokers, registered Fund's distributor. Existing shareholders of Safeco
investment advisers, banks and other financial Municipal Bond Fund who own shares in their own name
institutions that have entered into selling as of the closing date of the Reorganization and who
agreements with the Fund's principal maintain their accounts may buy shares of any fund in
underwriter, as described in the Fund's the Pioneer family of funds through such accounts in
prospectus. the future without paying sales charges.
If the account is established in the shareholder's
Certain account transactions may be done by own name, shareholders may also purchase additional
telephone shares of Pioneer Municipal Bond Fund by telephone or
online.
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Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Municipal Bond
acquire through dividend reinvestment or other Fund without incurring any fee on the exchange with
fund distributions. the more than 62 other Pioneer Funds. Your exchange
would be for Class A shares, which is subject to Rule
Certain account transactions may be done by 12b-1 fees. An exchange generally is treated as a sale
telephone. and a new purchase of shares for federal income tax
purposes.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer Municipal Bond Fund for shares of other
Pioneer Funds by telephone or online.
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Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives
your request in good order.
--------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer Municipal Bond Fund by telephone or online.
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4
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. Even
though each Fund seeks to maintain a $1 share price, you could lose money on
your investment or the Fund could fail to generate high current income if:
o Interest rates go up, causing the value of the Fund's investments to
decline
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest or has its credit rating downgraded
o The investment adviser's judgment about the credit quality, attractiveness
or relative value of a particular security proves to be incorrect
Investing in mutual fund shares is not the same as making a bank deposit. Your
investment is not insured or guaranteed by the Federal Deposit Insurance
Corporation.
PAST PERFORMANCE
Set forth below is performance information for Safeco Municipal Bond Fund. The
bar charts show how Safeco Municipal Bond Fund'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 Municipal Bond Fund 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 Municipal Bond Fund has not commenced investment operations.
SAFECO MUNICIPAL BOND FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1994 -8.25
1995 21.48
1996 3.18
1997 10.68
1998 6.35
1999 -6.18
2000 14.17
2001 5.3
2002 10.33
2003 5.96
* During the period shown in the bar chart, your Fund's highest quarterly return
was 8.82% for the quarter ended March 31, 1995, and the lowest quarterly return
was -6.77% for the quarter ended March 31, 1994.
5
SAFECO MUNICIPAL BOND FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS (1)
------ ------- ------------
SAFECO MUNICIPAL BOND FUND, CLASS A SHARES
Return Before Taxes 0.91% 4.38% 5.20%
Return After Taxes on Distributions (2) 0.65% 4.24% 5.07%
Return After Taxes on Distributions and 2.24% 4.34% 5.09%
Sale of Fund Shares (2)
SAFECO MUNICIPAL BOND FUND, CLASS B SHARES
Return Before Taxes -0.07% 4.21% 5.23%
SAFECO MUNICIPAL BOND FUND, CLASS C SHARES
Return Before Taxes 3.89% 4.54% 5.13%
SAFECO MUNICIPAL BOND FUND, INVESTOR CLASS
SHARES
Return Before Taxes 5.96% 5.69% 5.97%
Return After Taxes on Distributions (2) 5.68% 5.55% 5.83%
Return After Taxes on Distributions and 5.70% 5.53% 5.81%
Sale of Fund Shares (2)
LEHMAN BROTHERS LONG MUNICIPAL 6.13% 5.95% 6.40%
BOND INDEX (3)
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on September 30, 1996.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Lehman Brothers Long Municipal Bond Index, an unmanaged index of bonds
with a minimum credit rating of BAA3 issued as part of a deal of at least
$50 million, having an amount of at least $5 million and maturing in 22 or
more years, is for reference only, is not limited to California issuers,
does not mirror the Fund's investments and reflects no deduction of fees,
expenses or taxes.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer Municipal Bond Fund, the
expenses of Pioneer Municipal Bond Fund for the period ended December 31, 2003.
Future expenses for all share classes may be greater or less.
------------------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES SAFECO SAFECO SAFECO PIONEER
(PAID DIRECTLY MUNICIPAL BOND SAFECO MUNICIPAL BOND MUNICIPAL MUNICIPAL BOND
FROM YOUR FUND MUNICIPAL BOND FUND BOND FUND FUND INVESTOR
INVESTMENT) CLASS A FUND CLASS B CLASS C INVESTOR CLASS CLASS
------------------------------------------------------------------------------------------------------------
Maximum sales 4.50%(6) None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
------------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
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6
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SHAREHOLDER
TRANSACTION FEES SAFECO SAFECO SAFECO PIONEER
(PAID DIRECTLY MUNICIPAL BOND SAFECO MUNICIPAL BOND MUNICIPAL MUNICIPAL BOND
FROM YOUR FUND MUNICIPAL BOND FUND BOND FUND FUND INVESTOR
INVESTMENT) CLASS A FUND CLASS B CLASS C INVESTOR CLASS CLASS
------------------------------------------------------------------------------------------------------------
price or the amount
you receive when
you sell shares,
whichever is less
------------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
------------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
------------------------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
fee
------------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
(DEDUCTED FROM
FUND ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
------------------------------------------------------------------------------------------------------------
Management fee 0.47% 0.47% 0.47% 0.47% 0.47%
------------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service (12b-1) fee
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Other expenses 0.15% 0.19% 41.66% 0.14% 0.27%
------------------------------------------------------------------------------------------------------------
Total fund 0.87% 1.66% 43.13% 0.61% 0.74%
operating expenses
------------------------------------------------------------------------------------------------------------
Expense reduction None (2) None (2) 41.26%(2) None (2) 0.12% (3)
------------------------------------------------------------------------------------------------------------
Net fund operating 0.87% 1.66% 1.87% 0.61% 0.62%
expenses
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(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer Bond Fund
through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer Bond Fund or of any fund in the Pioneer
family of funds through such account in the future without paying this sales
charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco
Municipal Bond Fund to the extent the Fund's total ordinary operating expenses
exceeded 0.40% of the Fund's average daily net asset value in a fiscal year.
This arrangement included all fund operating expenses except management fees,
Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 operating expenses) of the
Investor Class shares of Pioneer Bond Fund to 0.62% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
7
The hypothetical example below helps you compare the cost of investing in each
fund. It assumes that: (a) you invest $10,000 in each fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco Municipal
Bond Fund and two years for Pioneer Municipal Bond Fund and (e) and the Investor
Class shares of Pioneer Municipal Bond Fund convert to Class A shares after two
years. The examples are for comparison purposes only and are not a
representation of either fund's actual expenses or returns, either past or
future.
----------------------------------------------------------
EXAMPLE
----------------------------------------------------------
SAFECO MUNICIPAL BOND FUND
----------------------------------------------------------
CLASS A SHARES
----------------------------------------------------------
Year 1 $ 535
----------------------------------------------------------
Year 3 $ 715
----------------------------------------------------------
Year 5 $ 911
----------------------------------------------------------
Year 10 $ 1,474
----------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
----------------------------------------------------------
Year 1 $ 669 $ 169
----------------------------------------------------------
Year 3 $ 823 $ 523
----------------------------------------------------------
Year 5 $ 1,102 $ 902
----------------------------------------------------------
Year 10 $ 1,561 $ 1,561
----------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
----------------------------------------------------------
Year 1 $ 290 $ 190
----------------------------------------------------------
Year 3 $ 588 $ 588
----------------------------------------------------------
Year 5 $ 1,011 $ 1,011
----------------------------------------------------------
Year 10 $ 2,190 $ 2,190
----------------------------------------------------------
INVESTOR CLASS SHARES
----------------------------------------------------------
Year 1 $ 62
----------------------------------------------------------
Year 3 $ 195
----------------------------------------------------------
Year 5 $ 340
----------------------------------------------------------
Year 10 $ 762
----------------------------------------------------------
PIONEER MUNICIPAL BOND FUND
----------------------------------------------------------
INVESTOR CLASS SHARES
----------------------------------------------------------
Year 1 $ 63
----------------------------------------------------------
Year 3 $ 212
----------------------------------------------------------
Year 5 $ 387
----------------------------------------------------------
Year 10 $ 895
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REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco Municipal Bond Fund. The Trustees considered the following matters,
among others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the significant experience and resources of Pioneer in managing
portfolios of tax exempt securities. At June 30, 2004, Pioneer Managed Portfolio
of tax exempt securities with total assets of approximately $_____ billion.
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 Fund
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 Fund's shareholders through exchanges. In addition, Pioneer
offers shareholders additional options for their accounts, including
8
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's commitment until the second anniversary of the Reorganization
to limit the ordinary operating expenses (excluding taxes, commissions, interest
and extraordinary expenses) of the Investor Class of Pioneer Municipal Bond Fund
to 0.62% of average daily net assets. This expense ratio is no higher than both
the gross expenses and expenses net of expense reimbursement of the Class A
shares and Investor Class shares of your Fund. Although you will experience
higher expenses once the Investor Class shares convert to Class A shares after
two years, your expenses will remain the same until the second anniversary of
the Reorganization.
FIFTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SIXTH, the Investor Class shares of Pioneer Municipal Bond Fund received in the
Reorganization will provide Safeco Municipal Bond Fund shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer Municipal Bond Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer Municipal Bond
Fund 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 Municipal Bond Fund and
its shareholders.
CAPITALIZATION
The following table sets forth the capitalization of each fund, as of December
31, 2003, and the PRO FORMA combined capitalization of both funds as if the
Reorganization had occurred on that date.
--------------------------------------------------------------------------
SAFECO MUNICIPAL BOND PIONEER MUNICIPAL BOND
FUND FUND
DECEMBER 31, 2003 DECEMBER 31, 2003
--------------------------------------------------------------------------
NET ASSETS (in thousands) $ 573,084 N/A
--------------------------------------------------------------------------
NET ASSET VALUE PER SHARE N/A
Class A shares $ 14.45
Class B shares $ 14.42
Class C shares $ 14.42
Investor Class shares $ 14.44
--------------------------------------------------------------------------
SHARES OUTSTANDING N/A
Class A shares 452,000
Class B shares 218,000
Class C shares 7,000
Investor Class shares 39,004,000
--------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Municipal Bond Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer Municipal
Bond Fund'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 Fund. Similarly, the
board of trustees of Pioneer
9
Municipal Bond Fund, including its Independent Trustees, approved the
Reorganization. They also determined that the Reorganization is in the best
interests of Pioneer Municipal Bond Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
10
SAFECO SMALL-CAP VALUE FUND AND
PIONEER SMALL CAP VALUE FUND
PROPOSAL 15
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 SC VALUE FUND TO THE PIONEER SC VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO SC VALUE FUND PIONEER SC VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Business A series of Safeco Common Stock Trust, a 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.
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Net assets as of $76.8 million $521.9 million
June 30, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisers Investment adviser (until July 31, 2004): Investment adviser
and portfolio managers SAM Pioneer
Portfolio Manager (until July 31, 2004): Portfolio Managers:
Greg Eisen Day-to-day management of the Fund's portfolio is the
Assistant vice president, SAM responsibility of David M. Adams and John McPherson.
Mr. Adams is a vice president of Pioneer and joined
Currently Pioneer is acting as investment Pioneer in 1994. Mr. McPherson joined Pioneer in
adviser to the Fund. The Portfolio Managers of 2002.
the Pioneer Fund, as indicated in the next
column, currently manage your Safeco Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment objective The Fund seeks long-term growth of capital The Fund seeks long-term growth through
through investing primarily in small-sized small-capitalization value companies.
companies.
- -----------------------------------------------------------------------------------------------------------------------------------
Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment
object as described above.
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments Under normal circumstances the Fund invests at Under normal market conditions, the Fund invests at
least 80% of its net assets (plus any least 80% of its net assets in equity securities of
borrowings for investment purposes) in equity small companies. Small companies are those with
and equity-related securities of companies with market values, at the time of the investment, that do
total market capitalizations at the time of the not exceed the greater of the market capitalization
investment of less than $1.5 billion. of the largest company within the Russell 2000
Index. For purposes of the Fund's investment
policies, equity securities include common stocks,
convertible debt and other equity instruments, such
as depositary receipts, warrants, rights, interest in
REITs and preferred stocks.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Strategies When evaluating a stock to buy for the Fund, Pioneer uses a "value" approach to select the Fund's
SAM historically looked for companies having investments. Pioneer seeks securities selling at
one or more of the following characteristics: substantial discounts to their underlying values and
o Long-term potential for above-average or then holds these securities until the market values
improving earnings growth 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 relative including the attractiveness of its market valuation,
value as determined by price-to-earnings based on the company's assets and prospects for
ratio or other commonly used valuation earnings and revenue growth. Factors Pioneer looks
measures for in selecting investments include:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO SC VALUE FUND PIONEER SC VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
o Above average potential for earnings and
revenue growth
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 Fund may invest in securities convertible The Fund may invest up to 25% of its total assets in
into common stock, but less than 35% of its REITs.
total assets will be invested in such
securities. The Fund may invest in securities of Canadian issuers
to the same extent as securities of U.S. issuers.
The Fund may invest up to 5% of its total assets in
equity and debt securities of other non-U.S. issuers,
including securities of emerging market issuers.
The Fund 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 Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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.
- -----------------------------------------------------------------------------------------------------------------------------------
Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- -----------------------------------------------------------------------------------------------------------------------------------
Industry Concentration Each Fund 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 Fund may not invest more than 15% of its net
Securities action the value of the following securities, assets in securities which are illiquid and other
in the aggregate, would exceed 15% of the securities which are not readily marketable.
Fund's net assets, the Fund 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 Fund, (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.
- -----------------------------------------------------------------------------------------------------------------------------------
2
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO SC VALUE FUND PIONEER SC VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Borrowing The Fund may borrow money (i) from banks or Borrow money, except the Fund may: (a) borrow from
(ii) by engaging in reverse repurchase banks or through reverse repurchase agreements in an
agreements. The Fund will not commit to amount up to 33 1/3% of the Fund's total assets
additional securities purchases if total (including the amount borrowed); (b) to the extent
outstanding borrowings are equal to 5% or more permitted by applicable law, borrow up to an
of total assets. additional 5% of the Fund's assets for temporary
purposes; (c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on margin to
the extent permitted by applicable law; and (e)
engage in transactions in mortgage dollar rolls that
are accounted for as financings.
- -----------------------------------------------------------------------------------------------------------------------------------
Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value
institutional investors with a value of up to that may not exceed 33 1/3% of the value of its total
33% of the Fund's total assets. assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities,
a result thereof, the aggregate value of the indices and currencies, forward currency exchange
assets underlying all such options does not contracts and other derivatives. The Fund does not
exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and
generally limits their use to hedging. However, the
The Fund may purchase a put or call option or Fund may use derivatives for a variety of
option on a futures contract if, as a result non-principal purposes, including:
thereof, the aggregate premiums paid on all o As a hedge against adverse changes in stock
options or options on futures contracts held by market prices, interest rates or currency
the Fund do not exceed 20% of the Fund's net exchange rates
assets. o As a substitute for purchasing or selling
securities
The Fund may enter into a futures contract or o To increase the Fund's return as a
option on futures contract if, as a result non-hedging strategy that may be considered
thereof, the aggregate margin deposits and speculative
premiums required on all such instruments do
not exceed 5% of the Fund's net assets.
The Fund may not purchase securities on margin.
However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------------
BUYING, SELLING AND EXCHANGE SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer SC Value Fund
the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be subject
charge. to any sales charge. Moreover, if you own shares in
your own name as of the closing of the Reorganization
Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your
you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer
purchase. SC Value Fund and Class A shares of any fund in the
Pioneer family of funds through such account in the
Contingent deferred sales charge of 1% if you future without paying any sales charge.
redeem Class C share within one year of
purchase. Except as described above, Class A shares of Pioneer
Tax Free Income Fund are subject to a front-end sales
Purchases of Investor Class shares of the Fund charge of up to 5.75%.
are not subject to a sales load.
The Fund assesses a mandatory redemption fee of
2%, as a percentage of the amount redeemed or
exchanged, on Class A and Investor Class shares
held less than 30 days.
- -----------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco SC Value Fund pays an advisory fee on a The Fund pays Pioneer a management fee equal to 0.85%
- -----------------------------------------------------------------------------------------------------------------------------------
3
- -----------------------------------------------------------------------------------------------------------------------------------
SAFECO SC VALUE FUND PIONEER SC VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
fees monthly basis at an annual rate as follows: of the Fund's average daily net assets.
$0 - $250,000,000: 0.75 of 1%
$250,000,001- $750,000,000: 0.70 of 1% During its most recent fiscal year, Pioneer SC Value
$750,000,001- $1,250,000,000: 0.65 of 1% Fund paid an advisory fee at an average rate of [xx]%
Over $1,250,000,000: 0.60 of 1% of average daily net assets.
SAM serves as administrator and Fund accounting In addition, the fund reimburses Pioneer for certain
agent for the Fund. The Fund paid SAM an fund accounting and legal expenses incurred on behalf
administrative services fee of 0.05% of the of the fund and pays a separate shareholder
Fund's average daily net assets up to the first servicing/transfer agency fee to PIMSS, an affiliate
$200,000,000 and 0.01% of its net assets of Pioneer.
thereafter, and an accounting fee of 0.04% of
the Fund's average daily net assets up to the For the fiscal year ended April 1, 2004, the Fund's
first $200,000,000 and 0.01% of its net assets annual operating expenses for Class A shares were
thereafter. 1.66% per share.
Pioneer has agreed until the second anniversary of
During its most recent fiscal year, Safeco the closing of the Reorganization to limit the
High-Yield Fund paid aggregate advisory and ordinary operating expenses (excluding taxes,
administration fees at an average rate of 0.84% commissions, interest and extraordinary expenses) of
of average daily net assets. the Investor Class to 1.15% of the average daily net
assets attributable to the Investor Class.
SAM had contractually agreed until April 30,
2009, to pay certain fund operating expenses
(but not all of the operating expenses of the
Fund) that exceeded the rate of 0.40% per annum
of the Fund's average daily net assets. This
arrangement included all Fund operating
expenses except management fees, Rule 12b-1
fees, brokerage commissions, taxes, interest,
and extraordinary expenses.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
A shares, after giving effect to the expense
limitation were 1.40%, and without giving
effect to the expense limitation, were 1.82%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
B shares, after giving effect to the expense
limitation were 2.15%, and without giving
effect to the expense limitation, were 2.72%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for Class
C shares, after giving effect to the expense
limitation were 2.15%, and without giving
effect to the expense limitation, were 39.37%
per share.
For the fiscal year ended December 31, 2003,
the Fund's annual operating expenses for
Investor Class shares, after giving effect to
the expense limitation were 1.15%, and without
giving effect to the expense limitation, were
1.43% per share.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares
service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1
fee equal to 0.25% annually of average daily net assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer SC Value Fund's
underwriter or through brokers, registered distributor. Existing shareholders of Safeco SC
investment advisers, banks and other financial Value Fund who own shares in their own name as of the
institutions that have entered into selling closing date of the Reorganization and who maintain
agreements with the Fund's principal their accounts may buy shares of any fund in the
underwriter, as described in the Fund's Pioneer family of funds through such accounts in the
prospectus. future without paying sales charges.
- -----------------------------------------------------------------------------------------------------------------------------------
4
- -----------------------------------------------------------------------------------------------------------------------------------
Safeco SC Value Fund Pioneer SC Value Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Certain account transactions may be done by If the account is established in the shareholder's
telephone own name, shareholders may also purchase additional
shares of Pioneer SC Value Fund by telephone or
online.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer SC Value Fund
acquire through dividend reinvestment or other without incurring any fee on the exchange with the
fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would
you have exchanged for Class A shares of be for Class A shares, which is subject to Rule 12b-1
another Fund. fees. An exchange generally is treated as a sale and
a new purchase of shares for federal income tax
Certain account transactions may be done by purposes.
telephone.
If the account is established in the shareholder's
own name, shareholders may also exchange shares of
Pioneer SC Value Fund for shares of other Pioneer
Funds by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling Shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the
Fund receives your request in good order.
---------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's
own name, shareholders may also redeem shares of
Pioneer SC Value Fund by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. You
could lose money on your investment in either Fund 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 Small company or value stocks fall out of favor with investors
o The Fund's assets remain undervalued or do not have the potential value
originally expected
Each Fund 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 times and prices Pioneer thins appropriate
o Offer greater potential for gain and loss
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. You
could lose money by investing in either Fund.
PAST PERFORMANCE
Set forth below is performance information for each Fund. The bar charts show
how each Fund'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
5
(before and after sales taxes) for each Fund 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.
SAFECO SC VALUE FUND - INVESTOR CLASS
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1997 23.38
1998 -21.57
1999 14.07
2000 -7.54
2001 18.20
2002 -3.76
2003 43.10
* During the period shown in the bar chart, your Fund's highest quarterly return
was 27.05% for the quarter ended December 31, 1999, and the lowest quarterly
return was -33.97% for the quarter ended September 30, 1998.
PIONEER SC VALUE FUND - CLASS A SHARES
CALENDAR YEAR TOTAL RETURNS*
[THE FOLLOWING TABLE WAS DEPICTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1998 -12.69
1999 35.96
2000 15.30
2001 13.08
2002 -12.70
2003 37.11
* During the period shown in the bar chart, Pioneer SC Value Fund's highest
quarterly return was 22.18% for the quarter ended June 30, 2003, and the lowest
quarterly return was -26.57% for the quarter ended September 30, 1998.
6
SAFECO SC VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
SINCE
1 YEAR 5 YEARS INCEPTION(1)
------ ------- ------------
SAFECO SC VALUE FUND, CLASS A SHARES
Return Before Taxes 34.45% 9.71% 8.52%
Return After Taxes on Distributions (2) 34.39% 9.63% 8.14%
Return After Taxes on Distributions and 22.47% 8.41% 7.26%
Sale of Fund Shares (2)
SAFECO SC VALUE FUND, CLASS B SHARES
Return Before Taxes 36.67% 9.93% 8.69%
SAFECO SC VALUE FUND, CLASS C SHARES
Return Before Taxes 40.67% 10.21% 8.57%
SAFECO SC VALUE FUND, INVESTOR CLASS SHARES
Return Before Taxes 43.10% 11.42% 9.67%
Return After Taxes on Distributions (2) 42.97% 11.28% 9.25%
Return After Taxes on Distributions and 28.18% 9.90% 8.27%
Sale of Fund Shares (2)
RUSSELL VALUE 2000 INDEX (3) 46.02% 12.28% 13.06%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on September 30, 1996.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Russell 2000 Value Index, an unmanaged index of value stocks in the
Russell 2000 Index of small-capitalization U.S. stocks, is for reference
only, does not mirror the Fund's investments, and reflects no deduction for
fees, expenses or taxes.
PIONEER SC VALUE FUND - CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1)
------ ------- -------------------
PIONEER SC VALUE FUND, CLASS A SHARES
Return Before Taxes 29.20% 14.87% 10.86%
Return After Taxes on Distributions (2) 29.11% 14.61% 10.28%
Return After Taxes on Distributions and 19.09% 12.99% 9.21%
Sale of Fund Shares (2)
RUSSELL VALUE 2000 INDEX (3) 46.03% 12.28% 11.83%
(reflects no deduction for fees, expenses or taxes)
- ----------
(1) The Fund commenced operations on February 28, 1997.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Russell 2000 Value Index, an unmanaged index of value stocks in the
Russell 2000 Index of small-capitalization U.S. stocks, is for reference
only, does not mirror the Fund's investments, and reflects no deduction for
fees, expenses or taxes.
Pioneer SC Value Fund's Investor Class shares will not be outstanding prior to
the closing of the Reorganization and consequently have no performance history.
However, the performance record of the Investor Class would be modestly higher
than the performance of Class A shares due to the lower expenses applicable to
the Investor Class.
THE FUNDS' FEES AND EXPENSES
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for your Fund, the expenses of your Fund for
the period ended December 31, 2003 and (ii) for Pioneer SC Value
7
Fund, the expenses of Pioneer SC Value Fund for the period ended June 30, 2003.
Future expenses for all share classes may be greater or less.
----------------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSACTION FEES PIONEER SC
(PAID DIRECTLY SAFECO SC VALUE SAFECO SC VALUE SAFECO SC VALUE SAFECO SC VALUE VALUE
FROM YOUR FUND FUND FUND FUND INVESTOR
INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS
---------------------------------------------------------------------------------------------------------
Maximum sales 5.75% (6) None None None None (1)
charge (load) when
you buy shares as a
percentage of
offering price
---------------------------------------------------------------------------------------------------------
Maximum deferred None 5.00%(7) 1.00%(8) None None
sales charge (load)
as a % of purchase
price or the amount
you receive when
you sell shares,
whichever is less
---------------------------------------------------------------------------------------------------------
Redemption fees for 2.00% None None 2.00% N/A
shares held less
than 30 days
---------------------------------------------------------------------------------------------------------
Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A
---------------------------------------------------------------------------------------------------------
Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A
fee
---------------------------------------------------------------------------------------------------------
ANNUAL FUND
OPERATING
EXPENSES
(DEDUCTED FROM
FUND ASSETS)
(AS A % OF AVERAGE
NET ASSETS)
---------------------------------------------------------------------------------------------------------
Management fee 0.75% 0.75% 0.75% 0.75% 0.85%
---------------------------------------------------------------------------------------------------------
Distribution and 0.25% 1.00% 1.00% None None
service
(12b-1) fee
---------------------------------------------------------------------------------------------------------
Other expenses 0.82% 0.97% 37.62% 0.68% 0.51%
---------------------------------------------------------------------------------------------------------
Total fund 1.82% 2.72% 39.37% 1.43% 1.36%
operating expenses
---------------------------------------------------------------------------------------------------------
Expense reduction 0.42% (2) 0.57% (2) 37.22% (2) 0.28% (2) 0.21% (3)
---------------------------------------------------------------------------------------------------------
Net fund operating 1.40% 2.15% 2.15% 1.15% 1.15%
expenses
---------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer SC Value
Fund through the Reorganization. In addition, shareholders of your Fund who own
shares in their own name (I.E., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer SC Value Fund or of any fund in the
Pioneer family of funds through such account in the future without paying this
sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco SC
Value Fund to the extent the Fund's total ordinary operating expenses exceeded
0.40% of the Fund's average daily net asset value in a fiscal year. This
arrangement included all fund operating expenses except management fees, Rule
12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses.
(3) 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 SC Value Fund to 1.15% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
8
(5) A low balance fee is charged once each year in December for accounts with
balances under $1,000 in your Fund.
(6) Purchases of $1,000,000 or more of Class A shares of your Fund are not
subject to a front-end sales charge, but a 1.00% deferred sales charge will
apply to redemptions made in the first twelve months except with respect to
participant-directed redemptions from qualified retirement plans.
(7) The contingent deferred sales charge on Class B shares of your Fund reduces
to zero after six years from purchase, and the Class B shares convert to Class A
shares at that time.
(8) The contingent deferred sales charge on Class C shares applies only to
redemptions made in the first twelve months after purchase.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco SC Value
Fund and two years for Pioneer SC Value Fund and (e) and the Investor Class
shares of Pioneer SC Value Fund convert to Class A shares after two years. The
examples are for comparison purposes only and are not a representation of either
Fund's actual expenses or returns, either past or future.
-------------------------------------------------------------------
EXAMPLE
-------------------------------------------------------------------
SAFECO SC VALUE FUND
-------------------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------------------
Year 1 $ 709
-------------------------------------------------------------------
Year 3 $ 993
-------------------------------------------------------------------
Year 5 $ 1,297
-------------------------------------------------------------------
Year 10 $ 2,158
-------------------------------------------------------------------
CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION
-------------------------------------------------------------------
Year 1 $ 718 $ 218
-------------------------------------------------------------------
Year 3 $ 973 $ 673
-------------------------------------------------------------------
Year 5 $ 1,354 $ 1,154
-------------------------------------------------------------------
Year 10 $ 2,117 $ 2,117
-------------------------------------------------------------------
CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION
-------------------------------------------------------------------
Year 1 $ 318 $ 218
-------------------------------------------------------------------
Year 3 $ 673 $ 673
-------------------------------------------------------------------
Year 5 $ 1,154 $ 1,154
-------------------------------------------------------------------
Year 10 $ 2,483 $ 2,483
-------------------------------------------------------------------
INVESTOR CLASS SHARES
-------------------------------------------------------------------
Year 1 $ 117
-------------------------------------------------------------------
Year 3 $ 365
-------------------------------------------------------------------
Year 5 $ 633
-------------------------------------------------------------------
Year 10 $ 1,398
-------------------------------------------------------------------
PIONEER SC VALUE FUND
-------------------------------------------------------------------
INVESTOR CLASS SHARES
-------------------------------------------------------------------
Year 1 $ 117
-------------------------------------------------------------------
Year 3 $ 404
-------------------------------------------------------------------
Year 5 $ 753
-------------------------------------------------------------------
Year 10 $ 1,737
-------------------------------------------------------------------
REASONS FOR THE PROPOSED REORGANIZATION
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco SC Value Fund. The Trustees considered the following matters, among
others, in approving the proposal.
FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund's investment management was necessary.
SECOND, the long-term investment performance of Pioneer SC Value Fund is
superior to your Fund's performance, although your Fund had better performance
during the most recent 12 month period. For the five year period ended June 30,
2004, Class A
9
shares of Pioneer SC Value Fund had an average annual return of [xx]% compared
to an average annual of the Class A shares and Investor Class shares of [xx]%
and [xx]%, 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 Fund
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 Fund'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's commitment until the second anniversary of the Reorganization
to limit the ordinary operating expenses (excluding taxes, commissions, interest
and extraordinary expenses) of the Investor Class of Pioneer SC Value Fund to
1.15% of average daily net assets. This expense ratio is no lower than both the
gross expenses and expenses net of expense reimbursement of the Class A, Class B
and Class C shares of your Fund and lower than the gross and the same as the net
expense of your Fund's Investor Class shares. Although without the expense
limitation Pioneer SC Value Fund's expenses are significantly higher than your
Fund's net expenses, the trustees believe that Pioneer SC Value Fund offers the
potential for lower expenses through economies of scale.
FIFTH, the substantially larger size of Pioneer SC Value Fund offers greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks.
SIXTH, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
SEVENTH, the Investor Class shares of Pioneer SC Value Fund received in the
Reorganization will provide Safeco SC Value Fund shareholders with exposure to
substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer SC Value Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer SC Value Fund
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 SC Value Fund and its
shareholders.
CERTAIN AGREEMENTS BETWEEN PIONEER AND SYMETRA
Pioneer is supporting the Reorganizations because it believes that it offers
favorable long-term investment performance and enhanced shareholder services to
the Safeco Funds' 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 Funds and the Pioneer Funds 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. 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 Reorganizations
and their obligation to indemnify Pioneer against liabilities with respect to
the management of the Safeco Funds prior to the closing of the Reorganizations,
Pioneer has agreed to pay Symetra up to $30 million. This amount is subject to
downward adjustment if the net assets of the Safeco Funds that approve the
Reorganizations (together with assets in certain other
10
accounts) are less than $2.6 billion. Under this agreement, Pioneer and Symetra
have also agreed, among other things, that (i) once the Investor Class converts
to Class A shares, PFD, the principal underwriter of the Pioneer Funds, shall
make payments to Safeco Securities pursuant to a Rule 12b-1 plan equal to 0.25%
of the average daily net assets attributable to accounts maintained by former
shareholders of the Funds, (ii) PFD will also make additional payments out of
its own resources to Safeco Securities in connection with purchases of Class A
shares of the Pioneer Funds by former shareholders of the Funds; and (iii)
Symetra and SAM will be subject to certain non-competition provisions.
CAPITALIZATION
The following table sets forth the capitalization of each Fund, as of December
31, 2003 for Safeco SC Value Fund and November 30, 2003 for Pioneer SC Value
Fund.
- ------------------------------------------------------------------------
SAFECO SC VALUE FUND PIONEER SC VALUE FUND
DECEMBER 31, 2003 NOVEMBER 30, 2003
- ------------------------------------------------------------------------
NET ASSETS (in millions) $ 52.419 $ 391.509391
- ------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A shares $ 18.50 $ 27.10
Class B shares $ 17.68 $ 25.75
Class C shares $ 17.68 $ 26.73
Investor Class shares $ 18.79 N/A
- ------------------------------------------------------------------------
SHARES OUTSTANDING
Class A shares 169,000 7,449,673
Class B shares 100,000 5,193,293
Class C shares 7,000 2,053,791
Investor Class shares 2,523,000 N/A
- ------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer SC Value Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer SC Value
Fund'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 Fund. Similarly, the
board of trustees of Pioneer SC Value Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of Pioneer SC Value Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
11
Safeco Tax-Free Money Market Fund and
Pioneer Tax Free Money Market Fund
PROPOSAL 16
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 TF Money Market Fund to the Pioneer TF Money Market Fund
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Safeco TF Money Market Fund Pioneer TF Money Market Fund
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Business A series of Safeco Money Market Trust, a A newly organized diversified open-end management
diversified open-end management investment investment company organized as a Delaware statutory
company organized as a Delaware statutory trust.
trust.
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Net assets as of $60.7 million None. The Pioneer TF Money Market Fund is newly
June 30, 2004 organized and does not expect to commence investment
operations until the Reorganization occurs.
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Investment advisers and Investment adviser (until August 2, 2004): Investment adviser
portfolio managers SAM Pioneer
Portfolio Managers: Portfolio Manager:
Mary Metastasio (since 1987 and until August 2, Day-to-day management of the Fund's portfolio is the
2004) responsibility of a team of fixed income portfolio
managers led by Kenneth J. Taubes.
Stephen C. Bauer (since 2003 and until August
2, 2004) Mr. Taubes joined Pioneer as a senior vice president
CFA in 1998 and has been an investment professional since
1982.
Currently Pioneer is acting as investment adviser
to the Fund. The Portfolio Managers of the
Pioneer Fund, as indicated in the next column,
currently manages your Safeco Fund.
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Investment objective Each Fund seeks to provide as high a level of current income exempt from federal income tax as is
consistent with a portfolio of high-quality, short-term municipal obligations selected on the basis of
liquidity and preservation of capital.
Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment
objective as described above.
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Primary investments To achieve its investment objective, each Fund will purchase only high-quality securities having minimal
credit risk with remaining maturities of 397 days or less.
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Investment strategies Each Fund may purchase only high-quality securities that the investment adviser believes present minimal
credit risks. To be considered high quality, a security must be rated, or the issuer must have received a
rating for a comparable short-term security, in accordance with applicable rules in one of the two highest
categories for short-term securities by at least two nationally recognized rating services (or by one, if
one rating service has rated the security); or, if unrated, the security must be judged by the investment
adviser to be of equivalent quality.
Each Fund may not invest more than 5% of its total assets in second tier securities. In addition, the each
Fund 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.
Each Fund may invest in:
o Variable and floating rate instruments that change interest rates periodically to keep their market
value near par
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Safeco TF Money Market Fund Pioneer TF Money Market Fund
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o Municipal notes that have a maturity of one year or less from the date of purchase
o Put bonds, which allow the holder to redeem the issue on specified dates before maturity and receive
full face value
o Tax-exempt commercial paper
o Restricted securities that are exempt from registration requirements and eligible for resale to
qualified institutional investors, such as mutual funds under Rule 144A of Section 4(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Other investments Each Fund will limit its investment in municipal obligations the interest on which is payable from the
revenues of similar types of projects to less than 25% of the Fund's total assets. As a matter of
operating policy, "similar types of projects" may include sports, convention or trade show facilities;
airports or mass transportation; sewage or solid waste disposal facilities; or air and water pollution
control projects.
Each Fund will limit its investment in securities whose issuers are located in the same state to less
than 25% of the Fund's total assets.
Each Fund 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. First tier securities are securities (1) rated in the highest
short-term category by two nationally recognized statistical rating organizations (NRSROs); (2) rated in
the highest short-term rating category by a single NRSRO if only that NRSRO has assigned the securities a
short-term rating; or (3) unrated, but determined by SAM to be of comparable quality.
Each Fund may invest in any of the following types of short-term, tax-exempt obligations: municipal notes
of issuers rated, at the time of purchase, within one of the three highest grades assigned by a NRSRO;
unrated municipal notes offered by issuers having outstanding municipal bonds rated within one of the
three highest grades assigned by an NRSRO; notes issued by or on behalf of municipal issuers that are
guaranteed by the U.S. government; tax-exempt commercial paper assigned one of the two highest grades by
an NRSRO; certificates of deposit issued by banks with assets of $1,000,000,000 or more; and municipal
obligations that have a maturity of one year or less from the date of purchase.
- ------------------------------------------------------------------------------------------------------------------------------------
Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in
strategies high-quality, short-term securities issued by securities with remaining maturities of less than one
an agency or instrumentality of the U.S. 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 Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to
diversification requirements under the Code.
- ------------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined in
the Investment Company Act, any rule or order thereunder, or SEC staff interpretation thereof) of its
investments in the securities of issuers primarily engaged in the same industry, provided that this
restriction does not limit the Fund from investing in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or governmental issuers of special or general tax-exempt
securities, or certain bank instruments issued by domestic banks.
- ------------------------------------------------------------------------------------------------------------------------------------
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 10% of the Fund's net assets, the Fund 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
Fund, (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 Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. The
Fund will not commit to additional securities purchases if total outstanding borrowings are equal to 5%
or more of total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Lending Each Fund may lend securities to qualified institutional investors with a value of up to 33% of the
Fund's total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
2
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Safeco TF Money Market Fund Pioneer TF Money Market Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Derivative instruments Each Fund may not purchase securities on margin. However, the Fund 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 Funds have substantially similar principal investment strategies and policies.
policies and Certain of the non-principal investment policies and restrictions are different. For a more complete
restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment
restrictions, see the SAI.
- ------------------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Sales charges A contingent deferred sales charge may apply if The Investor Class shares of Pioneer TF Money Market
you redeem Class B shares that were purchased Fund you receive in the Reorganization will not be
by exchange from another fund. subject to any sales charge. Moreover, if you own
shares in your own name as of the closing of the
A contingent deferred sales charge of 1% if you Reorganization (i.e., not in the name of a broker)
redeem Class C shares within one year of and maintain your account, you may purchase Class A
purchase, and the shares were purchased by shares of Pioneer TF Money Market Fund and Class A
exchange from another fund. shares of any fund in the Pioneer family of funds
through such account in the future without paying any
Purchases of Investor Class shares of the Fund sales charge.
are not subject to a sales load.
In general, Class A shares of Pioneer TF Money Market
The Fund assesses a mandatory redemption fee of Fund are not subject to a front-end sales charge.
2%, as a percentage of the amount redeemed or
exchanged, on Investor Class shares held less
than 30 days.
- ------------------------------------------------------------------------------------------------------------------------------------
Management and other Safeco TF Money Market Fund pays advisory Pioneer TF Money Market Fund pays Pioneer a
fees fee on a monthly basis at an annual rate as management fee equal to 0.40% of the Fund's average
follows: daily net assets.
$0 - $250,000,000: 0.50 of 1%
$250,000,001 - $750,000,000: 0.45 of 1% In addition, the Fund reimburses Pioneer for certain
$750,000,001 - $1,250,000,000: 0.40 of 1% Fund accounting and legal expenses incurred on behalf
Over $1,250,000,000: 0.35 of 1% of the Fund and pays a separate shareholder
servicing/transfer agency fee to PIMSS, an affiliate
SAM serves as administrator and Fund accounting of Pioneer.
agent for the Fund. The Fund pays SAM an
administrative services fee of 0.05% of the Pioneer has agreed until the second anniversary of
Fund's average daily net assets up to the first the closing of the Reorganization to limit the
$200,000,000 and 0.01% of its net assets ordinary operating expenses (excluding taxes,
thereafter, and an accounting fee of 0.04% of commissions, interest and extraordinary expenses) of
the Fund's average daily net assets up to the the Investor Class to 0.65% of the average daily net
first $200,000,000 and 0.01% of its net assets assets attributable to the Investor Class.
thereafter.
During its most recent fiscal year, Safeco TF
Money Market Fund paid aggregate advisory and
administration fees at an average rate of 0.59%
of average daily net assets.
SAM had contractually agreed until April 30,
2009, to pay certain Fund operating expenses (but
not all of the operating expenses of the Fund)
that exceeded the rate of 0.30% per annum of the
Fund's average daily net assets. This arrangement
included all Fund operating expenses except
management fees, Rule 12b-1 fees, brokerage
commissions, taxes, interest, and extraordinary
expenses.
For the fiscal year ended December 31, 2003, the
Fund's annual operating expenses for Investor
Class shares were 0.74%.
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee.
service (12b-1) fee
- ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------
Safeco TF Money Market Fund Pioneer TF Money Market Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has
Safeco Securities, Inc., the Fund's principal a sales agreement with PFD. Existing shareholders of
underwriter or through brokers, registered Safeco TF Money Market Fund who own shares in their
investment advisers, banks and other financial own name as of the closing date of the Reorganization
institutions that have entered into selling and who maintain their accounts may buy shares of any
agreements with the Fund's principal fund in the Pioneer family of funds through such
underwriter, as described in the Fund's accounts in the future without paying sales charges.
prospectus.
If the account is established in the shareholder's own
Certain account transactions may be name, shareholders may also purchase additional shares
done by telephone of Pioneer TF Money Market Fund by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer TF Money Market
acquire through dividend reinvestment or other Fund without incurring any fee on the exchange with
fund distributions. the more than 62 other Pioneer Funds. Your exchange
would be for Class A shares, which would be subject to
Certain account transactions may be done by a Rule 12b-1 fee. An exchange generally is treated as a
telephone. sale and a new purchase of shares for federal income tax
purposes.
If the account is established in the shareholder's own
name, shareholders may also exchange shares of Pioneer
TF Money Market Fund for shares of other Pioneer Funds
by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives
your request in good order.
----------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Fund Normally, your investment firm will send your request
directly in writing or by contacting a to sell shares to PIMSS. You can also sell your
financial intermediary as described in the shares by contacting the Fund directly if your
Fund's prospectus. account is registered in your name.
If the account is established in the shareholder's own
name, shareholders may also redeem shares of Pioneer TF
Money Market Fund by telephone or online.
- ------------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because each Fund has a similar investment objective, primary investment
policies and strategies, the Funds are subject to the same principal risks. Even
though each Fund seeks to maintain a $1 share price, you could lose money on
your investment or either Fund could fail to generate high current income if:
o Interest rates go up, causing the value of the Fund's investments to
decline
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest or has its credit rating downgraded
o The investment adviser's judgment about the credit quality, attractiveness
or relative value of a particular security proves to be incorrect
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
Past Performance
Set forth below is performance information for Safeco TF Money Market Fund. The
bar charts show how Safeco TF Money Market Fund'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 TF Money Market Fund over time for each class of shares
(including deductions for sales charges) compared with a broad-based securities
market index. Past performance
4
before and after taxes does not indicate future results. Pioneer TF Money Market
Fund has not commenced investment operations.
Safeco TF Money Market Fund - Investor Class
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
2.45 3.54 3.07 3.12 3.07 2.77 3.52 2.34 0.97 0.51
*During the period shown in the bar chart, your Fund's highest quarterly return
was 0.94% for the quarter ended June 30, 2000, and the lowest quarterly return
was 0.10% for the quarter ended September 30, 2003.
Safeco TF Money Market Fund
Average Annual Total Returns as of December 31, 2003
1 Year 5 Years 10 Years (1)
------ ------- ---------
Safeco TF Money Market Fund, Investor Class Shares
Return Before Taxes 0.51% 2.02% 2.53%
- --------------------
(1) The Fund commenced operations on [ ].
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly or
indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the table
appearing below are based on (i) for your Fund, the expenses of your Fund for
its fiscal year ended December 31, 2003 and (ii) for the Pioneer TF Money Market
Fund, the estimated annual expenses of the Pioneer TF Money Market Fund. The
Pioneer TF Money Market Fund's actual expenses may be greater or less.
------------------------------------------------------------------------------------------------
Safeco TF Money Pioneer TF Money
Shareholder transaction fees (paid directly from Market Fund Market Fund
your investment) Investor Class Investor Class
------------------------------------------------------------------------------------------------
Maximum sales charge (load) when you buy shares as a None None(1)
percentage of offering price
------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) as a % of None None
purchase price or the amount you receive when you
sell shares, whichever is less
------------------------------------------------------------------------------------------------
Redemption fees for shares held less than 30 days None N/A
------------------------------------------------------------------------------------------------
Wire redemption fee $20(4) N/A
------------------------------------------------------------------------------------------------
Annual low balance fee $12(5) N/A
------------------------------------------------------------------------------------------------
Annual fund operating expenses (deducted from fund
assets)
(as a % of average net assets)
------------------------------------------------------------------------------------------------
Management fee 0.50% 0.40%
------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fee None None
------------------------------------------------------------------------------------------------
Other expenses 0.24% 0.41%
------------------------------------------------------------------------------------------------
Total fund operating expenses 0.74% 0.81%
------------------------------------------------------------------------------------------------
Expense reduction N/A 0.16%(3)
------------------------------------------------------------------------------------------------
Net fund operating expenses 0.74% 0.65%
------------------------------------------------------------------------------------------------
5
(1) No sales load will apply to shares received in the Reorganization by
shareholders of your Fund who become shareholders of record of Pioneer TF Money
Market Fund through the Reorganization. In addition, shareholders of your Fund
who own shares in their own name (i.e., not in the name of a broker or other
intermediary) and maintain such account as of the closing of the Reorganization
may purchase Class A Shares of Pioneer TF Money Market Fund or of any fund in
the Pioneer family of funds through such account in the future without paying
this sales charge.
(2) As described above, SAM had contractually agreed to reimburse Safeco TF
Money Market Fund to the extent the Fund's total ordinary operating expenses
exceeded 0.30% of the Fund's average daily net asset value in a fiscal year.
This arrangement included all Fund operating expenses except management fees,
Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses.
(3) 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 TF Money Market Fund to 0.65% of average daily net assets.
(4) There is a higher charge for international wire redemptions, which may vary
by country or dollar amount.
(5) A low balance fee is charged once in year in December for accounts with
balances under $1,000 in your Fund.
(6) A contingent deferred sales charge may apply if you redeem Class B shares of
your Fund that were purchased by exchange from another fund.
(7) A 1.00% contingent deferred sales charge may apply if, within the first
twelve months of the initial purchase, you redeem Class C shares that were
purchased by exchange from another fund.
The hypothetical example below helps you compare the cost of investing in each
Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods
shown, (b) you reinvest all dividends and distributions, (c) your investment has
a 5% return each year, (d) each Fund's gross operating expenses remain the same,
(e) the expense limitations are in effect for five years for Safeco TF Money
Market Fund and two years for Pioneer TF Money Market Fund and (f) and the
Investor Class shares of Pioneer TF Money Market Fund convert to Class A shares
after two years. The examples are for comparison purposes only and are not a
representation of either Fund's actual expenses or returns, either past or
future.
----------------------------------------------------------
Example
----------------------------------------------------------
Safeco TF Money Market Fund
----------------------------------------------------------
Investor Class Shares
----------------------------------------------------------
Year 1 $76
----------------------------------------------------------
Year 3 $237
----------------------------------------------------------
Year 5 $411
----------------------------------------------------------
Year 10 $918
----------------------------------------------------------
Pioneer TF Money Market Fund
----------------------------------------------------------
Investor Class Shares
----------------------------------------------------------
Year 1 $66
----------------------------------------------------------
Year 3 $226
----------------------------------------------------------
Year 5 $418
----------------------------------------------------------
Year 10 $979
----------------------------------------------------------
Reasons for the Proposed Reorganization
The Trustees believe that the proposed Reorganization is in the best interests
of Safeco TF Money Market Fund. The Trustees considered the following matters,
among others, in approving the proposal.
6
First, SAM, the investment adviser to the Fund until August 2, 2004, was
acquired by Symetra. Symetra informed the Trustees that it did not intend to
continue to provide investment advisory services to the Safeco Funds.
Consequently, a change in your Fund'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 Fund
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 Fund'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 has experience in many other money market and tax free
portfolios. At June 30, 2004, Pioneer managed portfolios investing in tax exempt
securities with aggregate assets of $__ billion and money market portfolios with
assets of $__ million.
Fourth, Pioneer and its affiliates have greater potential for increasing the
size of your Fund due to Pioneer's experience in distributing mutual funds
through a broader range of distribution channels than currently available to
your Fund. Over the long-term, if this potential for a larger asset base is
realized, it is expected to increase the portfolio management options available
to the Fund.
Fifth, Pioneer's commitment until the second anniversary of the Reorganization
to limit the ordinary operating expenses (excluding taxes, commissions, interest
and extraordinary expenses) of the Investor Class of Pioneer TF Money Market
Fund to 0.67% of average daily net assets. This expense ratio is no higher than
both the gross expenses and expenses net of expense reimbursement of the
Investor Class shares of your Fund. Although you will experience higher expenses
once the Investor Class shares convert to Class A shares after two years, your
expenses will remain the same until the second anniversary of the
Reorganization.
Sixth, shareholders who own shares in their name as of the closing of the
Reorganization (i.e., not in the name of a broker) and maintain their account
may purchase additional Class A shares of the corresponding Pioneer Fund through
such account in the future or may exchange those shares for Class A shares of
another Pioneer Fund or purchase Class A share of another Pioneer Fund without
paying any sales charge.
Seventh, the Investor Class shares of Pioneer TF Money Market Fund received in
the Reorganization will provide Safeco TF Money Market Fund shareholders with
exposure to substantially the same investment product as they currently have.
Pioneer and Symetra will pay all out of pocket 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 out of pocket expenses incurred as
a result of the Reorganizations.
The Trustees considered that Pioneer and Symetra will benefit from the
Reorganization. See "Certain Agreements between Pioneer and Symetra."
The board of trustees of Pioneer TF Money Market Fund also considered that the
Reorganization presents an excellent opportunity for the Pioneer TF Money Market
Fund 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 TF Money Market Fund
and its shareholders.
Capitalization
The following table sets forth the capitalization of each Fund, as of December
31, 2003.
------------------------------------------------------------------------------------
Safeco TF Money Market Fund Pioneer TF Money Market
December 31, 2003 Fund
December 31, 2003
------------------------------------------------------------------------------------
Net Assets (in thousands) $67,128 N/A
------------------------------------------------------------------------------------
Net Asset Value Per Share
Investor Class shares $1.00 N/A
------------------------------------------------------------------------------------
Shares Outstanding
Investor Class shares 67,128,000 N/A
------------------------------------------------------------------------------------
7
It is impossible to predict how many shares of Pioneer TF Money Market Fund will
actually be received and distributed by your Fund on the Reorganization date.
The table should not be relied upon to determine the amount of Pioneer TF Money
Market Fund'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 Fund. Similarly, the
board of trustees of Pioneer TF Money Market Fund, including its Independent
Trustees, approved the Reorganization. They also determined that the
Reorganization is in the best interests of Pioneer TF Money Market Fund.
The Trustees recommend that the shareholders of your Fund vote FOR the proposal
to approve the Agreement and Plan of Reorganization.
8
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION
THE REORGANIZATIONS
o Each Reorganization is scheduled to occur as of 4:00 p.m., Eastern time, on
[ ], 2004, unless your Safeco Fund and the corresponding Pioneer Fund
agree in writing to a later date. Each Safeco Fund will transfer all of its
assets to the corresponding Pioneer Fund. The corresponding Pioneer Fund
will assume your Safeco Fund's liabilities that are included in the
calculation of your Safeco Fund's net assets value at the closing of the
Reorganization. The net asset value of both Funds will be computed as of
4:00 p.m., Eastern time, on the closing date of the Reorganization.
o Each corresponding Pioneer Fund will issue to the corresponding Safeco Fund
Investor Class shares with an aggregate net asset value equal to the net
assets attributable to the corresponding Safeco Fund's shares. These shares
will immediately be distributed to your Safeco Fund's shareholders in
proportion to the relative net asset value of their holdings of your Safeco
Fund's shares on the Reorganization Date. As a result, each Safeco Fund's
shareholders will end up as Investor Class shareholders of the
corresponding Pioneer Fund.
o After the distribution of shares, your Safeco Fund will be liquidated and
dissolved.
o Each 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 Funds receive a satisfactory opinion concerning the tax consequences
of the reorganization from Wilmer Cutler Pickering Hale and Dorr LLP,
counsel to the Pioneer Funds.
AGREEMENT AND PLAN OF REORGANIZATION
The shareholders of each Safeco Fund are being asked to approve an Agreement and
Plan of Reorganization (the "Plan"), the form of which is attached as EXHIBIT A.
The description of the Plan contained herein is qualified in its entirety by the
attached copy.
CONDITIONS TO CLOSING EACH REORGANIZATION. The obligation of each Pioneer Fund
to consummate each reorganization is subject to the satisfaction of certain
conditions, including your Safeco Fund's performance of all of its obligations
under the Plan, the receipt of certain documents and financial statements from
your Safeco Fund and the receipt of all consents, orders and permits necessary
to consummate the Reorganization (see Sections 7 and 8 of the Plan, attached as
EXHIBIT A).
The obligations of both Funds are subject to the approval of the Plan by the
necessary vote of the outstanding shares of your Safeco Fund, in accordance with
the provisions of your Trust's trust instrument and by-laws. The Funds'
obligations are also subject to the receipt of a favorable opinion of Wilmer
Cutler Pickering Hale and Dorr LLP as to the federal income tax consequences of
each reorganization. (see Section 8.5 of the Plan, attached as EXHIBIT A).
TERMINATION OF AGREEMENT. The board of either a Safeco Fund or the corresponding
Pioneer Fund may terminate the Plan (even if the shareholders of your Safeco
Fund 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.
TAX STATUS OF EACH REORGANIZATION
Each Reorganization is not intended to result in income, gain or loss being
recognized for United States federal income tax purposes and will not take place
unless both Funds involved in the Reorganization receive a satisfactory opinion
from Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the Pioneer Funds,
substantially to the effect that each Reorganization will be a "reorganization"
within the meaning of Section 368(a) of the Code.
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your Safeco Fund upon (1) the
transfer of all of its assets to the Pioneer Fund as described in this
Proxy Statement Prospectus or (2) the distribution by your Safeco Fund of
Pioneer Fund shares to your Safeco Fund's shareholders;
o No gain or loss will be recognized by the Pioneer Fund upon the receipt of
your Safeco Fund's assets solely in exchange for the issuance of Pioneer
Fund shares to your Safeco Fund and the assumption of your Safeco Fund's
liabilities by the corresponding Pioneer Fund;
10
o The basis of the assets of your Safeco Fund acquired by the corresponding
Pioneer Fund will be the same as the basis of those assets in the hands of
your Safeco Fund immediately before the transfer;
o The tax holding period of the assets of your Safeco Fund in the hands of
the corresponding Pioneer Fund will include your Safeco Fund's tax holding
period for those assets;
o You will not recognize gain or loss upon the exchange of your shares of
your Safeco Fund solely for the Pioneer Fund shares as part of the
Reorganization;
o The basis of the Pioneer Fund shares received by you in the reorganization
will be the same as the basis of your shares of your Safeco Fund
surrendered in exchange; and
o The tax holding period of the Pioneer Fund shares you receive will include
the tax holding period of the shares of your Safeco Fund surrendered in the
exchange, provided that you held the shares of your Safeco Fund as capital
assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of your Safeco Fund and the
Pioneer Fund.
No tax ruling has been or will be received from the Internal Revenue Service
("IRS") in connection with the Reorganizations. An opinion of counsel is not
binding on the IRS or a court, and no assurance can be given that the IRS would
not assert, or a court would not sustain, a contrary position.
You should consult your tax adviser for the particular tax consequences to you
of the transaction, including the applicability of any state, local or foreign
tax laws.
11
9
PROPOSALS 17(a)-(p)
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 Fund 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 Funds.
Your approval of Pioneer will constitute approval of an interim advisory
agreement between your Safeco Fund and Pioneer. In the event that the interim
advisory contract is approved but the Reorganization is not approved, the
interim advisory contract would continue in effect for an indefinite period. The
fee under the interim agreement is the same as the fee under the current
advisory agreement.
INTERIM ADVISORY AGREEMENT
Under the Investment Company Act, shareholders must approve any new investment
adviser to the Funds. 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 until shareholders approval is obtained. If Pioneer is not approved as
investment adviser to a Fund, 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 Fund. During this period prior to the
meeting, the Funds would be managed as separate Fund and will not be combined
with a Pioneer Fund. During this period, you also will not be able to exchange
your shares in a Fund for shares of a Pioneer Fund. If the appointment of
Pioneer as interim investment adviser is not approved by December [ ], 2004,
Pioneer will no longer provide advisory services to the Funds, 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 Exhibit B.
SAFECO ADVISORY AGREEMENT
The following is a summary of the material terms of the Funds' existing
investment advisory agreement with SAM (the "Safeco Advisory Agreement").
SERVICES. Under the terms of the Safeco Advisory Agreement, SAM manages the
Funds' investments, 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 Funds.
COMPENSATION. As compensation under the Safeco Advisory Agreement, each Safeco
Fund pays SAM a monthly advisory fee at an annual rate as listed in the below
table of the Fund's average daily net assets. In addition, SAM has agreed to
reimburse each Fund to the extent a Fund's total annual expenses, other than
taxes, interest and extraordinary litigation expenses, during any of the Fund's
fiscal years, exceed 0.40% (0.30% for Safeco Money Market Fund and Safeco
Tax-Free Money Market Fund) of its average daily net asset value in such year.
This arrangement includes all Fund operating expenses except management fees,
Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary
expenses. This limitation cannot be changed without shareholder approval.
Brokers' commissions and other charges relative to the purchase and sale of
portfolio securities are not regarded as expenses.
12
-------------------------------------------------------------------------------
FUND NET ASSETS ANNUAL FEE
-------------------------------------------------------------------------------
SAFECO BALANCED FUND, $0 - $250,000,000 0.70 of 1%
SAFECO CORE EQUITY $250,000,0001 -
FUND, SAFECO GROWTH $750,000,000 0.65 of 1%
OPPORTUNITIES FUND, $750,000,001
SAFECO LARGE-CAP $1,250,000,000 0.60 of 1%
VALUE FUND, SAFECO Over $1,250,000,000 0.55 of 1%
MULTI-CAP CORE FUND
-------------------------------------------------------------------------------
SAFECO CALIFORNIA TAX- $0 - $250,000,000 0.50 of 1%
FREE INCOME FUND, $250,000,0001 -
SAFECO INTERMEDIATE- $750,000,000 0.45 of 1%
TERM MUNICIPAL BOND Over $750,000,000 0.40 of 1%
FUND, SAFECO
MUNICIPAL BOND FUND
-------------------------------------------------------------------------------
SAFECO HIGH-YIELD $0 - $250,000,000 0.65 of 1%
BOND FUND $250,000,0001 -
$750,000,000 0.55 of 1%
Over $750,000,000 0.50 of 1%
-------------------------------------------------------------------------------
SAFECO INTERMEDIATE- $0 - $750,000,000 0.50 of 1%
TERM BOND FUND $750,000,001
$1,250,000,000 0.45 of 1%
Over $1,250,000,000 0.40 of 1%
-------------------------------------------------------------------------------
SAFECO INTERMEDIATE- $0 - $250,000,000 0.55 of 1%
TERM U.S. GOVERNMENT $250,000,0001 -
FUND $750,000,000 0.50 of 1%
$750,000,001
$1,250,000,000 0.45 of 1%
Over $1,250,000,000 0.40 of 1%
-------------------------------------------------------------------------------
SAFECO INTERNATIONAL $0 - $250,000,000 1.00 of 1%
STOCK FUND $250,000,0001 -
$750,000,000 0.90 of 1%
Over $750,000,000 0.80 of 1%
-------------------------------------------------------------------------------
SAFECO LARGE-CAP $0 - $250,000,000 0.80 of 1%
GROWTH FUND $250,000,0001 -
$750,000,000 0.75 of 1%
$750,000,001
$1,250,000,000 0.70 of 1%
Over $1,250,000,000 0.65 of 1%
-------------------------------------------------------------------------------
SAFECO MONEY MARKET $0 - $250,000,000 0.50 of 1%
FUND, SAFECO TAX-FREE $250,000,0001 -
MONEY MARKET FUND $750,000,000 0.45 of 1%
$750,000,001
$1,250,000,000 0.40 of 1%
Over $1,250,000,000 0.35 of 1%
-------------------------------------------------------------------------------
SAFECO SMALL-CAP $0 - $250,000,000 0.75 of 1%
VALUE FUND $250,000,0001 -
$750,000,000 0.70 of 1%
$750,000,001
$1,250,000,000 0.65 of 1%
Over $1,250,000,000 0.60 of 1%
In addition to the management fee, your Safeco Fund pays SAM, in its capacity as
administrator and fund accounting agent an administrative services fee of 0.05%
of your Safeco Fund's average daily net assets up to the first $200,000,000 and
0.01% of its net assets thereafter, and an accounting fee of 0.04% of the Fund's
average daily net assets up to the first $200,000,000 and 0.01% of its net
assets thereafter.
13
The table below shows gross advisory fees paid by each Fund and any expense
reimbursements by SAM during the fiscal year ended December 31, 2003:
---------------------------------------------------------------
(In Thousands)
---------------------------------------------------------------
SAFECO BALANCED FUND
Advisory Fee $ 124
Reimbursement $ 79
---------------------------------------------------------------
SAFECO CALIFORNIA TAX-FREE INCOME FUND
Advisory Fee $ 458
Reimbursement $ 109
---------------------------------------------------------------
SAFECO CORE EQUITY FUND
Advisory Fee $ 4,663
Reimbursement $ 353
---------------------------------------------------------------
SAFECO GROWTH OPPORTUNITIES FUND
Advisory Fee $ 3,156
Reimbursement $ 499
---------------------------------------------------------------
SAFECO HIGH-YIELD BOND FUND
Advisory Fee $ 266
Reimbursement $ 152
---------------------------------------------------------------
SAFECO INTERMEDIATE-TERM BOND FUND
Advisory Fee $ 52
Reimbursement $ 99
---------------------------------------------------------------
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
Advisory Fee $ 84
Reimbursement $ 103
---------------------------------------------------------------
SAFECO INTERMEDIATE-TERM U.S. GOVERNMENT FUND
Advisory Fee $ 332
Reimbursement $ 135
---------------------------------------------------------------
SAFECO INTERNATIONAL STOCK FUND
Advisory Fee $ 256
Reimbursement $ 235
---------------------------------------------------------------
SAFECO LARGE-CAP GROWTH FUND
Advisory Fee $ 40
Reimbursement $ 70
---------------------------------------------------------------
SAFECO LARGE-CAP VALUE FUND
Advisory Fee $ 965
Reimbursement $ 58
---------------------------------------------------------------
SAFECO MULTI-CAP CORE FUND
Advisory Fee $ 523
Reimbursement $ 122
---------------------------------------------------------------
SAFECO MONEY MARKET FUND
Advisory Fee $ 1,960
Reimbursement $ 32
---------------------------------------------------------------
SAFECO MUNICIPAL BOND FUND
Advisory Fee $ 2,720
Reimbursement $ 10
---------------------------------------------------------------
SAFECO SMALL-CAP VALUE FUND
Advisory Fee $ 345
Reimbursement $ 149
---------------------------------------------------------------
SAFECO TAX-FREE MONEY MARKET FUND
Advisory Fee $ 364
Reimbursement $ 70
---------------------------------------------------------------
14
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 Funds or to any shareholder of the Funds for
any loss suffered by Fund 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 Fund'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 Fund. 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 Fund'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 Fund 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 Safeco Fund, the presence
in person or by proxy of a majority of shareholders entitled to cast votes at
the Meeting will constitute a quorum. A favorable vote of a "majority of the
outstanding voting securities" of the applicable Fund is required to approve
each Proposal. 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 Fund represented at the meeting, if at least 67% of
all outstanding shares of the fund are represented at the meeting, or (ii) 50%
or more of the outstanding shares of the fund 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
underlying holder has not Meeting for purposes of result in a vote "against" Proposals 1-16, and Proposal 17 if
voted and the broker does quorum. less than 67% 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
Meeting for purposes of in a vote "against" Proposals 1-16, and Proposal 17 if less than
quorum. 67% of the outstanding shares are present at the Meeting.
- ----------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS
INVESTMENT ADVISER
Pioneer serves as the investment adviser to each Pioneer Fund. Pioneer is an
indirect, wholly owned subsidiary of UniCredito Italiano S.p.A., one of the
largest banking groups in Italy. Pioneer is part of the global asset management
group providing investment management and financial services to mutual funds,
institutional and other clients. As of June 30, 2004, assets under management
were approximately $150 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 Funds is responsible for overseeing the
performance of each of Pioneer Fund's investment adviser and subadviser and
determining whether to approve and renew the fund'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 Funds' board of trustees, to
hire and terminate a subadviser or to materially modify an existing subadvisory
agreement for a Pioneer Fund without shareholder approval. Pioneer retains the
ultimate responsibility to oversee and recommend the hiring, termination and
replacement of any subadviser. To the extent that the SEC adopts a rule that
would supersede the Exemptive
15
Order, Pioneer and the Pioneer Funds intend to rely on such rule to permit
Pioneer, subject to the approval of the Pioneer Funds' board of trustees and any
other applicable conditions of the rule, to hire and terminate a subadviser or
to materially modify an existing subadvisory agreement for a Pioneer Fund
without shareholder approval.
BUYING, EXCHANGING AND SELLING SHARES OF THE PIONEER FUNDS
NET ASSET VALUE. Each Pioneer Fund's net asset value is the value of its
portfolio of securities plus any other assets minus its operating expenses and
any other liabilities. Each Fund calculates a net asset value for each class of
shares every day the New York Stock Exchange is open when regular trading closes
(normally 4:00 p.m. Eastern time).
Each Pioneer Fund generally values its portfolio securities using closing market
prices or readily available market quotations. When closing market prices or
market quotations are not available or are considered by Pioneer to be
unreliable, a Pioneer Fund may use 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 Funds' trustees.
Each Pioneer Fund also may use the fair value of a security, including a
non-U.S. security, when Pioneer determines that the closing market price on the
primary exchange where the security is traded no longer accurately reflects the
value of the security due to factors affecting one or more relevant securities
markets or the specific issuer. The use of fair value pricing by a Pioneer Fund
may cause the net asset value of its shares to differ from the net asset value
that would be calculated using closing market prices. International securities
markets may be open on days when the U.S. markets are closed. For this reason,
the value of any international securities owned by a Pioneer Fund could change
on a day you cannot buy or sell shares of the fund. Each Pioneer Fund may use a
pricing service or a pricing matrix to value some of its assets. Debt securities
with remaining maturities of 60 days or less are valued at amortized cost, which
is a method of determining a security's fair value.
The Pioneer International Equity Fund primarily invests in securities of
non-U.S. issuers and the markets for these securities generally close prior to
the time the fund determines its net asset value. However, the value of these
securities continues to be influenced by changes in the global markets.
Consequently, the fund's trustees have determined to use the fair value of these
securities as of the time the fund determines its net asset value, based upon
data from a pricing service. On a daily basis, the pricing service recommends
changes, based upon a proprietary model, to the closing market prices of each
non-U.S. security held by the fund to reflect the security's fair value at the
time the fund determines its net asset value. The fund applies these
recommendations in accordance with procedures approved by the trustees. A
security's fair value determined in this manner may differ from the security's
closing market price on the date the fund determines its net asset value or the
opening price of the security on the next business day. The fund's use of this
method may significantly affect its net asset value compared to the net asset
value that would have been determined using closing market prices. The fund also
may take other factors influencing specific markets or issuers into
consideration in determining the fair value of a non-U.S. security.
You buy or sell shares at the share price. When you buy Class A shares, you pay
an initial sales charge unless you qualify for a waiver or reduced sales charge.
The Class A Shares of the Pioneer Funds you receive in the reorganizations will
not be subject to any sales charge. Moreover, if you own shares in your own name
as of the closing of the reorganizations (i.e., not in the name of a broker) and
maintain your account, you may purchase additional Class A Shares of the
corresponding Pioneer Fund through such account in the future or may exchange
those shares for Class A shares of another Pioneer Fund without paying any sales
charge.
OPENING YOUR ACCOUNT. If your shares are held in your investment firm's name,
the options and services available to you may be different from those described
herein or in the Pioneer Fund's prospectus. Ask your investment professional for
more information.
If you invest in a Pioneer Fund through investment professionals or other
financial intermediaries, including wrap programs and fund supermarkets,
additional conditions may apply to your investment in a Pioneer Fund, and the
investment professional or intermediary may charge you a transaction-based or
other fee for its services. These conditions and fees are in addition to those
imposed by the Pioneer Fund and its affiliates. You should ask your investment
professional or financial intermediary about its services and any applicable
fees.
ACCOUNT OPTIONS. Use your account application to select options and privileges
for your account. You can change your selections at any time by sending a
completed account options form to the transfer agent. You may be required to
obtain a signature guarantee to make certain changes to an existing account.
Call or write to the Pioneer Funds' transfer agent for account applications,
account options forms and other account information:
PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Telephone 1-800-225-6292
16
TELEPHONE TRANSACTION PRIVILEGES. If your account is registered in your name,
you can buy, exchange or sell shares of the Pioneer Funds by telephone. If you
do not want your account to have telephone transaction privileges, you must
indicate that choice on your account application or by writing to the transfer
agent.
When you request a telephone transaction the transfer agent will try to confirm
that the request is genuine. The transfer agent records the call, requires the
caller to provide the personal identification number for the account and sends
you a written confirmation. Each Pioneer Fund may implement other confirmation
procedures from time to time. Different procedures may apply if you have a
non-U.S. account or if your account is registered in the name of an institution,
broker-dealer or other third party.
ONLINE TRANSACTION PRIVILEGES. If your account is registered in your name, you
may be able to buy, exchange or sell fund shares online. Your investment firm
may also be able to buy, exchange or sell your Safeco Fund shares online.
To establish online transaction privileges complete an account options form,
write to the transfer agent or complete the online authorization screen on:
www.pioneerfunds.com.
To use online transactions, you must read and agree to the terms of an online
transaction agreement available on the Pioneer website. When you or your
investment firm requests an online transaction the transfer agent electronically
records the transaction, requires an authorizing password and sends a written
confirmation. The Pioneer Funds may implement other procedures from time to
time. Different procedures may apply if you have a non-U.S. account or if your
account is registered in the name of an institution, broker-dealer or other
third party. You may not be able to use the online transaction privilege for
certain types of accounts, including most retirement accounts.
SHARE PRICE. If you place an order with your investment firm before the New York
Stock Exchange closes and your investment firm submits the order to PFD prior to
PFD's close of business (usually 5:30 p.m. Eastern time), your share price will
be calculated that day. Otherwise, your price per share will be calculated at
the close of the New York Stock Exchange after the distributor receives your
order. Your investment firm is responsible for submitting your order to the
distributor.
BUYING PIONEER FUND SHARES. You may buy shares of each Pioneer Fund from any
investment firm that has a sales agreement with PFD. If you do not have an
investment firm, please call 1-800-225-6292 for information on how to locate an
investment professional in your area.
You can buy shares of the Pioneer Funds at the offering price. The distributor
may reject any order until it has confirmed the order in writing and received
payment. The fund reserves the right to stop offering any class of shares.
MINIMUM INVESTMENT AMOUNTS. Your initial investment must be at least $1,000.
Additional investments must be at least $100 for Class A shares. You may qualify
for lower initial or subsequent investment minimums if you are opening a
retirement plan account, establishing an automatic investment plan or placing
your trade through your investment firm. The minimum investment amount does not
apply for purposes of the reorganization.
EXCHANGING PIONEER FUND SHARES. You may exchange your shares in a Pioneer Fund
for shares of the same class of another Pioneer mutual fund. Your exchange
request must be for at least $1,000 unless the fund you are exchanging into has
a different minimum. Each Pioneer Fund allows you to exchange your shares at net
asset value without charging you either an initial or contingent deferred sales
charge at the time of the exchange. Shares you acquire as part of an exchange
will continue to be subject to any contingent deferred sales charge that applies
to the shares you originally purchased. When you ultimately sell your shares,
the date of your original purchase will determine your contingent deferred sales
charge. Before you request an exchange, consider each Fund's investment
objective and policy as described in each fund's prospectus.
SELLING PIONEER FUND SHARES. Your shares will be sold at net asset value per
share next calculated after the Pioneer Fund, or authorized agent, and as a
broker-dealer, receives your request in good order. If the shares you are
selling are subject to a deferred sales charge, it will be deducted from the
sale proceeds. Each Pioneer Fund generally will send your sale proceeds by
check, bank wire or electronic funds transfer. Normally you will be paid within
seven days. If you are selling shares from a non-retirement account or certain
IRAs, you may use any of the methods described below. If you are selling shares
from a retirement account other than an IRA, you must make your request in
writing.
You may have to pay federal income taxes on a sale or an exchange.
17
Good Order means that:
o You have provided adequate instructions
o There are no outstanding claims against your account
o There are no transaction limitations on your account
o If you have any Pioneer Fund share certificates, you submit them and
they are signed by each record owner exactly as the shares are
registered
o Your request includes a signature guarantee if you:
o Are selling over $100,000 or exchanging over $500,000 worth
of shares
o Changed your account registration or address within the last
30 days
o Instruct the transfer agent to mail the check to an address
different from the one on your account
o Want the check paid to someone other than the account
owner(s)
o Are transferring the sale proceeds to a Pioneer mutual fund
account with a different registration
BUYING, EXCHANGING AND SELLING PIONEER FUND SHARES
- ---------------------------------------------------------------------------------------------------------------
BUYING SHARES EXCHANGING SHARES
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
THROUGH YOUR INVESTMENT FIRM Normally, your investment firm will Normally, your investment firm will send
send your purchase request to the your exchange request to the Pioneer
Pioneer Funds' transfer agent. Fund's transfer agent. CONSULT YOUR
CONSULT YOUR INVESTMENT PROFESSIONAL INVESTMENT PROFESSIONAL FOR MORE
FOR MORE INFORMATION. Your INFORMATION ABOUT EXCHANGING YOUR SHARES.
investment firm may receive a
commission from the distributor for
your purchase of fund shares. The
distributor or its affiliates may
pay additional compensation, out of
their own assets, to certain
investment firms or their affiliates
based on objective criteria
established by the distributor.
- ---------------------------------------------------------------------------------------------------------------
BY PHONE OR ONLINE YOU CAN USE THE TELEPHONE OR ONLINE After you establish your Pioneer Fund
PURCHASE PRIVILEGE IF you have an account, YOU CAN EXCHANGE FUND SHARES BY
existing non-retirement account or PHONE OR ONLINE IF:
certain IRAs. You can purchase
additional fund shares by phone if: o You are exchanging into an existing
account or using the exchange to
o You established your bank establish a new account, provided the
account of record at new account has a registration identical
least 30 days ago to the original account
o Your bank information has o The fund into which you
not changed for at least are exchanging offers the
30 days same class of shares
o You are not purchasing more o You are not exchanging more
than $25,000 worth of shares than $500,000 worth of shares
per account per day per account per day
o You can provide the proper You can provide the proper account
account identification identification information
information
When you request a telephone or
online purchase, the transfer agent
will electronically debit the amount
of the purchase from your bank
account of record. The transfer
agent will purchase Pioneer Fund
shares for the amount of the debit
at the offering price determined
after the transfer agent receives
your
- ---------------------------------------------------------------------------------------------------------------
18
- ---------------------------------------------------------------------------------------------------------------
telephone or online purchase
instruction and good funds. It
usually takes three business days
for the transfer agent to receive
notification from your bank that
good funds are available in the
amount of your investment.
- ---------------------------------------------------------------------------------------------------------------
IN WRITING, BY MAIL OR BY You can purchase Pioneer Fund shares You can exchange fund shares by MAILING
FAX for an existing fund account by OR FAXING A LETTER OF INSTRUCTION TO THE
MAILING A CHECK TO THE TRANSFER TRANSFER AGENT. You can exchange Pioneer
AGENT. Make your check payable to Fund shares directly through the Pioneer
the Pioneer Fund. Neither initial Fund only if your account is registered
nor subsequent investments should be in your name. However, you may not fax
made by third party check. Your an exchange request for more than
check must be in U.S. dollars and $500,000. Include in your letter:
drawn on a U.S. bank. Include in
your purchase request the fund's o The name, social security
name, the account number and the number and signature of
name or names in the account all registered owners
registration.
o A signature guarantee for
each registered owner if
the amount of the exchange
is more than $500,000
o The name of the fund
out of which you are
exchanging and the
name of the fund
into which you are
exchanging
o The class of shares you
are exchanging
The dollar amount or number of shares
your are exchanging
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
SELLING SHARES HOW TO CONTACT PIONEER
- ---------------------------------------------------------------------------------------------------------------------
Normally, your investment firm will send your request to BY PHONE
sell shares to the Pioneer Funds' transfer agent. CONSULT For information or to request a telephone transaction
YOUR INVESTMENT PROFESSIONAL FOR MORE INFORMATION. Each between 8:00 a.m. and 7:00 p.m. (Eastern time) by
Pioneer Fund has authorized PFD to act as its agent in the speaking with a shareholder services representative
repurchase of Pioneer Fund shares from qualified call 1-800-225-6292
investment firms. Each Pioneer Fund reserves the right to
terminate this procedure at any time. To request a transaction using FactFoneSM call
1-800-225-4321
- ---------------------------------
YOU MAY SELL UP TO $100,000 PER ACCOUNT PER DAY BY PHONE
OR ONLINE. You may sell Pioneer Fund shares held in a Telecommunications Device for the Deaf (TDD)
retirement plan account by phone only if your account is 1-800-225-1997
an eligible IRA (tax penalties may apply). You may not
sell your shares by phone or online if you have changed BY MAIL
your address (for checks) or your bank information (for Send your written instructions to:
wires and transfers) in the last 30 days. PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
P.O. Box 55014
Boston, Massachusetts 02205-5014
You may receive your sale proceeds:
o By check, provided the check is made payable exactly BY FAX
as your account is registered Fax your exchange and sale requests to:
1-800-225-4240
o By bank wire or by electronic funds transfer,
provided the sale proceeds are being sent to your bank
address of record ----------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
19
- ---------------------------------------------------------------------------------------------------------------------
- -------------------------------------------- EXCHANGE PRIVILEGE
You can sell some or all of your Pioneer Fund shares by You may make up to four exchange redemptions of Safeco
WRITING DIRECTLY TO THE PIONEER FUND only if your account Fund account number, the class of shares to be $25,000 or
is registered in your name. Include in your request your more per account per calendar year out of sold, the
name, your social security number, the fund's name, your dollar amount or number of shares to be sold and the
any other applicable requirements as described below. The fund.
transfer agent will send the sale proceeds to your
address of record unless you provide other instructions. EXCESSIVE TRADING
Your request must be signed by all registered owners and
be in good order. You may not sell more than $100,000 per The fund discourages excessive and/or trading practices,
account per day by fax. such as market timing, that may disrupt portfolio
management strategies and harm fund request until it is
received in performance. These practices consist of:
o Selling shares purchased within
the preceding 90 days;
o Two or more purchases and redemptions in any
90-day period; or
o Any other series of transactions
indicative of a timing pattern
If we identify an account that engages in such
activity, the fund and the distributor reserve the
right to refuse or restrict any purchase order
(including exchanges) for that account and other
accounts under common ownership or control.
- ---------------------------------------------------------------------------------------------------------------------
PIONEER FUND SHAREHOLDER ACCOUNT POLICIES
SIGNATURE GUARANTEES AND OTHER REQUIREMENTS. You are required to obtain a
signature guarantee when you are:
o Requesting certain types of exchanges or sales of Pioneer Fund shares
o Redeeming shares for which you hold a share certificate
o Requesting certain types of changes for your existing account
You can obtain a signature guarantee from most broker-dealers, banks, credit
unions (if authorized under state law) and federal savings and loan
associations. You cannot obtain a signature guarantee from a notary public. All
Pioneer funds will accept only medallion signature guarantees. A medallion
signature guarantee may be obtained from a domestic bank or trust company,
broker, dealer, clearing agency, savings association, or other financial
institution that is participating in a medallion program recognized by the
Securities Transfer Association. Signature guarantees from financial
institutions that are not participating in one of these programs are not
accepted. Fiduciaries and corporations are required to submit additional
documents to sell Pioneer Fund shares.
EXCHANGE LIMITATION. You may only make up to four exchange redemptions of
$25,000 or more per account per calendar year out of a fund. Each fund's
exchange limitation is intended to discourage short-term trading in fund shares.
Short-term trading can increase the expenses incurred by the fund and make
portfolio management less efficient. In determining whether the exchange
redemption limit has been reached, Pioneer may aggregate a series of exchanges
(each valued at less than $25,000) and/or fund accounts that appear to be under
common ownership or control. Pioneer may view accounts for which one person
gives instructions or accounts that act on advice provided by a single source to
be under common control.
The exchange limitation does not apply to automatic exchange transactions or to
exchanges made by participants in employer-sponsored retirement plans qualified
under Section 401(a) of the Internal Revenue Code. While financial
intermediaries that maintain omnibus accounts that invest in the fund are
requested to apply the exchange limitation policy to shareholders who hold
shares through such accounts, we do not impose the exchange limitation policy at
the level of the omnibus account and are not able to monitor compliance by the
financial intermediary with this policy.
REDEMPTION FEE. Pioneer International Equity Fund has adopted a redemption fee
on short term holdings of the fund's shares. If you sell or exchange shares
within 30 days of any purchase of fund shares, the fund will apply a 2% fee to
the entire amount of your sales proceeds. The fund's redemption fee is intended
to discourage short-term trading in fund shares. Short-term trading can increase
the expenses incurred by the fund and make portfolio management less efficient.
20
EXCESSIVE TRADING. The fund discourages excessive and short-term trading
practices, such as market timing, that may disrupt portfolio management
strategies and harm fund performance. Although there is no generally applied
standard in the marketplace as to what level of trading activity is excessive,
we may consider trading in the fund's shares to be excessive if:
o You sell shares within a short period of time after the shares were
purchased;
o You make two or more purchases and redemptions within a short period of
time;
o You enter into a series of transactions that is indicative of a timing
pattern or strategy; or
o We reasonably believe that you have engaged in such practices in connection
with other mutual funds.
We monitor selected trades on a daily basis in an effort to detect excessive
short-term trading. If we determine that an investor or a client of a broker has
engaged in excessive short-term trading that we believe may be harmful to the
fund, we will ask the investor or broker to cease such activity and we will
refuse to process purchase orders (including purchases by exchange) of such
investor, broker or accounts that we believe are under their control. In
determining whether to take such actions, we seek to act in a manner that is
consistent with the best interests of the fund's shareholders. We also limit the
number of exchanges of $25,000 or more in any calendar year.
While we use our reasonable efforts to detect excessive trading activity, there
can be no assurance that our efforts will be successful or that market timers
will not employ tactics designed to evade detection. Frequently, fund shares are
held through omnibus accounts maintained by financial intermediaries such as
brokers and retirement plan administrators where the holdings of multiple
shareholders, such as all the clients of a particular broker, are aggregated.
Our ability to monitor trading practices by investors purchasing shares through
omnibus accounts is limited and dependent upon the cooperation of the financial
intermediary in observing the fund's policies.
MINIMUM ACCOUNT SIZE. Each Pioneer Fund requires that you maintain a minimum
account value of $500. If you hold less than the minimum in your account because
you have sold or exchanged some of your shares, the Pioneer Fund will notify you
of its intent to sell your shares and close your account. You may avoid this by
increasing the value of your account to at least the minimum within six months
of the notice from the fund.
TELEPHONE ACCESS. You may have difficulty contacting the Pioneer Fund by
telephone during times of market volatility or disruption in telephone service.
If you are unable to reach the Pioneer Fund by telephone, you should communicate
with the fund in writing.
SHARE CERTIFICATES. Normally, your shares will remain on deposit with the
transfer agent and certificates will not be issued. If you are legally required
to obtain a certificate, you may request one for your Class A shares only. A fee
may be charged for this service.
OTHER POLICIES. Each Pioneer Fund may suspend transactions in shares when
trading on the New York Stock Exchange is closed or restricted, when an
emergency exists that makes it impracticable for the fund to sell or value its
portfolio securities or with the permission of the Securities and Exchange
Commission.
Each Pioneer Fund or PFD may revise, suspend or terminate the account options
and services available to shareholders at any time.
Each Pioneer Fund reserves the right to redeem in kind by delivering portfolio
securities to a redeeming shareholder, provided that the Pioneer Fund must pay
redemptions in cash if a shareholder's aggregate redemptions in a 90 day period
are less than $250,000 or 1% of the fund's net assets.
DIVIDENDS AND CAPITAL GAINS
Each Pioneer Fund generally pays any distributions of net short- and long-term
capital gains and dividends from any net investment income at least annually.
Each Pioneer Fund may also pay dividends and capital gain distributions at other
times if necessary for the fund to avoid U.S. federal income or excise tax. If
you invest in a Pioneer Fund close to the time that the fund makes a
distribution, generally you will pay a higher price per share and you will pay
taxes on the amount of the distribution whether you reinvest the distribution or
receive it as cash.
TAXES
For U.S. federal income tax purposes, distributions from each Pioneer Fund's net
long-term capital gains (if any) are considered long-term capital gains and may
be taxable to you at different maximum rates depending upon their source and
other factors.
21
Short-term capital gain distributions are taxable as ordinary income. Dividends
(other than exempt-interest dividends) are taxable either as ordinary income or,
if so designated by the fund and certain other conditions, including holding
period requirements, are met by the fund and the shareholder, as "qualified
dividend income" taxable to individual shareholders at the maximum 15% U.S.
federal tax rate. Dividends and distributions generally are taxable, whether you
take payment in cash or reinvest them to buy additional Pioneer Fund shares.
When you sell or exchange Pioneer Fund shares you will generally recognize a
capital gain or capital loss in an amount equal to the difference between the
net amount of sale proceeds (or, in the case of an exchange, the fair market
value of the shares) that you receive and your tax basis for the shares that you
sell or exchange. In January of each year each Pioneer Fund will mail to you
information about your dividends, distributions and any shares you sold in the
previous calendar year.
You must provide your social security number or other taxpayer identification
number to the fund along with the certifications required by the Internal
Revenue Service when you open an account. If you do not or if it is otherwise
legally required to do so, the Pioneer Fund will withhold 28% "backup
withholding" tax from your dividends and distributions, sale proceeds and any
other payments to you.
You should ask your tax adviser about any federal, state and foreign tax
considerations, including possible additional withholding taxes for non-U.S.
shareholders. You may also consult the "Tax Status" section of each Pioneer
Fund's statement of additional information for a more detailed discussion of
U.S. federal income tax considerations, including qualified dividend income
considerations that may affect the Pioneer Fund and its shareowners.
PIONEER FUNDS' CLASS A RULE 12B-1 PLANS
As described above, each Pioneer Fund has adopted a Rule 12b-1 plan for its
Class A shares (the "Class A Plans" or the "Plans"). Because the 12b-1 fees
payable under each Plan are an ongoing expense, over time they may increase the
cost of your investment and your shares may cost more than shares that are not
subject to a distribution or service fee or sales charge.
COMPENSATION AND SERVICES. Each Class A Plan is a reimbursement plan, and
distribution expenses of PFD are expected to substantially exceed the
distribution fees paid by the fund in a given year. Pursuant to each Class A
Plan the fund reimburses PFD for its actual expenditures to finance any activity
primarily intended to result in the sale of Class A shares or to provide
services to holders of Class A shares, provided the categories of expenses for
which reimbursement is made are approved by the board of trustees. The expenses
of the fund pursuant to the Class A Plan are accrued daily at a rate which may
not exceed the annual rate of 0.25% of the fund's average daily net assets
attributable to Class A shares.
TRUSTEE APPROVAL AND OVERSIGHT. Each Plan was last approved by the board of
trustees of each Pioneer Fund, including a majority of the independent trustees,
by votes cast in person at meetings called for the purpose of voting on the Plan
on December 6, 2003. Pursuant to the Plan, at least quarterly, PFD will provide
each fund with a written report of the amounts expended under the Plan and the
purpose for which these expenditures were made. The trustees review these
reports on a quarterly basis to determine their continued appropriateness.
TERM, TERMINATION AND AMENDMENT. Each Plan's adoption, terms, continuance and
termination are governed by Rule 12b-1 under the 1940 Act. The board of trustees
believes that there is a reasonable likelihood that the Plans will benefit each
fund and its current and future shareholders. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the fund affected thereby, and material amendments of the Plans
must also be approved by the trustees as provided in Rule 12b-1.
FINANCIAL HIGHLIGHTS
The following tables show the financial performance of each Pioneer Fund for the
past five fiscal years and, if applicable, for any recent semi-annual period (or
the period during which each Pioneer Fund has been in operation, if less than
five years). Certain information reflects financial results for a single Pioneer
Fund share. "Total return" shows how much an investment in a Fund would have
increased or decreased during each period, assuming you had reinvested all
dividends and other distributions. In the case of each Pioneer Fund, each fiscal
year ended on or after the fiscal year ended June 30,2002 has been audited by
Ernst & Young LLP, each Pioneer Fund's independent registered public accounting
firm, as stated in their reports incorporated by reference in this registration
statement. For fiscal years prior to the fiscal year ended June 30,2002, the
financial statements of each Pioneer Fund was audited by Arthur Anderson LLP.
The information for any semi-annual period has not been audited.
22
PIONEER BALANCED FUND
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01(A) 12/31/00 12/31/99
--------- --------- ------------ --------- ---------
CLASS A
Net asset value, beginning of period $ 8.29 $ 9.46 $ 9.94 $ 9.73 $ 9.74
--------- --------- --------- --------- ---------
Increase (decrease) from investment
operations:
Net investment income $ 0.12 $ 0.11 $ 0.19 $ 0.30 $ 0.31
Net realized and unrealized gain (loss)
on investments 1.20 (1.17) (0.47) 0.22 (0.01)
--------- --------- --------- --------- ---------
Net increase (decrease) from investment
operations $ 1.32 $ (1.06) $ (0.28) $ 0.52 $ 0.30
Distributions to shareowners:
Net investment income (0.14) (0.11) (0.20) (0.31) (0.31)
Net increase (decrease) in net asset value $ 1.18 $ (1.17) $ (0.48) $ 0.21 $ (0.01)
Net asset value, end of period $ 9.47 $ 8.29 $ 9.46 $ 9.94 $ 9.73
========= ========= ========= ========= =========
Total return* 15.99% (11.20)% (2.87)% 5.38% 3.15%
Ratio of net expenses to average net
assets+ 1.38% 1.41% 1.31% 1.23% 1.23%
Ratio of net investment income to
average net assets+ 1.25% 1.19% 1.97% 2.96% 3.21%
Portfolio turnover rate 44% 180% 133% 17% 46%
Net assets, end of period (in thousands) $ 107,265 $ 106,734 $ 141,746 $ 162,855 $ 214,866
Ratios with reductions for fees paid
indirectly:
Net expenses 1.38% 1.41% 1.30% 1.20% 1.21%
Net investment income 1.25% 1.19% 1.98% 2.99% 3.23%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 2.02%
to 1.98%. Per share ratios and supplemental data for periods prior to
January 1, 2002, have not been restated to reflect this change in
presentation.
23
PIONEER FUND
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
----------- ----------- ----------- ----------- -----------
CLASS A
Net asset value, beginning of
period $ 30.76 $ 38.87 $ 44.26 $ 47.60 $ 43.30
----------- ----------- ----------- ----------- -----------
Increase (decrease) from
investment operations:
Net investment income $ 0.28 $ 0.27 $ 0.18 $ 0.16 $ 0.18
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 7.24 (8.12) (5.11) (0.14) 6.51
----------- ----------- ----------- ----------- -----------
Net increase (decrease) from
investment operations $ 7.52 $ (7.85) $ (4.93) $ 0.02 $ 6.69
Distributions to shareowners:
Net investment income $ (0.28) $ (0.26) $ (0.16) $ (0.12) $ (0.17)
Net realized gain -- -- (0.30) (3.24) (2.22)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
asset value $ 7.24 $ (8.11) $ (5.39) $ (3.34) $ 4.30
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 38.00 $ 30.76 $ 38.87 $ 44.26 $ 47.60
----------- ----------- ----------- ----------- -----------
Total return* 24.58% (20.26)% (11.13)% 0.12% 15.63%
Ratio of net expenses to average
net assets+ 1.09% 1.11% 1.14% 1.11% 1.10%
Ratio of net investment income to
average net assets+ 0.86% 0.75% 0.43% 0.31% 0.39%
Portfolio turnover rate 6% 7% 6% 20% 10%
Net assets, end of period (in
thousands) $ 5,370,888 $ 4,584,649 $ 6,140,520 $ 6,645,954 $ 6,638,130
Ratios with reductions for fees paid
indirectly:
Net expenses 1.09% 1.10% 1.13% 1.09% 1.09%
Net investment income 0.86% 0.76% 0.44% 0.33% 0.40%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
24
PIONEER HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED YEAR ENDED
4/30/04 10/31/03 10/31/02
---------------- ----------- -----------
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 11.59 $ 9.14 $ 10.41
----------- ----------- -----------
Increase (decrease) from investment operations:
Net investment income $ 0.35 $ 0.80 $ 0.96
Net realized and unrealized gain (loss) on
investments 0.17 2.45 (1.24)
----------- ----------- -----------
Net increase (decrease) from investment
Operations $ 0.52 $ 3.25 $ (0.28)
Distributions to shareowners:
Net investment income (0.37) (0.79) (0.99)
Net realized gain (0.01) (0.01) --
----------- ----------- -----------
Net increase (decrease) in net asset value $ 0.14 $ 2.45 $ (1.27)
----------- ----------- -----------
Net asset value, end of period $ 11.73 $ 11.59 $ 9.14
----------- ----------- -----------
Total return* 4.43% 36.83% (3.53)%
=========== =========== ===========
Ratio of net expenses to average net assets 1.02%**+ 1.06%+ 1.03%+
Ratio of net investment income to average net
assets 5.87%**+ 7.30%+ 9.20%+
Portfolio turnover rate 54%** 38% 29%
Net assets, end of period (in thousands) $ 3,660,416 $ 3,268,359 $ 1,260,074
Ratios with no waiver of management fees by PIM
and no reduction for fees paid indirectly:
Net expenses 1.02%** 1.06% 1.10%
Net investment income 5.87%** 7.30% 9.13%
Ratios with waiver of management fees by PIM
and reduction for fees paid indirectly:
Net expenses 1.02%** 1.06% 1.03%
Net investment income 5.87%** 7.30% 9.20%
25
PIONEER BOND FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED YEAR ENDED
12/31/03 6/30/03
----------- ----------
(UNAUDITED)
CLASS A
Net asset value, beginning of period $ 9.41 $ 8.89
----------- ----------
Increase from investment operations:
Net investment income $ 0.20 $ 0.45
Net realized and unrealized gain (loss) on investments -- 0.53
----------- ----------
Net increase from investment operations $ 0.20 $ 0.98
Distributions to shareowners:
Net investment income (0.27) (0.46)
----------- ----------
Net increase (decrease) in net asset value $ (0.07) $ 0.52
----------- ----------
Net asset value, end of period $ 9.34 $ 9.41
----------- ----------
Total return* 2.23% 11.38%
Ratio of net expenses to average net assets+ 1.18%** 1.20%
Ratio of net investment income to average net assets+ 4.29%** 5.02%
Portfolio turnover rate 72%** 48%
Net assets, end of period (in thousands) $ 164,866 $ 183,338
Ratios with reductions for fees paid indirectly:
Net expenses 1.18%** 1.20%
Net investment income 4.29%** 5.02%
26
PIONEER TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
---------- ---------- ---------- ---------- ----------
CLASS A
Net asset value, beginning of period $ 11.61 $ 11.47 $ 11.70 $ 10.98 $ 12.02
--------- --------- --------- --------- ---------
Increase (decrease) from investment
operations:
Net investment income $ 0.56 $ 0.56 $ 0.53 $ 0.52 $ 0.51
Net realized and unrealized gain (loss)
on investments 0.09 0.23 (0.05) 0.72 (1.02)
--------- --------- --------- --------- ---------
Net increase (decrease) from investment
operations $ 0.65 $ 0.79 $ 0.48 $ 1.24 $ (0.51)
Distributions to shareowners:
Net investment income (0.56) (0.57) (0.53) (0.52) (0.51)
In excess of net investment income -- -- -- (0.00)(a) --
Net realized gain -- (0.08) (0.18) -- (0.02)
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value $ 0.09 $ 0.14 $ (0.23) $ 0.72 $ (1.04)
Net asset value, end of period $ 11.70 $ 11.61 $ 11.47 $ 11.70 $ 10.98
========== ========== ========== ========== ==========
Total return* 5.80% 7.07% 4.13% 11.63% (4.29)%
Ratio of net expenses to average net
assets+ 0.93% 0.93% 0.92% 0.95% 0.93%
Ratio of net investment income to average
net assets+ 4.88% 4.83% 4.49% 4.62% 4.43%
Portfolio turnover rate 80% 161% 92% 14% 24%
Net assets, end of period (in thousands) $ 326,173 $ 343,872 $ 333,867 $ 341,179 $ 368,559
Ratios with reductions for fees paid
indirectly:
Net expenses 0.93% 0.92% 0.91% 0.91% 0.92%
Net investment income 4.88% 4.84% 4.50% 4.66% 4.44%
(a) Amount rounds to less than one cent per share
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
27
PIONEER AMERICA INCOME TRUST
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/03 12/31/02 12/31/01(A) 12/31/00 12/31/99
---------- ---------- ----------- ------------ ----------
CLASS A
Net asset value, beginning of period $ 10.27 $ 9.79 $ 9.76 $ 9.30 $ 10.10
--------- --------- --------- -------- ---------
Increase from investment operations:
Net investment income $ 0.28 $ 0.40 $ 0.52 $ 0.58 $ 0.55
Net realized and unrealized gain
(loss) on investments (0.13) 0.54 0.05 0.46 (0.80)
Net increase (decrease) from
investment operations $ 0.15 $ 0.94 $ 0.57 $ 1.04 $ (0.25)
Distributions to shareowners:
Net investment income (0.47) (0.46) (0.51) (0.58) (0.55)
Net realized gain -- -- (0.03) -- --
--------- --------- --------- -------- ---------
Net increase (decrease) in net asset
value $ (0.32) $ 0.48 $ 0.03 $ 0.46 $ (0.80)
--------- --------- --------- -------- ---------
Net asset value, end of period $ 9.95 $ 10.27 $ 9.79 $ 9.76 $ 9.30
========= ========= ========= ======== =========
Total return* 1.47% 9.78% 5.92% 11.58% (2.52)%
Ratio of net expenses to average net
assets+ 1.10% 1.00% 1.01% 1.04% 1.01%
Ratio of net investment income to
average net assets+ 2.85% 4.17% 5.14% 6.09% 5.63%
Portfolio turnover rate 66% 76% 72% 56% 72%
Net assets, end of period (in
thousands) $ 153,939 $ 164,393 $ 115,998 $ 96,068 $ 111,262
Ratios with no waiver of
management fees by PIM and no
reductions for fees paid indirectly:
Net expenses 1.12% 1.08% 1.12% 1.16% 1.14%
Net investment income 2.83% 4.09% 5.03% 5.97% 5.50%
Ratios with waiver of management
fees by PIM and reductions for fees
paid indirectly:
Net expenses 1.10% 1.00% 1.00% 1.00% 1.00%
Net investment income 2.85% 4.18% 5.15% 6.13% 5.64%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
(a) On January 1, 2001, the Trust began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001, was to decrease net investment income by $0.02 per
share, increase net realized and unrealized gain (loss) by $0.02 per share
and decrease the ratio of net investment income to average net assets
assuming waiver of management fees by PIM and reduction for fees paid
indirectly from 5.35% to 5.15%. Per share ratios and supplemental data for
periods prior to January 1, 2001, have not been restated to reflect this
change in presentation.
28
PIONEER INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
---------- ---------- ---------- ---------- ----------
CLASS A
Net asset value, beginning of
period $ 11.64 $ 15.94 $ 16.81 $ 27.50 $ 18.55
------- -------- -------- -------- --------
Increase (decrease) from investment
operations:
Net investment income (loss) $ 0.10 $ 0.05 $ (0.06) $ (0.16) $ (0.06)
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 5.81 (4.35) (0.78) (9.25) 9.09
Net increase (decrease) from
investment operations $ 5.91 $ (4.30) $ (0.84) $ (9.41) $ 9.03
Distributions to shareowners:
Net investment income -- -- -- -- (0.08)
Net realized gain -- -- (0.03) (1.28) --
------- -------- -------- -------- --------
Net increase (decrease) in net asset
value $ 5.91 $ (4.30) $ (0.87) $ (10.69) $ 8.95
------- -------- -------- -------- --------
Net asset value, end of period $ 17.55 $ 11.64 $ 15.94 $ 16.81 $ 27.50
======= ======== ======== ======== ========
Total return(*) 50.77% (26.98)% (4.98)% (34.95)% 48.70%
Ratio of net expenses to average net
assets(+) 1.75% 1.76% 1.75% 1.77% 1.76%
Ratio of net investment income (loss)
to average net assets(+) 0.67% 0.30% (0.35)% (0.75)% (0.23)%
Portfolio turnover rate 169% 45% 77% 50% 59%
Net assets, end of period (in
thousands) $ 18,345 $ 11,578 $ 16,455 $ 20,689 $ 41,276
Ratios with no waiver of
management fees
and assumption of expenses by PIM
and no reduction for fees paid
indirectly:
Net expenses 2.80% 2.94% 2.68% 2.12% 2.10%
Net investment loss (0.38)% (0.88)% (1.28)% (1.10)% (0.57)%
Ratios with waiver of management
fees and assumption of expenses
by PIM and reduction for fees
paid indirectly:
Net expenses 1.75% 1.75% 1.75% 1.75% 1.75%
Net investment income (loss) 0.67% 0.31% (0.35)% (0.73)% (0.22)%
(*) Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
(+) Ratios with no reduction for fees paid indirectly.
29
PIONEER GROWTH SHARES
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/03 12/31/02(A) 12/31/01 12/31/00 12/31/99
CLASS A
Net asset value, beginning of
period $ 9.05 $ 13.90 $ 17.21 $ 20.16 $ 20.34
-------- --------- --------- ----------- -----------
Increase (decrease) from
investment operations:
Net investment loss $ (0.04) $ (0.04) $ (0.04) $ (0.09) $ (0.09)
Net realized and unrealized gain
(loss) on investments 2.41 (4.81) (3.27) (1.81) 1.59
-------- --------- --------- ----------- -----------
Net increase (decrease) from
investment operations $ 2.37 $ (4.85) $ (3.31) $ (1.90) $ 1.50
Distributions to shareowners:
Net realized gain -- -- -- (1.05) (1.68)
-------- --------- --------- ----------- -----------
Net increase (decrease) in net
asset value $ 2.37 $ (4.85) $ (3.31) $ (2.95) $ (0.18)
-------- --------- --------- ----------- -----------
Net asset value, end of period $ 11.42 $ 9.05 $ 13.90 $ 17.21 $ 20.16
======== ========= ========= =========== ===========
Total return(*) 26.19% (34.89)% (19.23)% (9.57)% 7.40%
Ratio of net expenses to average net
assets(+) 1.45% 1.39% 1.18% 1.22% 1.02%
Ratio of net investment loss to
average net assets(+) (0.42)% (0.39)% (0.29)% (0.60)% (0.41)%
Portfolio turnover rate 47% 88% 111% 58% 48%
Net assets, end of period (in
thousands) $ 516,234 $ 452,070 $ 836,149 $ 1,197,025 $ 1,935,072
Ratios with reductions for fees paid
indirectly:
Net expenses 1.45% 1.38% 1.16% 1.19% 1.00%
Net investment loss (0.42)% (0.38)% (0.27)% (0.57)% (0.39)%
(a) The per share data presented above is based upon the average shares
outstanding for the year presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratio with no reduction for fees paid indirectly.
30
PIONEER VALUE FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/04 9/30/03 9/30/02 9/30/01 9/30/00 9/30/99
----------- ----------- -------------- ----------- ----------- ------------
CLASS A
Net asset value, beginning of period $ 16.25 $ 15.29 $ 19.12 $ 22.67 $ 20.16 $ 18.32
----------- ----------- -------------- ----------- ----------- -----------
Increase (decrease) from investment
operations:
Net investment income $ 0.07 $ 0.11 $ 0.15 $ 0.17 $ 0.20 $ 0.21
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 2.52 3.20 (3.17) (2.05) 3.0 21.97
----------- ----------- -------------- ----------- ----------- -----------
Net increase (decrease) from investment
operations $ 2.59 $ 3.31 $ (3.02) $ (1.88) $ 3.22 $ 2.18
Distributions to shareowners:
Net investment income (0.08) (0.24) (0.09) (0.14) (0.20) (0.19)
Net realized gain (0.04) (2.11) (0.72) (1.53) (0.51) (0.15)
----------- ----------- -------------- ----------- ----------- -----------
Net increase (decrease) in net asset value $ 2.47 $ 0.96 $ (3.83) $ (3.55) $ 2.51 $ 1.84
Net asset value, end of period $ 18.72 $ 16.25 $ 15.29 $ 19.12 $ 22.67 $ 20.16
----------- ----------- -------------- ----------- ----------- -----------
Total return(*) 15.98% 22.94% (16.78)% (8.88)% 16.29% 11.86%
Ratio of net expenses to average net
assets+1.06%(**) 1.19% 1.16% 1.01% 0.96% 0.96%
Ratio of net investment income to average
net assets(+) 0.70%** 0.85% 0.74% 0.76% 0.81% 0.93%
Portfolio turnover rate 35%** 40% 61% 3% 3% 12%
Net assets, end of period (in thousands) $ 3,843,212 $ 3,424,962 $ 3,016,623 $ 3,885,560 $ 4,614,739 $ 5,125,858
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.06%** 1.19% 1.16% 0.99% 0.94% 0.95%
Net investment income 0.70%** 0.85% 0.74% 0.78% 0.83% 0.94%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios assuming no reduction for fees paid indirectly.
** Annualized.
31
PIONEER CASH RESERVES FUND
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED
12/31/03 12/31/02
---------- ----------
CLASS A
Net asset value, beginning of period $ 1.00 $ 1.00
---------- ----------
Increase (decrease) from investment operations:
Net investment income $ 0.003 $ 0.01
Distributions to shareowners:
Net investment income (0.003) (0.01)
---------- ----------
Net asset value, end of period $ 1.00 $ 1.00
---------- ----------
Total return(*) 0.26% 1.15%
Ratio of net expenses to average net assets +1.00% 0.76%
Ratio of net investment income to average net assets +0.26% 1.18%
Net assets, end of period (in thousands) $ 227,052 $ 268,861
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reductions for fees paid indirectly:
Net expenses 1.06% 0.93%
Net investment income 0.20% 1.01%
Ratios with waiver of management fees and assumption of
expenses by PIM and reductions for fees paid indirectly:
Net expenses 0.99% 0.75%
Net investment income 0.27% 1.19%
32
PIONEER MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
4/30/04 10/31/03 10/31/02 10/31/01 10/31/00 10/31/99
----------- ----------- ---------- ---------- ---------- -----------
(UNAUDITED)
CLASS A
Net asset value,
beginning of period $ 22.25 $ 16.93 $ 19.29 $ 20.83 $ 19.90 $ 19.02
----------- ----------- --------- --------- --------- -----------
Increase (decrease) from
investment operations:
Net investment income
(loss) $ 0.01 $ 0.04 $ (0.02) $ (0.01) $ 0.11 $ 0.12
Net realized and
unrealized gain (loss)
on investments 2.03 5.28 (0.97) 0.34 3.46 1.70
----------- ----------- --------- --------- --------- -----------
Net increase (decrease)
from investment
operations $ 2.04 $ 5.32 $ (0.99) $ 0.33 $ 3.57 $ 1.82
Distributions to
shareowners:
Net investment income (0.03) -- -- -- -- (0.02)
Net realized gain (0.49) -- (1.37) (1.87) (2.64) (0.92)
----------- ----------- --------- --------- --------- -----------
Net increase (decrease)
in net asset value 1.52 $ 5.32 $ (2.36) $ (1.54) $ 0.93 $ 0.88
----------- ----------- --------- --------- --------- -----------
Net asset value, end of
period $ 23.77 $ 22.25 $ 16.93 $ 19.29 $ 20.83 $ 19.90
=========== =========== ========= ========= ========= ===========
Total return* 9.37% 31.42% (5.99)% 1.85% 20.00% 10.02%
Ratio of net expenses to
average net assets+ 1.19%**(a) 1.37% 1.30% 1.24% 1.13% 1.18%
Ratio of net investment
income (loss) to
average net assets+ 0.08%**(a) 0.24% (0.09)% 0.01% 0.27% 0.37%
Portfolio turnover rate 46%** 58% 65% 95% 70% 75%
Net assets, end of period
(in thousands) $ 1,363,097 $ 1,208,400 $ 890,856 $ 921,310 $ 945,583 $ 1,067,562
Ratios with reduction for
fees paid indirectly:
Net expenses 1.19%**(a) 1.37% 1.30% 1.22% 1.11% 1.16%
Net investment income (loss) 0.08%**(a) 0.24% (0.09)% 0.03% 0.29% 0.39%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
(a) In the absence of the negative printing fees in the statement of
operations, which relates to a change in estimate for printing fees in the
period ended October 31, 2003, the gross expense ratio and net investment
income ratio to average net assets would have been 1.20% and 0.07%,
respectively.
33
PIONEER SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/04 11/30/03 11/30/02 11/30/01 11/30/00 11/30/99
---------- ---------- ---------- ---------- ---------- ----------
CLASS A
Net asset value, beginning of period $ 27.10 $ 21.51 $ 22.46 $ 20.10 $ 17.40 $ 13.85
--------- --------- --------- -------- -------- --------
Increase (decrease) from investment
operations:
Net investment loss $ (0.07) $ (0.07) $ (0.24) $ (0.09) $ (0.12) $ (0.08)
Net realized and unrealized gain (loss)
on investments and futures contracts 2.67 5.78 (0.69) 3.29 3.13 3.63
--------- --------- --------- -------- -------- --------
Net increase (decrease) from investment
operations $ 2.60 $ 5.71 $ (0.93) $ 3.20 $ .01 $ 3.55
Distributions to shareowners:
Net realized gain -- (0.12) (0.02) (0.84) (0.31) --
--------- --------- --------- -------- -------- --------
Net increase (decrease) in net asset value $ 2.60 $ 5.59 $ (0.95) $ 2.36 $ 2.70 $ 3.55
--------- --------- --------- -------- -------- --------
Net asset value, end of period $ 29.70 $ 27.10 $ 21.51 $ 22.46 $ 20.10 $ 17.40
========= ========= ========= ======== ======== ========
Total return* 9.59% 26.56% (4.16)% 15.92% 17.26% 25.63%
Ratio of net expenses to average net
assets+ 1.51%** 1.66% 1.65% 1.79% 1.72% 2.02%
Ratio of net investment loss to average *
net assets+ (0.50)%* (0.32)% (0.49)% (0.33)% (0.27)% (0.71)%
Portfolio turnover rate 31%** 37% 31% 49% 61% 78%
Net assets, end of period (in thousands) $ 256,248 $ 201,892 $ 139,170 $ 73,855 $ 58,323 $ 33,714
Ratios with no waiver of management
fees and assumption of expenses by
PIM and no reduction for fees paid
indirectly:
Net expenses 1.51%** 1.66% 1.65% 1.79% 1.72% 2.02%
Net investment loss (0.50)%** (0.32)% (0.49)% (0.33)% (0.27)% (0.71)%
Ratios with waiver of management fees
and assumption of expenses by PIM
and reduction for fees paid indirectly:
Net expenses 1.51%** 1.65% 1.63% 1.76% 1.69% 1.98%
Net investment loss (0.50)%** (0.31)% (0.47)% (0.30)% (0.24)% (0.67)%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratios with no reduction for fees paid indirectly.
34
INFORMATION CONCERNING THE MEETING
SOLICITATION OF PROXIES
In addition to the mailing of these proxy materials, proxies may be solicited by
telephone, by fax or in person by the trustees, officers and employees of your
Safeco Fund; by personnel of your Safeco Fund, Pioneer Funds' investment
adviser, Pioneer, their transfer agent, PIMSS, or by broker-dealer firms. [ ]
has been retained to provide proxy solicitation services to the Funds at a cost
of approximately $[_____]. Pioneer and Symetra will bear the cost of such
solicitation.
REVOKING PROXIES
A Safeco Fund 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 Fund'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 Fund
(without complying with any formalities) at any time before it is voted.
Being present at the Meeting alone does NOT revoke a previously executed and
returned proxy.
OUTSTANDING SHARES AND QUORUM
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
one-third of the outstanding shares entitled to cast votes at the Meeting will
constitute a quorum.
As of the record date, the following number of shares of each Safeco Fund were
outstanding.
- -------------------------------------------------------------
FUND SHARE OUTSTANDING
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
OTHER BUSINESS
Your Fund'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.
35
ADJOURNMENTS
If, by the time scheduled for a Meeting, a quorum of shareholders of a Fund 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 Funds 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 Fund 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 Fund
will set a new record date), your Safeco Fund 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 Fund
may also arrange to have votes recorded by telephone by officers and employees
of your Safeco Fund 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 Fund 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 Fund'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.]
36
SHAREHOLDERS' PROPOSALS
Your Fund 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 Fund at [ ] within a reasonable time before any
meeting. If the reorganization is completed, your Safeco Fund will not hold
another shareholder meeting.
APPRAISAL RIGHTS
If the reorganization of your Safeco Fund is approved at the Meeting,
shareholders of your Safeco Fund 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
Funds, however, have the right to redeem their Fund shares until the closing
date of the reorganizations. After the reorganization, shareholders of your
Safeco Funds will hold shares of the Pioneer Funds which may also be redeemed at
net asset value subject to deferred sales charges (if any).
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of your Safeco Fund, as of [ ], 2004, the following persons
owned of record or beneficially 5% or more of the outstanding shares of each of
the Safeco Funds.
- -----------------------------------------------------------------------------------
FUND/CLASS SHAREHOLDER NAME AND ADDRESS ACTUAL PERCENTAGE
OWNED
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
%
- -----------------------------------------------------------------------------------
As of December 31, 2003, the trustees and officers of your Safeco Fund, as a
group, owned in the aggregate less than 1% of the outstanding shares of your
Safeco Fund. As of December 31, 2003, the trustees and officers of each Pioneer
Fund owned less than 1% of the outstanding shares of the Pioneer Fund.
EXPERTS
Safeco Funds
The financial statements and financial highlights of each Safeco Fund
incorporated by reference in the respective Safeco 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 reports
thereon incorporated by reference into this registration statement. Such
financial statements and financial highlights are incorporated herein by
reference in reliance on such reports given the authority of such firm as
experts in accounting and auditing.
Pioneer Funds
The financial statements and financial highlights of each Pioneer Fund
incorporated by reference in the respective Pioneer Fund's Annual Report at for
the year ended December 31, 2003, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their reports
thereon incorporated by reference into this registration statement. Such
financial statements and financial highlights are incorporated herein by
reference in reliance on such reports given the authority of such firm as
experts in accounting and auditing.
37
AVAILABLE INFORMATION
The Safeco Funds and the Pioneer Funds 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 Funds can be inspected and copied (for a duplication fee) at the
public reference facilities of the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. Copies of these materials can also be
obtained by mail from the Public Reference Section of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, copies of these documents may be viewed on-screen
or downloaded from the SEC's Internet site at http://www.sec.gov.
38
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
39
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.
(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
40
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.
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.
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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 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 most recent fiscal year 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. 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,
42
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;
(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;
43
(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.
(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;
44
(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 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;
45
(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;
(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
46
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;
(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
47
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 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.
48
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, 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.
49
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.
50
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:
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.
51
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;
(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.
52
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.
53
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:
54
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.
55
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:
56
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.
57
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.
* * * * *
58
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:
59
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
the2ndt day of August 2004.
60
[SAFECO TRUST]
By:
------------------------------------------------
Its:
-----------------------------------------------
PIONEER INVESTMENT MANAGEMENT, INC.
By:
------------------------------------------------
Its:
-----------------------------------------------
61
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 fund by Pioneer pursuant to authority contained in the fund's management
contract. Pioneer seeks to obtain the best execution on portfolio trades. The
price of securities and any commission rate paid are always factors, but
frequently not the only factors, in judging best execution. In selecting brokers
or dealers, Pioneer considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character of
the markets for the security to be purchased or sold; the execution efficiency,
settlement capability and financial condition of the dealer; the dealer's
execution services rendered on a continuing basis; and the reasonableness of any
dealer spreads. Transactions in non-U.S. equity securities are executed by
broker-dealers in non-U.S. countries in which commission rates may not be
negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or research
services to a fund 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 fund may pay commissions to such
broker-dealer in an amount greater than the amount another firm may charge. Such
services may include advice concerning the value of securities; the advisability
of investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; providing stock quotation
services, credit rating service information and comparative fund statistics;
furnishing analyses, electronic information services, manuals and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts and particular investment
decisions; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Pioneer maintains a
listing of broker-dealers who provide such services on a regular basis. However,
because many transactions on behalf of a fund and other investment companies or
accounts managed by Pioneer are placed with broker-dealers (including
broker-dealers on the listing) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such transactions
directed to such dealers solely because such services were provided. Pioneer
believes that no exact dollar value can be calculated for such services.
The research received from broker-dealers may be useful to Pioneer in rendering
investment management services to any of the funds as well as other investment
companies or other accounts managed by Pioneer, although not all such research
may be useful to any of the funds. 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
funds. 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 fund as well as shares of other investment companies managed by Pioneer. This
policy does not imply a commitment to execute all portfolio transactions through
all broker-dealers that sell shares of the fund.
None of the funds 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 fund in the Pioneer Family of
Funds. The following table identifies other funds in the Pioneer Family of Funds
that have similar investment objectives to the Funds described in this proxy
statement and provides other information regarding the similar funds.
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Pioneer Fund 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
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62
PIONEER VALUE FUND
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 Investor Class shares of Pioneer Value Fund to be
issued in exchange for shares of Safeco Large-Cap Value Fund, a series of Safeco
Common Stock Trust. Please retain this Statement of Additional Information for
further reference.
The Prospectus is available to you free of charge (please call
[1-800-407-7298]).
INTRODUCTION................................................................2
EXHIBITS....................................................................2
ADDITIONAL INFORMATION ABOUT PIONEER VALUE FUND.............................2
FUND HISTORY...........................................................2
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS.......................2
MANAGEMENT OF THE FUND.................................................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 THE FUND...................................................3
UNDERWRITERS...........................................................3
CALCULATION OF PERFORMANCE DATA........................................3
FINANCIAL STATEMENTS...................................................3
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 reorganization
of Safeco Large-Cap Value Fund, a series of Safeco Common Stock Trust, into
Pioneer Value Fund and in connection with the solicitation by the management of
Safeco Common Stock Trust of proxies to be voted at the Meeting of Shareholders
of Safeco Large-Cap Value Fund 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. Pioneer Value Fund's statement of additional information for Class A, B, C,
R and Y shares, dated August 5, 2004 (the "SAI") (File No. 2-32773), as
filed with the Securities and Exchange Commission on August 5, 2004
(Accession No. 0001016964-04-00329) and June 4, 2004 (Post-effective
amendment no. 60) (Accession No. 0001016964-04-000240) are incorporated
herein by reference.
2. Pioneer Value Fund's Annual Report for the fiscal year ended September 30,
2003 (File No. 811-01835), as filed with the Securities and Exchange
Commission on November 28, 2003 (Accession No. 0001094522-03-000004) is
incorporated herein by reference.
3. Pioneer Value Fund's Semi-Annual Report for the period ended March 31, 2004
(File No. 811-01835), as filed with the Securities and Exchange Commission
on June 3, 2004 (Accession No. 0001016964-04-000217) is incorporated herein
by reference.
4. Safeco Common Stock Trust's statement of additional information, dated
April 30, 2004 (File No. 33-36700), as filed with the Securities and
Exchange Commission on April 29, 2004 (Accession No. 0001193125-04-072454)
is incorporated herein by reference.
5. Safeco Large-Cap Value Fund's Annual Report for the fiscal year ended
December 31, 2003 (File No. 811-06167), as filed with the Securities and
Exchange Commission on February 26, 2004 (Accession No.
0001193125-04-030270) is incorporated herein by reference.
6. [Safeco Large-Cap Value Fund's Semi-Annual Report for the period ended June
30, 2004] [to be filed]
ADDITIONAL INFORMATION ABOUT
PIONEER VALUE FUND
FUND HISTORY
For additional information about Pioneer Value Fund generally and its
history, see "Fund History" in the SAI.
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS
-2-
For additional information about Pioneer Value Fund's investment objective,
policies, risks and restrictions, see "Investment Policies, Risks and
Restrictions" in the SAI.
MANAGEMENT OF THE FUND
For additional information about Pioneer Value Fund's Board of Trustees and
officers, see "Trustees and Officers" in the SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
For additional information, see "Annual Fee, Expense and Other Information
- - Share ownership."
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information, see "Investment Adviser," "Shareholder
Servicing/Transfer Agent," "Custodian" and "Independent Auditors" in Pioneer
Value Fund's SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about the Pioneer Value Fund'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 Pioneer Value Fund, see
"Description of Shares" in the SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For additional information about purchase, redemption and pricing of shares
of Pioneer Value Fund, see "Sales Charges," "Redeeming Shares," "Telephone and
Online Transactions" and "Pricing of Shares" in the SAI.
TAXATION OF THE FUND
For additional information about tax matters related to an investment in
Pioneer Value Fund, see "Tax Status" in the SAI.
UNDERWRITERS
For additional information about the Pioneer Value Fund's principal
underwriter and distribution plans, see "Principal Underwriter and Distribution
Plans" and "Sales Charges" in the SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of Pioneer
Value Fund, see "Investment Results" in the SAI.
FINANCIAL STATEMENTS
For additional information, see "Financial Statements" in Pioneer Value
Fund's SAI.
[Pro Forma Financial Statements to be filed by amendment.]
-3-
PART C
OTHER INFORMATION
PIONEER VALUE FUND
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the most recently filed
Registration Statement of Pioneer Value Fund (the "Registrant") on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940 (File
Nos. 2-32773 and 811-01835) as filed with the Securities and Exchange Commission
on June 4, 2004 (Accession No. 0001016964-04-000240), which information is
incorporated herein by reference.
(1)(a) Agreement and Declaration of Trust (1)
(1)(b) Amendment to Agreement and Declaration of Trust (3)
(1)(c) Amendment to Agreement and Declaration of Trust to establish
Investor Class Shares (*)
(2) Restated By-Laws (2)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization (7)
(5) Reference is made to Exhibits (1) and (2) hereof
(6)(a) Management Contract (5)
(6)(b) Expense Limitation Agreement (*)
(7) Underwriting Agreement with Pioneer Funds Distributor, Inc. (3)
(8) Not applicable
(9) Custodian Agreement with Brown Brothers Harriman & Co. (3)
(10) 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 (5)
(13)(b) Administration Agreement with Pioneer Investment Management, Inc. (4)
(14) Consents of Independent Registered Public Accounting Firm (*)
(15) Not applicable
(16) Powers of Attorney (5)
(17)(a) Code of Ethics (6)
(17)(b) Form of Proxy Card (*)
(1) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 46 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-32773; 811-01835), as filed with the Securities and
Exchange Commission on May 1, 1996 (Accession no. 0000078758-96-000017).
(2) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 53 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-32773; 811-01835), as filed with the Securities and
Exchange Commission on November 27, 2000 (Accession no.0001016964-00-000172).
(3) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 56 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-32773; 811-01835), as filed with the Securities and
Exchange Commission on January 25, 2002 (Accession no. 0001016964-02-000006).
(4) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 58 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-32773; 811-01835), as filed with the Securities and
Exchange Commission on January 27, 2003 (Accession no. 0001016964-03-000010).
(5) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 59 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-32773; 811-01835), as filed with the Securities and
Exchange Commission on December 1, 2003 (Accession no. 0001016964-03-000245).
(6) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 60 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-32773; 811-01835), as filed with the Securities and
Exchange Commission on June 4, 2004 (Accession no. 0001016964-04-000240).
(7) 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 Value Fund
By: /s/ Osbert M. Hood
----------------------------------------
Osbert M. Hood
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
* Chairman of the Board, Trustee, August 20, 2004
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John F. Cogan, Jr. and President
* Chief Financial Officer and August 20, 2004
- ---------------------------
Vincent Nave Treasurer
*
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Mary K. Bush Trustee
*
- ---------------------------
Richard H. Egdahl Trustee
*
- ---------------------------
Margaret B.W. Graham Trustee
/s/ Osbert M. Hood
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Osbert M. Hood Trustee
*
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Marguerite A. Piret Trustee
*
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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)(b) Expense Limitation Agreement
(10) Multiple Class Plan Pursuant to Rule 18f-3
(11) Opinion of Counsel
(12) Form of Opinion as to Tax Matters and Consent
(14) Consents of Independent Registered Public Accounting Firm
(17)(b) Form of Proxy Card