PIONEER
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INDEPENDENCE FUND
Prospectus
April 30, 2007
Class A and Class C Shares
Contents
Basic information about the fund .............. 1
Management .................................... 10
Buying, exchanging and selling shares ......... 12
Dividends, capital gains and taxes ............ 41
Financial highlights .......................... 42
Neither the Securities and Exchange Commission nor any state securities agency
has approved the fund's shares or determined whether this prospectus is accurate
or complete. Any representation to the contrary is a crime.
[LOGO] PIONEER
Investments(R)
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An investment in the fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
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Contact your investment professional to discuss how the fund fits into your
portfolio.
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Basic information about the fund
Investment objective
Capital growth.
Principal investment strategies
The fund invests at least 80% of its assets in equity securities. For purposes
of the fund's investment policies, equity securities include common stocks,
convertible debt and other equity instruments, such as exchange-traded funds
(ETFs) that invest primarily in equity securities, depositary receipts,
warrants, rights, equity interests in real estate investment trusts (REITs) and
preferred stocks.
The fund may invest up to 25% of its total assets in equity and debt securities
of non-U.S. corporate issuers and debt securities of non-U.S. government
issuers, including up to 10% of its assets in the securities of emerging markets
issuers. The fund invests in non-U.S. securities to diversify its portfolio when
they offer similar or greater potential for capital appreciation compared to
U.S. securities.
Pioneer Investment Management, Inc., the fund's investment adviser, seeks
securities selling at reasonable prices or substantial discounts to their
underlying values and then holds these securities until the market values
reflect their intrinsic values. Pioneer evaluates a security's potential value,
including the attractiveness of its market valuation, based on the company's
assets and prospects for earnings and revenue growth. In making that assessment,
Pioneer employs due diligence and fundamental research, an evaluation of the
issuer based on its financial statements and operations. Pioneer relies on the
knowledge, experience and judgment of its staff and the staff of its affiliates
who have access to a wide variety of research. Pioneer focuses on the quality
and price of individual issuers, not on economic sector or market-timing
strategies. Factors Pioneer looks for in selecting investments include:
o Estimated private market value in excess of current stock price. Private
market value is the price an independent investor would pay to own the
entire company
o Above average potential for earnings and revenue growth
o Management with demonstrated ability and commitment to the company
o Low market valuations relative to earnings forecast, book value, cash flow
and sales
Principal risks of investing in the fund
You could lose money on your investment or not make as much as if you invested
elsewhere if:
o The stock market goes down or performs poorly relative to other investments
(this risk may be greater in the short term)
o Value stocks fall out of favor with investors
o The fund's investments do not have the growth potential originally expected
1
Basic information about the fund
Risks of non-U.S. investments
Investing in non-U.S. issuers may involve unique risks compared to investing in
securities of U.S. issuers. These risks are more pronounced for issuers in
emerging markets or to the extent that the fund invests significantly in one
region or country. These risks may include:
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
Market segment risks
To the extent the fund emphasizes, from time to time, investments in a market
segment, the fund will be subject to a greater degree to the risks particular to
the industries in that segment, and may experience greater market fluctuation,
than a fund without the same focus. For example, industries in the financial
segment, such as banks, insurance companies, broker-dealers and real estate
investment trusts (REITs), may be sensitive to changes in interest rates and
general economic activity and are subject to extensive government regulation.
Industries in the technology segment, such as information technology,
communications equipment, computer hardware and software, and office and
scientific equipment, are subject to risks of rapidly evolving technology, short
product lives, rates of corporate expenditures, falling prices and profits,
competition from new market entrants, and general economic conditions.
2
The fund's past performance
The bar chart and table indicate the risks of investing in the fund by showing
how the fund has performed in the past. The fund's performance will vary from
year to year.
The performance of Class A shares for the period prior to the commencement of
operations of Class A shares is the net asset value performance of the fund's
Class P shares, which has been restated to reflect differences in any applicable
sales charges, but not differences in expenses, including Rule 12b-1 fees
applicable to Class A shares.
The fund's past performance does not necessarily indicate how it will perform in
the future. As a shareowner, you may lose or make money on your investment.
Fund performance
The chart shows the year-by-year performance of the fund's Class A shares.
The chart does not reflect any sales charge you may pay when you buy or sell
fund shares. Any sales charge will reduce your return. Class C shares will have
different performance.
Annual return Class A shares (%)
(Year ended December 31)
[The following data was represented as a bar chart in the printed material]
'99 22.88
'00 15.38
'01 -11.86
'02 -22.18
'03 29.79
'04 9.53
'05 9.59
'06 11.38
The highest calendar quarterly return was 19.09% (03/31/2003 to 06/30/2003)
The lowest calendar quarterly return was -18.36% (06/30/2002 to 09/30/2002)
3
Basic information about the fund
Comparison with the Russell 1000 Index and the Russell 1000 Growth Index The
table shows the average annual total returns for each class of the fund over
time and compares these returns to the returns of the Russell 1000 Index and the
Russell 1000 Growth Index. The Russell 1000 Index measures the performance of
large-cap U.S. stocks. The Russell 1000 Growth Index measures the performance of
large-cap U.S. growth stocks.
The fund's benchmark has changed from the Russell 1000 Index to the Russell 1000
Growth Index. It is Pioneer's opinion that since the Russell 1000 Growth Index
better reflects the fund's investment strategies, it is a more appropriate
benchmark for the fund.
Unlike the fund, the indices are not managed and do not incur expenses. The
table:
o Reflects sales charges applicable to the class
o Assumes that you sell your shares at the end of the period
o Assumes that you reinvest all of your dividends and distributions
Average annual total return (%)
(for periods ended December 31, 2006)
Since Inception
1 Year 5 Years Inception Date
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Class A 3/16/98
Return before taxes 4.98 4.94 5.08
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Return after taxes on distributions 3.26 4.37 4.30
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Return after taxes on distributions
and sale of shares 4.79 4.12 4.03
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Class C 3/16/98
Return before taxes N/A N/A 5.07
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Russell 1000 Index
(reflects no deduction for taxes) 15.46 6.82 4.91*
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Russell 1000 Growth Index
(reflects no deduction for taxes) 9.07 2.69 1.41**
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# Inception date of the fund's Class P shares. Class A and Class C shares
commenced operations on March 10, 2006.
* Since the inception of Class A shares. Class C shares: 10.50%.
** Since the inception of Class A shares. Class C shares: 5.80%.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on the investor's tax situation and may
differ from those shown, and the after-tax returns shown are not relevant to
shareholders who hold fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts. After-tax returns for Class C
shares will vary from the after-tax returns presented for Class A shares.
4
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
Shareowner fees
paid directly from your investment Class A Class C
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Maximum sales charge (load) when you buy shares as
a percentage of offering price 5.75% None
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Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell shares,
whichever is less None(1) 1%
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Annual fund operating expenses
paid from the assets of the fund
as a percentage of average daily net assets Class A Class C
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Management Fee 0.75% 0.75%
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Distribution and Service (12b-1) Fee 0.25% 1.00%
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Other Expenses 0.63% 0.33%
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Total Annual Fund Operating Expenses(2) 1.63% 2.08%
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Less: Fee Waiver and Expense Limitation(3) -0.38% 0.00%
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Net Expenses(3) 1.25% 2.08%
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5
Basic information about the fund
Example
This example helps you compare the cost of investing in the fund with the cost
of investing in other mutual funds. It assumes that: a) you invest $10,000 in
the fund for the time periods shown, b) you reinvest all dividends and
distributions, c) your investment has a 5% return each year, d) the fund's total
operating expenses remain the same and e) Pioneer's contractual expense
limitation is in effect for year one. Although your actual costs may be higher
or lower, under these assumptions your costs would be:
If you sell your shares If you do not sell your shares
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Number of years you own your shares
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1 3 5 10 1 3 5 10
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Class A $695 $1,025 $1,377 $2,367 $695 $1,025 $1,377 $2,367
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Class C 311 652 1,119 2,410 211 652 1,119 2,410
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1 Class A purchases of $1 million or more and purchases by participants in
certain group plans are not subject to an initial sales charge but may be
subject to a contingent deferred sales charge of 1%. See "Buying,
exchanging and selling shares."
2 Total annual fund operating expenses in the table have not been reduced by
any expense offset arrangements.
3 Net expenses in the table reflect the expense limitations currently in
effect, under which Pioneer has contractually agreed to limit ordinary
operating expenses to the extent required to reduce fund expenses to 1.25%
and 2.15% of the average daily net assets attributable to Class A and Class
C shares, respectively. These expense limitations are in effect through May
1, 2009 for Class A shares and through May 1, 2008 for Class C shares.
There can be no assurance that Pioneer will extend the expense limitations
beyond such time. See the statement of additional information for details
regarding the expense limitation agreement.
6
Non-principal investment strategies and related risks
As discussed, the fund invests primarily in equity securities.
The following sections describe additional investments that the fund may make or
strategies that it may pursue to a lesser degree to achieve the fund's goal. The
fund's secondary, or non-principal, investment policies and strategies also
entail risks. To learn more about these investments and risks, you should obtain
and read the statement of additional information (SAI).
Initial public offerings
To the extent consistent with its investment objective, the fund may invest in
initial public offerings of equity securities. The market for such securities
may be more volatile and entail greater risk of loss than investments in more
established companies. Investments in initial public offerings represent a
significant portion of the fund's past investment performance. The fund cannot
assure that investments in initial public offerings will continue to be
available to the fund or, if available, will continue to result in positive
investment performance. In addition, as the fund grows in size, the impact of
investments in initial public offerings on the overall performance of the fund's
portfolio is likely to decrease.
Investments in REITs
The fund may invest up to 20% of its net assets in REITs. REITs are companies
that invest primarily in real estate or real estate related loans. Investing in
REITs involves unique risks. They are significantly affected by the market for
real estate and are dependent upon management skills and cash flow. In addition
to its own expenses, the fund will indirectly bear its proportionate share of
any management and other expenses paid by REITs in which it invests.
Debt 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 investment grade, but the fund may invest up to 5% of its net assets in
below investment grade debt securities, including below investment grade
convertible debt securities. The fund invests in debt securities when Pioneer
believes they are consistent with the fund's investment objective of capital
growth, to diversify the fund's portfolio or for greater liquidity.
Debt securities are subject to the risk of an issuer's inability to meet
principal or interest payments on its obligations. Factors that could contribute
to a decline in the market value of debt securities in the fund's portfolio
include rising interest rates or a reduction in the perceived creditworthiness
of the issuer of the securities. A debt security is investment grade if it is
rated in one of the top four categories by a nationally recognized statistical
rating organization or determined to be of equivalent credit quality by Pioneer.
Debt securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. Below investment grade
7
Basic information about the fund
debt securities involve greater risk of loss, are subject to greater price
volatility and are less liquid, especially during periods of economic
uncertainty or change, than higher quality debt securities.
Cash management and temporary investments
Normally, the fund invests substantially all of its assets to meet its
investment objective. The fund may invest the remainder of its assets in
securities with remaining maturities of less than one year, cash equivalents or
may hold cash. For temporary defensive purposes, including during periods of
unusual cash flows, the fund may depart from its principal investment strategies
and invest part or all of its assets in these securities or may hold cash.
During such periods, the fund may not be able to achieve its investment
objective. The fund intends to adopt a defensive strategy when Pioneer believes
securities in which the fund normally invests have extraordinary risks due to
political or economic factors and in other extraordinary circumstances.
Short-term trading
The fund usually does not trade for short-term profits. The fund will sell an
investment, however, even if it has only been held for a short time, if it no
longer meets the fund's investment criteria. If the fund does a lot of trading,
it may incur additional operating expenses, which would reduce performance, and
could cause shareowners to incur a higher level of taxable income or capital
gains. See "Financial highlights" for actual annual turnover rates.
Derivatives
The fund may, but is not required to, use futures and options on securities,
indices and currencies, forward foreign currency exchange contracts and other
derivatives. A derivative is a security or instrument whose value is determined
by reference to the value or the change in value of one or more securities,
currencies, indices or other financial instruments. Although there is no
specific limitation on investing in derivatives, the fund does not use
derivatives as a primary investment technique and generally limits their use to
hedging. However, the fund may use derivatives for a variety of non-principal
purposes, including:
o As a hedge against adverse changes in the market prices of securities,
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
8
Even a small investment in derivatives can have a significant impact on the
fund's exposure to the market prices of securities, interest rates or currency
exchange rates. If changes in a derivative's value do not correspond to changes
in the value of the fund's other investments, the fund may not fully benefit
from or could lose money on the derivative position. In addition, some
derivatives involve risk of loss if the person who issued the derivative
defaults on its obligation. Certain derivatives may be less liquid and more
difficult to value. The fund will only invest in derivatives to the extent
Pioneer believes these investments do not prevent the fund from seeking its
investment objective.
9
Management
Pioneer, the fund's investment adviser,
selects the fund's investments and oversees the fund's operations.
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 March 31, 2007, assets
under management were approximately $310 billion worldwide, including over $81
billion in assets under management by Pioneer.
Investment adviser
Pioneer's main office is at 60 State Street, Boston, Massachusetts 02109. The
firm's U.S. mutual fund investment history includes creating in 1928 one of the
first mutual funds.
Portfolio management
Day-to-day management of the fund's portfolio is the responsibility of Andrew
Acheson. Mr. Acheson is assisted by a team of analysts that meets to discuss
holdings, prospective investments and portfolio composition. Members of this
team manage other Pioneer funds investing primarily in U.S. equity securities.
The portfolio manager and the team also may draw upon the research and
investment management expertise of Pioneer's affiliate, Pioneer Investment
Management Limited (PIML). Mr. Acheson, a vice president of Pioneer, joined
Pioneer as a portfolio manager in May 2001 and has been an investment
professional since 1994.
The fund's statement of additional information provides additional information
about the portfolio manager's compensation, other accounts managed by the
portfolio manager, and the portfolio manager's ownership of shares of the fund.
Management fee
The fund pays Pioneer a fee for managing the fund and to cover the cost of
providing certain services to the fund. Pioneer's annual fee is equal to 0.75%
of the fund's average daily net assets. The fee is accrued daily and paid
monthly. For the fiscal year ended December 31, 2006, the fund paid management
fees equivalent to 0.75% of the fund's average daily net assets.
A discussion regarding the basis for the Board of Trustees' approval of the
management contract is available in the fund's annual report to shareholders,
dated December 31, 2006.
10
Distributor and transfer agent
Pioneer Funds Distributor, Inc. is the fund's distributor. Pioneer Investment
Management Shareholder Services, Inc. is the fund's transfer agent. The fund
compensates the distributor and transfer agent for their services. The
distributor and the transfer agent are affiliates of Pioneer.
Disclosure of portfolio holdings
The fund's policies and procedures with respect to disclosure of the fund's
portfolio securities are described in the statement of additional information
11
Buying, exchanging and selling shares
Net asset value
The fund's net asset value is the value of its portfolio of securities plus any
other assets minus its operating expenses and any other liabilities. The fund
calculates a net asset value for each class of shares every day the New York
Stock Exchange is open when regular trading closes (normally 4:00 p.m. Eastern
time).
The fund generally values its portfolio securities using closing market prices
or readily available market quotations. When closing market prices or market
quotations are not available or are considered by Pioneer to be unreliable, the
fund uses a security's fair value. All methods of determining the value of a
security used by the fund, including those discussed below, on a basis other
than market value, are forms of fair value. All valuations of securities on a
fair value basis are made pursuant to procedures adopted by the Board of
Trustees. The use of fair value pricing by the fund may cause the net asset
value of its shares to differ from the net asset value that would be calculated
only using market prices. For market prices and quotations, as well as for some
fair value methods, the fund relies upon securities prices provided by pricing
services.
The fund uses the fair value of a security, including a non-U.S. security, when
Pioneer determines that the closing market price on the primary exchange where
the security is traded no longer accurately reflects the value of the security
at the time the fund calculates its net asset value. This may occur for a
variety of reasons that affect either the relevant securities markets generally
or the specific issuer. For example, with respect to non-U.S. securities held by
the fund, developments relating to specific events in the securities markets or
the specific issuer may occur between the time the primary market closes and the
time the fund determines its net asset value. In those circumstances when the
fund believes the price of the security may be affected, the fund uses the fair
value of the security. International securities markets may be open on days when
the U.S. markets are closed. For this reason, the values of any international
securities owned by the fund could change on a day you cannot buy or sell shares
of the fund.
Certain types of securities, including those discussed in this paragraph, are
priced using fair value rather than market prices. The fund uses a pricing
matrix to determine the value of fixed income securities that do not trade
daily. A pricing matrix is a means of valuing a debt security on the basis of
current market prices for other debt securities and historical trading patterns
in the market for fixed income securities. The fund values cash equivalent
securities with remaining maturities of 60 days or less at amortized cost. To
the extent that the fund invests in the shares of other registered open-end
investment companies that are not traded on an exchange (mutual funds), such
shares are valued at their published net asset values per share as reported by
the funds. The prospectuses of these funds explain the circumstances under which
the funds will use fair value pricing and the effects of using fair value
pricing.
12
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.
When you sell Class C shares, you may pay a contingent deferred sales charge
depending on how long you have owned your shares.
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Share price
The net asset value per share calculated on the day of your transaction,
adjusted for any applicable sales charge.
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Contingent deferred sales charge
A sales charge that may be deducted from your sale proceeds.
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Choosing a class of shares
The fund offers two classes of shares through this prospectus. Each class has
different sales charges and expenses, allowing you to choose the class that best
meets your needs.
Factors you should consider include:
o How long you expect to own the shares
o The expenses paid by each class
o Whether you qualify for any reduction or waiver of sales charges
Your investment professional can help you determine which class meets your
goals. Your investment firm may receive different compensation depending upon
which class you choose. If you are not a U.S. citizen and are purchasing shares
outside the U.S., you may pay different sales charges under local laws and
business practices.
Distribution plans
The fund has adopted a distribution plan for each class of shares offered
through this prospectus in accordance with Rule 12b-1 under the Investment
Company Act of 1940. Under each plan, the fund pays distribution and service
fees to the distributor. Because these fees are an ongoing expense of the fund,
over time they increase the cost of your investment and your shares may cost
more than shares that are subject to other types of sales charges.
Additional payments to financial intermediaries
There are two principal ways you compensate the financial intermediary through
which you buy shares of the fund - directly, by the payment of sales
commissions, if any; and indirectly, as a result of the fund paying Rule 12b-1
fees.
13
Buying, exchanging and selling shares
Pioneer and its affiliates may make additional payments to your financial
intermediary. These payments by Pioneer may provide your financial intermediary
with an incentive to favor the Pioneer funds over other mutual funds or assist
the distributor in its efforts to promote the sale of the fund's shares.
Financial intermediaries include broker-dealers, banks (including bank trust
departments), registered investment advisers, financial planners, retirement
plan administrators and other types of intermediaries.
Pioneer makes these additional payments (sometimes referred to as "revenue
sharing") to financial intermediaries out of its own assets. Revenue sharing is
not an expense of the Pioneer funds. Pioneer may base these payments on a
variety of criteria, including the amount of sales or assets attributable to the
financial intermediary or as a per transaction fee.
Not all financial intermediaries receive additional compensation and the amount
of compensation paid varies for each financial intermediary. In certain cases,
these payments could be significant. Pioneer determines which firms to support
and the extent of the payments it is willing to make, generally choosing firms
that have a strong capability to effectively distribute shares of the Pioneer
funds and that are willing to cooperate with Pioneer's promotional efforts.
Pioneer also may compensate financial intermediaries for providing certain
administrative services and transaction processing services.
Pioneer may benefit from revenue sharing if the intermediary features the
Pioneer funds in its sales system (such as by placing certain Pioneer funds on
its preferred fund list or giving access on a preferential basis to members of
the financial intermediary's sales force or management). In addition, the
financial intermediary may agree to participate in the distributor's marketing
efforts (such as by helping to facilitate or provide financial assistance for
conferences, seminars or other programs at which Pioneer personnel may make
presentations on the funds to the intermediary's sales force). To the extent
intermediaries sell more shares of the Pioneer funds or retain shares of the
Pioneer funds in their clients' accounts, Pioneer receives greater management
and other fees due to the increase in the Pioneer funds' assets. Although an
intermediary may request additional compensation from Pioneer to offset costs
incurred by the financial intermediary in servicing its clients, the
intermediary may earn a profit on these payments, if the amount of the payment
may exceed the intermediary's costs.
The compensation that Pioneer pays to financial intermediaries is discussed in
more detail in the fund's statement of additional information. Your intermediary
may charge you additional fees or commissions other than those disclosed in this
prospectus. Intermediaries may categorize and disclose these arrangements
differently than the discussion above and in the statement of additional
information. You can ask your financial intermediary about any payments it
14
receives from Pioneer or the Pioneer funds, as well as about fees and/or
commissions it charges.
Pioneer and its affiliates may have other relationships with your financial
intermediary relating to the provision of services to the funds, such as
providing omnibus account services or effecting portfolio transactions for the
Pioneer funds. If your intermediary provides these services, Pioneer or the
Pioneer funds may compensate the intermediary for these services. In addition,
your intermediary may have other relationships with Pioneer or its affiliates
that are not related to the funds.
15
Buying, exchanging and selling shares
Comparing classes of shares
Class A Class C
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Why you might Class A shares may be your best You may prefer Class C shares if you
prefer each class alternative if you prefer to pay an do not wish to pay an initial sales
initial sales charge and have lower charge and you would rather pay
annual expenses, or if you qualify for higher annual expenses over time.
any reduction or waiver of the initial
sales charge.
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Initial sales Up to 5.75% of the offering price, None.
charge which is reduced or waived for large
purchases and certain types of
investors. At the time of your pur-
chase, your investment firm may
receive a commission from the dis-
tributor of up to 5%, declining as the
size of your investment increases.
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Contingent None, except in certain circum- A 1% charge if you sell your shares
deferred sales stances when the initial sales within one year of purchase. Your
charges charge is waived. investment firm may receive a com-
mission from the distributor at the
time of your purchase of up to 1%.
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Distribution and Up to 0.25% of average daily net Up to 1% of average daily net assets.
service fees assets.
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Annual expenses Lower than Class C. Higher than Class A shares; Class C
(including shares do not convert to any other
distribution and class of shares. You continue to pay
service fees) higher annual expenses.
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Exchange Class A shares of other Pioneer Class C shares of other Pioneer
privilege mutual funds. mutual funds.
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Maximum None $999,999
purchase amount
(per transaction)
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16
Sales charges: Class A shares
You pay the offering price when you buy Class A shares unless you qualify to
purchase shares at net asset value. You pay a lower sales charge as the size of
your investment increases. You do not pay a sales charge when you reinvest
dividends or capital gain distributions paid by the fund. You do not pay a
contingent deferred sales charge when you sell shares purchased through
reinvestment of dividends or capital gain distributions.
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Offering price
The net asset value per share plus any initial sales charge.
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Sales charges for Class A shares
Sales charge as % of
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Offering Net amount
Amount of purchase price invested
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Less than $50,000 5.75 6.10
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$50,000 but less than $100,000 4.50 4.71
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$100,000 but less than $250,000 3.50 3.63
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$250,000 but less than $500,000 2.50 2.56
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$500,000 but less than $1 million 2.00 2.04
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$1 million or more -0- -0-
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The dollar amount of the sales charge is the difference between the offering
price of the shares purchased (based on the applicable sales charge in the
table) and the net asset value of those shares. Since the offering price is
calculated to two decimal places using standard rounding methodology, the dollar
amount of the sales charge as a percentage of the offering price and of the net
amount invested for any particular purchase of fund shares may be higher or
lower due to rounding.
Reduced sales charges
You may qualify for a reduced Class A sales charge if you own or are purchasing
shares of Pioneer mutual funds. The investment levels required to obtain a
reduced sales charge are commonly referred to as "breakpoints." Pioneer offers
two principal means of taking advantage of breakpoints in sales charges for
aggregate purchases of Class A shares over time if:
o The amount of shares you own plus the amount you are investing now is at
least $50,000 (Rights of accumulation)
o You plan to invest at least $50,000 over the next 13 months (Letter of
intent)
17
Buying, exchanging and selling shares
Rights of accumulation
If you qualify for rights of accumulation, your sales charge will be based on
the combined value (at the current offering price) of all your Pioneer mutual
fund shares, the shares of your spouse and the shares of any children under the
age of 21.
Letter of intent
You can use a letter of intent to qualify for reduced sales charges in two
situations:
o If you plan to invest at least $50,000 (excluding any reinvestment of
dividends and capital gain distributions) in the fund's Class A shares
during the next 13 months
o If you include in your letter of intent the value (at the current offering
price) of all of your Class A shares of the fund and Class A, Class B or
Class C shares of all other Pioneer mutual fund shares held of record in
the amount used to determine the applicable sales charge for the fund
shares you plan to buy
Completing a letter of intent does not obligate you to purchase additional
shares, but if you do not buy enough shares to qualify for the projected level
of sales charges by the end of the 13-month period (or when you sell your
shares, if earlier), the distributor will recalculate your sales charge. You
must pay the additional sales charge within 20 days after you are notified of
the recalculation or it will be deducted from your account (or your sale
proceeds). Any share class for which no sales charge is paid cannot be included
under the letter of intent. For more information regarding letters of intent,
please contact your investment professional or obtain and read the statement of
additional information.
18
Qualifying for a reduced Class A sales charge
In calculating your total account value in order to determine whether you have
net sales charge breakpoints, you can include your Pioneer mutual fund shares,
those of your spouse and the shares of any children under the age of 21. Pioneer
will use each fund's current offering price to calculate your total account
value. Certain trustees and fiduciaries may also qualify for a reduced sales
charge.
To receive a reduced sales charge, you or your investment professional must, at
the time of purchase, notify the distributor of your eligibility. In order to
verify your eligibility for a discount, you may need to provide your investment
professional or the fund with information or records, such as account numbers or
statements, regarding shares of the fund or other Pioneer mutual funds held in
all accounts by you, your spouse or children under the age of 21 with that
investment professional or with any other financial intermediary. Eligible
accounts may include joint accounts, retirement plan accounts, such as IRA and
401k accounts, and custodial accounts, such as ESA, UGMA and UTMA accounts.
It is your responsibility to confirm that your investment professional has
notified the distributor of your eligibility for a reduced sales charge at the
time of sale. If you or your investment professional do not notify the
distributor of your eligibility, you will risk losing the benefits of a reduced
sales charge.
For this purpose, Pioneer mutual funds include any fund for which the
distributor is principal underwriter and, at the distributor's discretion, may
include funds organized outside the U.S. and managed by Pioneer or an affiliate.
You can locate information regarding the reduction or waiver of sales charges,
in a clear and prominent format and free of charge, on Pioneer's website at
www.pioneerinvestments.com. The website includes hyperlinks that facilitate
access to this information.
Class A purchases at a reduced initial sales charge or net asset value are
also available to:
Group plans if the sponsoring organization:
o recommends purchases of Pioneer mutual funds to,
o permits solicitation of, or
o facilitates purchases by its employees, members or participants.
19
Buying, exchanging and selling shares
Class A purchases at net asset value
You may purchase Class A shares at net asset value (without a sales charge) as
follows.
Investments of $1 million or more and certain retirement plans
You do not pay a sales charge when you purchase Class A shares if you are
investing $1 million or more, are a participant in an employer-sponsored
retirement plan with at least $1 million in total plan assets or are a
participant in certain employer-sponsored retirement plans with accounts
established with Pioneer on or before March 31, 2004 with 100 or more eligible
employees or at least $500,000 in total plan assets. However, you may pay a
deferred sales charge if you sell your Class A shares within 18 months of
purchase. The sales charge is equal to 1% of your investment or your sale
proceeds, whichever is less.
If you believe you qualify for any of the Class A sales charge waivers discussed
below, contact your investment professional or the distributor. You are required
to provide written confirmation of your eligibility. You may not resell these
shares except to or on behalf of the fund.
Class A purchases at net asset value are available to:
o Current or former trustees and officers of the fund;
o Partners and employees of legal counsel to the fund (at the time of initial
share purchase);
o Directors, officers, employees or sales representatives of Pioneer and its
affiliates (at the time of initial share purchase);
o Directors, officers, employees or sales representatives of any subadviser
or a predecessor adviser (or their affiliates) to any investment company
for which Pioneer serves as investment adviser (at the time of initial
share purchase);
o Officers, partners, employees or registered representatives of
broker-dealers (at the time of initial share purchase) which have entered
into sales agreements with the distributor;
o Employees of AmSouth Bank (at the time of initial share purchase) investing
through an account held with AmSouth Investment Services, Inc.;
o Members of the immediate families of any of the persons above;
o Any trust, custodian, pension, profit sharing or other benefit plan of the
foregoing persons;
o Insurance company separate accounts;
o Certain wrap accounts for the benefit of clients of investment
professionals or other financial intermediaries adhering to standards
established by the distributor;
o Other funds and accounts for which Pioneer or any of its affiliates serve
as investment adviser or manager;
o In connection with certain reorganization, liquidation or acquisition
transactions involving other investment companies or personal holding
companies;
20
o Certain unit investment trusts;
o Employer-sponsored retirement plans with at least $1 million in total plan
assets;
o Employer-sponsored retirement plans with accounts established with Pioneer
on or before March 31, 2004 with 100 or more eligible employees or at least
$500,000 in total plan assets;
o Participants in Optional Retirement Programs if (i) your employer has
authorized a limited number of mutual funds to participate in the program,
(ii) all participating mutual funds sell shares to program participants at
net asset value, (iii) your employer has agreed in writing to facilitate
investment in Pioneer mutual funds by program participants and (iv) the
program provides for a matching contribution for each participant
contribution;
o Participants in an employer-sponsored 403(b) plan or employer-sponsored 457
plan if (i) your employer has made special arrangements for your plan to
operate as a group through a single broker, dealer or financial
intermediary and (ii) all participants in the plan who purchase shares of a
Pioneer mutual fund do so through a single broker, dealer or other
financial intermediary designated by your employer;
o Individuals receiving a distribution consisting of Class Y shares of a
Pioneer fund from a trust, fiduciary, custodial or other similar account
who purchase Class A shares of the same Pioneer fund within 90 days of the
date of the distribution;
o Shareholders of record (i.e., not held in the name of your broker or an
omnibus account) on the date of the reorganization of a predecessor Safeco
fund into a corresponding Pioneer fund, shareholders who owned shares in
the name of an omnibus account provider on that date that agrees with the
fund to distinguish beneficial holders in the same manner, and retirement
plans with assets invested in the predecessor Safeco fund on that date.
In addition, Class A shares may be purchased at net asset value through certain
mutual fund programs sponsored by qualified intermediaries, such as
broker-dealers and investment advisers. In each case, the intermediary has
entered into an agreement with Pioneer to include the Pioneer funds in their
program without the imposition of a sales charge. The intermediary provides
investors participating in the program with additional services, including
advisory, asset allocation, recordkeeping or other services. You should ask your
investment firm if it offers and you are eligible to participate in such a
mutual fund program and whether participation in the program is consistent with
your investment goals. The intermediaries sponsoring or participating in these
mutual fund programs also may offer their clients other classes of shares of the
funds and investors may receive different levels of services or pay different
fees depending upon the class of shares included in the program. Investors
should consider carefully any separate transaction and other fees charged by
these programs in connection with investing in each available share class before
selecting a share class.
21
Buying, exchanging and selling shares
Reinstatement privilege for Class A shares
If you recently sold all or part of your Class A shares, you may be able to
reinvest all or part of your sale proceeds without a sales charge in Class A
shares of any Pioneer mutual fund. To qualify for reinstatement:
o You must send a written request to the transfer agent no more than 90 days
after selling your shares and
o The registration of the account in which you reinvest your sale proceeds
must be identical to the registration of the account from which you sold
your shares.
When you elect reinstatement, you are subject to the provisions outlined in the
selected fund's prospectus, including the fund's minimum investment requirement.
Your sale proceeds will be reinvested in shares of the fund at the Class A net
asset value per share determined after the transfer agent receives your written
request for reinstatement.
You may realize a gain or loss for federal income tax purposes as a result of
your sale of fund shares, and special tax rules may apply if you elect
reinstatement. Consult your tax adviser for more information.
Class A shares that are subject to a contingent deferred sales charge
Purchases of Class A shares of $1 million or more, or by participants in a group
plan which were not subject to an initial sales charge, may be subject to a
contingent deferred sales charge upon redemption. A contingent deferred sales
charge is payable to the distributor in the event of a share redemption within
18 months following the share purchase at the rate of 1% of the lesser of the
value of the shares redeemed (exclusive of reinvested dividend and capital gain
distributions) or the total cost of such shares. However, the contingent
deferred sales charge is waived for redemptions of Class A shares purchased by
an employer-sponsored retirement plan described under Section 401(a), 403(b) or
457 of the Internal Revenue Code that has at least $1 million in total plan
assets (or that has 1,000 or more eligible employees for plans with accounts
established with Pioneer on or before March 31, 2004).
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Contingent deferred sales charge
A sales charge that may be deducted from your sale proceeds.
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22
Sales charges: Class C shares
You buy Class C shares at net asset value per share without paying an initial
sales charge. However, if you sell your Class C shares within one year of
purchase, you will pay the distributor a contingent deferred sales charge of 1%
of the current market value or the original cost of the shares you are selling,
whichever is less.
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Paying the contingent deferred sales charge (CDSC)
Several rules apply for Class C shares so that you pay the lowest possible CDSC.
o The CDSC is calculated on the current market value or the original cost of
the shares you are selling, whichever is less
o You do not pay a CDSC on reinvested dividends or distributions
o If you sell only some of your shares, the transfer agent will first sell
your shares that are not subject to any CDSC and then the shares that you
have owned the longest
o You may qualify for a waiver of the CDSC normally charged. See "Waiver or
reduction of contingent deferred sales charges"
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Contingent deferred sales charge
A sales charge that may be deducted from your sale proceeds.
- --------------------------------------------------------------------------------
Waiver or reduction of contingent deferred sales charges (CDSC)
It is your responsibility to confirm that your investment professional has
notified the distributor of your eligibility for a reduced sales charge at the
time of sale. If you or your investment professional do not notify the
distributor of your eligibility, you will risk losing the benefits of a reduced
sales charge.
Class A and Class C shares
The distributor may waive or reduce the CDSC for Class A shares that are
subject to a CDSC or for Class C shares if:
o The distribution results from the death of all registered account owners or
a participant in an employer-sponsored plan. For UGMAs, UTMAs and trust
accounts, the waiver applies only upon the death of all beneficial owners;
o You become disabled (within the meaning of Section 72 of the Internal
Revenue Code) after the purchase of the shares being sold. For UGMAs, UTMAs
and trust accounts, the waiver only applies upon the disability of all
beneficial owners;
o The distribution is made in connection with limited automatic redemptions
as described in "Systematic withdrawal plans" (limited in any year to 10%
of the value of the account in the fund at the time the withdrawal plan is
established);
23
Buying, exchanging and selling shares
o The distribution is from any type of IRA, 403(b) or employer-sponsored plan
described under Section 401(a) or 457 of the Internal Revenue Code and, in
connection with the distribution, one of the following applies:
- It is part of a series of substantially equal periodic payments made
over the life expectancy of the participant or the joint life
expectancy of the participant and his or her beneficiary (limited in
any year to 10% of the value of the participant's account at the time
the distribution amount is established);
- It is a required minimum distribution due to the attainment of age
70-1/2, in which case the distribution amount may exceed 10% (based
solely on total plan assets held in Pioneer mutual funds);
- It is rolled over to or reinvested in another Pioneer mutual fund in
the same class of shares, which will be subject to the CDSC of the
shares originally held; or
- It is in the form of a loan to a participant in a plan that permits
loans (each repayment applied to the purchase of shares will be
subject to a CDSC as though a new purchase);
o The distribution is to a participant in an employer-sponsored retirement
plan described under Section 401(a) of the Internal Revenue Code or to a
participant in an employer-sponsored 403(b) plan or employer-sponsored 457
plan if (i) your employer has made special arrangements for your plan to
operate as a group through a single broker, dealer or financial
intermediary and (ii) all participants in the plan who purchase shares of a
Pioneer mutual fund do so through a single broker, dealer or other
financial intermediary designated by your employer and is or is in
connection with:
- A return of excess employee deferrals or contributions;
- A qualifying hardship distribution as described in the Internal
Revenue Code. For all participants, reduced by the total of any prior
distributions made in that calendar year;
- Due to retirement or termination of employment. For all participants,
reduced by the total of any prior distributions made in the same
calendar year; or
- From a qualified defined contribution plan and represents a
participant's directed transfer, provided that this privilege has been
preauthorized through a prior agreement with the distributor regarding
participant directed transfers;
o The distribution is made pursuant to the fund's right to liquidate or
involuntarily redeem shares in a shareholder's account; or
o The selling broker elects, with the distributor's approval, to waive
receipt of the commission normally paid at the time of the sale.
Please see the fund's statement of additional information for more information
regarding reduced sales charges and breakpoints.
24
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 discussed in this prospectus. Ask
your investment professional for more information.
If you invest in the fund through investment professionals or other financial
intermediaries, including wrap programs and fund supermarkets, additional
conditions may apply to your investment in the fund, and the investment
professional or intermediary may charge you a transaction-based or other fee for
its services. These conditions and fees are in addition to those imposed by the
fund and its affiliates. You should ask your investment professional or
financial intermediary about its services and any applicable fees.
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 transfer agent for account applications, account options
forms and other account information:
Pioneer Investment Management
Shareholder Services, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Telephone 1-800-225-6292
Telephone transaction privileges
If your account is registered in your name, you can buy, exchange or sell fund
shares by telephone. If you do not want your account to have telephone
transaction privileges, you must indicate that choice on your account
application or by writing to the transfer agent.
When you request a telephone transaction the transfer agent will try to confirm
that the request is genuine. The transfer agent records the call, requires the
caller to provide validating information for the account and sends you a written
confirmation. The fund may implement other confirmation procedures from time to
time. Different procedures may apply if you have a non-U.S. account or if your
account is registered in the name of an institution, broker-dealer or other
third party.
25
Buying, exchanging and selling shares
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By phone
If you want to place your telephone transaction by speaking to a shareowner
services representative, call 1-800-225-6292 between 8:00 a.m. and 7:00 p.m.
Eastern time on any weekday that the New York Stock Exchange is open. You may
use FactFone(SM) at any time.
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Online transaction privileges
If your account is registered in your name, you may be able to buy, exchange or
sell fund shares online. Your investment firm may also be able to buy, exchange
or sell your fund shares online.
To establish online transaction privileges:
o For new accounts, complete the online section of the account application
o For existing accounts, complete an account options form, write to the
transfer agent or complete the online authorization screen on
www.pioneerinvestments.com
To use online transactions, you must read and agree to the terms of an online
transaction agreement available on the Pioneer website. When you or your
investment firm requests an online transaction the transfer agent electronically
records the transaction, requires an authorizing password and sends a written
confirmation. The fund may implement other procedures from time to time.
Different procedures may apply if you have a non-U.S. account or if your account
is registered in the name of an institution, broker-dealer or other third party.
You may not be able to use the online transaction privilege for certain types of
accounts, including most retirement accounts.
26
General rules on buying, exchanging and selling your fund shares
Share price
If you place an order to purchase, exchange or sell shares with the transfer
agent or a broker-dealer by the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m. Eastern time), your transaction will be completed
at the share price determined as of the close of trading on the New York Stock
Exchange on that day. If your order is placed with the transfer agent or a
broker-dealer after 4:00 p.m., or your order is not in good order, your
transaction will be completed at the share price next determined after your
order is received in good order by the fund. The broker-dealer is responsible
for transmitting your order to the fund in a timely manner.
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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 The purchase payment has cleared for shares you are requesting to redeem
o If you have any fund share certificates, you submit them and they are
signed by each record owner exactly as the shares are registered
o Your request includes a signature guarantee if you:
- Are selling over $100,000 or exchanging over $500,000 worth of shares
- Changed your account registration or address within the last 30 days
- Instruct the transfer agent to mail the check to an address different
from the one on your account
- Want the check paid to someone other than the account owner(s)
- Are transferring the sale proceeds to a Pioneer mutual fund account
with a different registration
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Buying
You may buy fund shares from any investment firm that has a sales agreement with
the distributor. If you do not have an investment firm, please call
1-800-225-6292 for information on how to locate an investment professional in
your area.
You can buy fund shares at the offering price. The distributor may reject any
order until it has confirmed the order in writing and received payment. The fund
reserves the right to stop offering any class of shares.
27
Buying, exchanging and selling shares
You may use securities you own to purchase shares of the fund provided that
Pioneer, in its sole discretion, determines that the securities are consistent
with the fund's objective and policies and their acquisition is in the best
interests of the fund. If the fund accepts your securities, they will be valued
for purposes of determining the number of fund shares to be issued to you in the
same way the fund will value the securities for purposes of determining its net
asset value. For federal income tax purposes, you may be taxed in the same
manner as if you sold the securities that you exchange for cash in an amount
equal to the value of the fund shares that you receive in exchange. Your sales
charge for purchases of fund shares will be based upon the value of the fund
shares that you receive. Your broker may also impose a fee in connection with
processing your purchase of fund shares with securities.
Minimum investment amounts
Your initial investment must be at least $1,000. Additional investments must be
at least $100 for Class A shares and $500 for Class C shares. You may qualify
for lower initial or subsequent investment minimums if you are opening a
retirement plan account, establishing an automatic investment plan or placing
your trade through your investment firm. The fund may waive the initial or
subsequent investment minimums. Minimum investment amounts may be waived for
share purchases made through certain mutual fund programs (e.g., asset based fee
program accounts) sponsored by qualified intermediaries, such as broker-dealers
and investment advisers, that have entered into an agreement with Pioneer.
Maximum purchase amounts
Purchases of fund shares are limited to $999,999 for Class C shares. This limit
is applied on a per transaction basis. Class A shares are not subject to a
maximum purchase amount.
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Retirement plan accounts
You can purchase fund shares through tax-deferred retirement plans for
individuals, businesses and tax-exempt organizations.
Your initial investment for most types of retirement plan accounts must be at
least $250. Additional investments for most types of retirement plans must be at
least $100.
You may not use the account application accompanying this prospectus to
establish a Pioneer retirement plan. You can obtain retirement plan applications
from your investment firm or by calling the Retirement Plans Department at
1-800-622-0176.
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28
Identity verification
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. When
you open an account, you will need to supply your name, address, date of birth,
and other information that will allow the fund to identify you.
The fund may close your account if we cannot adequately verify your identity.
The redemption price will be the net asset value (less applicable sales
charges) on the date of redemption.
Exchanging
You may exchange your shares for shares of the same class of another Pioneer
mutual fund.
Your exchange request must be for at least $1,000. The fund allows you to
exchange your shares at net asset value without charging you either an initial
or contingent deferred sales charge at the time of the exchange. Shares you
acquire as part of an exchange will continue to be subject to any contingent
deferred sales charge that applies to the shares you originally purchased. When
you ultimately sell your shares, the date of your original purchase will
determine your contingent deferred sales charge. Your exchanges are subject to
certain limitations. See "Shareowner Account Policies - Exchange Limitation."
Before you request an exchange, consider each fund's investment objective and
policies as described in the fund's prospectus.
Selling
Your shares will be sold at net asset value per share next calculated after the
fund or its authorized agent, such as broker-dealers, receives your request in
good order.
If the shares you are selling are subject to a deferred sales charge, it will be
deducted from the sale proceeds. The fund generally will send your sale proceeds
by check, bank wire or electronic funds transfer. Normally you will be paid
within seven days. If you recently sent a check to purchase the shares being
sold, the fund may delay payment of the sale proceeds until your check has
cleared. This may take up to 15 calendar days from the purchase date.
If you are selling shares from a non-retirement account or certain IRAs, you may
use any of the methods described below. If you are selling shares from a
retirement account other than an IRA, you must make your request in writing.
- --------------------------------------------------------------------------------
You may have to pay income taxes on a sale or an exchange.
- --------------------------------------------------------------------------------
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Consult your investment professional to learn more about buying, exchanging or
selling fund shares.
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29
Buying, exchanging and selling shares
Buying shares
Through your investment firm
Normally, your investment firm will send your purchase request to the fund's
distributor and/or transfer agent. Consult your investment professional for more
information. Your investment firm receives a commission from the distributor,
and may receive additional compensation from Pioneer, for your purchase of fund
shares.
By phone or online
You can use the telephone or online purchase privilege if you have an existing
non-retirement account. Certain IRAs can use the telephone purchase privilege.
If your account is eligible, you can purchase additional fund shares by phone
or online if:
o You established your bank account of record at least 30 days ago
o Your bank information has not changed for at least 30 days
o You are not purchasing more than $25,000 worth of shares per account per
day
o You can provide the proper account identification information
When you request a telephone or online purchase, the transfer agent will
electronically debit the amount of the purchase from your bank account of
record. The transfer agent will purchase fund shares for the amount of the debit
at the offering price determined after the transfer agent receives your
telephone or online purchase instruction and good funds. It usually takes three
business days for the transfer agent to receive notification from your bank that
good funds are available in the amount of your investment.
In writing, by mail
You can purchase fund shares for an existing fund account by mailing a check to
the transfer agent. Make your check payable to the fund. Neither initial nor
subsequent investments should be made by third party check. Your check must be
in U.S. dollars and drawn on a U.S. bank. Include in your purchase request the
fund's name, the account number and the name or names in the account
registration.
30
Exchanging shares
Through your investment firm
Normally, your investment firm will send your exchange request to the fund's
transfer agent. Consult your investment professional for more information about
exchanging your shares.
By phone or online
After you establish an eligible fund account, you can exchange fund shares by
phone or online if:
o You are exchanging into an existing account or using the exchange to
establish a new account, provided the new account has a registration
identical to the original account
o The fund into which you are exchanging offers the same class of shares
o You are not exchanging more than $500,000 worth of shares per account per
day
o You can provide the proper account identification information
In writing, by mail or by fax
You can exchange fund shares by mailing or faxing a letter of instruction to
the transfer agent. You can exchange fund shares directly through the fund only
if your account is registered in your name. However, you may not fax an
exchange request for more than $500,000. Include in your letter:
o The name, social security number and signature of all registered owners
o A signature guarantee for each registered owner if the amount of the
exchange is more than $500,000
o The name of the fund out of which you are exchanging and the name of the
fund into which you are exchanging
o The class of shares you are exchanging
o The dollar amount or number of shares you are exchanging
31
Buying, exchanging and selling shares
Selling shares
Through your investment firm
Normally, your investment firm will send your request to sell shares to the
fund's transfer agent. Consult your investment professional for more
information. The fund has authorized the distributor to act as its agent in the
repurchase of fund shares from qualified investment firms. The fund reserves the
right to terminate this procedure at any time.
By phone or online
If you have an eligible non-retirement account, you may sell up to $100,000 per
account per day by phone or online. You may sell fund shares held in a
retirement plan account by phone only if your account is an eligible IRA (tax
penalties may apply). You may not sell your shares by phone or online if you
have changed your address (for checks) or your bank information (for wires and
transfers) in the last 30 days.
You may receive your sale proceeds:
o By check, provided the check is made payable exactly as your account is
registered
o By bank wire or by electronic funds transfer, provided the sale proceeds
are being sent to your bank address of record
In writing, by mail or by fax
You can sell some or all of your fund shares by writing directly to the fund
only if your account is registered in your name. Include in your request your
name, your social security number, the fund's name, your fund account number,
the class of shares to be sold, the dollar amount or number of shares to be sold
and any other applicable requirements as described below. The transfer agent
will send the sale proceeds to your address of record unless you provide other
instructions. Your request must be signed by all registered owners and be in
good order.
The transfer agent will not process your request until it is received in good
order.
You may sell up to $100,000 per account per day by fax.
32
How to contact us
By phone
For information or to request a telephone transaction between 8:00 a.m. and
7:00 p.m. (Eastern time) by speaking with a shareholder services representative
call
1-800-225-6292
To request a transaction using FactFone(SM) call
1-800-225-4321
Telecommunications Device for the Deaf (TDD)
1-800-225-1997
By mail
Send your written instructions to:
Pioneer Investment Management
Shareholder Services, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Pioneer website
www.pioneerinvestments.com
By fax
Fax your exchange and sale requests to:
1-800-225-4240
33
Buying, exchanging and selling shares
Excessive trading
Frequent trading into and out of the fund can disrupt portfolio management
strategies, harm fund performance by forcing the fund to hold excess cash or to
liquidate certain portfolio securities prematurely and increase expenses for all
investors, including long-term investors who do not generate these costs. An
investor may use short-term trading as a strategy, for example, if the investor
believes that the valuation of the fund's portfolio securities for purposes of
calculating its net asset value does not fully reflect the then current fair
market value of those holdings. The fund discourages, and does not take any
intentional action to accommodate, excessive and short-term trading practices,
such as market timing. Although there is no generally applied standard in the
marketplace as to what level of trading activity is excessive, we may consider
trading in the fund's shares to be excessive for a variety of reasons, such as
if:
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.
The fund's Board of Trustees has adopted policies and procedures with respect to
frequent purchases and redemptions of fund shares by fund investors. Pursuant to
these policies and procedures, we monitor selected trades on a daily basis in an
effort to detect excessive short-term trading. If we determine that an investor
or a client of a broker has engaged in excessive short-term trading that we
believe may be harmful to the fund, we will ask the investor or broker to cease
such activity and we will refuse to process purchase orders (including purchases
by exchange) of such investor, broker or accounts that we believe are under
their control. In determining whether to take such actions, we seek to act in a
manner that is consistent with the best interests of the fund's shareholders.
While we use our reasonable efforts to detect excessive trading activity, there
can be no assurance that our efforts will be successful or that market timers
will not employ tactics designed to evade detection. If we are not successful,
your return from an investment in the fund may be adversely affected.
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 taking steps to limit this
type of activity.
34
In addition to monitoring trades, the policies and procedures provide that:
o The fund imposes limitations on the number of exchanges out of an account
holding the fund's Class A, Class C or Class P shares that may occur in any
calendar year. See "Exchange limitation."
The fund may reject a purchase or exchange order before its acceptance or an
order prior to issuance of shares. The fund may also restrict additional
purchases or exchanges in an account. Each of these steps may be taken, for any
reason, without prior notice, including transactions that the fund believes are
requested on behalf of market timers. The fund reserves the right to reject any
purchase request by any investor or financial institution if the fund believes
that any combination of trading activity in the account or related accounts is
potentially disruptive to the fund. A prospective investor whose purchase or
exchange order is rejected will not achieve the investment results, whether gain
or loss, that would have been realized if the order were accepted and an
investment made in the fund. The fund and its shareholders do not incur any gain
or loss as a result of a rejected order. The fund may impose further
restrictions on trading activities by market timers in the future. The fund's
prospectus will be amended or supplemented to reflect any material additional
restrictions on trading activities intended to prevent excessive trading.
Account options
See the account application form for more details on each of the following
options.
Automatic investment plans
You can make regular periodic investments in the fund by setting up monthly
bank drafts, government allotments, payroll deductions, a Pioneer Investomatic
Plan and other similar automatic investment plans. You may use an automatic
investment plan to establish a Class A share account with a small initial
investment. If you have a Class C share account and your balance is at least
$1,000, you may establish an automatic investment plan.
Pioneer Investomatic Plan
If you establish a Pioneer Investomatic Plan, the transfer agent will make a
periodic investment in fund shares by means of a preauthorized electronic funds
transfer from your bank account. Your plan investments are voluntary. You may
discontinue your plan at any time or change the plan's dollar amount, frequency
or investment date by calling or writing to the transfer agent. You should
allow up to 30 days for the transfer agent to establish your plan.
Automatic exchanges
You can automatically exchange your fund shares for shares of the same class of
another Pioneer mutual fund. The automatic exchange will begin on the day you
35
Buying, exchanging and selling shares
select when you complete the appropriate section of your account application or
an account options form. In order to establish automatic exchange:
o You must select exchanges on a monthly or quarterly basis
o Both the originating and receiving accounts must have identical
registrations
o The originating account must have a minimum balance of $5,000
You may have to pay income taxes on an exchange.
Distribution options
The fund offers three distribution options. Any fund shares you buy by
reinvesting distributions will be priced at the applicable net asset value per
share.
(1) Unless you indicate another option on your account application, any
dividends and capital gain distributions paid to you by the fund will
automatically be invested in additional fund shares.
(2) You may elect to have the amount of any dividends paid to you in cash and
any capital gain distributions reinvested in additional shares.
(3) You may elect to have the full amount of any dividends and/or capital gain
distributions paid to you in cash.
Options (2) or (3) are not available to retirement plan accounts or accounts
with a current value of less than $500.
If your distribution check is returned to the transfer agent or you do not cash
the check for six months or more, the transfer agent may reinvest the amount of
the check in your account and automatically change the distribution option on
your account to option (1) until you request a different option in writing. If
the amount of a distribution check would be less than $10, the fund may reinvest
the amount instead of sending a check. Additional shares will be purchased at
the then current net asset value.
Directed dividends
You can invest the dividends paid by one of your Pioneer mutual fund accounts
in a second Pioneer mutual fund account. The value of your second account must
be at least $1,000. You may direct the investment of any amount of dividends.
There are no fees or charges for directed dividends. If you have a retirement
plan account, you may only direct dividends to accounts with identical
registrations.
Systematic withdrawal plans
When you establish a systematic withdrawal plan for your account, the transfer
agent will sell the number of fund shares you specify on a periodic basis and
the proceeds will be paid to you or to any person you select. You must obtain a
signature guarantee to direct payments to another person after you have
established your systematic withdrawal plan. Payments can be made either by
check or by electronic transfer to a bank account you designate.
36
To establish a systematic withdrawal plan:
o Your account must have a total value of at least $10,000 when you establish
your plan
o You must request a periodic withdrawal of at least $50
o You may not request a periodic withdrawal of more than 10% of the value of
any Class C share account (valued at the time the plan is implemented)
These requirements do not apply to scheduled (Internal Revenue Code Section
72(t) election) or mandatory (required minimum distribution) withdrawals from
IRAs and certain retirement plans.
Systematic sales of fund shares may be taxable transactions for you. While you
are making systematic withdrawals from your account, you may pay unnecessary
initial sales charges on additional purchases of Class A shares or contingent
deferred sales charges.
Direct deposit
If you elect to take dividends or dividends and capital gain distributions in
cash, or if you establish a systematic withdrawal plan, you may choose to have
those cash payments deposited directly into your savings, checking or NOW bank
account.
Voluntary tax withholding
You may have the transfer agent withhold 28% of the dividends and capital gain
distributions paid from your fund account (before any reinvestment) and forward
the amount withheld to the Internal Revenue Service as a credit against your
federal income taxes. Voluntary tax withholding is not available for retirement
plan accounts or for accounts subject to backup withholding.
Shareowner services
Pioneer website
www.pioneerinvestments.com
The website includes a full selection of information on mutual fund investing.
You can also use the website to get:
o Your current account information
o Prices, returns and yields of all publicly available Pioneer mutual funds
o Prospectuses, statements of additional information and shareowner reports
for all the Pioneer mutual funds
o A copy of Pioneer's privacy notice
If you or your investment firm authorized your account for the online
transaction privilege, you may buy, exchange and sell shares online.
37
Buying, exchanging and selling shares
FactFone(SM) 1-800-225-4321
You can use FactFone(SM) to:
o Obtain current information on your Pioneer mutual fund accounts
o Inquire about the prices and yields of all publicly available Pioneer
mutual funds
o Make computer-assisted telephone purchases, exchanges and redemptions for
your fund accounts
o Request account statements
If you plan to use FactFone(SM) to make telephone purchases and redemptions,
first you must activate your personal identification number and establish your
bank account of record. If your account is registered in the name of a
broker-dealer or other third party, you may not be able to use FactFone(SM).
Household delivery of fund documents
With your consent, Pioneer may send a single proxy statement, prospectus and
shareowner report to your residence for you and any other member of your
household who has an account with the fund. If you wish to revoke your consent
to this practice, you may do so by notifying Pioneer, by phone or in writing
(see "How to contact us"). Pioneer will begin mailing separate proxy
statements, prospectuses and shareowner reports to you within 30 days after
receiving your notice.
Confirmation statements
The transfer agent maintains an account for each investment firm or individual
shareowner and records all account transactions. You will be sent confirmation
statements showing the details of your transactions as they occur, except
automatic investment plan transactions, which are confirmed quarterly. If you
have more than one Pioneer mutual fund account registered in your name, the
Pioneer combined account statement will be mailed to you each quarter.
Tax information
In January of each year, the fund will mail you information about the tax
status of the dividends and distributions paid to you by the fund.
TDD 1-800-225-1997
If you have a hearing disability and access to TDD keyboard equipment, you can
contact our telephone representatives with questions about your account by
calling our TDD number between 8:30 a.m. and 5:30 p.m. Eastern time any weekday
that the New York Stock Exchange is open.
Privacy
The fund has a policy that protects the privacy of your personal information. A
copy of Pioneer's privacy notice was given to you at the time you opened your
account. The fund will send you a copy of the privacy notice each year. You may
also obtain the privacy notice by calling the transfer agent or through
Pioneer's website.
38
Shareowner account policies
Signature guarantees and other requirements
You are required to obtain a signature guarantee when:
o Requesting certain types of exchanges or sales of fund shares
o 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.
The Pioneer funds generally accept only medallion signature guarantees. A
medallion signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency, savings association, or other
financial institution that is participating in a medallion program recognized by
the Securities Transfer Association. Signature guarantees from financial
institutions that are not participating in one of these programs are not
accepted as medallion signature guarantees. The fund may accept other forms of
guarantee from financial intermediaries in limited circumstances.
Fiduciaries and corporations are required to submit additional documents to
sell fund shares.
Exchange limitation
You may only make up to four exchange redemptions of $25,000 or more per
account per calendar year out of the fund. The 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.
39
Buying, exchanging and selling shares
Minimum account size
The fund requires that you maintain a minimum account value of $500. If you
hold less than $500 in your account, the fund reserves the right to notify you
that it intends to sell your shares and close your account. You will be given
60 days from the date of the notice to make additional investments to avoid
having your shares sold. This policy does not apply to certain qualified
retirement plan accounts.
Telephone and website access
You may have difficulty contacting the fund by telephone or accessing
pioneerinvestments.com during times of market volatility or disruption in
telephone or Internet service. On New York Stock Exchange holidays or on days
when the exchange closes early, Pioneer will adjust the hours for the telephone
center and for online transaction processing accordingly. If you are unable to
access pioneerinvestments.com or reach the fund by telephone, you should
communicate with the fund in writing.
Share certificates
The fund does not offer share certificates. Shares are electronically recorded.
Any existing certificated shares can only be sold by returning your certificate
to the transfer agent, along with a letter of instruction or a stock power (a
separate written authority transferring ownership) and a signature guarantee.
Other policies
The fund and the distributor reserve the right to:
o reject any purchase or exchange order for any reason, without prior notice
o charge a fee for exchanges or to modify, limit or suspend the exchange
privilege at any time without notice. The fund will provide 60 days' notice
of material amendments to or termination of the exchange privilege
o revise, suspend, limit or terminate the account options or services
available to shareowners at any time, except as required by the rules of
the Securities and Exchange Commission
The fund reserves the right to:
o suspend transactions in shares when trading on the New York Stock Exchange
is closed or restricted, when the Securities and Exchange Commission
determines an emergency or other circumstances exist that make it
impracticable for the fund to sell or value its portfolio securities
o redeem in kind by delivering to you portfolio securities owned by the fund
rather than cash. Securities you receive this way may increase or decrease
in value while you hold them and you may incur brokerage and transaction
charges and tax liability when you convert the securities to cash
o charge transfer, shareholder servicing or similar agent fees, such as an
account maintenance fee for small balance accounts, directly to accounts
upon at least 30 days' notice. The fund may do this by deducting the fee
from your distribution of dividends and/or by redeeming shares to the
extent necessary to cover the fee
40
Dividends, capital gains and taxes
Dividends and capital gains
The fund generally pays any distributions of net short- and long-term capital
gains in November. The fund generally pays dividends from any net investment
income in December. The 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 the 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 the 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. Distributions from the fund's net short-term capital gains are
taxable as ordinary income. 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 a maximum 15% U.S.
federal income tax rate. Dividends and distributions are taxable, whether you
take payment in cash or reinvest them to buy additional fund shares.
When you sell or exchange fund shares you will generally recognize a capital
gain or capital loss in an amount equal to the difference between the net amount
of sale proceeds (or, in the case of an exchange, the fair market value of the
shares) that you receive and your tax basis for the shares that you sell or
exchange. In January of each year the fund will mail to you information about
your dividends, distributions and any shares you sold in the previous calendar
year.
You must provide your social security number or other taxpayer identification
number to the fund along with the certifications required by the Internal
Revenue Service when you open an account. If you do not or if it is otherwise
legally required to do so, the fund will withhold 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, local and foreign tax
considerations, including possible additional withholding taxes for non-U.S.
shareholders. You may also consult the fund's statement of additional
information for a more detailed discussion of qualified dividend income and
other U.S. federal income tax considerations that may affect the fund and its
shareowners.
- --------------------------------------------------------------------------------
Sales and exchanges may be taxable transactions to shareowners.
- --------------------------------------------------------------------------------
41
Financial highlights
The financial highlights table helps you understand
the fund's financial performance since the inception of Class A and Class C
shares.
Certain information reflects financial results for a single fund share. The
total returns in the table represent the rate that you would have earned or lost
on an investment in Class A and Class C shares of the fund (assuming
reinvestment of all dividends and distributions).
The information below has been audited by Ernst & Young LLP, the fund's
independent registered public accounting firm, whose report is included in the
fund's annual report along with the fund's financial statements. The annual
report is available upon request.
42
Pioneer Independence Fund
Class A shares
3/10/06 (a)
to
12/31/06 (b)
- -----------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.17
----------------
Increase from investment operations:
Net investment income $ 0.00(c)
Net realized and unrealized gain on investments 0.91
----------------
Net increase from investment operations $ 0.91
Distributions to shareowners:
Net investment income (0.08)
Net realized gain (1.17)
----------------
Net decrease in net asset value $ (0.34)
----------------
Net asset value, end of period $ 12.83
================
Total return* 6.82%(d)
Ratio of net expenses to average net assets 1.25%**
Ratio of net investment loss to average net assets (0.13)%**
Portfolio turnover rate 72%
Net assets, end of period (in thousands) $ 2,056
Ratios with no waiver of management fees and
assumption of expenses by Pioneer and no reduction
for fees paid indirectly:
Net expenses 1.63%**
Net investment loss (0.51)%**
Ratios with waiver of management fees and
assumption of expenses by Pioneer and reduction
for fees paid indirectly:
Net expenses 1.25%**
Net investment loss (0.13)%**
- -----------------------------------------------------------------------------------
(a) Class A shares were first publicly offered on March 10, 2006.
(b) Net investment income and distribution per share amounts have been
calculated using different methods.
(c) Amount rounds to less than one cent per share.
(d) Not Annualized.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of the period.
** Annualized.
43
Financial highlights
Pioneer Independence Fund
Class C shares
3/10/06 (a)
to
12/31/06 (b)
- -----------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.17
----------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.00(c)
Net realized and unrealized gain on investments 0.81
----------------
Net increase from investment operations $ 0.81
Distributions to shareowners:
Net investment income (0.07)
Net realized gain (1.17)
----------------
Net decrease in net asset value $ (0.43)
----------------
Net asset value, end of period $ 12.74
================
Total return* 6.04%(d)
Ratio of net expenses to average net assets 2.08%**
Ratio of net investment income (loss) to average net assets (1.05)%**
Portfolio turnover rate 72%
Net assets, end of period (in thousands) $ 901
Ratios with no waiver of management fees and
assumption of expenses by Pioneer and no reduction
for fees paid indirectly:
Net expenses 2.08%**
Net investment loss (1.05)%**
Ratios with waiver of management fees and
assumption of expenses by Pioneer and reduction
for fees paid indirectly:
Net expenses 2.08%**
Net investment loss (1.05)%**
- -----------------------------------------------------------------------------------
(a) Class C shares were first publicly offered on March 10, 2006.
(b) Net investment income and distribution per share amounts have been
calculated using different methods.
(c) Amount rounds to less than one cent per share.
(d) Not Annualized.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of the period.
** Annualized.
44
Pioneer
Independence Fund
You can obtain more free information about the fund from your investment firm or
by writing to Pioneer Investment Management Shareholder Services, Inc., 60 State
Street, Boston, Massachusetts 02109. You may also call 1-800-225-6292.
The fund makes available the statement of additional information and shareowner
reports, free of charge, on the fund's website at www.pioneerinvestments.com.
Shareowner reports
Annual and semiannual reports to shareowners, and quarterly reports filed with
the Securities and Exchange Commission, provide information about the fund's
investments. The annual report discusses market conditions and investment
strategies that significantly affected the fund's performance during its last
fiscal year.
Statement of additional information
The statement of additional information provides more detailed information
about the fund. It is incorporated by reference into this prospectus.
Visit our website
www.pioneerinvestments.com
You can also review and copy the fund's shareowner reports, prospectus and
statement of additional information at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. Call 1-202-551-8090 for information.
The Commission charges a fee for copies. You can get the same information free
from the Commission's EDGAR database on the Internet (http://www.sec.gov). You
may also e-mail requests for these documents to publicinfo@sec.gov or make a
request in writing to the Commission's Public Reference Section, Washington,
D.C. 20549-0102.
(Investment Company Act file no. 811-08547)
[LOGO] PIONEER
Investments(R)
Pioneer Funds Distributor, Inc.
60 State Street
Boston, MA 02109 18594-01-0507
(C)2007 Pioneer Funds Distributor, Inc.
www.pioneerinvestments.com Member SIPC
PIONEER
- --------------------------------------------------------------------------------
INDEPENDENCE FUND
Prospectus
April 30, 2007
Class Y Shares
Contents
Basic information about the fund .............. 1
Management .................................... 9
Buying, exchanging and selling shares ......... 11
Dividends, capital gains and taxes ............ 29
Financial highlights .......................... 30
Neither the Securities and Exchange Commission nor any state securities agency
has approved the fund's shares or determined whether this prospectus is accurate
or complete. Any representation to the contrary is a crime.
[LOGO]PIONEER
Investments(R)
- --------------------------------------------------------------------------------
An investment in the fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contact your investment professional to discuss how the fund fits into your
portfolio.
- --------------------------------------------------------------------------------
Basic information about the fund
Investment objective
Capital growth.
Principal investment strategies
The fund invests at least 80% of its assets in equity securities. For purposes
of the fund's investment policies, equity securities include common stocks,
convertible debt and other equity instruments, such as exchange-traded funds
(ETFs) that invest primarily in equity securities, depositary receipts,
warrants, rights, equity interests in real estate investment trusts (REITs) and
preferred stocks.
The fund may invest up to 25% of its total assets in equity and debt securities
of non-U.S. corporate issuers and debt securities of non-U.S. government
issuers, including up to 10% of its assets in the securities of emerging markets
issuers. The fund invests in non-U.S. securities to diversify its portfolio when
they offer similar or greater potential for capital appreciation compared to
U.S. securities.
Pioneer Investment Management, Inc., the fund's investment adviser, seeks
securities selling at reasonable prices or substantial discounts to their
underlying values and then holds these securities until the market values
reflect their intrinsic values. Pioneer evaluates a security's potential value,
including the attractiveness of its market valuation, based on the company's
assets and prospects for earnings and revenue growth. In making that assessment,
Pioneer employs due diligence and fundamental research, an evaluation of the
issuer based on its financial statements and operations. Pioneer relies on the
knowledge, experience and judgment of its staff and the staff of its affiliates
who have access to a wide variety of research. Pioneer focuses on the quality
and price of individual issuers, not on economic sector or market-timing
strategies. Factors Pioneer looks for in selecting investments include:
o Estimated private market value in excess of current stock price. Private
market value is the price an independent investor would pay to own the
entire company
o Above average potential for earnings and revenue growth
o Management with demonstrated ability and commitment to the company
o Low market valuations relative to earnings forecast, book value, cash flow
and sales
Principal risks of investing in the fund
You could lose money on your investment or not make as much as if you invested
elsewhere if:
o The stock market goes down or performs poorly relative to other investments
(this risk may be greater in the short term)
o Value stocks fall out of favor with investors
o The fund's investments do not have the growth potential originally expected
Risks of non-U.S. investments
Investing in non-U.S. issuers may involve unique risks compared to investing in
securities of U.S. issuers. These risks are more pronounced for issuers in
1
Basic information about the fund
emerging markets or to the extent that the fund invests significantly in one
region or 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
Market segment risks
To the extent the fund emphasizes, from time to time, investments in a market
segment, the fund will be subject to a greater degree to the risks particular to
the industries in that segment, and may experience greater market fluctuation,
than a fund without the same focus. For example, industries in the financial
segment, such as banks, insurance companies, broker-dealers and real estate
investment trusts (REITs), may be sensitive to changes in interest rates and
general economic activity and are subject to extensive government regulation.
Industries in the technology segment, such as information technology,
communications equipment, computer hardware and software, and office and
scientific equipment, are subject to risks of rapidly evolving technology, short
product lives, rates of corporate expenditures, falling prices and profits,
competition from new market entrants, and general economic conditions.
2
The fund's past performance
The bar chart and table indicate the risks of investing in the fund by showing
how the fund has performed in the past. The fund's performance will vary from
year to year.
The fund's past performance does not necessarily indicate how it will perform in
the future. As a shareowner, you may lose or make money on your investment.
Fund performance
The chart shows the year-by-year performance of the fund's Class Y shares.
The performance of Class Y shares for the period prior to the commencement of
operations of Class Y shares is the net asset value performance of the fund's
Class P shares, which has not been restated to reflect any differences in
expenses, including Rule 12b-1 fees applicable to Class P shares.
The chart does not reflect any sales charge you may pay when you buy or sell
fund shares. Any sales charge will reduce your return.
You do not pay a sales charge on purchases or redemptions of Class Y shares.
Annual return Class Y shares (%)
(Year ended December 31)
[THE FOLLOWING DATA IS REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'99 22.88
'00 15.38
'01 -11.86
'02 -22.18
'03 29.79
'04 9.53
'05 9.59
'06 11.21
The highest calendar quarterly return was 19.09% (03/31/2003 to 06/30/2003)
The lowest calendar quarterly return was -18.36% (06/30/2002 to 09/30/2002)
3
Basic information about the fund
Comparison with the Russell 1000 Index and the Russell 1000 Growth Index The
table shows the average annual total returns for Class Y shares of the fund over
time and compares these returns to the returns of the Russell 1000 Index and the
Russell 1000 Growth Index. The Russell 1000 Index measures the performance of
large-cap U.S. stocks. The Russell 1000 Growth Index measures the performance of
large-cap U.S. growth stocks.
The fund's benchmark has changed from the Russell 1000 Index to the Russell 1000
Growth Index. It is Pioneer's opinion that since the Russell 1000 Growth Index
better reflects the fund's investment strategies, it is a more appropriate
benchmark for the fund.
Unlike the fund, the indices are not managed and do not incur expenses. The
table:
o Assumes that you sell your shares at the end of the period
o Assumes that you reinvest all of your dividends and distributions
The performance of Class Y shares for the period prior to the commencement of
operations of Class Y shares is the net asset value performance of the fund's
Class P shares, which has not been restated to reflect any differences in
expenses, including Rule 12b-1 fees applicable to Class P shares.
Average annual total return (%)
(for periods ended December 31, 2006)
Since Inception
1 Year 5 Years Inception Date#
- ----------------------------------------------------------------------------------
Class Y 3/16/98
Return before taxes 11.21 6.16 5.77
- ----------------------------------------------------------------------------------
Return after taxes on distributions 9.47 5.65 5.02
- ----------------------------------------------------------------------------------
Return after taxes on distribution
and sale of shares 8.90 5.24 4.68
- ----------------------------------------------------------------------------------
Russell 1000 Index (reflects no
deduction for taxes) 15.46 6.82 4.91
- ----------------------------------------------------------------------------------
Russell 1000 Growth Index
(reflects no deduction for taxes) 9.07 2.69 1.41
- ----------------------------------------------------------------------------------
# Inception date of the fund's Class P shares. Class Y shares commenced
operations on March 10, 2006.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on the investor's tax situation and may
differ from those shown, and the after-tax returns shown are not relevant to
shareholders who hold fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts.
4
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
Shareowner fees
paid directly from your investment Class Y
- ---------------------------------------------------------------------------------------
Maximum sales charge (load) when you buy shares None
- ---------------------------------------------------------------------------------------
Maximum deferred sales charge (load) when you sell shares None
- ---------------------------------------------------------------------------------------
Annual fund operating expenses
paid from the assets of the fund
as a percentage of average daily net assets Class Y
- ---------------------------------------------------------------------------------------
Management Fee 0.75%
- ---------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fee 0.00%
- ---------------------------------------------------------------------------------------
Other Expenses 0.54%
- ---------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses1 1.29%
- ---------------------------------------------------------------------------------------
Example
This example helps you compare the cost of investing in the fund with the cost
of investing in other mutual funds. It assumes that: a) you invest $10,000 in
the fund for the time periods shown, b) you reinvest all dividends and
distributions, c) your investment has a 5% return each year and d) the fund's
total operating expenses remain the same. Although your actual costs may be
higher or lower, under these assumptions your costs would be:
Number of years you own your
shares
------------------------------
1 3 5 10
- ---------------------------------------------------------------------------------------
Class Y $131 $409 $708 $1,556
- ---------------------------------------------------------------------------------------
1 Total annual fund operating expenses in the table have not been reduced by
any expense offset arrangements.
5
Basic information about the fund
Non-principal investment strategies and related risks
As discussed, the fund invests primarily in equity securities.
The following sections describe additional investments that the fund may make or
strategies that it may pursue to a lesser degree to achieve the fund's goal. The
fund's secondary, or non-principal, investment policies and strategies also
entail risks. To learn more about these investments and risks, you should obtain
and read the statement of additional information (SAI).
Initial public offerings
To the extent consistent with its investment objective, the fund may invest in
initial public offerings of equity securities. The market for such securities
may be more volatile and entail greater risk of loss than investments in more
established companies. Investments in initial public offerings represent a
significant portion of the fund's past investment performance. The fund cannot
assure that investments in initial public offerings will continue to be
available to the fund or, if available, will continue to result in positive
investment performance. In addition, as the fund grows in size, the impact of
investments in initial public offerings on the overall performance of the fund's
portfolio is likely to decrease.
Investments in REITs
The fund may invest up to 20% of its net assets in REITs. REITs are companies
that invest primarily in real estate or real estate related loans. Investing in
REITs involves unique risks. They are significantly affected by the market for
real estate and are dependent upon management skills and cash flow. In addition
to its own expenses, the fund will indirectly bear its proportionate share of
any management and other expenses paid by REITs in which it invests.
Debt 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 investment grade, but the fund may invest up to 5% of its net assets in
below investment grade debt securities, including below investment grade
convertible debt securities. The fund invests in debt securities when Pioneer
believes they are consistent with the fund's investment objective of capital
growth, to diversify the fund's portfolio or for greater liquidity.
Debt securities are subject to the risk of an issuer's inability to meet
principal or interest payments on its obligations. Factors that could contribute
to a decline in the market value of debt securities in the fund's portfolio
include rising interest rates or a reduction in the perceived creditworthiness
of the issuer of the securities. A debt security is investment grade if it is
rated in one of the top four categories by a nationally recognized statistical
rating organization or determined to be of equivalent credit quality by Pioneer.
Debt securities rated below
6
investment grade are commonly referred to as "junk bonds" and are considered
speculative. Below investment grade debt securities involve greater risk of
loss, are subject to greater price volatility and are less liquid, especially
during periods of economic uncertainty or change, than higher quality debt
securities.
Cash management and temporary investments
Normally, the fund invests substantially all of its assets to meet its
investment objective. The fund may invest the remainder of its assets in
securities with remaining maturities of less than one year, cash equivalents or
may hold cash. For temporary defensive purposes, including during periods of
unusual cash flows, the fund may depart from its principal investment strategies
and invest part or all of its assets in these securities or may hold cash.
During such periods, the fund may not be able to achieve its investment
objective. The fund intends to adopt a defensive strategy when Pioneer believes
securities in which the fund normally invests have extraordinary risks due to
political or economic factors and in other extraordinary circumstances.
Short-term trading
The fund usually does not trade for short-term profits. The fund will sell an
investment, however, even if it has only been held for a short time, if it no
longer meets the fund's investment criteria. If the fund does a lot of trading,
it may incur additional operating expenses, which would reduce performance, and
could cause shareowners to incur a higher level of taxable income or capital
gains. See "Financial highlights" for actual annual turnover rates.
Derivatives
The fund may, but is not required to, use futures and options on securities,
indices and currencies, forward foreign currency exchange contracts and other
derivatives. A derivative is a security or instrument whose value is determined
by reference to the value or the change in value of one or more securities,
currencies, indices or other financial instruments. Although there is no
specific limitation on investing in derivatives, the fund does not use
derivatives as a primary investment technique and generally limits their use to
hedging. However, the fund may use derivatives for a variety of non-principal
purposes, including:
o As a hedge against adverse changes in the market prices of securities,
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
Even a small investment in derivatives can have a significant impact on the
fund's exposure to the market prices of securities, interest rates or currency
exchange rates. If changes in a derivative's value do not correspond to changes
in the value of the fund's other investments, the fund may not fully benefit
from or could lose money on the derivative position. In addition, some
derivatives involve risk of loss
7
Basic information about the fund
if the person who issued the derivative defaults on its obligation. Certain
derivatives may be less liquid and more difficult to value. The fund will only
invest in derivatives to the extent Pioneer believes these investments do not
prevent the fund from seeking its investment objective.
8
Management
Pioneer, the fund's investment adviser,
selects the fund's investments and oversees the fund's operations.
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 March 31, 2007, assets
under management were approximately $310 billion worldwide, including over $81
billion in assets under management by Pioneer.
Investment adviser
Pioneer's main office is at 60 State Street, Boston, Massachusetts 02109. The
firm's U.S. mutual fund investment history includes creating in 1928 one of the
first mutual funds.
Portfolio management
Day-to-day management of the fund's portfolio is the responsibility of Andrew
Acheson. Mr. Acheson is assisted by a team of analysts that meets to discuss
holdings, prospective investments and portfolio composition. Members of this
team manage other Pioneer funds investing primarily in U.S. equity securities.
The portfolio manager and the team also may draw upon the research and
investment management expertise of Pioneer's affiliate, Pioneer Investment
Management Limited (PIML). Mr. Acheson, a vice president of Pioneer, joined
Pioneer as a portfolio manager in May 2001 and has been an investment
professional since 1994.
The fund's statement of additional information provides additional information
about the portfolio manager's compensation, other accounts managed by the
portfolio manager, and the portfolio manager's ownership of shares of the fund.
Management fee
The fund pays Pioneer a fee for managing the fund and to cover the cost of
providing certain services to the fund. Pioneer's annual fee is equal to 0.75%
of the fund's average daily net assets. The fee is accrued daily and paid
monthly.
For the fiscal year ended December 31, 2006, the fund paid management fees
equivalent to 0.75% of the fund's average daily net assets.
A discussion regarding the basis for the Board of Trustees' approval of the
management contract is available in the fund's annual report to shareholders,
dated December 31, 2006.
9
Management
Distributor and transfer agent
Pioneer Funds Distributor, Inc. is the fund's distributor. Pioneer Investment
Management Shareholder Services, Inc. is the fund's transfer agent. The fund
compensates the distributor and transfer agent for their services. The
distributor and the transfer agent are affiliates of Pioneer.
Disclosure of portfolio holdings
The fund's policies and procedures with respect to disclosure of the fund's
portfolio securities are described in the statement of additional information.
10
Buying, exchanging and selling shares
Net asset value
The fund's net asset value is the value of its portfolio of securities plus any
other assets minus its operating expenses and any other liabilities. The fund
calculates a net asset value for each class of shares every day the New York
Stock Exchange is open when regular trading closes (normally 4:00 p.m. Eastern
time).
The fund generally values its portfolio securities using closing market prices
or readily available market quotations. When closing market prices or market
quotations are not available or are considered by Pioneer to be unreliable, the
fund uses a security's fair value. All methods of determining the value of a
security used by the fund, including those discussed below, on a basis other
than market value, are forms of fair value. All valuations of securities on a
fair value basis are made pursuant to procedures adopted by the Board of
Trustees. The use of fair value pricing by the fund may cause the net asset
value of its shares to differ from the net asset value that would be calculated
only using market prices. For market prices and quotations, as well as for some
fair value methods, the fund relies upon securities prices provided by pricing
services.
The fund uses the fair value of a security, including a non-U.S. security, when
Pioneer determines that the closing market price on the primary exchange where
the security is traded no longer accurately reflects the value of the security
at the time the fund calculates its net asset value. This may occur for a
variety of reasons that affect either the relevant securities markets generally
or the specific issuer. For example, with respect to non-U.S. securities held by
the fund, developments relating to specific events in the securities markets or
the specific issuer may occur between the time the primary market closes and the
time the fund determines its net asset value. In those circumstances when the
fund believes the price of the security may be affected, the fund uses the fair
value of the security. International securities markets may be open on days when
the U.S. markets are closed. For this reason, the values of any international
securities owned by the fund could change on a day you cannot buy or sell shares
of the fund.
Certain types of securities, including those discussed in this paragraph, are
priced using fair value rather than market prices. The fund uses a pricing
matrix to determine the value of fixed income securities that do not trade
daily. A pricing matrix is a means of valuing a debt security on the basis of
current market prices for other debt securities and historical trading patterns
in the market for fixed income securities. The fund values cash equivalent
securities with remaining maturities of 60 days or less at amortized cost. To
the extent that the fund invests in the shares of other registered open-end
investment companies that are not traded on an exchange (mutual funds), such
shares are valued at their published net asset values per share as reported by
the funds. The prospectuses of these funds explain the circumstances under which
the funds will use fair value pricing and the effects of using fair value
pricing.
11
Buying, exchanging and selling shares
You buy or sell Class Y shares at the share price.
- --------------------------------------------------------------------------------
Share price
The net asset value per share calculated on the day of your transaction.
- --------------------------------------------------------------------------------
Distribution of Class Y shares
The distributor incurs the expenses of distributing the fund's Class Y shares,
none of which are reimbursed by the fund or the Class Y shareowners.
Distribution expenses include fees paid to broker-dealers which have sales
agreements with the distributor and other parties, advertising expenses and the
cost of printing and mailing prospectuses to potential investors.
Additional payments to financial intermediaries
Pioneer and its affiliates may make additional payments to your financial
intermediary. These payments by Pioneer may provide your financial intermediary
with an incentive to favor the Pioneer funds over other mutual funds or assist
the distributor in its efforts to promote the sale of the fund's shares.
Financial intermediaries include broker-dealers, banks (including bank trust
departments), registered investment advisers, financial planners, retirement
plan administrators and other types of intermediaries.
Pioneer makes these additional payments (sometimes referred to as "revenue
sharing") to financial intermediaries out of its own assets. Revenue sharing is
not an expense of the Pioneer funds. Pioneer may base these payments on a
variety of criteria, including the amount of sales or assets attributable to the
financial intermediary or as a per transaction fee.
Not all financial intermediaries receive additional compensation and the amount
of compensation paid varies for each financial intermediary. In certain cases,
these payments could be significant. Pioneer determines which firms to support
and the extent of the payments it is willing to make, generally choosing firms
that have a strong capability to effectively distribute shares of the Pioneer
funds and that are willing to cooperate with Pioneer's promotional efforts.
Pioneer also may compensate financial intermediaries for providing certain
administrative services and transaction processing services.
Pioneer may benefit from revenue sharing if the intermediary features the
Pioneer funds in its sales system (such as by placing certain Pioneer funds on
its preferred fund list or giving access on a preferential basis to members of
the financial intermediary's sales force or management). In addition, the
financial intermediary may agree to participate in the distributor's marketing
efforts (such as by helping to facilitate or provide financial assistance for
conferences, seminars or other programs at which Pioneer personnel may make
presentations on the funds to the intermediary's sales force). To the extent
intermediaries sell more shares of the
12
Pioneer funds or retain shares of the Pioneer funds in their clients' accounts,
Pioneer receives greater management and other fees due to the increase in the
Pioneer funds' assets. Although an intermediary may request additional
compensation from Pioneer to offset costs incurred by the financial intermediary
in servicing its clients, the intermediary may earn a profit on these payments,
if the amount of the payment may exceed the intermediary's costs.
The compensation that Pioneer pays to financial intermediaries is discussed in
more detail in the fund's statement of additional information. Your intermediary
may charge you additional fees or commissions other than those disclosed in this
prospectus. Intermediaries may categorize and disclose these arrangements
differently than the discussion above and in the statement of additional
information. You can ask your financial intermediary about any payments it
receives from Pioneer or the Pioneer funds, as well as about fees and/or
commissions it charges.
Pioneer and its affiliates may have other relationships with your financial
intermediary relating to the provision of services to the funds, such as
providing omnibus account services or effecting portfolio transactions for the
Pioneer funds. If your intermediary provides these services, Pioneer or the
Pioneer funds may compensate the intermediary for these services. In addition,
your intermediary may have other relationships with Pioneer or its affiliates
that are not related to the funds.
13
Buying, exchanging and selling shares
Opening your account
If you are an individual or other non-institutional investor, open your Class Y
share account by completing an account application and sending it to the
transfer agent by mail or by fax. If you are any other type of investor, please
call the transfer agent to obtain a Class Y share account application and an
account number.
If you invest in the fund through investment professionals or other financial
intermediaries, including wrap programs and fund supermarkets, additional
conditions may apply to your investment in the fund, and the investment
professional or intermediary may charge you a transaction-based or other fee for
its services. These conditions and fees are in addition to those imposed by the
fund and its affiliates. You should ask your investment professional or
financial intermediary about its services and any applicable fees.
The transfer agent must receive your account application before you send your
initial check or federal funds wire. In addition, you must provide a bank wire
address of record when you establish your account.
If your shares are held in your investment firm's name, the options and services
available to you may be different from those discussed in this prospectus. Ask
your investment professional for more information.
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 transfer agent for account applications, account options
forms and other account information:
Pioneer Investment Management
Shareholder Services, Inc.
P.O. Box 55150
Boston, Massachusetts 02205-5150
Telephone 1-800-665-8839
Telephone transaction privileges
If your account is registered in your name, you can exchange or sell Class Y
shares by telephone. If you do not want your account to have telephone
transaction privileges, you must indicate that choice on your account
application or by writing to the transfer agent.
When you request a telephone transaction the transfer agent will try to confirm
that the request is genuine. The transfer agent records the call, requires the
caller to
14
provide validating information for the account and sends you a written
confirmation. The fund may implement other confirmation procedures from time to
time. Different procedures may apply if you have a non-U.S. account or if your
account is registered in the name of an institution, broker-dealer or other
third party.
- --------------------------------------------------------------------------------
By phone
If you want to place your telephone transaction by speaking to a shareowner
services representative, call 1-800-665-8839 between 9:00 a.m. and 5:30 p.m.
Eastern time on any weekday that the New York Stock Exchange is open.
- --------------------------------------------------------------------------------
15
Buying, exchanging and selling shares
General rules on buying, exchanging and selling your fund shares
Share price
If you place an order to purchase, exchange or sell shares with the transfer
agent or a broker-dealer by the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m. Eastern time), your transaction will be completed
at the share price determined as of the close of trading on the New York Stock
Exchange on that day. If your order is placed with the transfer agent or a
broker-dealer after 4:00 p.m., or your order is not in good order, your
transaction will be completed at the share price next determined after your
order is received in good order by the fund. The broker-dealer is responsible
for transmitting your order to the fund in a timely manner.
- --------------------------------------------------------------------------------
Good order means that:
o You have provided adequate instructions
o There are no outstanding claims against your account
o There are no transaction limitations on your account
o The purchase payment has cleared for shares you are requesting to redeem
o If you have any fund share certificates, you submit them and they are
signed by each record owner exactly as the shares are registered
o Your request includes a signature guarantee if you:
- Are selling over $100,000 worth of shares and
- Want the sale proceeds sent to an address other than your bank account
of record or
- Want the sale proceeds to be made payable to someone other than the
account's record owners or
- The account registration, address of record or bank account of record
has changed within the last 30 days
- Are selling or exchanging over $5 million worth of shares
- Are transferring the sale proceeds to a Pioneer mutual fund account
with a different registration
- --------------------------------------------------------------------------------
Buying
You can buy Class Y shares at net asset value per share. The fund does not
impose any initial, contingent deferred or asset based sales charge on Class Y
shares. The distributor may reject any order until it has confirmed it in
writing and received payment.
You may use securities you own to purchase shares of the fund provided that
Pioneer, in its sole discretion, determines that the securities are consistent
with the fund's objective and policies and their acquisition is in the best
interests of the
16
fund. If the fund accepts your securities, they will be valued for purposes of
determining the number of fund shares to be issued to you in the same way the
fund will value the securities for purposes of determining its net asset value.
For federal income tax purposes, you may be taxed in the same manner as if you
sold the securities that you exchange for cash in an amount equal to the value
of the fund shares that you receive in exchange. Your sales charge for purchases
of fund shares will be based upon the value of the fund shares that you receive.
Your broker may also impose a fee in connection with processing your purchase of
fund shares with securities.
Minimum investment amount
Your initial Class Y share investment must be at least $5 million. This amount
may be invested in one or more of the Pioneer mutual funds that currently offer
Class Y shares. There is no minimum additional investment amount. The fund may
waive the initial investment amount.
Waivers of the minimum investment amount
The fund will accept an initial investment of less than $5 million if:
(a) The investment is made by a trust company or bank trust department which is
initially investing at least $1 million in any of the Pioneer mutual funds
and, at the time of the purchase, such assets are held in a fiduciary,
advisory, custodial or similar capacity over which the trust company or
bank trust department has full or shared investment discretion; or
(b) The investment is at least $1 million in any of the Pioneer mutual funds
and the purchaser is an insurance company separate account; or
(c) The account is not represented by a broker/dealer and the investment is
made by (1) an ERISA-qualified retirement plan that meets the requirements
of Section 401 of the Internal Revenue Code, (2) an employer-sponsored
retirement plan that meets the requirements of Sections 403 or 457 of the
Internal Revenue Code, (3) a private foundation that meets the requirements
of Section 501(c)(3) of the Internal Revenue Code or (4) an endowment or
other organization that meets the requirements of Section 509(a)(1) of the
Internal Revenue Code; or
(d) The investment is made by an employer-sponsored retirement plan established
for the benefit of (1) employees of Pioneer or its affiliates, or (2)
employees or the affiliates of broker-dealers who have a Class Y shares
sales agreement with the distributor; or
(e) The investment is made through certain mutual fund programs sponsored by
qualified intermediaries, such as broker-dealers and investment advisers.
In each case, the intermediary has entered into an agreement with Pioneer
to include Class Y shares of the Pioneer mutual funds in their program. The
17
Buying, exchanging and selling shares
intermediary provides investors participating in the program with
additional services, including advisory, asset allocation, recordkeeping or
other services. You should ask your investment firm if it offers and you
are eligible to participate in such a mutual fund program and whether
participation in the program is consistent with your investment goals. The
intermediaries sponsoring or participating in these mutual fund programs
may also offer their clients other classes of shares of the funds and
investors may receive different levels of services or pay different fees
depending upon the class of shares included in the program. Investors
should consider carefully any separate transaction and other fees charged
by these programs in connection with investing in each available share
class before selecting a share class; or
(f) The investment is made by another Pioneer fund
The fund reserves the right to waive the initial investment minimum in other
circumstances.
Identity verification
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. When
you open an account, you will need to supply your name, address, date of birth,
and other information that will allow the fund to identify you.
The fund may close your account if we cannot adequately verify your identity.
The redemption price will be the net asset value (less applicable sales
charges) on the date of redemption.
Exchanging
You may exchange your Class Y shares for the Class Y shares of another Pioneer
mutual fund.
Your exchange request must be for at least $1,000. The fund allows you to
exchange your Class Y shares at net asset value without charging you either an
initial or contingent deferred sales charge.
Before you request an exchange, consider each fund's investment objective and
policies as described in the fund's prospectus.
Selling
Your Class Y shares will be sold at net asset value per share next calculated
after the fund or its authorized agent, such as broker-dealers, receives your
request in good order. If a signature guarantee is required, you must submit
your request in writing.
The fund generally will send your sale proceeds by check, bank wire or
electronic funds transfer. Normally you will be paid within seven days. If you
recently purchased the shares being sold, the fund may delay payment of the sale
18
proceeds until your check has cleared. This may take up to 15 calendar days
from the purchase date.
If you are selling shares from a non-retirement account or certain IRAs, you may
use any of the methods described below. If you are selling shares from a
retirement account other than an IRA, you must make your request in writing.
- --------------------------------------------------------------------------------
Other requirements
If you must use a written request to exchange or sell your Class Y shares and
your account is registered in the name of a corporation or other fiduciary you
must include the name of an authorized person and a certified copy of a current
corporate resolution, certificate of incumbency or similar legal document
showing that the named individual is authorized to act on behalf of the record
owner.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You may have to pay income taxes on a sale or an exchange.
- --------------------------------------------------------------------------------
19
Buying, exchanging and selling shares
Buying shares
In writing, by mail
You can purchase Class Y shares by mailing a check to the transfer agent. Make
your check payable to the fund. Neither initial nor subsequent investments
should be made by third party check. Your check must be in U.S. dollars and
drawn on a U.S. bank. Include in your purchase request the fund's name, the
account number and the name or names in the account registration.
If you are registering an account in the name of a corporation or other
fiduciary, you must send your completed account set-up forms to the transfer
agent prior to making your initial purchase.
By wire
If you have an existing Class Y account, you may wire funds to purchase Class Y
shares. Note, however, that:
o State Street Bank must receive your wire no later than 11:00 a.m. Eastern
time on the business day after the fund receives your request to purchase
shares
o If State Street Bank does not receive your wire by 11:00 a.m. Eastern time
on the next business day, your transaction will be canceled at your expense
and risk
o Wire transfers normally take two or more hours to complete and a fee may be
charged by the sending bank
o Wire transfers may be restricted on holidays and at certain other times
Instruct your bank to wire funds to:
Receiving Bank: State Street Bank
and Trust Company
225 Franklin Street
Boston, MA 02101
ABA Routing No. 011000028
For further credit to: Shareholder Name
Existing Pioneer
Account No.
Pioneer Independence Fund
Through your investment firm
Consult your investment professional for more information.
20
Exchanging shares
In writing, by mail or by fax
You can exchange Class Y shares by mailing or faxing a letter of instruction to
the transfer agent. You can exchange fund shares directly through the fund only
if your account is registered in your name. However, you may not fax an exchange
request for more than $5 million. Include in your letter:
o The name and signature of all registered owners
o A signature guarantee for each registered owner if the amount of the
exchange is more than $5 million
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 dollar amount or number of Class Y shares you are exchanging
By phone
After you establish your Class Y account, you can exchange fund shares by phone
if:
o You are using the exchange to establish a new account, provided the new
account has a registration identical to the original account
o The fund into which you are exchanging offers Class Y shares
o You are not exchanging more than $5 million worth of shares per account per
day
o You can provide the proper account identification information
Through your investment firm
Consult your investment professional for more information about exchanging your
shares.
21
Buying, exchanging and selling shares
Selling shares
In writing, by mail or by fax
You can sell some or all of your Class Y shares by writing directly to the fund
only if your account is registered in your name. Include in your request your
name, the fund's name, your fund account number, the dollar amount or number of
Class Y shares to be sold and any other applicable requirements as described
below.
o The transfer agent will send the sale proceeds to your address of record
unless you provide other instructions
o Your request must be signed by all registered owners
o The transfer agent will not process your request until it is received in
good order
By fax
o You may sell up to $5 million per account per day if the proceeds are
directed to your bank account of record
o You may sell up to $100,000 per account per day if the proceeds are not
directed to your bank account of record
By phone or wire
o You may sell up to $5 million per account per day if the proceeds are
directed to your bank account of record
o You may sell up to $100,000 per account per day if the proceeds are not
directed to your bank account of record
You may sell fund shares held in a retirement plan account by phone only if your
account is an IRA. You may not sell your shares by phone if you have changed
your address (for checks) or your bank information (for wires and transfers) in
the last 30 days.
You may receive your sale proceeds:
o By check, provided the check is made payable exactly as your account is
registered
o By bank wire or by electronic funds transfer, provided the sale proceeds
are being sent to your bank address of record
Through your investment firm
Consult your investment professional for more information. The fund has
authorized the distributor to act as its agent in the repurchase of fund shares
from qualified investment firms. The fund reserves the right to terminate this
procedure at any time.
22
How to contact us
By phone
For information or to request a telephone transaction between 9:00 a.m. and 5:30
p.m. (Eastern time) by speaking with a shareholder services representative call
1-800-665-8839
To use FactFone(SM) call
1-800-225-4321
By mail
Send your written instructions to:
Pioneer Investment Management
Shareholder Services, Inc.
P.O. Box 55150
Boston, Massachusetts 02205-5150
Pioneer website
www.pioneerinvestments.com
By fax
Fax your exchange and sale requests to:
1-888-294-4485
23
Buying, exchanging and selling shares
Excessive trading
Frequent trading into and out of the fund can disrupt portfolio management
strategies, harm fund performance by forcing the fund to hold excess cash or to
liquidate certain portfolio securities prematurely and increase expenses for all
investors, including long-term investors who do not generate these costs. An
investor may use short-term trading as a strategy, for example, if the investor
believes that the valuation of the fund's portfolio securities for purposes of
calculating its net asset value does not fully reflect the then current fair
market value of those holdings. The fund discourages, and does not take any
intentional action to accommodate, excessive and short-term trading practices,
such as market timing. Although there is no generally applied standard in the
marketplace as to what level of trading activity is excessive, we may consider
trading in the fund's shares to be excessive for a variety of reasons, such as
if:
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.
The fund's Board of Trustees has adopted policies and procedures with respect to
frequent purchases and redemptions of fund shares by fund investors. Pursuant to
these policies and procedures, we monitor selected trades on a daily basis in an
effort to detect excessive short-term trading. If we determine that an investor
or a client of a broker has engaged in excessive short-term trading that we
believe may be harmful to the fund, we will ask the investor or broker to cease
such activity and we will refuse to process purchase orders (including purchases
by exchange) of such investor, broker or accounts that we believe are under
their control. In determining whether to take such actions, we seek to act in a
manner that is consistent with the best interests of the fund's shareholders.
While we use our reasonable efforts to detect excessive trading activity, there
can be no assurance that our efforts will be successful or that market timers
will not employ tactics designed to evade detection. If we are not successful,
your return from an investment in the fund may be adversely affected.
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 taking steps to limit this
type of activity.
The fund may reject a purchase or exchange order before its acceptance or an
order prior to issuance of shares. The fund may also restrict additional
purchases or exchanges in an account. Each of these steps may be taken, for any
reason, without
24
prior notice, including transactions that the fund believes are requested on
behalf of market timers. The fund reserves the right to reject any purchase
request by any investor or financial institution if the fund believes that any
combination of trading activity in the account or related accounts is
potentially disruptive to the fund. A prospective investor whose purchase or
exchange order is rejected will not achieve the investment results, whether gain
or loss, that would have been realized if the order were accepted and an
investment made in the fund. The fund and its shareholders do not incur any gain
or loss as a result of a rejected order. The fund may impose further
restrictions on trading activities by market timers in the future. The fund's
prospectus will be amended or supplemented to reflect any material additional
restrictions on trading activities intended to prevent excessive trading.
Account options
Distribution options
The fund offers three distribution options. Any fund shares you buy by
reinvesting distributions will be priced at the applicable net asset value per
share.
(1) Unless you indicate another option on your account application, any
dividends and capital gain distributions paid to you by the fund will
automatically be invested in additional fund shares.
(2) You may elect to have the amount of any dividends paid to you in cash and
any capital gain distributions reinvested in additional shares.
(3) You may elect to have the full amount of any dividends and/or capital gain
distributions paid to you in cash.
Options (2) or (3) are not available to retirement plan accounts or accounts
with a current value of less than $500.
If your distribution check is returned to the transfer agent or you do not cash
the check for six months or more, the transfer agent may reinvest the amount of
the check in your account and automatically change the distribution option on
your account to option (1) until you request a different option in writing. If
the amount of a distribution check would be less than $10, the fund may reinvest
the amount instead of sending a check. Additional shares will be purchased at
the then current net asset value.
25
Buying, exchanging and selling shares
Shareowner services
Pioneer website
www.pioneerinvestments.com
The website includes a full selection of information on mutual fund investing.
You can also use the website to get:
o Your current account information
o Prices, returns and yields of all publicly available Pioneer mutual funds
o Prospectuses, statements of additional information and shareowner reports
for all the Pioneer mutual funds
o A copy of Pioneer's privacy notice
FactFone(SM) 1-800-225-4321
You can use FactFone(SM) to:
o Obtain current information on your Pioneer mutual fund accounts
o Inquire about the prices and yields of all publicly available Pioneer
mutual funds
o Request account statements
If your account is registered in the name of a broker-dealer or other third
party, you may not be able to use FactFone(SM) to obtain account information.
Confirmation statements
The transfer agent maintains an account for each investment firm or individual
shareowner and records all account transactions. You will be sent confirmation
statements showing the details of your transactions as they occur, except
automatic investment plan transactions, which are confirmed quarterly. If you
have more than one Pioneer mutual fund account registered in your name, the
Pioneer combined account statement will be mailed to you each quarter.
Tax information
In January of each year, the fund will mail you information about the tax status
of the dividends and distributions paid to you by the fund.
Privacy
The fund has a policy that protects the privacy of your personal information. A
copy of Pioneer's privacy notice was given to you at the time you opened your
account. The fund will send you a copy of the privacy notice each year. You may
also obtain the privacy notice by calling the transfer agent or through
Pioneer's website.
26
Shareowner account policies
Signature guarantees and other requirements
You are required to obtain a signature guarantee when:
o Requesting certain types of exchanges or sales of fund shares
o 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.
The Pioneer funds generally accept only medallion signature guarantees. A
medallion signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency, savings association, or other
financial institution that is participating in a medallion program recognized by
the Securities Transfer Association. Signature guarantees from financial
institutions that are not participating in one of these programs are not
accepted as medallion signature guarantees. The fund may accept other forms of
guarantee from financial intermediaries in limited circumstances.
Fiduciaries and corporations are required to submit additional documents to sell
fund shares.
Minimum account size
The fund requires that you maintain a minimum account value of $500. If you hold
less than $500 in your account, the fund reserves the right to notify you that
it intends to sell your shares and close your account. You will be given 60 days
from the date of the notice to make additional investments to avoid having your
shares sold. This policy does not apply to certain qualified retirement plan
accounts.
Telephone and website access
You may have difficulty contacting the fund by telephone or accessing
pioneerinvestments.com during times of market volatility or disruption in
telephone or Internet service. On New York Stock Exchange holidays or on days
when the exchange closes early, Pioneer will adjust the hours for the telephone
center accordingly. If you are unable to access pioneerinvestments.com or reach
the fund by telephone, you should communicate with the fund in writing.
Share certificates
The fund does not offer share certificates. Shares are electronically recorded.
Other policies
The fund and the distributor reserve the right to:
o reject any purchase or exchange order for any reason, without prior notice
27
Buying, exchanging and selling shares
o charge a fee for exchanges or to modify, limit or suspend the exchange
privilege at any time without notice. The fund will provide 60 days' notice
of material amendments to or termination of the exchange privilege
o revise, suspend, limit or terminate the account options or services
available to shareowners at any time, except as required by the rules of
the Securities and Exchange Commission
The fund reserves the right to:
o stop offering Class Y shares
o suspend transactions in shares when trading on the New York Stock Exchange
is closed or restricted, when the Securities and Exchange Commission
determines an emergency or other circumstances exist that make it
impracticable for the fund to sell or value its portfolio securities
o redeem in kind by delivering to you portfolio securities owned by the fund
rather than cash. Securities you receive this way may increase or decrease
in value while you hold them and you may incur brokerage and transaction
charges and tax liability when you convert the securities to cash
o charge transfer, shareholder servicing or similar agent fees, such as an
account maintenance fee for small balance accounts, directly to accounts
upon at least 30 days' notice. The fund may do this by deducting the fee
from your distribution of dividends and/or by redeeming shares to the
extent necessary to cover the fee
28
Dividends, capital gains and taxes
Dividends and capital gains
The fund generally pays any distributions of net short- and long-term capital
gains in November. The fund generally pays dividends from any net investment
income in December. The 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 the 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 the 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. Distributions from the fund's net short-term capital gains are
taxable as ordinary income. 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 a maximum 15% U.S.
federal income tax rate. Dividends and distributions are taxable, whether you
take payment in cash or reinvest them to buy additional fund shares.
When you sell or exchange fund shares you will generally recognize a capital
gain or capital loss in an amount equal to the difference between the net amount
of sale proceeds (or, in the case of an exchange, the fair market value of the
shares) that you receive and your tax basis for the shares that you sell or
exchange. In January of each year the fund will mail to you information about
your dividends, distributions and any shares you sold in the previous calendar
year.
You must provide your social security number or other taxpayer identification
number to the fund along with the certifications required by the Internal
Revenue Service when you open an account. If you do not or if it is otherwise
legally required to do so, the fund will withhold 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, local and foreign tax
considerations, including possible additional withholding taxes for non-U.S.
shareholders. You may also consult the fund's statement of additional
information for a more detailed discussion of qualified dividend income and
other U.S. federal income tax considerations that may affect the fund and its
shareowners.
- --------------------------------------------------------------------------------
Sales and exchanges may be taxable transactions to shareowners.
- --------------------------------------------------------------------------------
29
Financial highlights
The financial highlights table helps you understand
the fund's financial performance since the inception of Class Y shares.
Certain information reflects financial results for a single fund share. The
total returns in the table represent the rate that you would have earned or lost
on an investment in Class Y shares of the fund (assuming reinvestment of all
dividends and distributions).
The information below has been audited by Ernst & Young LLP, the fund's
independent registered public accounting firm, whose report is included in the
fund's annual report along with the fund's financial statements. The annual
report is available upon request.
30
Pioneer Independence Fund
Class Y shares
3/10/06 (a)
to 12/31/06 (b)
- --------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.17
-------
Increase from investment operations:
Net investment income $ 0.03
Net realized and unrealized gain on investments 0.86
-------
Net increase from investment operations $ 0.89
Distributions to shareowners:
Net investment income (0.04)
Net realized gain (1.17)
-------
Net decrease in net asset value $ (0.32)
-------
Net asset value, end of period $ 12.85
=======
Total return* 6.74%(c)
Ratio of net expenses to average net assets 1.29%**
Ratio of net investment income to average net assets 0.26%**
Portfolio turnover rate 72%
Net assets, end of period (in thousands) $ 10
Ratios with no waiver of management fees and assumption of expenses
by Pioneer and no reduction for fees paid indirectly:
Net expenses 1.29%**
Net investment income 0.26%**
Ratios with waiver of management fees and assumption of expenses
by Pioneer and reduction for fees paid indirectly:
Net expenses 1.29%**
Net investment income 0.26%**
- --------------------------------------------------------------------------------------
(a) Class Y shares were first publicly offered on March 10, 2006.
(b) Net investment income and distribution per share amounts have been
calculated using different methods.
(c) Not Annualized.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of the period.
** Annualized.
31
Notes
Notes
Notes
Notes
Notes
Notes
Pioneer
Independence Fund
You can obtain more free information about the fund from your investment firm or
by writing to Pioneer Investment Management Shareholder Services, Inc., 60 State
Street, Boston, Massachusetts 02109. You may also call 1-800-665-8839.
The fund makes available the statement of additional information and shareowner
reports, free of charge, on the fund's website at www.pioneerinvestments.com.
Shareowner reports
Annual and semiannual reports to shareowners, and quarterly reports filed with
the Securities and Exchange Commission, provide information about the fund's
investments. The annual report discusses market conditions and investment
strategies that significantly affected the fund's performance during its last
fiscal year.
Statement of additional information
The statement of additional information provides more detailed information about
the fund. It is incorporated by reference into this prospectus.
Visit our website
www.pioneerinvestments.com
You can also review and copy the fund's shareowner reports, prospectus and
statement of additional information at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. Call 1-202-551-8090 for information.
The Commission charges a fee for copies. You can get the same information free
from the Commission's EDGAR database on the Internet (http://www.sec.gov). You
may also e-mail requests for these documents to publicinfo@sec.gov or make a
request in writing to the Commission's Public Reference Section, Washington,
D.C. 20549-0102.
(Investment Company Act file no. 811-08547)
[LOGO]PIONEER
Investments(R)
Pioneer Funds Distributor, Inc.
60 State Street
Boston, MA 02109
www.pioneerinvestments.com
18595-01-0507
(C)2007 Pioneer Funds Distributor, Inc.
Member SIPC
PIONEER INDEPENDENCE FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class C and Class Y Shares
April 30, 2007
This statement of additional information is not a prospectus. It should be read
in conjunction with the fund's Class A and Class C prospectus and its Class Y
shares prospectus, each dated April 30, 2007, as supplemented or revised from
time to time. A copy of each prospectus can be obtained free of charge by
calling Shareholder Services at 1-800-225-6292 or by written request to the
fund at 60 State Street, Boston, Massachusetts 02109. You can also obtain a
copy of each prospectus from our website at: www.pioneerinvestments.com. The
fund's financial statements for the fiscal year ended December 31, 2006 are
incorporated into this statement of additional information by reference. The
most recent annual report to shareholders is attached to this statement of
additional information.
TABLE OF CONTENTS
Page
-----
1. Fund History ............................................................................ 2
2. Investment Policies, Risks and Restrictions ............................................. 2
3. Trustees and Officers ................................................................... 22
4. Investment Adviser ...................................................................... 32
5. Principal Underwriter and Distribution Plan ............................................. 34
6. Shareholder Servicing/Transfer Agent .................................................... 36
7. Custodian ............................................................................... 37
8. Independent Registered Public Accounting Firm ........................................... 37
9. Portfolio Management .................................................................... 37
10. Portfolio Transactions .................................................................. 40
11. Description of Shares ................................................................... 42
12. Sales Charges ........................................................................... 44
13. Redeeming Shares ........................................................................ 49
14. Telephone and Online Transactions ....................................................... 50
15. Pricing of Shares ....................................................................... 51
16. Tax Status .............................................................................. 52
17. Investment Results ...................................................................... 59
18. Financial Statements .................................................................... 59
19. Annual Fee, Expense and Other Information ............................................... 59
20. Appendix A -- Description of Short-Term Debt, Corporate Bond and Preferred Stock Ratings 65
21. Appendix B -- Proxy Voting Policies and Procedures ...................................... 70
1. FUND HISTORY
The fund is a diversified open-end management investment company organized as a
Delaware statutory trust on December 8, 1997. The fund is a series of Pioneer
Independence Fund (the "Trust"). Pioneer Investment Management Inc.,
("Pioneer") is the fund's investment adviser.
2. INVESTMENT POLICIES, RISKS AND RESTRICTIONS
The prospectuses present the investment objective and the principal investment
strategies and risks of the fund. This section supplements the disclosure in
the fund's prospectuses and provides additional information on the fund's
investment policies or restrictions. Restrictions or policies stated as a
maximum percentage of the fund's assets are only applied immediately after a
portfolio investment to which the policy or restriction is applicable (other
than the limitations on borrowing and illiquid securities). Accordingly, any
later increase or decrease resulting from a change in values, net assets or
other circumstances will not be considered in determining whether the
investment complies with the fund's restrictions and policies.
Illiquid Securities
The fund will not invest more than 15% of its net assets in illiquid and other
securities that are not readily marketable. Repurchase agreements maturing in
more than seven days will be included for purposes of the foregoing limit.
Securities subject to restrictions on resale under the Securities Act of 1933,
as amended (the "1933 Act"), are considered illiquid unless they are eligible
for resale pursuant to Rule 144A or another exemption from the registration
requirements of the 1933 Act and are determined to be liquid by Pioneer.
Pioneer determines the liquidity of Rule 144A and other restricted securities
according to procedures adopted by the Board of Trustees. Under the direction
of the Board of Trustees, Pioneer monitors the application of these guidelines
and procedures. The inability of the fund to dispose of illiquid investments
readily or at reasonable prices could impair the fund's ability to raise cash
for redemptions or other purposes. If the fund sold restricted securities other
than pursuant to an exception from registration under the 1933 Act such as Rule
144A, it may be deemed to be acting as an underwriter and subject to liability
under the 1933 Act.
Investments in Initial Public Offerings
To the extent consistent with its investment objective, the fund may invest in
initial public offerings ("IPOs") of equity securities. The market for such
securities may be more volatile and entail greater risk of loss than
investments in more established companies. Investments in initial public
offerings may represent a significant portion of the fund's investment
performance. The fund cannot assure that investments in initial public
offerings will continue to be available to the fund or, if available, will
result in positive investment performance. In addition, as the fund's portfolio
grows in size, the impact of investments in initial public offerings on the
overall performance of the fund is likely to decrease.
2
Debt Securities Selection
In selecting debt securities for the fund, Pioneer gives primary consideration
to the fund's investment objective, the attractiveness of the market for debt
securities given the outlook of Pioneer for the equity markets and the fund's
liquidity requirements. Once Pioneer determines to allocate a portion of the
fund's assets to debt securities, Pioneer generally focuses on short-term
instruments to provide liquidity and may invest in a range of fixed income
securities if the fund is investing in such instruments for income or capital
gains. Pioneer selects individual securities based on broad economic factors
and issuer specific factors including the terms of the securities (such as
yields compared to U.S. Treasuries or comparable issues), liquidity and rating,
sector and issuer diversification.
Convertible Debt Securities
The fund may invest in convertible debt securities which are debt obligations
convertible at a stated exchange rate or formula into common stock or other
equity securities of or owned by the issuer. Convertible securities rank senior
to common stocks in an issuer's capital structure and consequently may be of
higher quality and entail less risk than the issuer's common stock. As with all
debt securities, the market values of convertible securities tend to increase
when interest rates decline and, conversely, tend to decline when interest
rates increase.
Short-Term Investments
For temporary defensive or cash management purposes, the fund may invest in all
types of short-term investments including, but not limited to, (a) commercial
paper and other short-term commercial obligations; (b) obligations (including
certificates of deposit and bankers' acceptances) of banks; (c) obligations
issued or guaranteed by a governmental issuer, including governmental agencies
or instrumentalities; (d) fixed income securities of corporate issuers; and (e)
other cash equivalents or cash. Subject to the fund's restrictions regarding
investment in non-U.S. securities, these securities may be denominated in any
currency. Although these investments generally are rated investment grade or
are determined by Pioneer to be of equivalent credit quality, the fund may also
invest in these instruments if they are rated below investment grade in
accordance with its investment objective, policies and restrictions.
Debt Securities Rating Criteria
Investment grade debt securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("Standard & Poor's") or the equivalent rating of other
nationally recognized statistical rating organizations. Debt securities rated
BBB are considered medium grade obligations with speculative characteristics,
and adverse economic conditions or changing circumstances may weaken the
issuer's ability to pay interest and repay principal. If the rating of an
investment grade debt security falls below investment grade,, Pioneer will
consider if any action is appropriate in light of the fund's investment
objective and policies.
Below investment grade debt securities are those rated "BB" and below by
Standard & Poor's or the equivalent rating of other nationally recognized
statistical rating organizations. See "Appendix A" for a description of rating
categories. The fund may invest in debt securities rated "C" or better, or
comparable unrated securities.
3
Below investment grade debt securities or comparable unrated securities are
commonly referred to as "junk bonds" and are considered predominantly
speculative and may be questionable as to principal and interest payments.
Changes in economic conditions are more likely to lead to a weakened capacity
to make principal payments and interest payments. The amount of high yield
securities outstanding has proliferated as an increasing number of issuers have
used high yield securities for corporate financing. An economic downturn could
severely affect the ability of highly leveraged issuers to service their debt
obligations or to repay their obligations upon maturity. Factors having an
adverse impact on the market value of lower quality securities will have an
adverse effect on the fund's net asset value to the extent that it invests in
such securities. In addition, the fund may incur additional expenses to the
extent it is required to seek recovery upon a default in payment of principal
or interest on its portfolio holdings.
The secondary market for high yield securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an
adverse effect on the fund's ability to dispose of a particular security when
necessary to meet its liquidity needs. Under adverse market or economic
conditions, the secondary market for high yield securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the fund could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower
than if such securities were widely traded. Prices realized upon the sale of
such lower rated or unrated securities, under these circumstances, may be less
than the prices used in calculating the fund's net asset value.
Since investors generally perceive that there are greater risks associated with
lower quality debt securities of the type in which the fund may invest a
portion of its assets, the yields and prices of such securities may tend to
fluctuate more than those for higher rated securities. In the lower quality
segments of the debt securities market, changes in perceptions of issuers'
creditworthiness tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the debt securities market,
resulting in greater yield and price volatility.
Lower rated and comparable unrated debt securities tend to offer higher yields
than higher rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers. However, lower rated securities generally
involve greater risks of loss of income and principal than higher rated
securities. Pioneer will attempt to reduce these risks through portfolio
diversification and by analysis of each issuer and its ability to make timely
payments of income and principal, as well as broad economic trends and
corporate developments.
For purposes of the fund's credit quality policies, if a security receives
different ratings from nationally recognized statistical rating organizations,
the fund will use the rating chosen by the portfolio manager as most
representative of the security's credit quality. If a rating organization
downgrades the quality rating assigned to one or more of the fund's portfolio
securities, Pioneer will consider what actions, if any, are appropriate
including selling the downgraded security or purchasing additional investment
grade securities of the appropriate credit quality as soon as it is prudent to
do so.
U.S. Government Securities
U.S. government securities in which the fund invests include debt obligations
of varying maturities issued by the U.S. Treasury or issued or guaranteed by an
agency or instrumentality of the U.S. government, including the Federal Housing
Administration, Federal Financing Bank, Farmers Home Administration,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association ("GNMA"), General Services Administration,
Central Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan
Banks ("FHLBs"), Federal Home Loan Mortgage Corporation
4
("FHLMC"), Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory Board,
Resolution Trust Corporation and various institutions that previously were or
currently are part of the Farm Credit System (which has been undergoing
reorganization since 1987). Some U.S. government securities, such as U.S.
Treasury bills, Treasury notes and Treasury bonds, which differ only in their
interest rates, maturities and times of issuance, are supported by the full
faith and credit of the United States. Others are supported by: (i) the right
of the issuer to borrow from the U.S. Treasury, such as securities of the
FHLBs; (ii) the discretionary authority of the U.S. government to purchase the
agency's obligations, such as securities of the FNMA; or (iii) only the credit
of the issuer. No assurance can be given that the U.S. government will provide
financial support in the future to U.S. government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the
United States. Securities guaranteed as to principal and interest by the U.S.
government, its agencies, authorities or instrumentalities include: (i)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to non-U.S. governments or other entities that are so guaranteed. The
secondary market for certain of these participations is limited and, therefore,
may be regarded as illiquid.
U.S. government securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity.
Zero coupon U.S. government securities are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. government securities do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but generally require a higher rate of return to attract
investors who are willing to defer receipt of cash. These investments may
experience greater volatility in market value than U.S. government securities
that make regular payments of interest. The fund accrues income on these
investments for tax and accounting purposes, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the fund's
distribution obligations, in which case the fund will forgo the purchase of
additional income producing assets with these funds. Zero coupon U.S.
government securities include STRIPS and CUBES, which are issued by the U.S.
Treasury as component parts of U.S. Treasury bonds and represent scheduled
interest and principal payments on the bonds.
Debt Obligations of Non-U.S. Governments
The fund may invest in debt obligations of non-U.S. governments. An investment
in debt obligations of non-U.S. governments and their political subdivisions
(sovereign debt) involves special risks that are not present in corporate debt
obligations. The non-U.S. issuer of the sovereign debt or the non-U.S.
governmental authorities that control the repayment of the debt may be unable
or unwilling to repay principal or interest when due, and the fund may have
limited recourse in the event of a default. During periods of economic
uncertainty, the market prices of sovereign debt may be more volatile than
prices of debt obligations of U.S. issuers. In the past, certain non-U.S.
countries have encountered difficulties in servicing their debt obligations,
withheld payments of principal and interest and declared moratoria on the
payment of principal and interest on their sovereign debt.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign currency reserves, the availability of
sufficient foreign exchange, the relative size of the debt service burden, the
sovereign debtor's policy toward its principal international lenders and local
political constraints. Sovereign debtors
5
may also be dependent on expected disbursements from non-U.S. governments,
multinational agencies and other entities to reduce principal and interest
arrearages on their debt. The failure of a sovereign debtor to implement
economic reforms, achieve specified levels of economic performance or repay
principal or interest when due may result in the cancellation of third-party
commitments to lend funds to the sovereign debtor, which may further impair
such debtor's ability or willingness to service its debts.
Risks of Non-U.S. Investments
Investing in securities of non-U.S. issuers involves considerations and risks
not typically associated with investing in the securities of issuers in the
U.S. These risks are heightened with respect to investments in countries with
emerging markets and economies. The risks of investing in securities of
non-U.S. issuers generally, or in issuers with significant exposure to non-U.S.
markets may be related, among other things, to (i) differences in size,
liquidity and volatility of, and the degree and manner of regulation of, the
securities markets of certain non-U.S. markets compared to the securities
markets in the U.S.; (ii) economic, political and social factors; and (iii)
foreign exchange matters, such as restrictions on the repatriation of capital,
fluctuations in exchange rates between the U.S. dollar and the currencies in
which the fund's portfolio securities are quoted or denominated, exchange
control regulations and costs associated with currency exchange. The political
and economic structures in certain countries, particularly emerging markets,
are expected to undergo significant evolution and rapid development, and such
countries may lack the social, political and economic stability characteristic
of more developed countries.
Non-U.S. Securities Markets and Regulations. There may be less publicly
available information about non-U.S. markets and issuers than is available with
respect to U.S. securities and issuers. Non-U.S. companies generally are not
subject to accounting, auditing and financial reporting standards, practices
and requirements comparable to those applicable to U.S. companies. The trading
markets for most non-U.S. securities are generally less liquid and subject to
greater price volatility than the markets for comparable securities in the U.S.
The markets for securities in certain emerging markets are in the earliest
stages of their development. Even the markets for relatively widely traded
securities in certain non-U.S. markets, including emerging market countries,
may not be able to absorb, without price disruptions, a significant increase in
trading volume or trades of a size customarily undertaken by institutional
investors in the U.S. Additionally, market making and arbitrage activities are
generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity. The less liquid a market, the more difficult
it may be for the fund to accurately price its portfolio securities or to
dispose of such securities at the times determined by Pioneer to be
appropriate. The risks associated with reduced liquidity may be particularly
acute in situations in which the fund's operations require cash, such as in
order to meet redemptions and to pay its expenses.
Economic, Political and Social Factors. Certain countries, including emerging
markets, may be subject to a greater degree of economic, political and social
instability than is the case in the U.S. and Western European countries. Such
instability may result from, among other things: (i) authoritarian governments
or military involvement in political and economic decision making; (ii) popular
unrest associated with demands for improved economic, political and social
conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection and
conflict. Such economic, political and social instability could significantly
disrupt the financial markets in such countries and the ability of the issuers
in such countries to repay their obligations. Investing in emerging market
countries also involves the risk of expropriation, nationalization,
confiscation of assets and property or the imposition of restrictions on
foreign investments and on repatriation of capital invested. In the event of
such expropriation, nationalization or other confiscation in any emerging
country, the fund could lose its entire investment in that country.
6
Certain emerging market countries restrict or control foreign investment in
their securities markets to varying degrees. These restrictions may limit the
fund's investment in those markets and may increase the expenses of the fund.
In addition, the repatriation of both investment income and capital from
certain markets in the region is subject to restrictions such as the need for
certain governmental consents. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the fund's operation.
Economies in individual countries may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Many countries have experienced substantial,
and in some cases extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had, and may continue to have,
very negative effects on the economies and securities markets of certain
emerging countries.
Unanticipated political or social developments may affect the values of the
fund's investments and the availability to the fund of additional investments
in such countries. In the past, the economies, securities and currency markets
of many emerging markets have experienced significant disruption and declines.
There can be no assurance that these economic and market disruptions might not
occur again.
Economies in emerging market countries generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been, and may
continue to be, affected adversely by economic conditions in the countries with
which they trade.
Currency Risks. The value of the securities quoted or denominated in foreign
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The fund's investment
performance may be negatively affected by a devaluation of a currency in which
the fund's investments are quoted or denominated. Further, the fund's
investment performance may be significantly affected, either positively or
negatively, by currency exchange rates because the U.S. dollar value of
securities quoted or denominated in another currency will increase or decrease
in response to changes in the value of such currency in relation to the U.S.
dollar.
Custodian Services and Related Investment Costs. Custodial services and other
costs relating to investment in international securities markets generally are
more expensive than in the U.S. Such markets have settlement and clearance
procedures that differ from those in the U.S. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the fund to make intended securities purchases due to settlement
problems could cause the fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems
could result either in losses to the fund due to a subsequent decline in value
of the portfolio security or could result in possible liability to the fund. In
addition, security settlement and clearance procedures in some emerging
countries may not fully protect the fund against loss or theft of its assets.
Withholding and Other Taxes. The fund will be subject to taxes, including
withholding taxes, on income (possibly including, in some cases, capital gains)
that are or may be imposed by certain countries with respect to the fund's
investments in such countries. These taxes will reduce the return achieved by
the fund. Treaties between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.
7
Real Estate Investment Trusts ("REITs") and Associated Risk Factors
REITs are companies that invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as
equity REITs, mortgage REITs or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. REITs are not taxed on
income distributed to shareholders provided they comply with the applicable
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
fund will indirectly bear its proportionate share of any management and other
expenses paid by REITs in which it invests in addition to the expenses paid by
the fund. Debt securities issued by REITs are, for the most part, general and
unsecured obligations and are subject to risks associated with REITs.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. An equity
REIT may be affected by changes in the value of the underlying properties owned
by the REIT. A mortgage REIT may be affected by changes in interest rates and
the ability of the issuers of its portfolio mortgages to repay their
obligations. REITs are dependent upon the skills of their managers and are not
diversified. REITs are generally dependent upon maintaining cash flows to repay
borrowings and to make distributions to shareholders and are subject to the
risk of default by lessees or borrowers. REITs whose underlying assets are
concentrated in properties used by a particular industry, such as health care,
are also subject to risks associated with such industry.
REITs (especially mortgage REITs) are also subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. If the REIT invests in adjustable rate mortgage loans the interest
rates on which are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates. This causes the value of such investments to fluctuate less dramatically
in response to interest rate fluctuations than would investments in fixed rate
obligations.
REITs may have limited financial resources, may trade less frequently and in a
limited volume and may be subject to more abrupt or erratic price movements
than larger company securities. Historically REITs have been more volatile in
price than the larger capitalization stocks included in Standard & Poor's 500
Stock Index (the "S&P 500").
Other Investment Companies
The fund may invest in the securities of other investment companies to the
extent that such investments are consistent with the fund's investment
objective and policies and permissible under the Investment Company Act of
1940, as amended (the "1940 Act"). Under one provision of the 1940 Act, a fund
may not acquire the securities of another investment company if, as a result,
(i) such purchase would result in more than 3% of the total outstanding voting
securities of any one investment company being held by the fund, or (ii) more
than 5% of the fund's total assets would be invested in any one investment
company, or (iii) more than 10% of the fund's total assets would be invested in
securities of other investment companies. However, there are several provisions
of the 1940 Act and rules thereunder that allow more expansive investment in
investment companies. In addition, these limitations do not apply to the
purchase of shares of any investment company in connection with a merger,
consolidation, reorganization or acquisition of substantially all the assets of
another investment company. The fund may invest in
8
money market funds managed by Pioneer in reliance on an exemptive order granted
by the Securities and Exchange Commission (the "SEC").
The fund, as a holder of the securities of other investment companies, will
bear its pro rata portion of the other investment companies' expenses,
including advisory fees. These expenses are in addition to the direct expenses
of the fund's own operations.
Exchange Traded Funds
Subject to the limitations on investment in other investment companies, the
fund may invest in exchange traded funds (ETFs). ETFs, such as SPDRs, Power
Shares QQQ (QQQQs), iShares and various country index funds, are funds whose
shares are traded on a national exchange or the National Association of
Securities Dealers' Automatic Quotation System (NASDAQ). ETFs may be based on
underlying equity or fixed income securities. SPDRs, for example, seek to
provide investment results that generally correspond to the performance of the
component common stocks of the S&P 500. ETFs do not sell individual shares
directly to investors and only issue their shares in large blocks known as
"creation units." The investor purchasing a creation unit then sells the
individual shares on a secondary market. Therefore, the liquidity of ETFs
depends on the adequacy of the secondary market. There can be no assurance that
an ETF's investment objective will be achieved. ETFs based on an index may not
replicate and maintain exactly the composition and relative weightings of
securities in the index. ETFs are subject to the risks of investing in the
underlying securities. The fund, as a holder of the securities of the ETF, will
bear its pro rata portion of the ETF's expenses, including advisory fees. These
expenses are in addition to the direct expenses of the fund's own operations.
Investments in Depositary Receipts
The fund may hold securities of non-U.S. issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and other similar instruments. Generally, ADRs in
registered form are designed for use in U.S. securities markets, and EDRs and
GDRs and other similar global instruments in bearer form are designed for use
in non-U.S. securities markets.
ADRs are denominated in U.S. dollars and represent an interest in the right to
receive securities of non-U.S. issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the fund will avoid currency
risks during the settlement period for either purchases or sales. EDRs and GDRs
are not necessarily denominated in the same currency as the underlying
securities which they represent.
For purposes of the fund's investment policies, investments in ADRs, EDRs, GDRs
and similar instruments will be deemed to be investments in the underlying
equity securities of non-U.S. issuers. The fund may acquire depositary receipts
from banks that do not have a contractual relationship with the issuer of the
security underlying the depositary receipt to issue and secure such depositary
receipt. To the extent the fund invests in such unsponsored depositary receipts
there may be an increased possibility that the fund may not become aware of
events affecting the underlying security and thus the value of the related
depositary receipt. In addition, certain benefits (i.e., rights offerings)
which may be associated with the security underlying the depositary receipt may
not inure to the benefit of the holder of such depositary receipt.
9
Repurchase Agreements
The fund may enter into repurchase agreements with broker-dealers, member banks
of the Federal Reserve System and other financial institutions. Repurchase
agreements are arrangements under which the fund purchases securities and the
seller agrees to repurchase the securities within a specific time and at a
specific price. The repurchase price is generally higher than the fund's
purchase price, with the difference being income to the fund. Under the
direction of the Board of Trustees, Pioneer reviews and monitors the
creditworthiness of any institution which enters into a repurchase agreement
with the fund. The counterparty's obligations under the repurchase agreement
are collateralized with U.S. Treasury and/or agency obligations with a market
value of not less than 100% of the obligations, valued daily. Collateral is
held by the fund's custodian in a segregated, safekeeping account for the
benefit of the fund. Repurchase agreements afford the fund an opportunity to
earn income on temporarily available cash at low risk. In the event of
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the security before repurchase of the security under a repurchase agreement,
the fund may encounter delay and incur costs before being able to sell the
security. Such a delay may involve loss of interest or a decline in price of
the security. If the court characterizes the transaction as a loan and the fund
has not perfected a security interest in the security, the fund may be required
to return the security to the seller's estate and be treated as an unsecured
creditor of the seller. As an unsecured creditor, the fund would be at risk of
losing some or all of the principal and interest involved in the transaction.
Short Sales Against the Box
The fund may sell securities "short against the box." A short sale involves the
fund borrowing securities from a broker and selling the borrowed securities.
The fund has an obligation to return securities identical to the borrowed
securities to the broker. In a short sale against the box, the fund at all
times own an equal amount of the security sold short or securities convertible
into or exchangeable for, with or without payment of additional consideration,
an equal amount of the security sold short. The fund intends to use short sales
against the box to hedge. For example when the fund believes that the price of
a current portfolio security may decline, the fund may use a short sale against
the box to lock in a sale price for a security rather than selling the security
immediately. In such a case, any future losses in the fund's long position
should be offset by a gain in the short position and, conversely, any gain in
the long position should be reduced by a loss in the short position.
If the fund effects a short sale against the box at a time when it has an
unrealized gain on the security, it may be required to recognize that gain as
if it had actually sold the security (a "constructive sale") on the date it
effects the short sale. However, such constructive sale treatment may not apply
if the fund closes out the short sale with securities other than the
appreciated securities held at the time of the short sale provided that certain
other conditions are satisfied. Uncertainty regarding the tax consequences of
effecting short sales may limit the extent to which the fund may make short
sales against the box.
Asset Segregation
The 1940 Act requires that the fund segregate assets in connection with certain
types of transactions that may have the effect of leveraging the fund's
portfolio. If the fund enters into a transaction requiring segregation, such as
a forward commitment, the custodian or Pioneer will segregate liquid assets in
an amount required to comply with the 1940 Act. Such segregated assets will be
valued at market daily. If the aggregate value of such segregated assets
declines below the aggregate value required to satisfy the 1940 Act, additional
liquid assets will be segregated.
10
When-Issued and Delayed Delivery Securities
The fund may purchase securities, including U.S. government securities, on a
when-issued basis or may purchase or sell securities for delayed delivery. In
such transactions, delivery of the securities occurs beyond the normal
settlement period, but no payment or delivery is made by the fund prior to the
actual delivery or payment by the other party to the transaction. The fund will
not earn income on these securities until delivered. The purchase of securities
on a when-issued or delayed delivery basis involves the risk that the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction. The fund's obligations with respect to when-issued and delayed
delivery transactions will be fully collateralized by segregating liquid assets
with a value equal to the fund's obligations. See "Asset Segregation."
Portfolio Turnover
It is the policy of the fund not to engage in trading for short-term profits
although portfolio turnover rate is not considered a limiting factor in the
execution of investment decisions for the fund. A high rate of portfolio
turnover (100% or more) involves correspondingly greater transaction costs
which must be borne by the fund and its shareholders. See "Annual Fee, Expense
and Other Information" for the fund's annual portfolio turnover rate.
Foreign Currency Transactions
The fund may engage in foreign currency transactions. These transactions may be
conducted at the prevailing spot rate for purchasing or selling currency in the
foreign exchange market. The fund also has authority to enter into forward
foreign currency exchange contracts involving currencies of the different
countries in which the fund invests as a hedge against possible variations in
the foreign exchange rates between these currencies and the U.S. dollar. This
is accomplished through contractual agreements to purchase or sell a specified
currency at a specified future date and price set at the time of the contract.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the fund, accrued
in connection with the purchase and sale of its portfolio securities quoted in
foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in such
foreign currencies. There is no guarantee that the fund will be engaged in
hedging activities when adverse exchange rate movements occur. The fund will
not attempt to hedge all of its foreign portfolio positions and will enter into
such transactions only to the extent, if any, deemed appropriate by Pioneer.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the fund to hedge against a devaluation that is so generally
anticipated that the fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The fund may also engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated
in a different currency, if Pioneer determines that there is a pattern of
correlation between the two currencies. Cross-hedging may also include entering
into a forward transaction involving two foreign currencies, using one foreign
currency as a proxy for the U.S.
11
dollar to hedge against variations in the other foreign currency, if Pioneer
determines that there is a pattern of correlation between the proxy currency
and the U.S. dollar.
The cost to the fund of engaging in foreign currency transactions varies with
such factors as the currency involved, the size of the contract, the length of
the contract period, differences in interest rates between the two currencies
and the market conditions then prevailing. Since transactions in foreign
currency and forward contracts are usually conducted on a principal basis, no
fees or commissions are involved. The fund may close out a forward position in
a currency by selling the forward contract or by entering into an offsetting
forward contract.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. Using forward contracts to
protect the value of the fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which the fund can
achieve at some future point in time. The precise projection of short-term
currency market movements is not possible, and short-term hedging provides a
means of fixing the U.S. dollar value of only a portion of the fund's foreign
assets.
While the fund will enter into forward contracts to reduce currency exchange
rate risks, transactions in such contracts involve certain other risks. While
the fund may benefit from such transactions, unanticipated changes in currency
prices may result in a poorer overall performance for the fund than if it had
not engaged in any such transactions. Moreover, there may be imperfect
correlation between the fund's portfolio holdings of securities quoted or
denominated in a particular currency and forward contracts entered into by the
fund. Such imperfect correlation may cause the fund to sustain losses which
will prevent the fund from achieving a complete hedge or expose the fund to
risk of foreign exchange loss.
Over-the-counter markets for trading foreign forward currency contracts offer
less protection against defaults than is available when trading in currency
instruments on an exchange. Since a forward foreign currency exchange contract
is not guaranteed by an exchange or clearinghouse, a default on the contract
would deprive the fund of unrealized profits or force the fund to cover its
commitments for purchase or resale, if any, at the current market price.
If the fund enters into a forward contract to purchase foreign currency, the
custodian or Pioneer will segregate liquid assets. See "Asset Segregation."
Options on Foreign Currencies
The fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are quoted or denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In an
attempt to protect against such decreases in the value of portfolio securities,
the fund may purchase put options on the foreign currency. If the value of the
currency declines, the fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative
effect of currency depreciation on the value of the fund's securities quoted or
denominated in that currency.
12
Conversely, if a rise in the dollar value of a currency is projected for those
securities to be acquired, thereby increasing the cost of such securities, the
fund may purchase call options on such currency. If the value of such currency
increases, the purchase of such call options would enable the fund to purchase
currency for a fixed amount of dollars which is less than the market value of
such currency. Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency related increase in the price of
securities the fund intends to acquire. As in the case of other types of
options transactions, however, the benefit the fund derives from purchasing
foreign currency options will be reduced by the amount of the premium and
related transaction costs. In addition, if currency exchange rates do not move
in the direction or to the extent anticipated, the fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The fund may also write options on foreign currencies for hedging purposes. For
example, if the fund anticipated a decline in the dollar value of securities
quoted or denominated in a foreign currency because of declining exchange
rates, it could, instead of purchasing a put option, write a covered call
option on the relevant currency. If the expected decline occurs, the option
will most likely not be exercised, and the decrease in value of portfolio
securities will be partially offset by the amount of the premium received by
the fund.
Similarly, the fund could write a put option on the relevant currency, instead
of purchasing a call option, to hedge against an anticipated increase in the
dollar cost of securities to be acquired. If exchange rates move in the manner
projected, the put option will expire unexercised and allow the fund to offset
such increased cost up to the amount of the premium. However, as in the case of
other types of options transactions, the writing of a foreign currency option
will constitute only a partial hedge up to the amount of the premium, only if
rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the fund also may be required to forgo all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
currency exchange rates.
A call option written on foreign currency by the fund is "covered" if the fund
owns the underlying foreign currency subject to the call, or if it has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration. A call option is also covered if the fund holds
a call on the same foreign currency for the same principal amount as the call
written where the exercise price of the call held is (a) equal to or less than
the exercise price of the call written or (b) greater than the exercise price
of the call written if the amount of the difference is maintained by the fund
in cash or liquid securities. See "Asset Segregation."
The fund may close out its position in a currency option by either selling the
option it has purchased or entering into an offsetting option. An
exchange-traded options position may be closed out only on an options exchange
which provides a secondary market for an option of the same series. Although
the fund will generally purchase or write only those options for which there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular option, or at any
particular time. For some options no secondary market on an exchange may exist.
In such event, it might not be possible to effect closing transactions in
particular options, with the result that the fund would have to exercise its
options in order to realize any profit and would incur transaction costs upon
the sale of underlying currencies pursuant to the exercise of put options. If
the fund as a covered call option writer is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
currency (or security quoted or denominated in that currency) until the option
expires or it delivers the underlying currency upon exercise.
13
The fund may also use options on currencies to cross-hedge, which involves
writing or purchasing options on one currency to hedge against changes in
exchange rates of a different currency with a pattern of correlation.
Cross-hedging may also include using a foreign currency as a proxy for the U.S.
dollar, if Pioneer determines that there is a pattern of correlation between
that currency and the U.S. dollar.
The fund may purchase and write over-the-counter options to the extent
consistent with its limitation on investments in illiquid securities. Trading
in over-the-counter options is subject to the risk that the other party will be
unable or unwilling to close out options purchased or written by the fund.
Options on Securities and Securities Indices
For hedging purposes or to seek to increase total return, the fund may purchase
put and call options on any security in which it may invest or options on any
securities index based on securities in which it may invest. The fund would
also be able to enter into closing sale transactions in order to realize gains
or minimize losses on options it has purchased.
Writing Call and Put Options on Securities. A call option written by the fund
obligates the fund to sell specified securities to the holder of the option at
a specified price if the option is exercised at any time before the expiration
date. All call options written by the fund are covered, which means that the
fund will own the securities subject to the options as long as the options are
outstanding, or the fund will use the other methods described below. The fund's
purpose in writing covered call options is to realize greater income than would
be realized on portfolio securities transactions alone. However, the fund may
forgo the opportunity to profit from an increase in the market price of the
underlying security.
A put option written by the fund would obligate the fund to purchase specified
securities from the option holder at a specified price if the option is
exercised at any time before the expiration date. All put options written by
the fund would be covered, which means that the fund would have segregated
assets with a value at least equal to the exercise price of the put option. The
purpose of writing such options is to generate additional income for the fund.
However, in return for the option premium, the fund accepts the risk that it
may be required to purchase the underlying security at a price in excess of its
market value at the time of purchase.
Call and put options written by the fund will also be considered to be covered
to the extent that the fund's liabilities under such options are wholly or
partially offset by its rights under call and put options purchased by the
fund. In addition, a written call option or put may be covered by entering into
an offsetting forward contract and/or by purchasing an offsetting option or any
other option which, by virtue of its exercise price or otherwise, reduces the
fund's net exposure on its written option position.
Writing Call and Put Options on Securities Indices. The fund may also write
(sell) covered call and put options on any securities index composed of
securities in which it may invest. Options on securities indices are similar to
options on securities, except that the exercise of securities index options
requires cash payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price
fluctuations in a group of securities or segments of the securities market
rather than price fluctuations in a single security.
The fund may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying
index, or by having an absolute and immediate right to acquire such securities
without additional cash consideration (or for additional consideration if cash
in
14
such amount is segregated) upon conversion or exchange of other securities in
its portfolio. The fund may cover call and put options on a securities index by
segregating assets with a value equal to the exercise price.
Purchasing Call and Put Options. The fund would normally purchase call options
in anticipation of an increase in the market value of securities of the type in
which it may invest. The purchase of a call option would entitle the fund, in
return for the premium paid, to purchase specified securities at a specified
price during the option period. The fund would ordinarily realize a gain if,
during the option period, the value of such securities exceeded the sum of the
exercise price, the premium paid and transaction costs; otherwise the fund
would realize either no gain or a loss on the purchase of the call option.
The fund would normally purchase put options in anticipation of a decline in
the market value of securities in its portfolio ("protective puts") or in
securities in which it may invest. The purchase of a put option would entitle
the fund, in exchange for the premium paid, to sell specified securities at a
specified price during the option period. The purchase of protective puts is
designed to offset or hedge against a decline in the market value of the fund's
securities. Put options may also be purchased by the fund for the purpose of
affirmatively benefiting from a decline in the price of securities which it
does not own. The fund would ordinarily realize a gain if, during the option
period, the value of the underlying securities decreased below the exercise
price sufficiently to more than cover the premium and transaction costs;
otherwise the fund would realize either no gain or a loss on the purchase of
the put option. Gains and losses on the purchase of protective put options
would tend to be offset by countervailing changes in the value of the
underlying portfolio securities.
The fund may terminate its obligations under an exchange-traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
Risks of Trading Options. There is no assurance that a liquid secondary market
on an options exchange will exist for any particular exchange-traded option, or
at any particular time. If the fund is unable to effect a closing purchase
transaction with respect to covered options it has written, the fund will not
be able to sell the underlying securities or dispose of its segregated assets
until the options expire or are exercised. Similarly, if the fund is unable to
effect a closing sale transaction with respect to options it has purchased, it
will have to exercise the options in order to realize any profit and will incur
transaction costs upon the purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening or closing
transactions or both; (iii) trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of options; (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or the Options Clearing Corporation
(the "OCC") may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or
be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in that class or series of options) would cease to exist,
although outstanding options on that exchange, if any, that had been issued by
the OCC as a result of trades on that exchange would continue to be exercisable
in accordance with their terms.
The fund may purchase and sell both options that are traded on U.S. and
non-U.S. exchanges and options traded over-the-counter with broker-dealers who
make markets in these options. The ability to terminate
15
over-the-counter options is more limited than with exchange-traded options and
may involve the risk that broker-dealers participating in such transactions
will not fulfill their obligations. Until such time as the staff of the SEC
changes its position, the fund will treat purchased over-the-counter options
and all assets used to cover written over-the-counter options as illiquid
securities, except that with respect to options written with primary dealers in
U.S. government securities pursuant to an agreement requiring a closing
purchase transaction at a formula price, the amount of illiquid securities may
be calculated with reference to the formula.
Transactions by the fund in options on securities and indices will be subject
to limitations established by each of the exchanges, boards of trade or other
trading facilities governing the maximum number of options in each class which
may be written or purchased by a single investor or group of investors acting
in concert. Thus, the number of options which the fund may write or purchase
may be affected by options written or purchased by other investment advisory
clients of Pioneer. An exchange, board of trade or other trading facility may
order the liquidations of positions found to be in excess of these limits, and
it may impose certain other sanctions.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of protective
puts for hedging purposes depends in part on the ability of Pioneer to predict
future price fluctuations and the degree of correlation between the options and
securities markets.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price movements
can take place in the underlying markets that cannot be reflected in the
options markets.
In addition to the risks of imperfect correlation between the fund's portfolio
and the index underlying the option, the purchase of securities index options
involves the risk that the premium and transaction costs paid by the fund in
purchasing an option will be lost. This could occur as a result of
unanticipated movements in the price of the securities comprising the
securities index on which the option is based.
Futures Contracts and Options on Futures Contracts
To hedge against changes in securities prices or currency exchange rates or to
seek to increase total return, the fund may purchase and sell various kinds of
futures contracts, and purchase and write (sell) call and put options on any of
such futures contracts. The fund may also enter into closing purchase and sale
transactions with respect to any of such contracts and options. The futures
contracts may be based on various securities (such as U.S. government
securities), securities indices, foreign currencies and other financial
instruments and indices. The fund will engage in futures and related options
transactions for bona fide hedging and non-hedging purposes as described below.
All futures contracts entered into by the fund are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the Commodity Futures
Trading Commission (the "CFTC") or on non-U.S. exchanges.
Futures Contracts. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the fund can
seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling
16
or securities prices are rising, the fund, through the purchase of futures
contracts, can attempt to secure better rates or prices than might later be
available in the market when it effects anticipated purchases. Similarly, the
fund can sell futures contracts on a specified currency to protect against a
decline in the value of such currency and a decline in the value of its
portfolio securities which are denominated in such currency. The fund can
purchase futures contracts on a foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the fund has acquired
or expects to acquire.
Positions taken in the futures markets are not normally held to maturity but
are instead liquidated through offsetting transactions which may result in a
profit or a loss. While futures contracts on securities or currency will
usually be liquidated in this manner, the fund may instead make, or take,
delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.
Hedging Strategies. Hedging, by use of futures contracts, seeks to establish
with more certainty the effective price, rate of return and currency exchange
rate on portfolio securities and securities that the fund owns or proposes to
acquire. The fund may, for example, take a "short" position in the futures
market by selling futures contracts in order to hedge against an anticipated
rise in interest rates or a decline in market prices or foreign currency rates
that would adversely affect the value of the fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by the fund or securities with characteristics similar to those of the
fund's portfolio securities. Similarly, the fund may sell futures contracts in
a foreign currency in which its portfolio securities are denominated or in one
currency to hedge against fluctuations in the value of securities denominated
in a different currency if there is an established historical pattern of
correlation between the two currencies. If, in the opinion of Pioneer, there is
a sufficient degree of correlation between price trends for the fund's
portfolio securities and futures contracts based on other financial
instruments, securities indices or other indices, the fund may also enter into
such futures contracts as part of its hedging strategies. Although under some
circumstances prices of securities in the fund's portfolio may be more or less
volatile than prices of such futures contracts, Pioneer will attempt to
estimate the extent of this volatility difference based on historical patterns
and compensate for any such differential by having the fund enter into a
greater or lesser number of futures contracts or by attempting to achieve only
a partial hedge against price changes affecting the fund's portfolio
securities. When hedging of this character is successful, any depreciation in
the value of portfolio securities will be substantially offset by appreciation
in the value of the futures position. On the other hand, any unanticipated
appreciation in the value of the fund's portfolio securities would be
substantially offset by a decline in the value of the futures position.
On other occasions, the fund may take a "long" position by purchasing futures
contracts. This may be done, for example, when the fund anticipates the
subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.
Options on Futures Contracts. The acquisition of put and call options on
futures contracts will give the fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event
of an unfavorable price movement to the loss of the premium and transaction
costs.
The writing of a call option on a futures contract generates a premium which
may partially offset a decline in the value of the fund's assets. By writing a
call option, the fund becomes obligated, in
17
exchange for the premium, to sell a futures contract (if the option is
exercised), which may have a value higher than the exercise price. Conversely,
the writing of a put option on a futures contract generates a premium which may
partially offset an increase in the price of securities that the fund intends
to purchase. However, the fund becomes obligated to purchase a futures contract
(if the option is exercised) which may have a value lower than the exercise
price. Thus, the loss incurred by the fund in writing options on futures is
potentially unlimited and may exceed the amount of the premium received. The
fund will incur transaction costs in connection with the writing of options on
futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The
fund's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.
Other Considerations. The fund will engage in futures and related options
transactions only in accordance with CFTC regulations which permit principals
of an investment company registered under the 1940 Act to engage in such
transactions without registering as commodity pool operators.
The fund will engage in transactions in futures contracts and related options
only to the extent such transactions are consistent with the requirements of
the Code for maintaining its qualification as a regulated investment company
for U.S. federal income tax purposes.
Futures contracts and related options involve brokerage costs, require margin
deposits and, in the case of contracts and options obligating the fund to
purchase securities or currencies, require the fund to segregate assets to
cover such contracts and options.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while the fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the fund than if it had
not entered into any futures contracts or options transactions. In the event of
an imperfect correlation between a futures position and a portfolio position
which is intended to be protected, the desired protection may not be obtained
and the fund may be exposed to risk of loss. It is not possible to hedge fully
or perfectly against the effect of currency fluctuations on the value of
non-U.S. securities because currency movements impact the value of different
securities in differing degrees.
Warrants and Stock Purchase Rights
The fund may invest in warrants, which are securities permitting, but not
obligating, their holder to subscribe for other securities. Warrants do not
carry with them the right to dividends or voting rights with respect to the
securities that they entitle their holders to purchase, and they do not
represent any rights in the assets of the issuer.
The fund may also invest in stock purchase rights. Stock purchase rights are
instruments, frequently distributed to an issuer's shareholders as a dividend,
that entitle the holder to purchase a specific number of shares of common stock
on a specific date or during a specific period of time. The exercise price on
the rights is normally at a discount from market value of the common stock at
the time of distribution. The rights do not carry with them the right to
dividends or to vote and may or may not be transferable. Stock purchase rights
are frequently used outside of the United States as a means of raising
additional capital from an issuer's current shareholders.
18
As a result, an investment in warrants or stock purchase rights may be
considered more speculative than certain other types of investments. In
addition, the value of a warrant or a stock purchase right does not necessarily
change with the value of the underlying securities, and warrants and stock
purchase rights expire worthless if they are not exercised on or prior to their
expiration date.
Preferred Shares
The fund may invest in preferred shares of beneficial interest of trust
instruments. Preferred shares are equity securities, but they have many
characteristics of fixed income securities, such as a fixed dividend payment
rate and/or a liquidity preference over the issuer's common shares. However,
because preferred shares are equity securities, they may be more susceptible to
risks traditionally associated with equity investments than the fund's fixed
income securities.
Lending of Portfolio Securities
The fund may lend portfolio securities to registered broker-dealers or other
institutional investors deemed by Pioneer to be of good standing under
agreements which require that the loans be secured continuously by collateral
in cash, cash equivalents or U.S. Treasury bills maintained on a current basis
at an amount at least equal to the market value of the securities loaned. The
fund continues to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned as well as the benefit of an increase and
the detriment of any decrease in the market value of the securities loaned and
would also receive compensation based on investment of the collateral. The fund
may pay administrative and custodial fees in connection with loans of
securities and may pay a portion of the income or fee earned thereon to the
borrower, lending agent or other intermediary. The fund would not, however,
have the right to vote any securities having voting rights during the existence
of the loan, but would call the loan in anticipation of an important vote to be
taken among holders of the securities or of the giving or withholding of
consent on a material matter affecting the investment.
As with other extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower of the securities
fail financially. The fund will lend portfolio securities only to firms that
have been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the
securities loaned exceed 33 1/3% of the value of the fund's total assets.
Disclosure of Portfolio Holdings
The fund's Board of Trustees has adopted policies and procedures relating to
disclosure of the fund's portfolio securities. These policies and procedures
are designed to provide a framework for disclosing information regarding
portfolio holdings, portfolio composition or other portfolio characteristics
consistent with applicable regulations of the federal securities laws and
general principles of fiduciary duty relating to fund shareholders. While
Pioneer may manage other funds and accounts that have substantially similar
investment strategies, these policies and procedures only relate to the
disclosure of portfolio information of registered management investment
companies.
Generally, Pioneer will make the fund's portfolio information available to the
public on a monthly basis with an appropriate delay based upon the nature of
the information disclosed. Pioneer normally will publish the fund's full
portfolio holdings thirty (30) days after the end of each month. Such
information shall be made available on the fund's website
(www.pioneerinvestments.com) and may be sent to rating agencies, reporting/
news services and financial intermediaries, upon request. In addition, Pioneer
generally makes publicly available information regarding the fund's top ten
holdings (including the
19
percentage of the fund's assets represented by each security), the percentage
breakdown of the fund's investments by country, sector and industry, various
volatility measures (such as beta, standard deviation, etc.), market
capitalization ranges and other portfolio characteristics (such as alpha,
average P/E ratio, etc.) three (3) business days after the end of each month.
Pioneer may provide the fund's full portfolio holdings or other information to
certain entities prior to the date such information is made public, provided
that certain conditions are met. The entities to which such disclosure may be
made as of the date of this statement of additional information are rating
agencies, plan sponsors, prospective separate account clients and other
financial intermediaries (i.e., organizations evaluating the fund for purposes
of investment by their clients, such as broker-dealers, investment advisers,
banks, insurance companies, financial planning firms, plan sponsors, plan
administrators, shareholder servicing organizations and pension consultants).
As of the date of this statement of additional information, Pioneer had not
provided the fund's portfolio holdings information to any entity prior to the
date such information was made public. The third party must agree to a limited
use of that information which does not conflict with the interests of the
fund's shareholders, to use the information only for that authorized purpose,
to keep such information confidential, and not to trade on such information.
The Board of Trustees considered the disclosure of portfolio holdings
information to these categories of entities to be consistent with the best
interests of shareholders in light of the agreement to maintain the
confidentiality of such information and only to use such information for the
limited and approved purposes. Pioneer's compliance department, the local head
of investment management and the global chief investment officer may, but only
acting jointly, grant exemptions to this policy. Exemptions may be granted only
if these persons determine that providing such information is consistent with
the interests of shareholders and the third party agrees to limit the use of
such information only for the authorized purpose, to keep such information
confidential, and not to trade on such information. Although the Board will
periodically be informed of exemptions granted, granting exemptions entails the
risk that portfolio holdings information may be provided to entities that use
the information in a manner inconsistent with their obligations and the best
interests of the fund.
Compliance with the fund's portfolio holdings disclosure policy is subject to
periodic review by the Board of Trustees, including a review of any potential
conflicts of interest in the disclosures made by Pioneer in accordance with the
policy or the exceptions permitted under the policy. Any change to the policy
to expand the categories of entities to which portfolio holdings may be
disclosed or an increase in the purposes for which such disclosure may be made
would be subject to approval by the Board of Trustees and, reflected, if
material, in a supplement to the fund's statement of additional information.
The fund's portfolio holdings disclosure policy is not intended to prevent the
disclosure of any and all portfolio information to the fund's service providers
who generally need access to such information in the performance of their
contractual duties and responsibilities, such as Pioneer, the fund's custodian,
fund accounting agent, principal underwriter, investment sub-adviser, if any,
independent registered public accounting firm or counsel. In approving the
policy, the Board of Trustees considered that the service providers are subject
to duties of confidentiality arising under law or contract that provide an
adequate safeguard for such information. None of Pioneer, the fund or any other
party receive any compensation or other consideration from any arrangement
pertaining to the release of the fund's portfolio holdings information.
In addition, the fund makes its portfolio holdings available semi-annually in
shareholder reports filed on Form N-CSR and after the first and third fiscal
quarters in regulatory filings on Form N-Q. These shareholder reports and
regulatory filings are filed with the SEC, as required by the federal
securities laws, and are generally available within seventy (70) days after the
end of the fund's fiscal quarter.
20
Investment Restrictions
Fundamental Investment Restrictions. The fund has adopted certain fundamental
investment restrictions which may not be changed without the affirmative vote
of the holders of a "majority of the outstanding voting securities" (as defined
in the 1940 Act) of the fund. Statements in italics are not part of the
restriction. For this purpose, a majority of the outstanding shares of the fund
means the vote of the lesser of:
1. 67% or more of the shares represented at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or
2. more than 50% of the outstanding shares of the fund.
The fund may not:
(1) Issue senior securities, except as permitted by the fund's borrowing,
lending and commodity restrictions and, for purposes of this restriction, the
issuance of shares of beneficial interest in multiple classes or series, the
purchase or sale of options, futures contracts and options on futures
contracts, forward commitments, forward foreign exchange contracts, repurchase
agreements, fully covered reverse repurchase agreements, dollar rolls, swaps
and any other financial transaction entered into pursuant to the fund's
investment policies as described in the prospectuses and the statements of
additional information and in accordance with applicable SEC pronouncements, as
well as the pledge, mortgage or hypothecation of the fund's assets within the
meaning of the fundamental investment restriction regarding pledging, are not
deemed to be senior securities.
(2) Borrow money, except from banks as a temporary measure to facilitate the
meeting of redemption requests or for extraordinary emergency purposes and
except pursuant to reverse repurchase agreements and dollar rolls and then only
in amounts not to exceed 33 1/3 of the fund's total assets (including the
amount borrowed) taken at market value. The fund will not use leverage to
attempt to increase income. In the opinion of the SEC, the fund's limitation on
borrowing includes any pledge, mortgage or hypothecation of its assets.
(3) Guarantee the securities of any other company, or mortgage, pledge,
hypothecate or assign or otherwise encumber as security for indebtedness its
securities or receivables in an amount exceeding the amount of the borrowing
thereby secured.
(4) Act as an underwriter, except as it may be deemed to be an underwriter in a
sale of restricted securities held in its portfolio.
(5) Invest in real estate, commodities or commodity contracts, except that the
fund may invest in securities of issuers that invest in real estate or
interests therein, securities that are secured by real estate or interests
therein, financial futures contracts and related options and in any other
financial instruments which may be deemed to be commodities or commodity
contracts in which the fund is not prohibited from investing by the Commodity
Exchange Act and the rules and regulations thereunder.
(6) Make loans, except by the purchase of debt obligations in which the fund
may invest consistent with its investment policies, by entering into repurchase
agreements or through the lending of portfolio securities, in each case only to
the extent permitted by the prospectuses and the statements of additional
information.
21
(7) With respect to 75% of its total assets, purchase securities of an issuer
(other than the U.S. government, its agencies or instrumentalities), if
(a) such purchase would cause more than 5% of the fund's total assets,
taken at market value, to be invested in the securities of such issuer, or
(b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the fund.
(8) Concentrate its investments in securities of companies in any particular
industry. The fund's policy does not apply to investments in U.S. government
securities. In the opinion of the SEC, investments are concentrated in a
particular industry if such investments aggregate 25% or more of the fund's
total assets. When identifying industries for purposes of its concentration
policy, the fund will rely upon available industry classifications. As of the
date of this statement of additional information, the fund relied on MSCI
Global Industry Classification Standard (GICS) classifications.
Non-Fundamental Investment Restrictions. The following restrictions have been
designated as non-fundamental and all restrictions not deemed fundamental,
including those set forth below, may be changed by a vote of the fund's Board
of Trustees without approval of shareholders.
The fund may not:
(a) Purchase securities during the current fiscal year while borrowings are in
excess of 5% of the fund's total assets.
(b) Engage in mortgaging, hypothecating or pledging of its assets except in
connection with any borrowing permitted under fundamental investment
restriction (2); thus the fund's borrowings involving mortgaging, hypothecating
or pledging of its assets will not exceed 33 1/3% of its total assets
(including the amount borrowed), notwithstanding any temporary borrowings not
in excess of 5% of its total assets.
(c) Invest in any investment company in reliance on Section 12(d)(1)(F) of the
1940 Act, which would allow the fund to invest in other investment companies,
or in reliance on Section 12(d)(1)(G) of the 1940 Act, which would allow the
fund to invest in other Pioneer funds, in each case without being subject to
the limitations discussed above under "Other Investment Companies" so long as
another investment company invests in the fund in reliance on Section
12(d)(1)(G). The fund has adopted this non-fundamental policy in order that the
fund may be a permitted investment to the series of Pioneer Ibbotson Asset
Allocation Series, which invest all of their assets in other investment
companies. If the series of Pioneer Ibbotson Asset Allocation Series do not
invest in the fund, then this non-fundamental restriction will not apply.
3. TRUSTEES AND OFFICERS
The fund's Board of Trustees provides broad supervision over the fund's
affairs. The officers of the fund are responsible for the fund's operations.
The fund's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the fund within the meaning of the 1940 Act are referred to as
Interested Trustees. Trustees who are not interested persons of the fund are
referred to as Independent Trustees. Each of the Trustees (except Mr. Kingsbury
and Mr. West) serves as a Trustee of each of the 82 U.S. registered investment
portfolios for which Pioneer serves as investment adviser (the "Pioneer
Funds"). Each of Mr. Kingsbury and Mr. West each serves as Trustee of 33 of the
82 Pioneer Funds. The address for all Interested Trustees and all officers of
the fund is 60 State Street, Boston, Massachusetts 02109.
22
Term of Other
Position Office and Directorships
Name, Age Held With Length of Principal Occupation Held by this
and Address the Fund Service During Past Five Years Trustee
Interested Trustees:
John F. Cogan, Jr. Chairman of Trustee since 1997. Deputy Chairman and a Director of ICI
(80)* the Board, Serves until a Director of Pioneer Global Mutual Insurance
Trustee and successor trustee is Asset Management S.p.A. Company
President elected or earlier ("PGAM"); Non-Executive
retirement or Chairman and a Director of
removal. Pioneer Investment
Management USA Inc.
("PIM-USA"); Chairman and
a Director of Pioneer;
Chairman and Director of
Pioneer Institutional Asset
Management, Inc. (since
2006); Director of Pioneer
Alternative Investment
Management Limited
(Dublin); President and a
Director of Pioneer
Alternative Investment
Management (Bermuda)
Limited and affiliated funds;
Director of PIOGLOBAL
Real Estate Investment Fund
(Russia) (until June 2006);
Director of Nano-C, Inc.
(since 2003); Director of
Cole Management Inc.
(since 2004); Director of
Fiduciary Counseling, Inc.;
President and Director of
Pioneer Funds Distributor,
Inc. ("PFD") (until May
2006); President of all of the
Pioneer Funds; and Of
Counsel, Wilmer Cutler
Pickering Hale and Dorr
LLP (counsel to PIM-USA
and the Pioneer Funds)
23
Daniel K. Trustee and Trustee since March Director, CEO and President
Kingsbury (48)* Executive 2007. Serves until a of Pioneer Investment
Vice President successor trustee is Management USA Inc.;
elected or earlier Pioneer Investment
retirement or Management, Inc. and
removal. Pioneer Institutional Asset
Management, Inc. (since
March 2007); Executive
Vice President of all of the
Pioneer Funds (since March
2007); Director of Pioneer
Global Asset Management
S.p.A. (since March 2007);
Head of New Markets
Division, Pioneer Global
Asset Management S.p.A.
(2000-2007)
Independent Trustees:
David R. Bock Trustee Trustee since 2005. Executive Vice President and Director of The
(63) Serves until a Chief Financial Officer, Enterprise Social
3050 K Street successor trustee is I-trax, Inc. (publicly traded Investment
NW, elected or earlier health care services Company
Washington, DC retirement or company) (2004--present); (privately-held
20007 removal. Partner, Federal City Capital affordable
Advisors (boutique merchant housing finance
bank)(1997 to 2004); and company); and
Executive Vice President and Director of New
Chief Financial Officer, York Mortgage
Pedestal Inc. (internet-based Trust (publicly
mortgage trading company) traded mortgage
(2000-2002) REIT)
Mary K. Bush Trustee Trustee since 1998. President, Bush Director of Brady
(59) Serves until a International, LLC Corporation
3509 Woodbine successor trustee is (international financial (industrial
Street elected or earlier advisory firm) identification and
Chevy Chase, MD retirement or specialty coated
20815 removal. material products
manufacturer);
Director of Briggs
& Stratton Co.
(engine
manufacturer);
Director of UAL
Corporation
(airline holding
company); and
Director of
Mantech
International
Corporation
(national security,
defense, and
intelligence
technology firm)
24
Margaret B.W. Trustee Trustee since 1998. Founding Director, Vice- None
Graham (59) Serves until a President and Corporate
1001 Sherbrooke successor trustee is Secretary, The Winthrop
Street West, elected or earlier Group, Inc. (consulting
Montreal, retirement or firm); and Desautels Faculty
Quebec, Canada removal. of Management, McGill
H3A1G5 University
Thomas J. Perna Trustee Trustee since 2006. Private investor (2004 -- Director of
(56) Serves until a present); and Senior Quadriserv Inc.
89 Robbins successor trustee is Executive Vice President, (technology
Avenue, elected or earlier The Bank of New York products for
Berkeley Heights, retirement or (financial and securities securities lending
NJ 07922 removal. services) (1986 -- 2004) industry)
Marguerite A. Trustee Trustee since 1998. President and Chief Director of New
Piret (58) Serves until a Executive Officer, Newbury, America High
200 State Street, successor trustee is Piret & Company, Inc. Income Fund, Inc.
12th Floor, elected or earlier (investment banking firm) (closed-end
Boston, MA retirement or investment
02109 removal. company)
Stephen K. West Trustee Trustee since 1998. Senior Counsel, Sullivan & Director, The
(78) Serves until a Cromwell (law firm) Swiss Helvetia
125 Broad Street, successor trustee is Fund, Inc.
New York, NY elected or earlier (closed-end
10004 retirement or investment
removal. company)
John Winthrop Trustee Trustee since 1998. President, John Winthrop & None
(70) Serves until a Co., Inc. (private investment
One North Adgers successor trustee is firm)
Wharf, elected or earlier
Charleston, SC retirement or
29401 removal.
25
Fund Officers:
Dorothy E. Secretary Since 2003. Serves at Secretary of PIM-USA; None
Bourassa (59) the discretion of the Senior Vice President- Legal
Board of Pioneer; Secretary/Clerk
of most of PIM-USA's
subsidiaries; and Secretary
of all of the Pioneer Funds
since September 2003
(Assistant Secretary from
November 2000 to
September 2003)
Christopher J. Assistant Since 2003. Serves at Vice President and Senior None
Kelley (42) Secretary the discretion of the Counsel of Pioneer since
Board July 2002; Vice President
and Senior Counsel of
BISYS Fund Services, Inc.
(April 2001 to June 2002);
Senior Vice President and
Deputy General Counsel of
Funds Distributor, Inc. (July
2000 to April 2001), and
Assistant Secretary of all of
the Pioneer Funds since
September 2003
Christopher P. Assistant Since 2006. Serves at Partner, Wilmer Cutler None
Harvey (45) Secretary the discretion of the Pickering Hale and Dorr
Board LLP; and Assistant Secretary
of all of the Pioneer Funds
since July 2006
Vincent Nave Treasurer Since 2000. Serves at Vice President-Fund None
(61) the discretion of the Accounting, Administration
Board and Controllership Services
of Pioneer; and Treasurer of
all of the Pioneer Funds
Mark E. Bradley Assistant Since 2004. Serves at Deputy Treasurer of Pioneer None
(47) Treasurer the discretion of the since 2004; Treasurer and
Board Senior Vice President, CDC
IXIS Asset Management
Services from 2002 to 2003;
and Assistant Treasurer of all
of the Pioneer Funds since
November 2004
26
Luis I. Presutti Assistant Since 2000. Serves at Assistant Vice President- None
(42) Treasurer the discretion of the Fund Accounting,
Board Administration and
Controllership Services of
Pioneer; and Assistant
Treasurer of all of the
Pioneer Funds
Gary Sullivan Assistant Since 2002. Serves at Fund Accounting Manager-- None
(49) Treasurer the discretion of the Fund Accounting,
Board Administration and
Controllership Services of
Pioneer; and Assistant
Treasurer of all of the
Pioneer Funds since May
2002
Katherine Kim Assistant Since 2003. Serves at Fund Administration None
Sullivan (33) Treasurer the discretion of the Manager -- Fund
Board Accounting, Administration
and Controllership Services
since June 2003; Assistant
Vice President -- Mutual
Fund Operations of State
Street Corporation from June
2002 to June 2003 (formerly
Deutsche Bank Asset
Management); Pioneer Fund
Accounting, Administration
and Controllership Services
(Fund Accounting Manager
from August 1999 to May
2002); and Assistant
Treasurer of all of the
Pioneer Funds since
September 2003
Teri W. Chief Since January 2007. Chief Compliance Officer of None
Anderholm (47) Compliance Serves at the Pioneer since December
Officer discretion of the 2006 and of all the Pioneer
Board Funds since January 2007;
Vice President and
Compliance Officer, MFS
Investment Management
(August 2005 to December
2006); Consultant, Fidelity
Investments (February 2005
to July 2005): Independent
Consultant (July 1997 to
February 2005)
*Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are an
officer or director of the fund's investment adviser and certain of its
affiliates.
27
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
Board Committees
During the most recent fiscal year, the Board of Trustees held 11 meetings.
Each Trustee attended at least 75% of such meetings.
The Board of Trustees has an Audit Committee, an Independent Trustees
Committee, a Nominating Committee, a Valuation Committee and a Policy
Administration Committee. Committee members are as follows:
Audit
David R. Bock, Margaret B. W. Graham, Marguerite A. Piret (Chair) and Stephen
K. West
Independent Trustees
David R. Bock, Mary K. Bush, Margaret B.W. Graham (Chair), Thomas J. Perna,
Marguerite A. Piret, Stephen K. West and John Winthrop
Nominating
Mary K. Bush, Marguerite A. Piret and John Winthrop (Chair)
Valuation
David R. Bock, Margaret B. W. Graham, Marguerite A. Piret (Chair) and Stephen
K. West
Policy Administration
Mary K. Bush (Chair), Thomas J. Perna and John Winthrop
During the most recent fiscal year, the Audit, Independent Trustees,
Nominating, Valuation, and Policy Administration Committees held 16, 13, 3, 4
and 9 meetings, respectively.
The Board of Trustees has adopted a charter for the Audit Committee. In
accordance with its charter, the purposes of the Audit Committee are to:
o act as a liaison between the fund's independent registered public accounting
firm and the full Board of Trustees of the fund;
o discuss with the fund's independent registered public accounting firm their
judgments about the quality of the fund's accounting principles and
underlying estimates as applied in the fund's financial reporting;
o review and assess the renewal materials of all related party contracts and
agreements, including management advisory agreements, underwriting
contracts, administration agreements, distribution contracts, and transfer
agency contracts, among any other instruments and agreements that may be
appropriate from time to time;
28
o review and approve insurance coverage and allocations of premiums between the
management and the fund and among the Pioneer Funds;
o review and approve expenses under the administration agreement between
Pioneer and the fund and allocations of such expenses among the Pioneer
Funds; and
o receive on a periodic basis a formal written statement delineating all
relationships between the independent registered public accounting firm and
the fund or Pioneer; to actively engage in a dialogue with the independent
registered public accounting firm with respect to any disclosed
relationships or services that may impact the objectivity and independence
of the firm; and to recommend that the Trustees take appropriate action in
response to the independent registered public accounting firm's report to
satisfy itself of the firm's independence.
The Nominating Committee reviews the qualifications of any candidate
recommended by the Independent Trustees to serve as an Independent Trustee and
makes a recommendation regarding that person's qualifications. The Committee
does not accept nominations from shareholders.
The Valuation Committee reviews the valuation assigned to certain securities by
Pioneer in accordance with the fund's valuation procedures.
The Policy Administration Committee reviews the implementation of certain of
the fund's administrative policies and procedures.
The Independent Trustees Committee reviews the fund's management contract and
other related party contracts annually and is also responsible for any other
action required to be taken, under the 1940 Act, by the Independent Trustees
acting alone.
The Agreement and Declaration of Trust provides that the Trust will indemnify
the Trustees and officers against liabilities and expenses incurred in
connection with any litigation in which they may be involved because of their
offices with the Trust, unless it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the
Trust or the fund or that such indemnification would relieve any officer or
Trustee of any liability to the Trust or the fund or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
his or her duties.
Compensation of Officers and Trustees
The fund pays no salaries or compensation to any of its officers. The Pioneer
Funds, including the fund, compensate their Trustees. The Independent Trustees
review and set their compensation annually, taking into consideration the
committee and other responsibilities assigned to specific Trustees. The table
under "Annual Fees, Expense and Other Information-Compensation of Officers and
Trustees" sets forth the compensation paid to each of the Trustees. The
compensation paid to the Trustees is then allocated among the funds as follows:
o each fund with assets less than $250 million pays each Trustee who is not
affiliated with PIM-USA, Pioneer, PFD, PIMSS or UniCredito Italiano (i.e.,
Independent Trustees) an annual fee of $1,000.
o the remaining compensation of the Independent Trustees is allocated to each
fund with assets greater than $250 million based on the fund's net assets.
29
o the Interested Trustees receive an annual fee of $500 from each fund, except
in the case of funds with net assets of $50 million or less, which pay each
Interested Trustee an annual fee of $200. Pioneer reimburses the funds for
the fees paid to the Interested Trustees.
See "Compensation of Officers and Trustees" in "Annual Fee, Expense and Other
Information."
Sales Loads. The fund offers its shares to Trustees and officers of the fund
and employees of Pioneer and its affiliates without a sales charge in order to
encourage investment in the fund by individuals who are responsible for its
management and because the sales to such persons do not entail any sales effort
by the fund, brokers or other intermediaries.
Other Information
Material Relationships of the Independent Trustees. For purposes of the
statements below:
o the immediate family members of any person are their spouse, children in
the person's household (including step and adoptive children) and any
dependent of the person.
o an entity in a control relationship means any person who controls, is
controlled by or is under common control with the named person. For
example, UniCredito Italiano is an entity that is in a control
relationship with Pioneer.
o a related fund is a registered investment company or an entity exempt
from the definition of an investment company pursuant to Sections 3(c)(1)
or 3(c)(7) of the 1940 Act, for which Pioneer or any of its affiliates act
as investment adviser or for which PFD or any of its affiliates act as
principal underwriter. For example, the fund's related funds include all
of the Pioneer Funds and any non-U.S. funds managed by Pioneer or its
affiliates.
As of December 31, 2006, none of the Independent Trustees, nor any of their
immediate family members, beneficially owned any securities issued by Pioneer,
UniCredito Italiano or any other entity in a control relationship to Pioneer or
PFD. During the calendar years 2005 and 2006, none of the Independent Trustees,
nor any of their immediate family members, had any direct or indirect interest
(the value of which exceeded $120,000), whether by contract, arrangement or
otherwise, in Pioneer, UniCredito Italiano, or any other entity in a control
relationship to Pioneer or PFD. During the calendar years 2005 and 2006, none
of the Independent Trustees, nor any of their immediate family members, had an
interest in a transaction or a series of transactions in which the aggregate
amount involved exceeded $120,000 and to which any of the following were a
party (each a "fund related party"):
o the fund
o an officer of the fund
o a related fund
o an officer of any related fund
o Pioneer
o PFD
o an officer of Pioneer or PFD
o any affiliate of Pioneer or PFD
o an officer of any such affiliate
During the calendar years 2005 and 2006, none of the Independent Trustees, nor
any of their immediate
30
family members, had any relationship (the value of which exceeded $120,000)
with any fund related party, including, but not limited to, relationships
arising out of (i) the payment for property and services, (ii) the provision of
legal services, (iii) the provision of investment banking services (other than
as a member of the underwriting syndicate) or (iv) the provision of consulting
services, except that Mr. West, an Independent Trustee, is Senior Counsel to
Sullivan & Cromwell and acts as counsel to the Independent Trustees and the
Independent Trustees of the other Pioneer Funds. The aggregate compensation
paid to Sullivan & Cromwell by the fund and the other Pioneer Funds was
approximately $173,353 and $287,452.56 in each of 2005 and 2006, respectively.
During the calendar years 2005 and 2006, none of the Independent Trustees, nor
any of their immediate family members, served as a member of a board of
directors on which an officer of any of the following entities also serves as a
director:
o Pioneer
o PFD
o UniCredito Italiano
o any other entity in a control relationship with Pioneer or PFD
None of the fund's Trustees or officers has any arrangement with any other
person pursuant to which that Trustee or officer serves on the Board of
Trustees. During the calendar years 2005 and 2006, none of the Independent
Trustees, nor any of their immediate family members, had any position,
including as an officer, employee, director or partner, with any of the
following:
o the fund
o any related fund
o Pioneer
o PFD
o any affiliated person of the fund, Pioneer or PFD
o UniCredito Italiano
o any other entity in a control relationship to the fund, Pioneer or PFD
Share Ownership. See "Annual Fee, Expense and Other Information" for annual
information on the ownership of fund shares by the Trustees, the fund's
officers and owners in excess of 5% of any class of shares of the fund and a
table indicating the value of shares that each Trustee beneficially owns in the
fund and in all the Pioneer Funds.
Code of Ethics. The fund's Board of Trustees approved a code of ethics under
Rule 17j-1 under the 1940 Act that covers the fund, Pioneer and certain of
Pioneer's affiliates. The code of ethics establishes procedures for personal
investing and restricts certain transactions. Employees subject to the code of
ethics may invest in securities for their personal investment accounts,
including securities that may be purchased or held by the fund.
Proxy Voting Policies. Information regarding how the funds voted proxies
relating to portfolio securities during the most recent 12-month period ended
June 30 is publicly available to shareowners without charge at
http://www.pioneerinvestments.com and on the SEC's website at
http://www.sec.gov. The fund's "Proxy Voting Policies and Procedures" are
attached as "Appendix B".
31
4. INVESTMENT ADVISER
The fund has contracted with Pioneer to act as its investment adviser. Pioneer
is an indirect, wholly owned subsidiary of UniCredito Italiano. Certain
Trustees or officers of the fund are also directors and/or officers of certain
of UniCredito Italiano's subsidiaries (see management biographies above).
Pioneer has entered into an agreement with its affiliate, Pioneer Investment
Management Limited ("PIML"), pursuant to which PIML provides certain services
and personnel to Pioneer.
As the fund's investment adviser, Pioneer provides the fund with investment
research, advice and supervision and furnishes an investment program for the
fund consistent with the fund's investment objective and policies, subject to
the supervision of the fund's Trustees. Pioneer determines what portfolio
securities will be purchased or sold, arranges for the placing of orders for
the purchase or sale of portfolio securities, selects brokers or dealers to
place those orders, maintains books and records with respect to the fund's
securities transactions, and reports to the Trustees on the fund's investments
and performance.
Under the terms of its management contract with the fund, Pioneer pays all the
operating expenses, including executive salaries and the rental of office
space, relating to its services for the fund, with the exception of the
following, which are paid by the fund: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of Pioneer or its
affiliates, office space and facilities and personnel compensation, training
and benefits; (b) the charges and expenses of auditors; (c) the charges and
expenses of any custodian, transfer agent, plan agent, dividend disbursing
agent and registrar appointed by the fund; (d) issue and transfer taxes
chargeable to the fund in connection with securities transactions to which the
fund is a party; (e) insurance premiums, interest charges, dues and fees for
membership in trade associations and all taxes and corporate fees payable by
the fund to federal, state or other governmental agencies; (f) fees and
expenses involved in registering and maintaining registrations of the fund
and/or its shares with federal regulatory agencies, state or blue sky
securities agencies and foreign jurisdictions, including the preparation of
prospectuses and statements of additional information for filing with such
regulatory authorities; (g) all expenses of shareholders' and Trustees'
meetings and of preparing, printing and distributing prospectuses, notices,
proxy statements and all reports to shareholders and to governmental agencies;
(h) charges and expenses of legal counsel to the fund and the Trustees; (i) any
distribution fees paid by the fund in accordance with Rule 12b-1 promulgated by
the SEC pursuant to the 1940 Act; (j) compensation of those Trustees of the
fund who are not affiliated with or interested persons of Pioneer, the fund
(other than as Trustees), PIM-USA or PFD; (k) the cost of preparing and
printing share certificates; and (l) interest on borrowed money, if any. In
addition, the fund shall pay all brokers' and underwriting commissions
chargeable to the fund in connection with securities transactions to which the
fund is a party. The Trustees' approval of and the terms, continuance and
termination of the management contract are governed by the 1940 Act and the
Investment Advisers Act of 1940, as applicable. Pursuant to the management
contract, Pioneer will not be liable for any error of judgment or mistake of
law or for any loss sustained by reason of the adoption of any investment
policy or the purchase, sale or retention of any securities on the
recommendation of Pioneer. Pioneer, however, is not protected against liability
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the management contract.
Advisory Fee. As compensation for its management services and expenses
incurred, the fund pays Pioneer a fee at the annual rate of 0.75% of the fund's
average daily net assets. This fee is computed and accrued daily and paid
monthly.
See the table in "Annual Fee, Expense and Other Information" for the management
fees paid to Pioneer during recently completed fiscal years.
32
Administration Agreement. The fund has entered into an administration agreement
with Pioneer pursuant to which certain accounting, administration and legal
services are performed by Pioneer and pursuant to which Pioneer receives a fee
at the annual rate of 0.0225% of the fund's average daily net assets. See
"Annual Fee, Expense and Other Information" for fees the fund paid to Pioneer
for administration and related services.
Expense Limit. Pioneer has contractually agreed to limit ordinary operating
expenses to the extent required to reduce fund expenses for Class A shares to
1.25% of average daily net assets and for Class C shares to 2.15% of average
daily net assets. These expense limitations are in effect through May 1, 2009
for Class A shares and through May 1, 2008 for Class C shares. Ordinary
operating expenses include all fund expenses other than extraordinary expenses,
sucs as litigation, taxes and brokerage commissions. Pioneer expects to
continue its limitations of expenses unless the expense limit agreement with
the fund is terminated pursuant to the terms of the expense limit agreement.
However, there can be no assurance that Pioneer will extend the expense
limitation beyond May 1, 2009 for Class A shares and beyond May 1, 2008 for
Class C shares. The fund may terminate the expense limit agreement at any time;
provided, however, that the Board of Trustees would not take such action unless
it determined termination of the agreement to be in the best interests of the
fund and its shareholders.
Potential Conflicts of Interest. The fund is managed by Pioneer which also
serves as investment adviser to other Pioneer mutual funds and other accounts
with investment objectives identical or similar to those of the fund.
Securities frequently meet the investment objectives of the fund, the other
Pioneer mutual funds and such other accounts. In such cases, the decision to
recommend a purchase to one fund or account rather than another is based on a
number of factors. The determining factors in most cases are the amount of
securities of the issuer then outstanding, the value of those securities and
the market for them. Other factors considered in the investment recommendations
include other investments which each fund or account presently has in a
particular industry and the availability of investment funds in each fund or
account.
It is possible that at times identical securities will be held by more than one
fund and/or account. However, positions in the same issue may vary and the
length of time that any fund or account may choose to hold its investment in
the same issue may likewise vary. To the extent that more than one of the
Pioneer mutual funds or a private account managed by Pioneer seeks to acquire
the same security at about the same time, the fund may not be able to acquire
as large a position in such security as it desires or it may have to pay a
higher price for the security. Similarly, the fund may not be able to obtain as
large an execution of an order to sell or as high a price for any particular
portfolio security if Pioneer decides to sell on behalf of another account the
same portfolio security at the same time. On the other hand, if the same
securities are bought or sold at the same time by more than one fund or
account, the resulting participation in volume transactions could produce
better executions for the fund. In the event more than one account purchases or
sells the same security on a given date, the purchases and sales will normally
be made as nearly as practicable on a pro rata basis in proportion to the
amounts desired to be purchased or sold by each account. Although the other
Pioneer mutual funds may have the same or similar investment objectives and
policies as the fund, their portfolios do not generally consist of the same
investments as the fund or each other, and their performance results are likely
to differ from those of the fund.
Personal Securities Transactions. The fund, Pioneer, and PFD have adopted a
code of ethics under Rule 17j-1 under the 1940 Act which is applicable to
officers, trustees/directors and designated employees of Pioneer and PIML. The
code permits such persons to engage in personal securities transactions for
their own accounts, including securities that may be purchased or held by the
fund, and is designed to prescribe
33
means reasonably necessary to prevent conflicts of interest from arising in
connection with personal securities transactions. The code is on public file
with and available from the SEC.
5. PRINCIPAL UNDERWRITER AND DISTRIBUTION PLAN
Principal Underwriter
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal underwriter
for the fund in connection with the continuous offering of its shares. PFD is
an indirect wholly owned subsidiary of PIM-USA.
The fund entered into an underwriting agreement with PFD which provides that
PFD will bear expenses for the distribution of the fund's shares, except for
expenses incurred by PFD for which it is reimbursed or compensated by the fund
under the distribution plan (discussed below). PFD bears all expenses it incurs
in providing services under the underwriting agreement. Such expenses include
compensation to its employees and representatives and to securities dealers for
distribution-related services performed for the fund. PFD also pays certain
expenses in connection with the distribution of the fund's shares, including
the cost of preparing, printing and distributing advertising or promotional
materials, and the cost of printing and distributing prospectuses and
supplements to prospective shareholders. The fund bears the cost of registering
its shares under federal and state securities law and the laws of certain
non-U.S. countries. Under the underwriting agreement, PFD will use its best
efforts in rendering services to the fund.
See "Sales Charges" for the schedule of initial sales charge reallowed to
dealers as a percentage of the offering price of the fund's applicable share
class.
See the tables in "Annual Fee, Expense and Other Information" for commissions
retained by PFD and reallowed to dealers in connection with PFD's offering of
the fund's applicable share class during recently completed fiscal years.
The fund will not generally issue fund shares for consideration other than
cash. At the fund's sole discretion, however, it may issue fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities.
It is the fund's general practice to repurchase its shares of beneficial
interest for cash consideration in any amount; however, the redemption price of
shares of the fund may, at Pioneer's discretion, be paid in portfolio
securities. The fund has elected to be governed by Rule 18f-1 under the 1940
Act pursuant to which the fund is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the fund's net asset value during any 90-day
period for any one shareholder. Should the amount of redemptions by any
shareholder exceed such limitation, the fund will have the option of redeeming
the excess in cash or portfolio securities. In the latter case, the securities
are taken at their value employed in determining the fund's net asset value.
You may incur additional costs, such as brokerage fees and taxes, and risks,
including a decline in the value of the securities you receive, if the fund
makes an in-kind distribution. The selection of such securities will be made in
such manner as the Board of Trustees deems fair and reasonable; however, the
fund will not distribute illiquid securities in kind.
Distribution Plan
The fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A shares (the "Class A Plan") and a plan of
distribution with respect to its Class C shares (the "Class C Plan") (together,
the "Plans"), pursuant to which certain distribution and service fees are paid
to
34
PFD. Because of the Plans, long-term shareholders may pay more than the
economic equivalent of the maximum sales charge permitted by the National
Association of Securities Dealers, Inc. (the "NASD") regarding investment
companies. The Class A Plan is a reimbursement plan, and distribution expenses
of PFD are expected to substantially exceed the distribution fees paid by the
fund in a given year. The Class C Plan is a compensation plan, which means that
the amount of payments under the Class C Plan are not linked to PFD's
expenditures and, consequently, PFD can make a profit under the Class C Plan.
Class A Plan. Pursuant to the Class A Plan the fund reimburses PFD for its
actual expenditures to finance any activity primarily intended to result in the
sale of Class A shares or to provide services to holders of Class A shares,
provided the categories of expenses for which reimbursement is made are
approved by the Board of Trustees. The Board of Trustees has approved the
following categories of expenses that may be reimbursed under the Class A Plan:
(i) a service fee to be paid to qualified broker-dealers in an amount not to
exceed 0.25% per annum of the fund's daily net assets attributable to Class A
shares; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the fund's Class A
shares with no initial sales charge; and (iii) reimbursement to PFD for
expenses incurred in providing services to Class A shareholders and supporting
broker-dealers and other organizations (such as banks and trust companies) in
their efforts to provide such services. The expenses of the fund pursuant to
the Class A Plan are accrued daily at a rate which may not exceed the annual
rate of 0.25% of the fund's average daily net assets attributable to Class A
shares.
The Class A Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the fund is first invoiced for an expense. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the fund in one fiscal year being paid in the subsequent fiscal
year and thus being treated for purposes of calculating the maximum
expenditures of the fund as having been incurred in the subsequent fiscal year.
In the event of termination or non-continuance of the Class A Plan, the fund
has 12 months to reimburse any expense which it incurs prior to such
termination or non-continuance, provided that payments by the fund during such
12-month period shall not exceed 0.25% of the fund's average daily net assets
attributable to Class A shares during such period. See "Annual Fee, Expense and
Other Information" for the amount, if any, of carryover of distribution
expenses as of the end of the most recent calendar year.
Class C Plan. Commissions on the sale of Class C shares of up to 0.75% of the
amount invested in Class C shares are paid to broker-dealers who have sales
agreements with PFD. PFD may also advance to dealers the first-year service fee
payable under the Class C Plan at a rate up to 0.25% of the purchase price of
such shares. As compensation for such advance of the service fee, PFD may
retain the service fee paid by the fund with respect to such shares for the
first year after purchase.
The Class C Plan provides that the fund will pay PFD, as the fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers that enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of
personal services and/or account maintenance services rendered by the dealer
with respect to Class C shares. PFD will advance to dealers the first-year
service fee at a rate equal to 0.25% of the amount invested. As compensation
therefor, PFD may retain the service fee paid by the fund with respect to such
shares for the first year after purchase. Commencing in the 13th month
following the purchase of Class C shares, dealers will become eligible for
additional annual distribution fees and service
35
fees of up to 0.75% and 0.25%, respectively, of the net asset value of such
shares. Dealers may from time to time be required to meet certain other
criteria in order to receive service fees. PFD or its affiliates are entitled
to retain all service fees payable under the Class C Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to Class C shares of
the fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel, office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. When a broker-dealer sells Class C shares and
elects, with PFD's approval, to waive its right to receive the commission
normally paid at the time of the sale, PFD may cause all or a portion of the
distribution fees described above to be paid to the broker-dealer.
General
In accordance with the terms of each Plan, PFD provides to the fund for review
by the Trustees a quarterly written report of the amounts expended under the
Plan and the purposes for which such expenditures were made. In the Trustees'
quarterly review of the Plans, they will consider the continued appropriateness
and the level of reimbursement or compensation the Plans provide.
No interested person of the fund, nor any Trustee of the fund who is not an
interested person of the fund, has any direct or indirect financial interest in
the operation of the Plans except to the extent that PFD and certain of its
employees may be deemed to have such an interest as a result of receiving a
portion of the amounts expended under the Plans by the fund and except to the
extent certain officers may have an interest in PFD's ultimate parent,
UniCredito Italiano, or in UniCredito Italiano's subsidiaries.
Each Plan's adoption, terms, continuance and termination are governed by Rule
12b-1 under the 1940 Act. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit the fund and its current and
future shareholders. The Plans may not be amended to increase materially the
annual percentage limitation of average net assets which may be spent for the
services described therein without approval of the shareholders of the fund
affected thereby, and material amendments of the Plans must also be approved by
the Trustees as provided in Rule 12b-1.
See "Annual Fee, Expense and Other Information" for fund expenses under the
Class A Plan and Class C Plan and CDSCs paid to PFD for the most recently
completed fiscal year.
Upon redemption, Class A shares and Class C shares may be subject to a 1% CDSC.
No front-end, deferred or asset based sales charges are applicable to class Y
shareholders.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The fund has contracted with PIMSS, 60 State Street, Boston, Massachusetts
02109, to act as shareholder servicing and transfer agent for the fund.
Under the terms of its contract with the fund, PIMSS services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the fund; (ii) distributing dividends
36
and capital gains associated with the fund's portfolio; and (iii) maintaining
account records and responding to shareholder inquiries.
PIMSS receives an annual fee of $26.60 for each shareholder account from the
fund as compensation for the services described above. PIMSS is also reimbursed
by the fund for its cash out-of-pocket expenditures. The fund may compensate
entities which have agreed to provide certain sub-accounting services such as
specific transaction processing and recordkeeping services. Any such payments
by the fund would be in lieu of the per account fee which would otherwise be
paid by the fund to PIMSS.
7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
the custodian of the fund's assets. The custodian's responsibilities include
safekeeping and controlling the fund's cash and securities, handling the
receipt and delivery of securities, and collecting interest and dividends on
the fund's investments.
8. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116, the
fund's independent registered public accounting firm, provides audit services,
tax return review, and assistance and consultation with respect to the
preparation of filings with the SEC.
9. PORTFOLIO MANAGEMENT
Additional Information About the Portfolio Manager
Other Accounts Managed by the Portfolio Manager. The table below indicates, for
the portfolio manager of the fund, information about the accounts other than
the fund over which the portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of December 31, 2006. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities ("UCITS") and other non-U.S.
investment funds and group trusts, and "Other Accounts" may include separate
accounts for institutions or individuals, insurance company general or separate
accounts, pension funds and other similar institutional accounts but generally
do not include the portfolio manager's personal investment accounts or those
which the manager may be deemed to own beneficially under the code of ethics.
Certain funds and other accounts managed by the portfolio manager may have
substantially similar investment strategies.
Number of
Accounts Assets
Managed Managed
for which for which
Advisory Advisory
Name of Number of Fee is Fee is
Portfolio Type of Accounts Total Assets Performance- Performance-
Manager Account Managed Managed Based Based
Andrew Other Registered 4 $1,099,155,000 2 $1,067,240,000
Acheson Investment
Companies
Other Pooled 2 $ 613,554,000 1 $ 563,459,000
Investment
Vehicles
Other Accounts 11 $ 336,237,000 0 $ 0
37
Potential Conflicts of Interest. When a portfolio manager is responsible for
the management of more than one account, the potential arises for the portfolio
manager to favor one account over another. The principal types of potential
conflicts of interest that may arise are discussed below. For the reasons
outlined below, Pioneer does not believe that any material conflicts are likely
to arise out of a portfolio manager's responsibility for the management of the
fund as well as one or more other accounts. Although Pioneer has adopted
procedures that it believes are reasonably designed to detect and prevent
violations of the federal securities laws and to mitigate the potential for
conflicts of interest to affect its portfolio management decisions, there can
be no assurance that all conflicts will be identified or that all procedures
will be effective in mitigating the potential for such risks. Generally, the
risks of such conflicts of interests are increased to the extent that a
portfolio manager has a financial incentive to favor one account over another.
Pioneer has structured its compensation arrangements in a manner that is
intended to limit such potential for conflicts of interests. See "Compensation
of Portfolio Managers" below.
o A portfolio manager could favor one account over another in allocating
new investment opportunities that have limited supply, such as initial
public offerings and private placements. If, for example, an initial
public offering that was expected to appreciate in value significantly
shortly after the offering was allocated to a single account, that account
may be expected to have better investment performance than other accounts
that did not receive an allocation of the initial public offering.
Generally, investments for which there is limited availability are
allocated based upon a range of factors including available cash and
consistency with the accounts' investment objectives and policies. This
allocation methodology necessarily involves some subjective elements but
is intended over time to treat each client in an equitable and fair
manner. Generally, the investment opportunity is allocated among
participating accounts on a pro rata basis. Although Pioneer believes that
its practices are reasonably designed to treat each client in an equitable
and fair manner, there may be instances where a fund may not participate,
or may participate to a lesser degree than other clients, in the
allocation of an investment opportunity.
o A portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If a portfolio manager
determines to purchase a security for more than one account in an
aggregate amount that may influence the market price of the security,
accounts that purchased or sold the security first may receive a more
favorable price than accounts that made subsequent transactions. The less
liquid the market for the security or the greater the percentage that the
proposed aggregate purchases or sales represent of average daily trading
volume, the greater the potential for accounts that make subsequent
purchases or sales to receive a less favorable price. When a portfolio
manager intends to trade the same security on the same day for more than
one account, the trades typically are "bunched," which means that the
trades for the individual accounts are aggregated and each account
receives the same price. There are some types of accounts as to which
bunching may not be possible for contractual reasons (such as directed
brokerage arrangements). Circumstances may also arise where the trader
believes that bunching the orders may not result in the best possible
price. Where those accounts or circumstances are involved, Pioneer will
place the order in a manner intended to result in as favorable a price as
possible for such client.
38
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater
degree than other accounts managed by the portfolio manager. If, for
example, the portfolio manager receives a bonus based upon the performance
of certain accounts relative to a benchmark while other accounts are
disregarded for this purpose, the portfolio manager will have a financial
incentive to seek to have the accounts that determine the portfolio
manager's bonus achieve the best possible performance to the possible
detriment of other accounts. Similarly, if Pioneer receives a
performance-based advisory fee, the portfolio manager may favor that
account, whether or not the performance of that account directly
determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager has a
beneficial interest in the account, in order to benefit a large client or
to compensate a client that had poor returns. For example, if the
portfolio manager held an interest in an investment partnership that was
one of the accounts managed by the portfolio manager, the portfolio
manager would have an economic incentive to favor the account in which the
portfolio manager held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise.
For example, if a portfolio manager purchases a security for one account
and sells the same security for another account, such trading pattern may
disadvantage either the account that is long or short. In making portfolio
manager assignments, Pioneer seeks to avoid such potentially conflicting
situations. However, where a portfolio manager is responsible for accounts
with differing investment objectives and policies, it is possible that the
portfolio manager will conclude that it is in the best interest of one
account to sell a portfolio security while another account continues to
hold or increase the holding in such security.
Compensation of Portfolio Managers. Pioneer has adopted a system of
compensation for portfolio managers that seeks to align the financial interests
of the portfolio managers with those of shareholders of the accounts (including
Pioneer funds) the portfolio managers manage, as well as with the financial
performance of Pioneer. The compensation program for all Pioneer portfolio
managers includes a base salary (determined by the rank and tenure of the
employee) and an annual bonus program, as well as customary benefits that are
offered generally to all full-time employees. Base compensation is fixed and
normally reevaluated on an annual basis. Pioneer seeks to set base compensation
at market rates, taking into account the experience and responsibilities of the
portfolio manager. The bonus plan is intended to provide a competitive level of
annual bonus compensation that is tied to the portfolio manager achieving
superior investment performance and align the interests of the investment
professional with those of shareholders, as well as with the financial
performance of Pioneer. Any bonus under the plan is completely discretionary,
with a maximum annual bonus that may be in excess of base salary. The annual
bonus is based upon a combination of the following factors:
o Quantitative Investment Performance. The quantitative investment
performance calculation is based on pre-tax investment performance of all
of the accounts managed by the portfolio manager (which includes the fund
and any other accounts managed by the portfolio manager) over a one-year
period (20% weighting) and four-year period (80% weighting), measured for
periods ending on December 31. The accounts, which include the fund, are
ranked against a group of mutual funds with similar investment objectives
and investment focus (60%) and a broad-based securities market index
measuring the performance of the same type of securities in which the
accounts invest (40%), which, in the case of the fund, is the Russell 1000
Growth Index. As a result of
39
these two benchmarks, the performance of the portfolio manager for
compensation purposes is measured against the criteria that are relevant
to the portfolio manager's competitive universe.
o Qualitative Performance. The qualitative performance component with
respect to all of the accounts managed by the portfolio manager includes
objectives, such as effectiveness in the areas of teamwork, leadership,
communications and marketing, that are mutually established and evaluated
by each portfolio manager and management.
o Pioneer Results and Business Line Results. Pioneer's financial
performance, as well as the investment performance of its investment
management group, affect a portfolio manager's actual bonus by a leverage
factor of plus or minus (+/-) a predetermined percentage.
The quantitative and qualitative performance components comprise 80% and 20%,
respectively, of the overall bonus calculation (on a pre-adjustment basis). A
portion of the annual bonus is deferred for a specified period and may be
invested in one or more Pioneer funds.
Certain portfolio managers may participate in other programs designed to reward
and retain key contributors. Senior executives or other key employees may be
granted performance units based on the stock price performance of UniCredito
Italiano and the financial performance of Pioneer Global Asset Management
S.p.A., which are affiliates of Pioneer. Portfolio managers also may
participate in a deferred compensation program, whereby deferred amounts are
invested in one or more Pioneer funds.
Share Ownership by Portfolio Managers. The following table indicates as of
December 31, 2006 the value, within the indicated range, of shares beneficially
owned by the portfolio managers of the fund.
Name of Portfolio Manager Beneficial Ownership of the Fund*
Andrew Acheson E
* Key to Dollar Ranges
A. None
B. $1--$10,000
C. $10,001--$50,000
D. $50,001--$100,000
E. $100,001--$500,000
F. $500,001--$1,000,000
G. Over $1,000,000
10. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by Pioneer pursuant to authority contained in the fund's
management contract. Securities purchased and sold on behalf of the fund
normally will be traded in the over-the counter market on a net basis (i.e.
without commission) through dealers acting for their own account and not as
brokers or otherwise through transactions directly with the issuer of the
instrument. The cost of securities purchased from underwriters includes an
underwriter's commission or concession, and the prices at which securities are
purchased and sold from and to dealers include a dealer's markup or markdown.
Pioneer normally seeks to deal directly with the primary market makers unless,
in its opinion, better prices are available elsewhere. Some securities are
purchased and sold on an exchange or in over-the-counter transactions conducted
on an
40
agency basis involving a commission. Pioneer seeks to obtain the best execution
on portfolio trades. The price of securities and any commission rate paid are
always factors, but frequently not the only factors, in judging best execution.
In selecting brokers or dealers, Pioneer considers various relevant factors,
including, but not limited to, the size and type of the transaction; the nature
and character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability and financial condition of the
dealer; the dealer's execution services rendered on a continuing basis; and the
reasonableness of any dealer spreads. Transactions in non-U.S. equity
securities are executed by broker-dealers in non-U.S. countries in which
commission rates may not be negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or research
services to the fund and/or other investment companies or other accounts
managed by Pioneer over which it or its affiliates exercise investment
discretion. In addition, consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, if Pioneer determines in good faith that the
amount of commissions charged by a broker-dealer is reasonable in relation to
the value of the brokerage and research services provided by such broker, the
fund may pay commissions to such broker-dealer in an amount greater than the
amount another firm may charge. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; providing stock quotation services, credit rating service
information and comparative fund statistics; furnishing analyses, electronic
information services, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and performance of
accounts and particular investment decisions; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). Pioneer maintains a listing of broker-dealers who provide such
services on a regular basis. However, because many transactions on behalf of
the fund and other investment companies or accounts managed by Pioneer are
placed with broker-dealers (including broker-dealers on the listing) without
regard to the furnishing of such services, it is not possible to estimate the
proportion of such transactions directed to such dealers solely because such
services were provided. Pioneer believes that no exact dollar value can be
calculated for such services.
The research received from broker-dealers may be useful to Pioneer in rendering
investment management services to the fund as well as other investment
companies or other accounts managed by Pioneer, although not all such research
may be useful to the fund. Conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of such other accounts
may be useful to Pioneer in carrying out its obligations to the fund. The
receipt of such research has not reduced Pioneer's normal independent research
activities; however, it enables Pioneer to avoid the additional expenses which
might otherwise be incurred if it were to attempt to develop comparable
information through its own staff.
The fund may participate in third-party brokerage and/or expense offset
arrangements to reduce the fund's total operating expenses. Pursuant to
third-party brokerage arrangements, the fund may incur lower expenses by
directing brokerage to third-party broker-dealers which have agreed to use part
of their commission to pay the fund's fees to service providers unaffiliated
with Pioneer or other expenses. Since the commissions paid to the third party
brokers reflect a commission cost that the fund would generally expect to incur
on its brokerage transactions but not necessarily the lowest possible
commission, this arrangement is intended to reduce the fund's operating
expenses without increasing the cost of its brokerage commissions. Since use of
such directed brokerage is subject to the requirement to achieve best execution
in connection with the fund's brokerage transactions, there can be no assurance
that such arrangements will be utilized. Pursuant to expense offset
arrangements, the fund may incur lower transfer agency expenses due to interest
earned on cash held with the transfer agent. See "Financial highlights" in the
prospectus.
41
See the table in "Annual Fee, Expense and Other Information" for aggregate
brokerage and underwriting commissions paid by the fund in connection with its
portfolio transactions during recently completed fiscal years. The Board of
Trustees periodically reviews Pioneer's performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of the fund.
11. DESCRIPTION OF SHARES
As an open-end management investment company, the fund continuously offers its
shares to the public and under normal conditions must redeem its shares upon
the demand of any shareholder at the next determined net asset value per share
less any applicable CDSC. See "Sales Charges." When issued and paid for in
accordance with the terms of the prospectuses and statements of additional
information, shares of the fund are fully paid and non-assessable. Shares will
remain on deposit with the fund's transfer agent and certificates will not
normally be issued.
The fund's Agreement and Declaration of Trust, dated as of December 8, 1997, as
amended and restated from time to time (the "Declaration"), permits the Board
of Trustees to authorize the issuance of an unlimited number of full and
fractional shares of beneficial interest which may be divided into such
separate series as the Trustees may establish. Currently, the fund consists of
only one series. The Trustees may, however, establish additional series of
shares and may divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
fund. The Declaration further authorizes the Trustees to classify or reclassify
any series of the shares into one or more classes. Pursuant thereto, the
Trustees have authorized the issuance of four classes of shares of the fund,
designated as Class A shares, Class C shares, Class Y shares and Class P
shares. Each share of a class of the fund represents an equal proportionate
interest in the assets of the fund allocable to that class. Upon liquidation of
the fund, shareholders of each class of the fund are entitled to share pro rata
in the fund's net assets allocable to such class available for distribution to
shareholders. The fund reserves the right to create and issue additional series
or classes of shares, in which case the shares of each class of a series would
participate equally in the earnings, dividends and assets allocable to that
class of the particular series.
Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. The fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The shares of each class represent an interest in the same portfolio of
investments of the fund. Each class has equal rights as to voting, redemption,
dividends and liquidation, except that each class bears different distribution
and transfer agent fees and may bear other expenses properly attributable to
the particular class. Class A and Class C shareholders have exclusive voting
rights with respect to the Rule 12b-1 Plans adopted by holders of those shares
in connection with the distribution of shares.
The shares of each series of the fund are entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the fund vote together as a
class on matters that affect all series of the fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely
42
affecting the rights of shareholders may be made to the Declaration without the
affirmative vote of a majority of the fund's shares. Shares have no preemptive
or conversion rights.
As a Delaware statutory trust, the fund's operations are governed by the
Declaration. A copy of the fund's Certificate of Trust, dated December 8, 1997,
is on file with the office of the Secretary of State of Delaware. Generally,
Delaware statutory trust shareholders are not personally liable for obligations
of the Delaware statutory trust under Delaware law. The Delaware Statutory
Trust Act (the "Delaware Act") provides that a shareholder of a Delaware
statutory trust shall be entitled to the same limitation of liability extended
to shareholders of private for-profit corporations. The Declaration expressly
provides that the fund is organized under the Delaware Act and that the
Declaration is to be governed by Delaware law. There is nevertheless a
possibility that a Delaware statutory trust, such as the fund, might become a
party to an action in another state whose courts refused to apply Delaware law,
in which case the fund's shareholders could become subject to personal
liability.
To guard against this risk, the Declaration (i) contains an express disclaimer
of shareholder liability for acts or obligations of the fund and provides that
notice of such disclaimer may be given in each agreement, obligation or
instrument entered into or executed by the fund or its Trustees, (ii) provides
for the indemnification out of fund property of any shareholders held
personally liable for any obligations of the fund or any series of the fund and
(iii) provides that the fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
fund itself would be unable to meet its obligations. In light of Delaware law,
the nature of the fund's business and the nature of its assets, the risk of
personal liability to a fund shareholder is remote.
In addition to the requirements under Delaware law, the Declaration provides
that a shareholder of the fund may bring a derivative action on behalf of the
fund only if the following conditions are met: (a) shareholders eligible to
bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the fund, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
The Declaration further provides that the fund shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the fund.
The Declaration does not authorize the fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason
of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
The Declaration provides that any Trustee who is not an "interested person" of
Pioneer shall be considered to be independent for purposes of Delaware law
notwithstanding the fact that such Trustee receives compensation for serving as
a trustee of the fund or other investment companies for which Pioneer acts as
investment adviser.
43
12. SALES CHARGES
The fund continuously offers four classes of shares designated as Class A
shares, Class C shares, Class Y shares and Class P shares as described in the
prospectuses and the statements of additional information. The fund offers its
shares at a reduced sales charge to investors who meet certain criteria that
permit the fund's shares to be sold with low distribution costs. These criteria
are described below or in the Class A and Class C shares prospectus. Creation
and sales charges on purchases or sales of Class P shares are described in the
fund's Class P shares prospectus and statement of additional information.
Class A Share Sales Charges
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
Sales Charge as a % of
----------------------
Offering Net Amount Dealer
Amount of Purchase Price Invested Reallowance
Less than $50,000 5.75 6.10 5.00
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than $250,000 3.50 3.63 3.00
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00 0.00 see below
The schedule of sales charges above is applicable to purchases of Class A
shares of the fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Sections 401 or 408 of the Code although more than one beneficiary is involved.
The sales charges applicable to a current purchase of Class A shares of the
fund by a person listed above is determined by adding the value of shares to be
purchased to the aggregate value (at the then current offering price) of shares
of any of the other Pioneer mutual funds previously purchased and then owned,
provided PFD is notified by such person or his or her broker-dealer each time a
purchase is made which would qualify. Pioneer mutual funds include all mutual
funds for which PFD serves as principal underwriter. At the sole discretion of
PFD, holdings of funds domiciled outside the U.S., but which are managed by
affiliates of Pioneer, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1 million
or more, or for purchases by participants in employer-sponsored retirement
plans described below subject to a CDSC of 1% which may be imposed in the event
of a redemption of Class A shares within 18 months of purchase (one year of
purchase for shares purchased prior to February 1, 2004). PFD may, in its
discretion, pay a commission to broker-dealers who initiate and are responsible
for such purchases as follows:
Accounts Other than Employer-Sponsored Retirement Plans
1.00% Up to $4 million
0.50% Next $46 million
0.25% Over $50 million
Employer-Sponsored Retirement Plans
0.50% Up to $50 million
0.25% Over $50 million
44
These commissions shall not be payable if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
employer-sponsored retirement plans with at least $10 million in total plan
assets (or that has 1,000 or more eligible participants for employer-sponsored
retirement plans with accounts established with Pioneer on or before March 31,
2004) will be required to return any commissions paid or a pro rata portion
thereof if the retirement plan redeems its shares within 18 months of purchase.
Letter of Intent ("LOI"). Reduced sales charges are available for purchases of
$100,000 or more of Class A shares (excluding any reinvestments of dividends
and capital gain distributions) made within a 13-month period pursuant to an
LOI which may be established by completing the Letter of Intent section of the
Account Application. The reduced sales charge will be the charge that would be
applicable to the purchase of the specified amount of Class A shares as if the
shares had all been purchased at the same time. A purchase not made pursuant to
an LOI may be included if the LOI is submitted to PIMSS within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the fund and all
other Pioneer mutual funds held of record as of the date of your LOI in the
amount used to determine the applicable sales charge for the Class A shares to
be purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PIMSS, registered in your name, until the terms of
the LOI are fulfilled. When you sign the Account Application, you agree to
irrevocably appoint PIMSS your attorney-in-fact to surrender for redemption any
or all shares held in escrow with full power of substitution. An LOI is not a
binding obligation upon the investor to purchase, or the fund to sell, the
amount specified in the LOI.
If the total purchases, less redemptions, exceed the amount specified under the
LOI and are in an amount that would qualify for a further quantity discount,
all transactions will be recomputed on the expiration date of the LOI to effect
the lower sales charge. Any difference in the sales charge resulting from such
recomputation will be either delivered to you in cash or invested in additional
shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI.
When the difference is paid, the shares held in escrow will be deposited to
your account. If you do not pay the difference in sales charge within 20 days
after written request from PFD or your dealer, PIMSS, after receiving
instructions from PFD, will redeem the appropriate number of shares held in
escrow to realize the difference and release any excess.
Class C Shares
You may buy Class C shares at net asset value per share next computed after
receipt of a purchase order without the imposition of an initial sales charge;
however, Class C shares redeemed within one year of purchase will be subject to
a CDSC of 1%. The charge will be assessed on the amount equal to the lesser of
the current market value or the original purchase cost of the shares being
redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gain distributions. Class C shares do not convert to any
other class of fund shares.
45
In processing redemptions of Class C shares, the fund will first redeem shares
not subject to any CDSC and then shares held for the longest period of time
during the one-year period. As a result, you will pay the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Class Y Shares
No front-end, deferred or asset based sales charges are applicable to Class Y
shares.
Additional Payments to Financial Intermediaries
The financial intermediaries through which shares are purchased may receive all
or a portion of the sales charges and Rule 12b-1 fees discussed above. In
addition to those payments, Pioneer or one or more of its affiliates
(collectively, "Pioneer Affiliates") may make additional payments to financial
intermediaries in connection with the promotion and sale of shares of Pioneer
funds. Pioneer Affiliates make these payments from their own resources, which
include resources that derive from compensation for providing services to the
Pioneer funds. These additional payments are described below. The categories
described below are not mutually exclusive. The same financial intermediary may
receive payments under more than one or all categories. Many financial
intermediaries that sell shares of Pioneer funds receive one or more types of
these payments. The financial intermediary typically initiates requests for
additional compensation. Pioneer negotiates these arrangements individually
with financial intermediaries and the amount of payments and the specific
arrangements may differ significantly. A financial intermediary also may
receive different levels of compensation with respect to sales or assets
attributable to different types of clients of the same intermediary or
different Pioneer funds. Where services are provided, the costs of providing
the services and the overall array of services provided may vary from one
financial intermediary to another. Pioneer Affiliates do not make an
independent assessment of the cost of providing such services. While the
financial intermediaries may request additional compensation from Pioneer to
offset costs incurred by the financial intermediary in servicing its clients,
the financial intermediary may earn a profit on these payments, since the
amount of the payment may exceed the financial intermediary's costs. In this
context, "financial intermediary" includes any broker, dealer, bank (including
bank trust departments), insurance company, transfer agent, registered
investment adviser, financial planner, retirement plan administrator and any
other financial intermediary having a selling, administrative and shareholder
servicing or similar agreement with a Pioneer Affiliate.
A financial intermediary's receipt of additional compensation may create
conflicts of interest between the financial intermediary and its clients. Each
type of payment discussed below may provide your financial intermediary with an
economic incentive to actively promote the Pioneer funds over other mutual
funds or cooperate with the distributor's promotional efforts. The receipt of
additional compensation for Pioneer Affiliates may be an important
consideration in a financial intermediary's willingness to support the sale of
the Pioneer funds through the financial intermediary's distribution system.
Pioneer Affiliates are motivated to make the payments described above since
they promote the sale of Pioneer fund shares and the retention of those
investments by clients of financial intermediaries. In certain cases these
payments could be significant to the financial intermediary. The financial
intermediary may charge additional fees or commissions other than those
disclosed in the prospectus. Financial intermediaries may categorize and
disclose these arrangements differently than Pioneer Affiliates do. To the
extent financial intermediaries sell more shares of the funds or retain shares
of the funds in their clients' accounts, Pioneer Affiliates benefit from the
incremental management and other fees paid to Pioneer Affiliates by the funds
46
with respect to those assets.
Revenue Sharing Payments. Pioneer Affiliates make revenue sharing payments as
incentives to certain financial intermediaries to promote and sell shares of
Pioneer funds. The benefits Pioneer Affiliates receive when they make these
payments include, among other things, entry into or increased visibility in the
financial intermediary's sales system, participation by the intermediary in the
distributor's marketing efforts (such as helping facilitate or providing
financial assistance for conferences, seminars or other programs at which
Pioneer personnel may make presentations on the funds to the intermediary's
sales force), placement on the financial intermediary's preferred fund list,
and access (in some cases, on a preferential basis over other competitors) to
individual members of the financial intermediary's sales force or management.
Revenue sharing payments are sometimes referred to as "shelf space" payments
because the payments compensate the financial intermediary for including
Pioneer funds in its fund sales system (on its "shelf space"). Pioneer
Affiliates compensate financial intermediaries differently depending typically
on the level and/or type of considerations provided by the financial
intermediary.
The revenue sharing payments Pioneer Affiliates make may be calculated on sales
of shares of Pioneer funds ("Sales-Based Payments"); although there is no
policy limiting the amount of Sales-Based Payments any one financial
intermediary may receive, the total amount of such payments normally does not
exceed 0.25% per annum of those assets. Such payments also may be calculated on
the average daily net assets of the applicable Pioneer funds attributable to
that particular financial intermediary ("Asset-Based Payments"); although there
is no policy limiting the amount of Asset-Based Payments any one financial
intermediary may receive, the total amount of such payments normally does not
exceed 0.15% per annum of those assets. Sales-Based Payments primarily create
incentives to make new sales of shares of Pioneer funds and Asset-Based
Payments primarily create incentives to retain previously sold shares of
Pioneer funds in investor accounts. Pioneer Affiliates may pay a financial
intermediary either or both Sales-Based Payments and Asset-Based Payments.
Administrative and Processing Support Payments. Pioneer Affiliates also may
make payments to certain financial intermediaries that sell Pioneer fund shares
for certain administrative services, including record keeping and
sub-accounting shareholder accounts, to the extent that the funds do not pay
for these costs directly. Pioneer Affiliates also may make payments to certain
financial intermediaries that sell Pioneer fund shares in connection with
client account maintenance support, statement preparation and transaction
processing. The types of payments that Pioneer Affiliates may make under this
category include, among others, payment of ticket charges per purchase or
exchange order placed by a financial intermediary, payment of networking fees
in connection with certain mutual fund trading systems, or one-time payments
for ancillary services such as setting up funds on a financial intermediary's
mutual fund trading system.
Other Payments. From time to time, Pioneer Affiliates, at their expense, may
provide additional compensation to financial intermediaries which sell or
arrange for the sale of shares of the Pioneer funds. Such compensation provided
by Pioneer Affiliates may include financial assistance to financial
intermediaries that enable Pioneer Affiliates to participate in and/or present
at conferences or seminars, sales or training programs for invited registered
representatives and other employees, client entertainment, client and investor
events, and other financial intermediary-sponsored events, and travel expenses,
including lodging incurred by registered representatives and other employees in
connection with client prospecting, retention and due diligence trips. Other
compensation may be offered to the extent not prohibited by federal or state
laws or any self-regulatory agency, such as the NASD. Pioneer Affiliates make
payments for entertainment events they deem appropriate, subject to Pioneer
Affiliates' guidelines and applicable law. These payments may vary depending
upon the nature of the event or the relationship.
47
As of January 1, 2007, Pioneer anticipates that the following broker-dealers or
their affiliates will receive additional payments as described in the fund's
prospectuses and statement of additional information:
A. G. Edwards & Sons Inc.
ADP Clearing & Outsourcing Services
AIG VALIC
Ameriprise Financial Services, Inc.
AmSouth Investment Services, Inc.
AXA Advisors, LLC
Bear, Stearns & Co. Inc.
Charles Schwab & Co., Inc.
Chevy Chase Securities, Inc.
Citigroup Global Markets Inc.
Citistreet Equities LLC
Commonwealth Financial Network
D. A. Davidson & Co.
Delaware Distributors, L.P.
Edward D. Jones & Co., L.P.
Eisner Retirement Solutions LLC
Ferris, Baker Watts Inc.
Fidelity Brokerage Services LLC
First Clearing, LLC
First Command Financial Planning, Inc.
H&R Block Financial Advisors, Inc.
Hewitt Financial Services LLC
ING
J.J.B. Hilliard, W.L Lyons, Inc.
Janney Montgomery Scott LLC
Jefferson National Securities Corporation
Legend Equities Corporation
Lincoln Investment Planning, Inc.
Linsco/Private Ledger Corp.
McDonald Investments Inc.
Merrill Lynch & Co., Inc.
Mesirow Financial, Inc.
MetLife Securities Inc.
Morgan Stanley DW Inc.
Mutual of Omaha Investor Services, Inc.
Mutual Services Corporation
N.I.S. Financial Services, Inc.
National Financial Services LLC
National Investor Services Corp.
Nationwide Securities, Inc.
OneAmerica Securities, Inc.
Oppenheimer & Co., Inc.
Pershing LLC
PFS Investments Inc
Prudential Financial
Primevest Financial Services, Inc.
Raymond James Financial Services, Inc.
48
RBC Dain Rauscher Inc.
Reliance Securities, LLC
Robert W. Baird & Co., Inc.
Scott and Stringfellow, Inc.
Scottrade, Inc.
Securities America, Inc.
Southwest Securities, Inc.
Sterne Agee & Leach, Inc.
Stifel Nicholas & Company, Inc.
Symetra Investment Services, Inc.
UnionBanc Investment Services LLC
UBS Financial Services Inc.
Wachovia Securities
Wells Fargo Investments, LLC
Please contact your financial intermediary for details about any payments it
receives from Pioneer Affiliates or the funds, as well as about fees and/or
commissions it charges.
13. REDEEMING SHARES
Redemptions may be suspended or payment postponed during any period in which
any of the following conditions exist: the New York Stock Exchange (the
"Exchange") is closed or trading on the Exchange is restricted; an emergency
exists as a result of which disposal by the fund of securities owned by it is
not reasonably practicable or it is not reasonably practicable for the fund to
fairly determine the value of the net assets of its portfolio; or the SEC, by
order, so permits.
Redemptions and repurchases are taxable transactions for shareholders that are
subject to U.S. federal income tax. The net asset value per share received upon
redemption or repurchase may be more or less than the cost of shares to an
investor, depending on the market value of the portfolio at the time of
redemption or repurchase.
Systematic Withdrawal Plan(s) ("SWP") (Class A and Class C Shares). A SWP is
designed to provide a convenient method of receiving fixed payments at regular
intervals from fund share accounts having a total value of not less than
$10,000. You must also be reinvesting all dividends and capital gain
distributions to use the SWP option.
Periodic payments of $50 or more will be deposited monthly, quarterly,
semiannually or annually directly into a bank account designated by the
applicant or will be sent by check to the applicant, or any person designated
by the applicant. Payments can be made either by check or electronic funds
transfer to a bank account designated by you. Withdrawals from Class C share
accounts are limited to 10% of the value of the account at the time the SWP is
established. See "Qualifying for a reduced sales charge" in the prospectus. If
you direct that withdrawal payments be paid to another person, want to change
the bank where payments are sent or designate an address that is different from
the account's address of record after you have opened your account, a medallion
signature guarantee must accompany your instructions. Withdrawals under the SWP
are redemptions that may have tax consequences for you.
Purchases of Class A shares of the fund at a time when you have a SWP in effect
may result in the payment of unnecessary sales charges and may, therefore, be
disadvantageous. SWP redemptions reduce and may ultimately exhaust the number
of shares in your account. In addition, the amounts received by a
49
shareholder cannot be considered as yield or income on his or her investment
because part of such payments may be a return of his or her investment.
A SWP may be terminated at any time (1) by written notice to PIMSS or from
PIMSS to the shareholder; (2) upon receipt by PIMSS of appropriate evidence of
the shareholder's death; or (3) when all shares in the shareholder's account
have been redeemed.
You may obtain additional information by calling PIMSS at 1-800-225-6292.
Reinstatement Privilege (Class A Shares). Subject to the provisions outlined in
the prospectus, you may reinvest all or part of your sale proceeds from Class A
shares without a sales charge into Class A shares of a Pioneer mutual fund.
However, the distributor will not pay your investment firm a commission on any
reinvested amount.
14. TELEPHONE AND ONLINE TRANSACTIONS
You may purchase, exchange or sell Class A or Class C shares by telephone or
online. Class Y shares may not be purchased by telephone and Class Y
shareowners are not eligible for online transaction privileges. See the
prospectuses for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 7:00 p.m. Eastern time on weekdays. (Class Y account
holders should contact Pioneer's Group Plans Department at 1-888-294-4480
between 9:00 a.m. and 6:0 p.m. Eastern time on weekdays.) Computer-assisted
telephone transactions may be available to shareholders who have prerecorded
certain bank information (see "FactFone(SM)"). You are strongly urged to
consult with your investment professional prior to requesting any telephone or
online transaction.
Telephone Transaction Privileges. To confirm that each transaction instruction
received by telephone is genuine, the fund will record each telephone
transaction, require the caller to provide validating information for the
account and send you a written confirmation of each telephone transaction.
Different procedures may apply to accounts that are registered to non-U.S.
citizens or that are held in the name of an institution or in the name of an
investment broker-dealer or other third party. If reasonable procedures, such
as those described above, are not followed, the fund may be liable for any loss
due to unauthorized or fraudulent instructions. The fund may implement other
procedures from time to time. In all other cases, neither the fund, PIMSS nor
PFD will be responsible for the authenticity of instructions received by
telephone; therefore, you bear the risk of loss for unauthorized or fraudulent
telephone transactions.
Online Transaction Privileges. If your account is registered in your name, you
may be able buy, exchange or sell fund shares online. Your investment firm may
also be able to buy, exchange or sell your fund shares online.
To establish online transaction privileges:
o For new accounts, complete the online section of the account application
o For existing accounts, complete an account options form, write to the
transfer agent or complete the online authorization screen on
www.pioneerfunds.com
To use online transactions, you must read and agree to the terms of an online
transaction agreement available on the Pioneer website. When you or your
investment firm requests an online transaction the transfer agent
electronically records the transaction, requires an authorizing password and
sends a written confirmation. The fund may implement other procedures from time
to time. Different procedures may apply if you have a non-U.S. account or if
your account is registered in the name of an institution, broker-
50
dealer or other third party. You may not be able to use the online transaction
privilege for certain types of accounts, including most retirement accounts.
Telephone and Website Online Access. You may have difficulty contacting the
fund by telephone or accessing www.pioneerfunds.com during times of market
volatility or disruption in telephone or Internet services. On Exchange
holidays or on days when the Exchange closes early, Pioneer will adjust the
hours for the telephone center and for online transaction processing
accordingly. If you are unable to access pioneerfunds.com or to reach the fund
by telephone, you should communicate with the fund in writing.
FactFone(SM). FactFone(SM) is an automated inquiry and telephone transaction
system available to Pioneer mutual fund shareholders by dialing 1-800-225-4321.
FactFone(SM) allows shareholder access to current information on Pioneer mutual
fund accounts and to the prices and yields of all publicly available Pioneer
mutual funds. In addition, you may use FactFone(SM) to make computer-assisted
telephone purchases, exchanges or redemptions from your Pioneer mutual fund
accounts, access your account balances and last three transactions and order a
duplicate statement if you have activated your PIN. Telephone purchases or
redemptions require the establishment of a bank account of record.
Computer-assisted Class Y share telephone purchases, exchanges and redemptions
and certain other FactFone(SM) features for Class Y shareholders are not
currently available through FactFone(SM). You are strongly urged to consult
with your investment professional prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone(SM). Call
PIMSS for assistance.
FactFone(SM) allows shareholders to hear the following recorded fund
information:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for Pioneer's
money market funds; and
o dividends and capital gain distributions on all Pioneer mutual funds.
Yields are calculated in accordance with SEC mandated standard formulas.
All performance numbers communicated through FactFone(SM) represent past
performance, and figures include the maximum applicable sales charge. A
shareholder's actual yield and total return will vary with changing market
conditions. The value of each class of shares (except for Pioneer Cash Reserves
Fund, Pioneer Institutional Money Market Fund, Pioneer Tax Free Money Market
Fund and Pioneer Treasury Reserves Fund, which each seek to maintain a stable
$1.00 share price) will also vary, and such shares may be worth more or less at
redemption than their original cost.
15. PRICING OF SHARES
The net asset value per share of each class of the fund is determined as of the
close of regular trading on the Exchange (normally 4:00 p.m. Eastern time) on
each day on which the Exchange is open for trading. As of the date of this
statement of additional information, the Exchange is open for trading every
weekday except for the days the following holidays are observed: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
51
Christmas Day. The net asset value per share of each class of the fund is also
determined on any other day on which the level of trading in its portfolio
securities is sufficiently high that the current net asset value per share
might be materially affected by changes in the value of its portfolio
securities. The fund is not required to determine its net asset value per share
on any day on which no purchase orders in good order for fund shares are
received and no shares are tendered and accepted for redemption.
The fund generally values its portfolio securities using closing market prices
or readily available market quotations. The fund may use a pricing service or a
pricing matrix to value some of its assets. Securities which have not traded on
the date of valuation or securities for which sales prices are not generally
reported are valued at the mean between the current bid and asked prices.
Securities quoted in foreign currencies are converted to U.S. dollars utilizing
foreign exchange rates employed by the fund's independent pricing services.
Generally, trading in non-U.S. securities is substantially completed each day
at various times prior to the close of regular trading on the Exchange. The
values of such securities used in computing the net asset value of the fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of regular trading on the
Exchange. When closing market prices or market quotations are not available or
are considered by Pioneer to be unreliable, the fund uses a security's fair
value. Fair value is the valuation of a security determined on the basis of
factors other than market value in accordance with procedures approved by the
fund's Trustees. The fund also may use the fair value of a security, including
a non-U.S. security, when Pioneer determines that the closing market price on
the primary exchange where the security is traded no longer accurately reflects
the value of the security due to factors affecting one or more relevant
securities markets or the specific issuer. The use of fair value pricing by the
fund may cause the net asset value of its shares to differ from the net asset
value that would be calculated using closing market prices. International
securities markets may be open on days when the U.S. markets are closed. For
this reason, the value of any international securities owned by the fund could
change on a day you cannot buy or sell shares of the fund. In connection with
making fair value determinations of the value of fixed income securities, the
fund's Trustees may use a pricing matrix. Debt securities with remaining
maturities of 60 days or less are valued at amortized cost, which is a method
of determining a security's fair value.
The net asset value per share of each class of the fund is computed by taking
the value of all of the fund's assets, less the fund's liabilities, and
dividing the result by the number of outstanding shares of the fund. For
purposes of determining net asset value, expenses of the fund are accrued daily
and taken into account. The fund's maximum offering price per Class A share is
determined by adding the maximum sales charge to the net asset value per Class
A share. Class C and Class Y shares are offered at net asset value without the
imposition of an initial sales charge (Class C shares may be subject to a
CDSC).
16. TAX STATUS
The fund has elected to be treated, has qualified and intends to continue to
qualify each year as a "regulated investment company" under Subchapter M of the
Code so that it will not pay U.S. federal income tax on income and capital
gains distributed to shareholders (provided that the distribution requirements
set forth below are satisfied). In order to qualify as a regulated investment
company under Subchapter M of the Code, the fund must, among other things, (i)
derive at least 90% of its gross income for each taxable year from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities or foreign currencies, or other income
(including gains from options, futures and forward contracts) derived with
respect to its business of investing in such stock, securities or currencies
and net income derived from an interest in a qualified publicly traded
partnership (as defined in Section 851(h) of the Code) (the "90% income test")
and (ii) diversify its holdings so that, at the end of each quarter of each
taxable year: (a) at least 50% of the value of the fund's total assets is
represented by (1) cash and cash items, U.S. government securities, securities
of other regulated
52
investment companies, and (2) other securities, with such other securities
limited, in respect to any one issuer, to an amount not greater than 5% of the
value of the fund's total assets and to not more than 10% of the outstanding
voting securities of such issuer and (b) not more than 25% of the value of the
fund's total assets is invested in (1) the securities (other than U.S.
government securities and securities of other regulated investment companies)
of any one issuer, (2) the securities (other than securities of other regulated
investment companies) of two or more issuers that the fund controls and that
are engaged in the same, similar, or related trades or businesses, or (3) the
securities of one or more qualified publicly traded partnerships. For purposes
of the 90% income test, the character of income earned by certain entities in
which the fund invests that are not treated as corporations for U.S. federal
income tax purposes (e.g., partnerships (other than qualified publicly traded
partnerships) or trusts) will generally pass through to the fund. Consequently,
the fund may be required to limit its equity investments in such entities that
earn fee income, rental income or other nonqualifying income.
If the fund qualifies as a regulated investment company and properly
distributes to its shareholders each taxable year an amount equal to or
exceeding the sum of (i) 90% of its "investment company taxable income" as that
term is defined in the Code (which includes, among other things, dividends,
taxable interest, and the excess of any net short-term capital gains over net
long-term capital losses, as reduced by certain deductible expenses) without
regard to the deduction for dividends paid and (ii) 90% of the excess of its
gross tax-exempt interest, if any, over certain disallowed deductions, the fund
generally will not be subject to U.S. federal income tax on any income of the
fund, including "net capital gain" (the excess of net long-term capital gain
over net short-term capital loss), distributed to shareholders. However, if the
fund meets such distribution requirements, but chooses to retain some portion
of its investment company taxable income or net capital gain, it generally will
be subject to U.S. federal income tax at regular corporate rates on the amount
retained. The fund intends to distribute at least annually all or substantially
all of its investment company taxable income, net tax-exempt interest, and net
capital gain. If the fund does not qualify as a regulated investment company
for any taxable year, it will be treated as a U.S. corporation subject to U.S.
federal income tax, thereby subjecting any income earned by the fund to tax at
the corporate level and to a further tax at the shareholder level when such
income is distributed.
Under the Code, the fund will be subject to a nondeductible 4% U.S. federal
excise tax on a portion of its undistributed ordinary income and capital gain
net income if it fails to meet certain distribution requirements with respect
to each calendar year. The fund intends to make distributions in a timely
manner and accordingly does not expect to be subject to the excise tax.
The fund generally distributes any net short- and long-term capital gains in
November. The fund generally pays dividends from any net investment income in
December. Dividends from income and/or capital gains may also be paid at such
other times as may be necessary for the fund to avoid U.S. federal income or
excise tax.
Unless shareholders specify otherwise, all distributions from the fund will be
automatically reinvested in additional full and fractional shares of the fund.
For U.S. federal income tax purposes, all dividends generally are taxable
whether a shareholder takes them in cash or reinvests them in additional shares
of the fund. In general, assuming that the fund has sufficient earnings and
profits, dividends from investment company taxable income are taxable either as
ordinary income or, if so designated by the fund and certain other conditions
are met, as "qualified dividend income" taxable to individual shareholders at a
maximum 15% U.S. federal income tax rate.
Dividend income distributed to individual shareholders will qualify for the
maximum 15% U.S. federal income tax rate on dividends to the extent that such
dividends are attributable to "qualified dividend income," as that term is
defined in Section 1(h)(11)(B) of the Code, from the fund's investments in
53
common and preferred stock of U.S. companies and stock of certain qualified
foreign corporations, provided that certain holding period and other
requirements are met by both the fund and the shareholders. Dividends received
by the fund from REITS are generally not expected to qualify for treatment as
qualified dividend income.
A foreign corporation generally is treated as a qualified foreign corporation
if it is incorporated in a possession of the United States or it is eligible
for the benefits of certain income tax treaties with the United States. A
foreign corporation that does not meet such requirements will be treated as
qualifying with respect to dividends paid by it if the stock with respect to
which the dividends are paid is readily tradable on an established securities
market in the United States. Dividends received by the fund from passive
foreign investment companies will not qualify for the maximum 15% U.S. federal
income tax rate.
A dividend that is attributable to qualified dividend income of the fund that
is paid by the fund to an individual shareholder will not be taxable as
qualified dividend income to such shareholder if (1) the dividend is received
with respect to any share of the fund held for fewer than 61 days during the
121-day period beginning on the date which is 60 days before the date on which
such share became ex-dividend with respect to such dividend, (2) to the extent
that the shareholder is under an obligation (whether pursuant to a short sale
or otherwise) to make related payments with respect to positions in
substantially similar or related property, or (3) the shareholder elects to
have the dividend treated as investment income for purposes of the limitation
on deductibility of investment interest. The "ex-dividend" date is the date on
which the owner of the share at the commencement of such date is entitled to
receive the next issued dividend payment for such share even if the share is
sold by the owner on that date or thereafter.
Dividends from net capital gain, if any, that are designated as capital gain
dividends by the fund are taxable as long-term capital gains for U.S. federal
income tax purposes without regard to the length of time the shareholder has
held shares of the fund. Capital gain dividends distributed by the fund to
individual shareholders generally will qualify for the maximum 15% U.S. federal
income tax rate on long-term capital gains, subject to certain limited
exceptions. A shareholder should also be aware that the benefits of the
favorable tax rate applicable to long-term capital gains and qualified dividend
income may be impacted by the application of the alternative minimum tax to
individual shareholders. Under current law, the maximum 15% U.S. federal income
tax rate on qualified dividend income and long-term capital gains will cease to
apply to taxable years beginning after December 31, 2010.
Distributions by the fund in excess of the fund's current and accumulated
earnings and profits will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in its shares and any such
amount in excess of that basis will be treated as gain from the sale of shares,
as discussed below. The U.S. federal income tax status of all distributions,
including the portion of such distributions which may qualify for treatment as
qualified dividend income, will be reported to shareholders annually.
Although dividends generally will be treated as distributed when paid, any
dividend declared by the fund as of a record date in October, November or
December and paid during the following January will be treated for U.S. federal
income tax purposes as received by shareholders on December 31 of the calendar
year in which it is declared. In addition, certain other distributions made
after the close of a taxable year of the fund may be "spilled back" and treated
as paid by the fund (except for purposes of the 4% excise tax) during such
taxable year. In such case, shareholders generally will be treated as having
received such dividends in the taxable year in which the distributions were
actually made.
Foreign exchange gains and losses realized by the fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses
54
to be treated as ordinary income and losses and may affect the amount, timing
and character of distributions to shareholders. Under Treasury regulations that
may be promulgated in the future, any gains from such transactions that are not
directly related to the fund's principal business of investing in stock or
securities (or in options contracts or futures contracts with respect to stock
or securities) may have to be limited in order to enable the fund to satisfy
the 90% income test. If the net foreign exchange loss for a year were to exceed
the fund's investment company taxable income (computed without regard to such
loss), the resulting ordinary loss for such year would not be deductible by the
fund or its shareholders in future years.
If the fund acquires any equity interest (under Treasury regulations that may
be promulgated in the future, generally including not only stock but also an
option to acquire stock such as is inherent in a convertible bond) in certain
foreign corporations that receive at least 75% of their annual gross income
from passive sources (such as interest, dividends, certain rents and royalties,
or capital gains) or that hold at least 50% of their assets in investments
producing such passive income ("passive foreign investment companies"), the
fund could be subject to U.S. federal income tax and additional interest
charges on "excess distributions" received from such companies or on gain from
the sale of stock in such companies, even if all income or gain actually
received by the fund is timely distributed to its shareholders. The fund would
not be able to pass through to its shareholders any credit or deduction for
such a tax. Elections may generally be available that would ameliorate these
adverse tax consequences, but such elections could require the fund to
recognize taxable income or gain (subject to tax distribution requirements)
without the concurrent receipt of cash. These investments could also result in
the treatment of capital gains from the sale of stock of passive foreign
investment companies as ordinary income. The fund may limit and/or manage its
holdings in passive foreign investment companies to limit its tax liability or
maximize its return from these investments.
The fund may invest in debt obligations that are in the lowest rating
categories or are unrated, including debt obligations of issuers not currently
paying interest or who are in default. Investments in debt obligations that are
at risk of or in default present special tax issues for the fund. Tax rules are
not entirely clear about issues such as when the fund may cease to accrue
interest, original issue discount or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the fund, in the event it
invests in such securities, in order to seek to ensure that it distributes
sufficient income to preserve its status as a regulated investment company and
does not become subject to U.S. federal income or excise tax.
If the fund invests in certain pay-in-kind securities, zero coupon securities,
deferred interest securities or, in general, any other securities with original
issue discount (or with market discount if the fund elects to include market
discount in income currently), the fund generally must accrue income on such
investments for each taxable year, which generally will be prior to the receipt
of the corresponding cash payments. However, the fund must distribute, at least
annually, all or substantially all of its investment company taxable income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid U.S. federal income and excise
taxes. Therefore, the fund may have to dispose of its portfolio securities
under disadvantageous circumstances to generate cash, or may have to borrow the
cash, to satisfy distribution requirements.
For U.S. federal income tax purposes, the fund is permitted to carry forward a
net capital loss for any year to offset its capital gains, if any, for up to
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in U.S. federal income
tax
55
liability to the fund and are not expected to be distributed as such to
shareholders. See "Annual Fee, Expense and Other Information" for the fund's
available capital loss carryforwards.
At the time of an investor's purchase of fund shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the fund's
portfolio or to undistributed taxable income of the fund. Consequently,
subsequent distributions by the fund with respect to these shares from such
appreciation or income may be taxable to such investor even if the net asset
value of the investor's shares is, as a result of the distributions, reduced
below the investor's cost for such shares and the distributions economically
represent a return of a portion of the investment.
Redemptions and exchanges generally are taxable events for shareholders that
are subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the tax treatment of any gains or losses
recognized in such transactions. In general, if fund shares are sold, the
shareholder will recognize gain or loss equal to the difference between the
amount realized on the sale and the shareholder's adjusted basis in the shares.
Such gain or loss generally will be treated as long-term capital gain or loss
if the shares were held for more than one year and otherwise generally will be
treated as short-term capital gain or loss. Any loss recognized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
In addition, if Class A shares that have been held for less than 91 days are
redeemed and the proceeds are reinvested in Class A shares of the fund or in
Class A shares of another mutual fund at net asset value pursuant to the
reinstatement privilege, or if Class A shares in the fund that have been held
for less than 91 days are exchanged for Class A shares of another fund at net
asset value pursuant to the fund's exchange privilege, all or a portion of the
sales charge paid on the shares that are redeemed or exchanged will not be
included in the tax basis of such shares under the Code to the extent a sales
charge that would otherwise apply to the shares received is reduced pursuant to
the reinstatement or exchange privilege. In either case, the portion of the
sales charge not included in the tax basis of the shares redeemed or
surrendered in an exchange is included in the tax basis of the shares acquired
in the exchange. Losses on redemptions or other dispositions of shares may be
disallowed under "wash sale" rules in the event of other investments in the
fund (including those made pursuant to reinvestment of dividends and/or capital
gain distributions) within a period of 61 days beginning 30 days before and
ending 30 days after a redemption or other disposition of shares. In such a
case, the disallowed portion of any loss generally would be included in the
U.S. federal tax basis of the shares acquired in the other investments.
Under Treasury regulations, if a shareholder recognizes a loss with respect to
fund shares of $2 million or more for an individual shareholder, or $10 million
or more for a corporate shareholder, in any single taxable year (or greater
amounts over a combination of years), the shareholder must file with the IRS a
disclosure statement on Form 8886. Shareholders who own portfolio securities
directly are in many cases excepted from this reporting requirement but, under
current guidance, shareholders of regulated investment companies are not
excepted. A shareholder who fails to make the required disclosure to the IRS
may be subject to substantial penalties. The fact that a loss is reportable
under these regulations does not affect the legal determination of whether or
not the taxpayer's treatment of the loss is proper. Shareholders should consult
with their tax advisers to determine the applicability of these regulations in
light of their individual circumstances.
Options written or purchased and futures contracts entered into by the fund on
certain securities, indices and foreign currencies, as well as certain forward
foreign currency contracts, may cause the fund to
56
recognize gains or losses from marking-to-market even though such options may
not have lapsed, been closed out, or exercised, or such futures or forward
contracts may not have been performed or closed out. The tax rules applicable
to these contracts may affect the characterization of some capital gains and
losses realized by the fund as long-term or short-term. Certain options,
futures and forward contracts relating to foreign currency may be subject to
Section 988 of the Code, as described above, and accordingly may produce
ordinary income or loss. Additionally, the fund may be required to recognize
gain if an option, futures contract, forward contract, short sale or other
transaction that is not subject to the mark-to-market rules is treated as a
"constructive sale" of an "appreciated financial position" held by the fund
under Section 1259 of the Code. Any net mark-to-market gains and/or gains from
constructive sales may also have to be distributed to satisfy the distribution
requirements referred to above even though the fund may receive no
corresponding cash amounts, possibly requiring the disposition of portfolio
securities or borrowing to obtain the necessary cash. Losses on certain
options, futures or forward contracts and/or offsetting positions (portfolio
securities or other positions with respect to which the fund's risk of loss is
substantially diminished by one or more options, futures or forward contracts)
may also be deferred under the tax straddle rules of the Code, which may also
affect the characterization of capital gains or losses from straddle positions
and certain successor positions as long-term or short-term. Certain tax
elections may be available that would enable the fund to ameliorate some
adverse effects of the tax rules described in this paragraph. The tax rules
applicable to options, futures, forward contracts and straddles may affect the
amount, timing and character of the fund's income and gains or losses and hence
of its distributions to shareholders.
Dividends received by the fund from U.S. corporations in respect of any share
of stock with a tax holding period of at least 46 days (91 days in the case of
certain preferred stock) extending before and after each dividend held in an
unleveraged position and distributed and designated by the fund (except for
capital gain dividends received from a regulated investment company) may be
eligible for the 70% dividends-received deduction generally available to
corporations under the Code. Any corporate shareholder should consult its tax
adviser regarding the possibility that its tax basis in its shares may be
reduced, for U.S. federal income tax purposes, by reason of "extraordinary
dividends" received with respect to the shares and, to the extent such basis
would be reduced below zero, current recognition of income may be required. In
order to qualify for the deduction, corporate shareholders must meet the
minimum holding period requirement stated above with respect to their fund
shares, taking into account any holding period reductions from certain hedging
or other transactions or positions that diminish their risk of loss with
respect to their fund shares, and, if they borrow to acquire or otherwise incur
debt attributable to fund shares, they may be denied a portion of the
dividends-received deduction. The entire dividend, including the otherwise
deductible amount, will be included in determining the excess, if any, of a
corporation's adjusted current earnings over its alternative minimum taxable
income, which may increase a corporation's alternative minimum tax liability.
The fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gains with
respect to its investments in those countries, which would, if imposed, reduce
the yield on or return from those investments. Tax conventions between certain
countries and the U.S. may reduce or eliminate such taxes in some cases. The
fund does not expect to satisfy the requirements for passing through to its
shareholders their pro rata shares of qualified foreign taxes paid by the fund,
with the result that shareholders will not include such taxes in their gross
incomes and will not be entitled to a tax deduction or credit for such taxes on
their own tax returns.
Shareholders that are exempt from U.S. federal income tax, such as retirement
plans that are qualified under Section 401 of the Code, generally are not
subject to U.S. federal income tax on fund dividends or distributions or on
sales or exchanges of fund shares unless the acquisition of the fund shares was
debt-financed. However, in the case of fund shares held through a non-qualified
deferred compensation plan, fund dividends and distributions received by the
plan and sales and exchanges of fund shares by the plan
57
generally are taxable to the employer sponsoring such plan in accordance with
the U.S. federal income tax laws governing deferred compensation plans.
A plan participant whose retirement plan invests in the fund, whether such plan
is qualified or not, generally is not taxed on fund dividends or distributions
received by the plan or on sales or exchanges of fund shares by the plan for
U.S. federal income tax purposes. However, distributions to plan participants
from a retirement plan account generally are taxable as ordinary income and
different tax treatment, including penalties on certain excess contributions
and deferrals, certain pre-retirement and post-retirement distributions and
certain prohibited transactions, is accorded to accounts maintained as
qualified retirement plans. Shareholders should consult their tax advisers for
more information.
Federal law requires that the fund withhold (as "backup withholding") 28% of
reportable payments, including dividends, capital gain distributions and the
proceeds of redemptions and exchanges or repurchases of fund shares, paid to
shareholders who have not complied with IRS regulations. In order to avoid this
withholding requirement, shareholders, other than certain exempt entities, must
certify on their Account Applications, or on separate IRS Forms W-9, that the
Social Security Number or other Taxpayer Identification Number they provide is
their correct number and that they are not currently subject to backup
withholding, or that they are exempt from backup withholding. The fund may
nevertheless be required to backup withhold if it receives notice from the IRS
or a broker that the number provided is incorrect or backup withholding is
applicable as a result of previous underreporting of interest or dividend
income.
If, as anticipated, the fund continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts
income, corporate excise or franchise taxes or any Delaware corporation income
tax.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, i.e.,
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax and hold their shares
as capital assets. Except as otherwise provided, this description does not
address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. federal income tax
treatment, including a non-resident alien U.S. withholding tax at the rate of
30% or at a lower treaty rate on amounts treated as ordinary dividends from the
fund (other than certain dividends derived from short-term capital gains and
qualified interest income of the fund for taxable years of the fund commencing
after December 31, 2004 and prior to January 1, 2008, provided that the fund
chooses to make a specific designation relating to such dividends) and, unless
an effective IRS Form W-8BEN, or other authorized withholding certificate is on
file, to backup withholding at the rate of 28% on certain other payments from
the fund. The fund does not expect to be a "U.S. real property holding
corporation" as defined in section 897(c)(2) of the Code and, therefore, does
not expect to be subject to look-through rules for gains from the sale or
exchange of U.S. real property interests. If the fund were a U.S. real property
holding corporation, certain distributions by the fund to non-U.S. shareholders
would be subject to U.S. federal withholding tax at a rate of up to 35% and
non-U.S. shareholders owning 5% or more of the fund within one year of certain
distributions would be required to file a U.S. federal income tax return to
report such gains.. Shareholders should consult their own tax advisers on these
matters and on state, local, foreign, and other applicable tax laws.
58
17. INVESTMENT RESULTS
See "Annual Fee, Expense and Other Information" for performance information for
each class of fund shares as of the most recently completed fiscal year.
18. FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the fiscal year
ended December 31, 2006 appearing in the fund's annual report, filed with the
SEC on March 1, 2007 (Accession No. 0000276776-07-000017) , are incorporated by
reference into this statement of additional information. These financial
statements and financial highlights have been audited by Ernst & Young LLP,
independent registered public accounting firm, as indicated in their report
thereon and are incorporated herein by reference in reliance upon such report
given on the authority of Ernst & Young LLP as experts in accounting and
auditing.
The fund's annual report includes the financial statements referenced above and
is available without charge upon request by calling Shareholder Services at
1-800-225-6292.
19. ANNUAL FEE, EXPENSE AND OTHER INFORMATION
Portfolio Turnover
The fund's annual portfolio turnover rate for the fiscal years ended
December 31,
2006 2005
72% 100%
Share Ownership
As of March 31, 2007, the Trustees and officers of the fund owned beneficially
in the aggregate less than 1% of the outstanding shares of the fund. The
following is a list of the holders of 5% or more of the fund's outstanding
shares as of March 31, 2007:
Class A Shares
Record Holder Number of Shares % of Class
Reliance Trust Co Cust. FBO
First Command Financial Planning
PO Box 48529
Atlanta GA 30362.1529 100,646.624 28.65
Class A Shares
Record Holder Number of Shares % of Class
MLPF&S for the sole benefit
of its customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville FL 32246-6484 37,731.701 10.74
59
Class C Shares
Record Holder Number of Shares % of Class
MLPF&S for the sole benefit
of its customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville FL 32246-6484 89,057.009 59.25
Trustee Ownership of Shares of the Trust and Other Pioneer Funds
The following table indicates the value of shares that each Trustee
beneficially owned in the fund and Pioneer Funds in the aggregate as of
December 31, 2006. Beneficial ownership is determined in accordance with SEC
rules. The share value of any closed-end fund is based on its closing market
price on December 31, 2006. The share value of any open-end Pioneer Fund is
based on the net asset value of the class of shares on December 31, 2006. The
dollar ranges in this table are in accordance with SEC requirements.
Aggregate Dollar Range of Equity
Securities in All Registered
Dollar Range of Investment Companies Overseen by
Equity Securities in Trustee in the Pioneer Family of
Name of Trustee the Trust Funds
Interested Trustees
John F. Cogan, Jr. None Over $100,000
Daniel K. Kingsbury+ None Over $100,000
Independent Trustees
David R. Bock None Over $100,000
Mary K. Bush None Over $100,000
Margaret B.W. Graham $1--$10,000 Over $100,000
Thomas J. Perna* None Over $100,000
Marguerite A. Piret None Over $100,000
Stephen K. West None Over $100,000
John Winthrop None Over $100,000
o *Mr. Perna became a Trustee on February 7, 2006.
o + Mr. Kingsbury became a Trustee on March 6, 2007
60
Compensation of Officers and Trustees
The following table sets forth certain information with respect to the
compensation of each Trustee of the fund.
Pension or
Retirement
Aggregate Benefits Accrued Total Compensation
Compensation as Part of from the Fund and
Name of Trustee from Fund** Fund Expenses Other Pioneer Funds***
Interested Trustees:
John F. Cogan, Jr.* $ 500.00 $ 0.00 $ 35,300.00
Osbert M. Hood* ++ $ 500.00 $ 0.00 $ 14,000.00
Daniel K. Kingsbury+++ N/A N/A N/A
Independent Trustees:
David R. Bock $ 1,399.17 $ 0.00 $ 149,500.00
Mary K. Bush $ 1,393.62 $ 0.00 $ 148,250.00
Margaret B.W. Graham $ 1,440.53 $ 0.00 $ 155,750.00
Thomas J. Perna+ $ 1,220.02 $ 0.00 $ 126,053.12
Marguerite A. Piret $ 1,586.38 $ 0.00 $ 178,250.00
Stephen K. West $ 1,363.55 $ 0.00 $ 54,506.57
John Winthrop $ 1,344.44 $ 0.00 $ 140,500.00
----------- --------------
Total $ 10,747.72 $ 0.00 $ 1,002,109.69
* Under the management contract, Pioneer reimburses the fund for any Interested
Trustee fees paid by the fund.
** For the fiscal year ended December 31, 2006.
*** For the calendar year ended December 31, 2006. There are 82 U.S. registered
investment portfolios in the Pioneer Family of Funds.
+ Mr. Perna became a Trustee on February 7, 2006.
++ Mr. Hood resigned as Trustee effective January 9, 2007.
+++ Mr. Kingsbury became a Trustee on March 6, 2007
Approximate Management Fees the Fund Paid or Owed Pioneer
The following table shows the dollar amount of gross investment management fees
incurred by the fund, along with the net amount of fees that were paid after
applicable fee waivers or expense reimbursements, if any. The data is for the
past three fiscal years or shorter period if the fund has been in operation for
a shorter period.
For the Fiscal Years Ended December 31,
2006 2005 2004
Gross Fee Incurred $3,350,691 $2,476,662 $1,752,917
Net Fee Paid $3,221,573 $2,376,840 $ 670,429
61
Fees the Fund Paid to Pioneer under the Administration Agreement
For the Fiscal Years Ended December 31,
2006 2005 2004
$94,311 $63,764 $45,027
Fund Expenses under the Distribution Plans
For the Fiscal Year Ended December 31, 2006
Class A Plan Class C Plan
$800 $1,122
Carryover of Distribution Expenses
As of December 31, 2006 the carryover of distribution expenses under the Class
A Plan was:
$817
Underwriting Expenses and Commissions
For the fiscal years ended December 31,
2006 2005 2004
Approximate Net Underwriting Expenses Retained
by PFD $ 1,692 $ 0 $ 0
Approximate Commissions Reallowed to Dealers
(Class A shares)
Approximate Commissions Reallowed to Dealers
(Class C shares)
Approximate Brokerage and Underwriting
Commissions (Portfolio Transactions) $686,058 $806,801 $815,662
62
CDSCs
During the fiscal year ended December 31, 2006, the following CDSCs were paid
to PFD:
$1
Capital Loss Carryforwards as of December 31, 2006
At December 31, 2006, the fund had the following net capital loss carryforward:
$0
Fund Performance
Average Annual Total Returns as of December 31, 2006
The table reflects sales charges applicable to the class.
The performance of Class A shares for the period prior to the commencement of
operations of Class A shares is the net asset value performance of the fund's
Class P shares, which has been restated to reflect differences in any
applicable sales charges, but not differences in expenses, including Rule 12b-1
fees applicable to Class A shares.
The performance of Class Y shares for the period prior to the commencement of
operations of Class Y shares is the net asset value performance of the fund's
Class P shares, which has not been restated to reflect any differences in
expenses, including Rule 12b-1 fees applicable to Class P shares.
Average Annual Total Return (%)
Since Inception
Class of Shares One Year Five Years Ten Years Inception Date
Class A Shares 3/16/98#
Return before taxes 4.98 4.94 N/A 5.08
Return after taxes on distributions 3.26 4.37 N/A 4.30
Return after taxes on distributions 4.79 4.12 N/A 4.03
and sale of shares
Class C Shares 3/10/06
Return before taxes N/A N/A N/A 5.07
Return after taxes on distributions N/A N/A N/A 3.34
Return after taxes on distributions N/A N/A N/A 4.87
and sale of shares
63
Class Y Shares + 3/16/98#
Return before taxes 11.21 6.16 N/A 5.77
Return after taxes on distributions 9.47 5.65 N/A 5.02
Return after taxes on distributions 8.90 5.24 N/A 4.68
and sale of shares
# Inception date of the fund's Class P shares. Class A, Class C and Class Y
shares commenced operations on March 10, 2006.
64
20. APPENDIX A--DESCRIPTION OF SHORT-TERM DEBT, CORPORATE BOND AND PREFERRED
STOCK RATINGS
Moody's Investors Service, Inc. ("Moody's") Prime Rating System
Moody's short-term ratings are opinions of the ability of issuers to honor
senior financial obligations and contracts. Such obligations generally have an
original maturity not exceeding one year, unless explicitly noted.
Moody's employs the following designations, all judged to be investment grade,
to indicate the relative repayment ability of rated issuers:
Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt and ample
asset protection.
Broad margins in earnings coverage of fixed financial charges and high internal
cash generation.
Well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2: Issuers (or supporting institutions) rated Prime-2 have a strong
ability to repay senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation than is the case for Prime-2 securities. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Prime-3: Issuers (or supporting institutions) rated Prime-3 have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of
debt-protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
Not Prime: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
In addition, in certain countries the prime rating may be modified by the
issuer's or guarantor's senior unsecured long-term debt rating.
Moody's Debt Ratings
Aaa: Bonds and preferred stock which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds and preferred stock which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
65
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risk appear somewhat larger
than the Aaa securities.
A: Bonds and preferred stock which are rated A possess many favorable
investment attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa: Bonds and preferred stock which are rated Baa are considered as
medium-grade obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba: Bonds and preferred stock which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds and preferred stock which are rated B generally lack characteristics
of the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds and preferred stock which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.
Ca: Bonds and preferred stock which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C: Bonds and preferred stock which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Moody's assigns ratings to individual debt securities issued from medium-term
note (MTN) programs, in addition to indicating ratings to MTN programs
themselves. Notes issued under MTN programs with such indicated ratings are
rated at issuance at the rating applicable to all pari passu notes issued under
the same program, at the program's relevant indicated rating, provided such
notes do not exhibit any of the characteristics listed below. For notes with
any of the following characteristics, the rating of the individual note may
differ from the indicated rating of the program:
1) Notes containing features which link the cash flow and/or market value to
the credit performance of any third party or parties.
2) Notes allowing for negative coupons, or negative principal.
3) Notes containing any provision which could obligate the investor to make any
additional payments.
Market participants must determine whether any particular note is rated, and if
so, at what rating level.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
66
Standard & Poor's Short-Term Issue Credit Ratings
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
Standard & Poor's Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on the following
considerations:
o Likelihood of payment-capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation;
o Nature of and provisions of the obligation;
o Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.
67
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated C is currently
highly vulnerable to nonpayment. The C rating may be used to cover a situation
where a bankruptcy petition has been filed or similar action taken, but
payments on this obligation are being continued. A C also will be assigned to a
preferred stock issue in arrears on dividends or sinking fund payments, but
that is currently paying.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
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r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating.
N.R.: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
Local Currency and Foreign Currency Risks
Country risk considerations are a standard part of Standard & Poor's analysis
for credit ratings on any issuer or issue. Currency of repayment is a key
factor in this analysis. An obligor's capacity to repay foreign currency
obligations may be lower than its capacity to repay obligations in its local
currency due to the sovereign government's own relatively lower capacity to
repay external versus domestic debt. These sovereign risk considerations are
incorporated in the debt ratings assigned to specific issues. Foreign currency
issuer ratings are also distinguished from local currency issuer ratings to
identify those instances where sovereign risks make them different for the same
issuer.
The ratings indicated herein are believed to be the most recent ratings
available at the date of this statement of additional information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the fund's fiscal year-end.
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21. Appendix B--Proxy Voting Policies Pioneer Investment Management, Inc.
- --------------------------------------------------------------------------------
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
VERSION DATED July, 2004
Overview
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes each
of its client's duties of care and loyalty with respect to all services
undertaken on the client's behalf, including proxy voting. When Pioneer has
been delegated proxy-voting authority for a client, the duty of care requires
Pioneer to monitor corporate events and to vote the proxies. To satisfy its
duty of loyalty, Pioneer must place its client's interests ahead of its own and
must cast proxy votes in a manner consistent with the best interest of its
clients. Pioneer will vote all proxies presented in a timely manner.
The Proxy Voting Policies and Procedures are designed to complement Pioneer's
investment policies and procedures regarding its general responsibility to
monitor the performance and/or corporate events of companies that are issuers
of securities held in accounts managed by Pioneer. Pioneer's Proxy Voting
Policies summarize Pioneer's position on a number of issues solicited by
companies held by Pioneer's clients. The policies are guidelines that provide a
general indication on how Pioneer would vote but do not include all potential
voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception votes,
and review of conflicts of interest and ensure that case-by-case votes are
handled within the context of the overall guidelines (i.e. best interest of
client). The overriding goal is that all proxies for US and non-US companies
that are received promptly will be voted in accordance with Pioneer's policies
or specific client instructions. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to us
or the Proxy Voting Oversight Group determines that the circumstances justify a
different approach.
Pioneer does not delegate the authority to vote proxies relating to its clients
to any of its affiliates, which include other subsidiaries of UniCredito.
Any questions about these policies and procedures should be directed to the
Proxy Coordinator.
Proxy Voting Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the voting
of proxies. The proxy voting service works with custodians to ensure that all
proxy materials are received by the custodians and are processed in a timely
fashion. To the extent applicable, the proxy voting service votes all proxies
in accordance with the proxy voting policies established by Pioneer. The proxy
voting service will refer proxy questions to the Proxy Coordinator (described
below) for instructions under circumstances where: (1) the application of the
proxy voting guidelines is unclear; (2) a particular proxy question is not
covered by the guidelines; or (3) the guidelines call for specific instructions
on a case-by-case basis. The proxy voting service is also requested to call to
the Proxy Coordinator's attention specific proxy questions that, while governed
by a guideline, appear to involve unusual or controversial issues. Pioneer
reserves the
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right to attend a meeting in person and may do so when it determines that the
company or the matters to be voted on at the meeting are strategically
important to its clients.
Proxy Coordinator
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy voting
service, will solicit voting recommendations and instructions from the Director
of Portfolio Management US or, to the extent applicable, investment
sub-advisers. The Proxy Coordinator is responsible for ensuring that these
questions and referrals are responded to in a timely fashion and for
transmitting appropriate voting instructions to the proxy voting service. The
Proxy Coordinator is responsible for verifying with the Compliance Department
whether Pioneer's voting power is subject to any limitations or guidelines
issued by the client (or in the case of an employee benefit plan, the plan's
trustee or other fiduciaries).
Referral Items
From time to time, the proxy voting service will refer proxy questions to the
Proxy Coordinator that are described by Pioneer's policy as to be voted on a
case-by-case basis, that are not covered by Pioneer's guidelines or where
Pioneer's guidelines may be unclear with respect to the matter to be voted on.
Under such certain circumstances, the Proxy Coordinator will seek a written
voting recommendation from the Director of Portfolio Management US. Any such
recommendation will include: (i) the manner in which the proxies should be
voted; (ii) the rationale underlying any such decision; and (iii) the
disclosure of any contacts or communications made between Pioneer and any
outside parties concerning the proxy proposal prior to the time that the voting
instructions are provided. In addition, the Proxy Coordinator will ask the
Compliance Department to review the question for any actual or apparent
conflicts of interest as described below under "Conflicts of Interest." The
Compliance Department will provide a "Conflicts of Interest Report," applying
the criteria set forth below under "Conflicts of Interest," to the Proxy
Coordinator summarizing the results of its review. In the absence of a conflict
of interest, the Proxy Coordinator will vote in accordance with the
recommendation of the Director of Portfolio Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will vote
according to the recommendation of the Director of Portfolio Management US
where such recommendation would go against Pioneer's interest or where the
conflict is deemed to be immaterial. Pioneer will vote according to the
recommendation of its proxy voting service when the conflict is deemed to be
material and the Pioneer's internal vote recommendation would favor Pioneer's
interest, unless a client specifically requests Pioneer to do otherwise. When
making the final determination as to how to vote a proxy, the Proxy Voting
Oversight Group will review the report from the Director of Portfolio
Management US and the Conflicts of Interest Report issued by the Compliance
Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear to
interfere with the interests of Pioneer's clients. Occasionally, Pioneer may
have a conflict that can affect how its votes proxies. The conflict may be
actual or perceived and may exist when the matter to be voted on concerns:
o An affiliate of Pioneer, such as another company belonging to the
UniCredito Italiano S.p.A. banking group (a "UniCredito Affiliate");
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o An issuer of a security for which Pioneer acts as a sponsor, advisor,
manager, custodian, distributor, underwriter, broker, or other similar
capacity (including those securities specifically declared by PGAM to
present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer that a
UniCredito Affiliate acts as a sponsor, advisor, manager, custodian,
distributor, underwriter, broker, or other similar capacity; or
o A person with whom Pioneer (or any of its affiliates) has an existing,
material contract or business relationship that was not entered into in
the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies directly or
indirectly owned by UniCredito Italiano Group, unless otherwise directed
by a client. In addition, Pioneer will inform PGAM Global Compliance and
the PGAM Independent Directors before exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department will
review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being voted upon against the
Compliance Department's internal list of interested persons and, for any
matches found, evaluating the anticipated magnitude and possible probability of
any conflict of interest being present. For each referral item, the
determination regarding the presence or absence of any actual or potential
conflict of interest will be documented in a Conflicts of Interest Report to
the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be voted
when the shares are out on loan through either Pioneer's lending program or a
client's managed security lending program. However, Pioneer will reserve the
right to recall lent securities so that they may be voted according to the
Pioneer's instructions. If a portfolio manager would like to vote a block of
previously lent shares, the Proxy Coordinator will work with the portfolio
manager and Investment Operations to recall the security, to the extent
possible, to facilitate the vote on the entire block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a custodian
(which may be different than the account custodian) for record keeping and
voting at the general meeting. The shares are unavailable for sale or delivery
until the end of the blocking period (typically the day after general meeting
date). Pioneer will vote in those countries with "share-blocking." In the event
a manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame and
practices) and/or communicate with executing brokerage firm. A list of countries
with "share-blocking" is available from the Investment Operations Department
upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering, Analysis,
and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
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o Is able to promptly provide Pioneer with a copy of the voting record upon
its request.
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in making the
decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other written
communication (including emails or other electronic communications) to or
from the client (or in the case of an employee benefit plan, the plan's
trustee or other fiduciaries) regarding the subject proxy vote cast by, or
the vote recommendation of, Pioneer.
Pioneer shall maintain the above records in the client's file for a period not
less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process or
procedures clients must follow to obtain information regarding how Pioneer
voted with respect to assets held in their accounts. In addition, Pioneer shall
describe to clients its proxy voting policies and procedures and will furnish a
copy of its proxy voting policies and procedures upon request. This information
may be provided to clients through Pioneer's Form ADV (Part II) disclosure, by
separate notice to the client, or through Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating, and
changing (when necessary) Pioneer's Proxy Voting Policies and Procedures. The
group meets at least annually to evaluate and review these policies and
procedures and the services of its third-party proxy voting service. In
addition, the Proxy Voting Oversight Group will meet as necessary to vote on
referral items and address other business as necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate parent,
Pioneer Global Asset Management S.p.A
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the proposal
on the value of portfolio holdings, considering both the short- and long-term
impact. In many instances, Pioneer believes that supporting the company's
strategy and voting "for" management's proposals builds portfolio value. In
other cases, however, proposals set forth by management may have a negative
effect on that value, while some shareholder proposals may hold the best
prospects for enhancing it. Pioneer monitors developments in the proxy-voting
arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below.
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All shares in a company held by Pioneer-managed accounts will be voted alike,
unless a client has given us specific voting instructions on an issue or has
not delegated authority to us. Proxy voting issues will be reviewed by
Pioneer's Proxy Voting Oversight Group, which consists of the Director of
Portfolio Management US, the Director of Investment Operations (the Proxy
Coordinator), and the Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and reviewing
conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities held
in their portfolios and Pioneer is happy to discuss our proxy votes with
company management. Pioneer retains a proxy voting service to provide research
on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they are
quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
o Authorization of the transferring of reserves and allocation of income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business; however,
Pioneer will oppose any routine business proposal if insufficient information
is presented in advance to allow Pioneer to judge the merit of the proposal.
Pioneer has also instructed its proxy voting service to inform Pioneer of its
analysis of any administrative items inconsistent, in its view, with supporting
the value of Pioneer portfolio holdings so that Pioneer may consider and vote
on those items on a case-by-case basis.
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Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are concerned
about the auditors' independence or their past work for the company.
Specifically, we will oppose the ratification of auditors and withhold
votes from audit committee members if non-audit fees paid by the company
to the auditing firm exceed the sum of audit fees plus audit-related fees
plus permissible tax fees according to the disclosure categories proposed
by the Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily required
or where rotation would demonstrably strengthen financial disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in instances
where corporate performance has been very poor or where the board appears to
lack independence.
General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of independent
directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against proposals
for broader indemnification.
o Changes in board size that appear to have a legitimate business purpose
and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced directors,
and shareholder control is better achieved through annual votes.
o Requirements for union or special interest representation on the board.
o Requirements to provide two candidates for each board seat.
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We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid reason. We
support proposals that require disclosure of director attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the purposes of
our policy, we accept the definition of affiliated directors provided by
our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the majority
of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with very
poor corporate performance.
We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a dead-hand or
modified dead-hand poison pill (a "dead-hand poison pill" is a shareholder
rights plan that may be altered only by incumbent or "dead " directors.
These plans prevent a potential acquirer from disabling a poison pill by
obtaining control of the board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting election
of a majority of independent directors in cases of poor performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been approved
by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
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o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large holders
before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
o Disgorgement provisions, which require acquirers to disgorge profits on
purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider voting
against proposals that require a supermajority vote to repeal or amend the
provision. Finally, we will consider the mechanism used to determine the
fair price; we are generally opposed to complicated formulas or
requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price provisions. We
will use the criteria used for fair price provisions in general to
determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We will
support proposals to restore shareholder authority in this area. We will
review on a case-by-case basis proposals that authorize the board to make
interim appointments.
o Classes of shares with unequal voting rights.
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o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we believe that
management should have full control over corporate funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g., amend
charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally allow
shareholders to buy additional shares at a below-market price in the event
of a change in control and may deter some bids.
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals in
this area. We will, however, reject proposals that impose high barriers to
potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on equal
terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than shares
issued in the normal course of business) submitted for shareholder
approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
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o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new class of
blank-check preferred, but may approve an increase in a class already
outstanding if the company has demonstrated that it uses this flexibility
appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
Compensation
Pioneer supports compensation plans that link pay to shareholder returns and
believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same time,
stock-related compensation plans have a significant economic impact and a
direct effect on the balance sheet. Therefore, while we do not want to
micromanage a company's compensation programs, we will place limits on the
potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares allocated to
ESOPs are less than 5% of outstanding shares. Larger blocks of stock in
ESOPs can serve as a takeover defense. We will support proposals to submit
ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act of
1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension benefits).
o Employee stock purchase plans where the purchase price is equal to at
least 85% of the market price, where the offering period is no greater
than 27 months and where potential dilution (as defined below) is no
greater than 10%.
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We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will consider
the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans where the
combined employee and director plans together would generate less than 15%
dilution. We will reject plans with 15% or more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that have
repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant discount
options and tax offset payments.
o We are generally in favor of proposals that increase participation
beyond executives.
o We generally support proposals asking companies to adopt rigorous vesting
provisions for stock option plans such as those that vest incrementally
over, at least, a three- or four-year period with a pro rata portion of
the shares becoming exercisable on an annual basis following grant date.
o We generally support proposals asking companies to disclose their window
period policies for stock transactions. Window period policies ensure that
employees do not exercise options based on insider information
contemporaneous with quarterly earnings releases and other material
corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred compensation
plans, employment agreements, loan guarantee programs and retirement
plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions, repricing
options, lengthening exercise periods or accelerating distribution of
awards and pyramiding and cashless exercise programs.
We will vote against:
o Pensions for non-employee directors. We believe these retirement plans
reduce director objectivity.
o Elimination of stock option plans.
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We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute their
opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares in
the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support reincorporations
supported by valid business reasons. We will oppose those that appear to
be solely for the purpose of strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand judicial
review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset sales,
joint ventures, conversions to holding company and conversions to
self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
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o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the company
be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments raises
several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes that do
not affect the investment objective or overall risk level of the fund. We
will examine more fundamental changes on a case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically support
such proposals.
Social Issues
Pioneer will abstain on stockholder proposals calling for greater disclosure of
corporate activities with regard to social issues. "Social Issues" may
generally be described as shareholder proposals for a company to:
o Conduct studies regarding certain issues of public concern and interest;
o Study the feasibility of the company taking certain actions with regard
to such issues; or
o Take specific action, including ceasing certain behavior and adopting
company standards and principles, in relation to issues of public concern
and interest.
We believe these issues are important and should receive management attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against proposals
with regard to contributions, believing that management should control the
routine disbursement of funds.
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