AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 2009
SECURITIES ACT FILE NO. 333-
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. [ ]
PIONEER BOND FUND
-----------------
(Exact Name of Registrant as Specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
(617) 742-7825
(Registrant's Area Code and Telephone Number)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.
60 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
With Copies To:
Roger P. Joseph, Esq.
Bingham McCutchen LLP
One Federal Street, Boston, Massachusetts 02110
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement is declared effective.
It is proposed that this filing become effective March 16, 2009 pursuant
to Rule 488 under the Securities Act of 1933, as amended.
Title of Securities Being Registered:
Class A shares and Class Y shares
----------
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933, as amended, pursuant to Section 24(f) under the
Investment Company Act of 1940, as amended; accordingly, no fee is payable
herewith because of reliance upon Section 24(f).
COMBINED PROXY STATEMENT
OF
REGIONS MORGAN KEEGAN SELECT FUNDS
on behalf of its Series:
REGIONS MORGAN KEEGAN SELECT MID CAP GROWTH FUND
REGIONS MORGAN KEEGAN SELECT GROWTH FUND
REGIONS MORGAN KEEGAN SELECT CORE EQUITY FUND
REGIONS MORGAN KEEGAN SELECT MID CAP VALUE FUND
REGIONS MORGAN KEEGAN SELECT VALUE FUND
REGIONS MORGAN KEEGAN SELECT BALANCED FUND
REGIONS MORGAN KEEGAN SELECT FIXED INCOME FUND
REGIONS MORGAN KEEGAN SELECT LIMITED MATURITY FIXED INCOME FUND
REGIONS MORGAN KEEGAN SELECT INTERMEDIATE TAX EXEMPT BOND FUND
REGIONS MORGAN KEEGAN SELECT TREASURY MONEY MARKET FUND
REGIONS MORGAN KEEGAN SELECT MONEY MARKET FUND
(each, an "RMK Fund" and together, the "RMK Funds")
The address and telephone number of each RMK Fund is:
50 North Front Street
Memphis, Tennessee 38103
1-901-524-4100
AND
PROSPECTUS
OF
PIONEER MID CAP GROWTH FUND II (a series of PIONEER SERIES TRUST I)
PIONEER GROWTH FUND (a series of PIONEER SERIES TRUST I)
PIONEER FUND
PIONEER MID CAP VALUE FUND
PIONEER CULLEN VALUE FUND (a series of PIONEER SERIES TRUST III)
PIONEER CLASSIC BALANCED FUND (a series of PIONEER SERIES TRUST IV)
PIONEER BOND FUND
PIONEER SHORT TERM INCOME FUND
PIONEER INTERMEDIATE TAX FREE INCOME FUND (a series of PIONEER SERIES TRUST I)
PIONEER TREASURY RESERVES FUND (a series of PIONEER SERIES TRUST IV)
PIONEER CASH RESERVES FUND (a series of PIONEER MONEY MARKET TRUST)
(each, a "Pioneer Fund" and together, the "Pioneer Funds")
The address and telephone number of each Pioneer Fund is:
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Scheduled for [ ], 2009
To the Shareholders of the RMK Funds:
This is the formal agenda for the RMK Funds' shareholder meeting (the
"meeting"). It tells you what matters will be voted on by your RMK Fund and the
time and place of the meeting, in case you want to attend in person.
A special meeting of shareholders of the RMK Funds will be held at the
offices of [ ] on [ ], 2009, at [ : ] [a.m./p.m.], Eastern
Time, to consider the following:
PROPOSAL 1: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Mid Cap Growth
Fund, in exchange for shares of Pioneer Mid Cap Growth Fund II to
be distributed to the shareholders of Regions Morgan Keegan Select
Mid Cap Growth Fund, and (ii) the subsequent liquidation and
dissolution of Regions Morgan Keegan Select Mid Cap Growth Fund;
PROPOSAL 2: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Growth Fund, in
exchange for shares of Pioneer Growth Fund to be distributed to the
shareholders of Regions Morgan Keegan Select Growth Fund, and (ii)
the subsequent liquidation and dissolution of Regions Morgan Keegan
Select Growth Fund;
PROPOSAL 3: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Core Equity
Fund, in exchange for shares of Pioneer Fund to be distributed to
the shareholders of Regions Morgan Keegan Select Core Equity Fund,
and (ii) the subsequent liquidation and dissolution of Regions
Morgan Keegan Select Core Equity Fund;
PROPOSAL 4: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Mid Cap Value
Fund, in exchange for shares of Pioneer Mid Cap Value Fund to be
distributed to the shareholders of Regions Morgan Keegan Select Mid
Cap Value Fund, and (ii) the subsequent liquidation and dissolution
of Regions Morgan Keegan Select Mid Cap Value Fund;
PROPOSAL 5: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Value Fund, in
exchange for shares of Pioneer Cullen Value Fund to be distributed
to the shareholders of Regions Morgan Keegan Select Value Fund, and
(ii) the subsequent liquidation and dissolution of Regions Morgan
Keegan Select Value Fund;
PROPOSAL 6: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Balanced Fund,
in exchange for shares of Pioneer Classic Balanced Fund to be
distributed to the shareholders of Regions Morgan Keegan Select
Balanced Fund, and (ii) the subsequent liquidation and dissolution
of Regions Morgan Keegan Select Balanced Fund;
PROPOSAL 7: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Fixed Income
Fund, in exchange for shares of Pioneer Bond Fund to be distributed
to the shareholders of Regions Morgan Keegan Select Fixed Income
Fund, and (ii) the subsequent liquidation and dissolution of
Regions Morgan Keegan Select Fixed Income Fund;
PROPOSAL 8: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Limited Maturity
Fixed Income Fund, in exchange for shares of Pioneer Short Term
Income Fund to be distributed to the shareholders of Regions Morgan
Keegan Select Limited Maturity Fixed Income
Fund, and (ii) the subsequent liquidation and dissolution of
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund;
PROPOSAL 9: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Intermediate Tax
Exempt Bond Fund, in exchange for shares of Pioneer Intermediate
Tax Free Income Fund to be distributed to the shareholders of
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund, and
(ii) the subsequent liquidation and dissolution of Regions Morgan
Keegan Select Intermediate Tax Exempt Bond Fund;
PROPOSAL 10: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Treasury Money
Market Fund, in exchange for shares of Pioneer Treasury Reserves
Fund to be distributed to the shareholders of Regions Morgan Keegan
Select Treasury Money Market Fund, and (ii) the subsequent
liquidation and dissolution of Regions Morgan Keegan Select
Treasury Money Market Fund; and
PROPOSAL 11: To approve an Agreement and Plan of Reorganization, providing for
(i) the acquisition of all of the assets and the assumption of the
stated liabilities of Regions Morgan Keegan Select Money Market
Fund, in exchange for shares of Pioneer Cash Reserves Fund to be
distributed to the shareholders of Regions Morgan Keegan Select
Money Market Fund, and (ii) the subsequent liquidation and
dissolution of Regions Morgan Keegan Select Money Market Fund.
The persons named as proxies will vote in their discretion on any other
business that may properly come before the meeting or any adjournments or
postponements thereof.
The Proposals are further described in the attached combined Proxy
Statement/Prospectus.
Your RMK Fund's Board of Trustees recommends that you vote in favor of all
Proposals upon which you are being asked to vote.
Shareholders of record as of the close of business on [ ], 2009
are entitled to vote at the meeting and any adjournments or postponement
thereof.
By Order of the Board of Trustees,
Brian B. Sullivan
President
Memphis, Tennessee
[ ], 2009
Whether or not you expect to attend the meeting, please vote promptly by
completing and returning the enclosed proxy card and returning it in the
accompanying postage-paid return envelope or by following the enclosed
instructions to vote over the internet or by telephone. Your vote could be
critical in allowing the RMK Funds to hold their meeting as scheduled. If
shareholders do not return their proxies in sufficient numbers, the RMK Funds
may be required to make additional solicitations.
The information in this Proxy Statement/Prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This Proxy
Statement/Prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
COMBINED PROXY STATEMENT
OF
REGIONS MORGAN KEEGAN SELECT FUNDS
on behalf of its Series:
REGIONS MORGAN KEEGAN SELECT MID CAP GROWTH FUND
REGIONS MORGAN KEEGAN SELECT GROWTH FUND
REGIONS MORGAN KEEGAN SELECT CORE EQUITY FUND
REGIONS MORGAN KEEGAN SELECT MID CAP VALUE FUND
REGIONS MORGAN KEEGAN SELECT VALUE FUND
REGIONS MORGAN KEEGAN SELECT BALANCED FUND
REGIONS MORGAN KEEGAN SELECT FIXED INCOME FUND
REGIONS MORGAN KEEGAN SELECT LIMITED MATURITY FIXED INCOME FUND
REGIONS MORGAN KEEGAN SELECT INTERMEDIATE TAX EXEMPT BOND FUND
REGIONS MORGAN KEEGAN SELECT TREASURY MONEY MARKET FUND
REGIONS MORGAN KEEGAN SELECT MONEY MARKET FUND
(each, an "RMK Fund" and together, the "RMK Funds")
The address and telephone number of each RMK Fund is:
50 North Front Street
Memphis, Tennessee 38103
1-901-524-4100
AND
PROSPECTUS
OF
PIONEER MID CAP GROWTH FUND II (a series of PIONEER SERIES TRUST I)
PIONEER GROWTH FUND (a series of PIONEER SERIES TRUST I)
PIONEER FUND
PIONEER MID CAP VALUE FUND
PIONEER CULLEN VALUE FUND (a series of PIONEER SERIES TRUST III)
PIONEER CLASSIC BALANCED FUND (a series of PIONEER SERIES TRUST IV)
PIONEER BOND FUND
PIONEER SHORT TERM INCOME FUND
PIONEER INTERMEDIATE TAX FREE INCOME FUND (a series of PIONEER SERIES TRUST I)
PIONEER TREASURY RESERVES FUND (a series of PIONEER SERIES TRUST IV)
PIONEER CASH RESERVES FUND (a series of PIONEER MONEY MARKET TRUST)
(each, a "Pioneer Fund" and together, the "Pioneer Funds")
The address and telephone number of each Pioneer Fund is:
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
Shares of the Pioneer Funds have not been approved or disapproved by the
Securities and Exchange Commission (the "SEC"). The SEC has not passed on upon
the adequacy of this Proxy Statement/Prospectus. Any representation to the
contrary is a criminal offense.
An investment in any RMK Fund or Pioneer Fund (each sometimes referred to
herein as a "Fund") is not a bank deposit and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency,
except as described herein.
This Proxy Statement/Prospectus sets forth information about the Pioneer
Funds that an investor needs to know before investing. Please read this Proxy
Statement/Prospectus carefully before investing and keep it for future
reference.
1
INTRODUCTION
This combined Proxy Statement/Prospectus, dated [ ], 2009, is
being furnished to shareholders of the RMK Funds in connection with the
solicitation by the RMK Funds' Board of Trustees (the "RMK Board" or the "RMK
Trustees") of proxies to be used at a special meeting of the shareholders of
the RMK Funds (the "meeting") to be held at the offices of [ ] on
[ ], 2009, at [ : ] [a.m./p.m.], Eastern Time. This Proxy
Statement/Prospectus is being mailed to shareholders of the RMK Funds on or
about [ ], 2009.
Each RMK Fund is a series of Regions Morgan Keegan Select Funds, an
open-end management investment company organized as a Massachusetts business
trust (the "RMK Trust"). Each Pioneer Fund is an open-end management investment
company, or a series thereof, organized as a Delaware statutory trust. Each of
Pioneer Fund, Pioneer Mid Cap Value Fund, Pioneer Bond Fund and Pioneer Short
Term Income Fund is the sole series of an open-end management investment
company with the same name. Pioneer Mid Cap Growth Fund II, Pioneer Growth Fund
and Pioneer Intermediate Tax Free Income Fund are series of Pioneer Series
Trust I, Pioneer Cullen Value Fund is a series of Pioneer Series Trust III,
Pioneer Classic Balanced Fund and Pioneer Treasury Reserves Fund are series of
Pioneer Series Trust IV and Pioneer Cash Reserves Fund is a series of Pioneer
Money Market Trust.
This Proxy Statement/Prospectus contains information you should know
before voting on the applicable Agreement and Plan of Reorganization (each, a
"Plan") that provides for the reorganization of your RMK Fund into a
corresponding Pioneer Fund (each, a "Reorganization"). The following table
indicates (a) which Proposal relates to which RMK Fund and corresponding
Pioneer Fund, (b) the corresponding Pioneer Fund shares that each RMK Fund
shareholder would receive if the Plan relating to such RMK Fund is approved,
(c) which RMK Fund shareholders may vote on which Proposals, and (d) on what
page of this Proxy Statement/Prospectus the discussion regarding each Proposal
begins.
Proposal RMK Fund & Shares Pioneer Fund & Shares Shareholders Entitled to Vote Page
- ------------------------------------------------------------------------------------------------------------------------
Proposal 1 Regions Morgan Keegan Select Pioneer Mid Cap Growth Fund II* Regions Morgan Keegan Select Mid 9
Mid Cap Growth Fund Cap Growth Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 2 Regions Morgan Keegan Select Pioneer Growth Fund* Regions Morgan Keegan Select 26
Growth Fund Growth Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 3 Regions Morgan Keegan Select Pioneer Fund Regions Morgan Keegan Select 41
Core Equity Fund Core Equity Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 4 Regions Morgan Keegan Select Pioneer Mid Cap Value Fund Regions Morgan Keegan Select Mid 59
Mid Cap Value Fund Cap Value Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 5 Regions Morgan Keegan Select Pioneer Cullen Value Fund Regions Morgan Keegan Select 78
Value Fund Value Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
2
Proposal RMK Fund & Shares Pioneer Fund & Shares Shareholders Entitled to Vote Page
- ------------------------------------------------------------------------------------------------------------------------
Proposal 6 Regions Morgan Keegan Select Pioneer Classic Balanced Fund Regions Morgan Keegan Select 95
Balanced Fund Balanced Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 7 Regions Morgan Keegan Select Pioneer Bond Fund Regions Morgan Keegan Select 117
Fixed Income Fund Fixed Income Fund Shareholders
Class A Class A
Class C Class A
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 8 Regions Morgan Keegan Select Pioneer Short Term Income Regions Morgan Keegan Select 140
Limited Maturity Fixed Fund Limited Maturity Fixed Income
Income Fund Fund Shareholders
Class A Class A
Class C Class A
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 9 Regions Morgan Keegan Select Pioneer Intermediate Tax Free Regions Morgan Keegan Select 161
Intermediate Tax Exempt Income Fund* Intermediate Tax Exempt Bond
Bond Fund Fund Shareholders
Class A Class A
Class C Class A
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 10 Regions Morgan Keegan Select Pioneer Treasury Reserves Fund Regions Morgan Keegan Select 176
Treasury Money Market Fund Treasury Money Market
Class A Class A Fund Shareholders
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
Proposal 11 Regions Morgan Keegan Select Pioneer Cash Reserves Fund Regions Morgan Keegan Select 186
Money Market Fund Money Market Fund
Class A Class A Shareholders
Class I Class Y
- ------------------------------------------------------------------------------------------------------------------------
* This is a newly-organized Pioneer fund that will commence operations upon
consummation of the proposed Reorganization.
A copy of the Plan for each of Proposals 1, 2 and 9 is attached to this
Proxy Statement/Prospectus as Exhibit A-1 and for each of Proposals 3 through
8, 10 and 11 is attached to this Proxy Statement/Prospectus as Exhibit A-2.
Shareholders should read this entire Proxy Statement/Prospectus, including the
exhibits, carefully.
On each Proposal with respect to an RMK Fund, all shareholders of the RMK
Fund, regardless of the class of shares held, will vote together as a single
class. Although each Reorganization is similar in structure, you should read
carefully the specific discussion regarding your RMK Fund's Reorganization.
The date of this Proxy Statement/Prospectus is [ ], 2009.
For more complete information about each Fund, please read the Fund's
Prospectus and Statement of Additional Information, as they may be amended
and/or supplemented. Because each of Pioneer Mid Cap Growth Fund II, Pioneer
Growth Fund and Pioneer Intermediate Tax Free Income Fund is newly-organized,
its Prospectus and Statement of Additional Information are not yet effective.
Each Fund's Prospectus(es) and Statement of Additional Information, and other
additional information about each Fund, has been filed with the SEC
(www.sec.gov) and is available upon request and without charge by calling the
toll-free numbers shown below.
3
- ------------------------------------------------------------------------------------------------------------------------------------
Where to Get More Information
- ------------------------------------------------------------------------------------------------------------------------------------
The RMK Funds' current prospectus and any applicable On file with the SEC (www.sec.gov) and available at no charge by
supplements. calling: 1-877-757-7424
The RMK Funds' current statement of additional On file with the SEC (www.sec.gov) and available at no charge by
information and any applicable supplements. calling: 1-877-757-7424
The RMK Funds' most recent annual and semi-annual On file with the SEC (www.sec.gov) and available at no charge by
reports to shareholders. calling: 1-877-757-7424. See "Available Information."
- ------------------------------------------------------------------------------------------------------------------------------------
Each Pioneer Fund's current prospectus(es) and any On file with the SEC (www.sec.gov) and available at no charge by
applicable supplements. calling: 1-800-225-6292 or 1-800-665-8839 (Class Y shareholders)
Each Pioneer Fund's current statement of additional On file with the SEC (www.sec.gov) and available at no charge by
information and any applicable supplements. calling: 1-800-225-6292 or 1-800-665-8839 (Class Y shareholders)
Each Pioneer Fund's most recent annual and semi-annual On file with the SEC (www.sec.gov) and available at no charge by
reports to shareholders. calling: 1-800-225-6292 or 1-800-665-8839 (Class Y shareholders).
See "Available Information."
- ------------------------------------------------------------------------------------------------------------------------------------
A statement of additional information for this Proxy On file with the SEC (www.sec.gov) and available at no charge by
Statement/Prospectus, dated [ ], 2009 (the calling: 1-877-757-7424. The SAI is incorporated by reference into
"SAI"). The SAI contains additional information about the this Proxy Statement/Prospectus.
RMK Funds and the Pioneer Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
To ask questions about this Proxy Statement/Prospectus. Call your RMK Fund's toll-free telephone number: 1-877-757-7424.
- ------------------------------------------------------------------------------------------------------------------------------------
The RMK Funds' Prospectus and Statement of Additional Information dated
April 1, 2008, as supplemented, are incorporated by reference into this Proxy
Statement/Prospectus
Background to the Reorganizations
Morgan Asset Management, Inc. ("MAM"), a registered investment adviser, is
an indirect wholly owned subsidiary of Regions Financial Corporation
("Regions") and serves as the RMK Funds' investment adviser. In 2008, MAM
informed the RMK Board that engaging in the business of investment adviser to
the RMK Funds is not a core business that MAM intends to continue and that
Regions would be conducting a search for a buyer for MAM's mutual fund
management business. After requests for proposals were solicited, received and
reviewed, MAM and Regions decided to recommend to the RMK Board that the RMK
Funds be reorganized into similar mutual funds managed by Pioneer Investment
Management, Inc. ("Pioneer").
Prior to making a recommendation to the RMK Board, Regions and MAM
conducted a comparative evaluation of Pioneer and the Pioneer family of funds,
including (i) Pioneer's investment processes and capabilities, (ii) the
availability of funds in the Pioneer family of funds with investment objectives
and strategies similar to those of the RMK Funds, (iii) the historical
investment performance of the proposed Pioneer Funds, (iv) the expense ratios
of each proposed Pioneer Fund as compared to the historical gross and net
expense ratios of the corresponding RMK Fund, (v) the portfolio managers of the
proposed Pioneer Funds, (vi) Pioneer's administrative capabilities, (vii) the
other types of funds available as part of the Pioneer family of funds, (viii)
the compliance culture and infrastructure of Pioneer and the Pioneer family of
funds, and (ix) the reputation of Pioneer and the Pioneer family of funds in
the marketplace.
The RMK Board met on a number of occasions after the Reorganizations were
recommended to consider the proposed Reorganizations. The RMK Trustees
requested and received such information from Pioneer, MAM and Regions as they
determined to be necessary to evaluate the proposed Reorganizations. At its
meetings, the RMK Board received and evaluated materials regarding Pioneer and
the Pioneer Funds, including the performance record and expense structure of
each of the Pioneer Funds, the effect of the proposed Reorganizations on the
RMK Funds' shareholders, and the quality of the services offered by Pioneer. In
addition to these general factors, the RMK Board also considered the factors
discussed below in the context of each Reorganization. The RMK Trustees who are
not "interested persons" of the RMK Funds or the Pioneer Funds (the
"Independent RMK Trustees") within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act"), retained an
independent consultant to assist them in evaluating the proposed
Reorganizations. The Independent RMK Trustees also were assisted in their
consideration of the proposed Reorganizations by their independent legal
counsel.
4
At its June 25, 2008 meeting, the RMK Board, including all of the
Independent RMK Trustees, met with and received a presentation by
representatives of Pioneer. The Independent RMK Trustees also met telephonically
on July 25, 2008 and January 8, 2009, to discuss the proposed Reorganizations
with their independent consultant, who provided a detailed evaluation of the
proposed Reorganizations. On January 16, 2009, the RMK Board, including all of
the Independent RMK Trustees, unanimously voted to approve each of the
Reorganizations. In approving each Reorganization, the RMK Board and the
Independent RMK Trustees determined that such Reorganization is in the best
interests of the applicable RMK Fund and the interests of existing shareholders
of the RMK Fund will not be diluted as a result of the Reorganization. The RMK
Board, including the Independent RMK Trustees, also considered and approved the
terms and conditions of the Plan for each proposed Reorganization.
How Will the Reorganizations Work?
o Each RMK Fund will transfer all of its assets to the corresponding Pioneer
Fund. In exchange, each Pioneer Fund will assume the corresponding RMK
Fund's stated liabilities. In no case will any Pioneer Fund assume any
unknown liabilities of the respective RMK Fund under the terms of the
applicable Plan. Each RMK Fund then will be liquidated and terminated.
o Each RMK Fund (other than Regions Morgan Keegan Select Treasury Money
Market Fund and Regions Morgan Keegan Select Money Market Fund (each, an
"RMK Money Market Fund")) offers Class A, Class C and Class I shares. In
each Reorganization not involving Regions Morgan Keegan Select Fixed
Income Fund, Regions Morgan Keegan Select Limited Maturity Fixed Income
Fund, Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund or an
RMK Money Market Fund, the Pioneer Fund will issue Class A, Class C and
Class Y shares, as applicable, to the corresponding RMK Fund in amounts
equal to the aggregate net asset value of the RMK Fund's Class A, Class C
and Class I shares, respectively. In each Reorganization involving Regions
Morgan Keegan Select Fixed Income Fund, Regions Morgan Keegan Select
Limited Maturity Fixed Income Fund or Regions Morgan Keegan Select
Intermediate Tax Exempt Bond Fund, the Pioneer Fund will issue Class A
shares to the corresponding RMK Fund in amounts equal to the aggregate net
asset value of the RMK Fund's Class A and Class C shares and Class Y
shares to the corresponding RMK Fund in amounts equal to the aggregate net
asset value of the RMK Fund's Class I shares. In each Reorganization
involving an RMK Money Market Fund, the Pioneer Fund will issue Class A
and Class Y shares, as applicable, to the corresponding RMK Money Market
Fund in amounts equal to the aggregate net asset value of the RMK Money
Market Fund's Class A and Class I shares, respectively.
o Shareholders of each RMK Fund will receive shares of the corresponding
Pioneer Fund in proportion to the relative net asset value of their share
holdings of the RMK Fund on the Closing Date of the Reorganization.
Therefore, on the Closing Date, each RMK Fund shareholder will hold shares
of a corresponding Pioneer Fund with the same aggregate net asset value as
the shares of the RMK Fund that the shareholder held immediately prior to
the Reorganization. The net asset value attributable to a class of shares
of an RMK Fund will be determined using the RMK Funds' valuation policies
and procedures and the net asset value attributable to a class of shares
of a Pioneer Fund will be determined using the Pioneer Funds' valuation
policies and procedures.
o No sales load, contingent deferred sales charge, commission, redemption
fee or other transactional fee will be charged as a result of any
Reorganization. After the Reorganization of your RMK Fund, for purposes of
determining any contingent deferred sales charge, the same sales charge
and schedule that applied to the shares of your RMK Fund will apply to the
shares of the corresponding Pioneer Fund you received in the
Reorganization and the holding period for determining the contingent
deferred sales charge will be calculated from the date the shares were
initially issued by your RMK Fund.
o Following the Reorganizations, Pioneer will continue to act as investment
adviser to each Pioneer Fund and MAM will not be involved in the
management of the Pioneer Funds.
o The exchange of RMK Fund shares for Pioneer Fund shares in a
Reorganization will not result in income, gain or loss being recognized
for federal income tax purposes by an exchanging shareholder. The
Reorganizations generally will not result in the recognition of gain or
loss for federal income tax purposes by any RMK Fund or Pioneer Fund.
o If each of the Reorganizations is approved by the shareholders of the RMK
Funds, the RMK Trust will file with the SEC an application for
deregistration on Form N-8F under the 1940 Act, and will cease to exist as
an investment company when such application is approved.
In addition to the Class A, Class C and Class Y shares, as applicable, to
be issued in the Reorganizations, each Pioneer Fund also offers at least one
other class of shares. This Proxy Statement/Prospectus relates only to the
Pioneer Funds' Class A, Class C and Class Y shares, as applicable, to be issued
to RMK Fund shareholders in the Reorganizations.
5
Why Do the RMK Trustees Recommend the Reorganizations?
In recommending the Reorganization of your RMK Fund, the RMK Board,
including all of the Independent RMK Trustees, determined that the
Reorganization is in the best interest of your RMK Fund and will not dilute the
interests of shareholders of your RMK Fund. The RMK Trustees believe that each
proposed Reorganization offers a number of potential benefits. These potential
benefits and various considerations include the following:
o Regions has made the decision to exit the mutual fund management business.
After exploring possible alternatives for the RMK Funds, Regions and MAM
recommended to the RMK Board, and the RMK Board approved, each proposed
Reorganization.
o The reputation, financial strength, resources and capabilities of
Pioneer.
o The investment objectives, policies and risks of each RMK Fund and their
compatibility with those of the corresponding Pioneer Fund.
o The benefit to each RMK Fund by making it part of the larger Pioneer
family of funds, and the potential long-term economies that may result
from the consummation of each Reorganization.
o The benefit of increased distribution capabilities which may result in
asset growth over time and additional cost savings and scale advantages.
o The historical investment performance records of each Pioneer Fund (other
than the newly-organized Pioneer Mid Cap Growth Fund II, Pioneer Growth
Fund and Pioneer Intermediate Tax Free Income Fund) compared to the
historical investment performance of the corresponding RMK Fund.
o The qualifications and experience of the investment personnel who are or
would be managing each Pioneer Fund.
o The pro forma management fee of each Pioneer Fund is, in most cases, lower
than the current management fee of the corresponding RMK Fund.
o The pro forma net expense ratio of each Pioneer Fund is, in nearly every
case, lower than the current net expense ratio of the corresponding RMK
Fund.
o Pioneer's agreement to waive fees and/or reimburse expenses for a period
of three years for all Pioneer Funds other than Pioneer Treasury Reserves
Fund and Pioneer Cash Reserves Fund and two years for Pioneer Treasury
Reserves Fund and Pioneer Cash Reserves Fund to the extent required so
that each Pioneer Fund's net expense ratio does not exceed the current net
expense ratio of the corresponding RMK Fund.
o The compliance culture and organization of Pioneer and the Pioneer
Funds.
o The absence of a dilutive effect on interests of current shareholders of
each RMK Fund.
o The transaction is expected to qualify as a tax free reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"),
and therefore, you will not recognize gain or loss for federal income tax
purposes on the exchange of your RMK Fund shares for shares of the
corresponding Pioneer Fund.
The RMK Board recommends that you vote in favor of your RMK Fund's
Reorganization.
What is Pioneer?
Pioneer is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and is an indirect, wholly owned subsidiary
of UniCredit S.p.A., one of the largest banking groups in Italy. Pioneer is
part of the global asset management group providing investment management and
financial services to mutual funds, institutional and other clients. As of
December 31, 2008, assets under management of the group were approximately $206
billion worldwide, including over $50 billion in assets under management by
Pioneer. Pioneer's main office is at 60 State Street, Boston, Massachusetts
02109. Pioneer's U.S. mutual fund investment history includes creating in 1928
one of the first mutual funds.
Who Bears the Expenses Associated with the Reorganizations?
Pioneer and MAM have agreed to share the fees and expenses associated with
each Fund's participation in the Reorganizations.
6
Will Pioneer and MAM Benefit from the Reorganizations?
Pioneer will benefit from managing a larger pool of assets which will
produce increased advisory fees and, in the case of certain of the Pioneer
Funds, should eliminate or reduce Pioneer's obligation under its expense
limitation agreement with such Pioneer Fund due to potential economies of
scale. Pioneer also is acquiring certain assets associated with MAM's
management business and the benefit of certain restrictive covenants on MAM's
activities, including MAM's assistance in facilitating the Reorganizations,
non-solicitation and non-competition covenants. In consideration for the
acquisition of these assets, and the receipt of these covenants from MAM and
the joint and several obligation of MAM and Regions to indemnify Pioneer
against certain liabilities, Pioneer has agreed to pay to MAM a purchase price
of approximately $[ ] million. The purchase price represents a multiple
of the total annualized run-rate advisory revenues from the RMK Funds that are
reorganized, excluding the RMK Money Market Funds, and is subject to reduction
and repayment in the event that the assets attributable to the RMK Funds are
redeemed (subject to certain conditions, including threshold amounts) from the
Pioneer Funds during the four year period following the Closing Date. In
addition, subject to certain exceptions, Pioneer and MAM have agreed that
Pioneer will compensate MAM based on fees earned by Pioneer with respect to the
Pioneer Funds into which the RMK Money Market Funds are reorganized for a
period of up to five years following the Closing Date.
What are the Federal Income Tax Consequences of the Reorganizations?
As a condition to the closing of each Reorganization, the RMK Fund and
corresponding Pioneer Fund must receive an opinion of Bingham McCutchen LLP to
the effect that the Reorganization will constitute a "reorganization" within
the meaning of Section 368 of the Code. Accordingly, it is expected that
neither you nor your RMK Fund will recognize gain or loss as a direct result of
the Reorganization, and that the aggregate tax basis of the Pioneer Fund shares
that you receive in the Reorganization will be the same as the aggregate tax
basis of the RMK Fund shares that you surrender in the Reorganization of your
RMK Fund. However, in order to maintain their qualification for taxation as
regulated investment companies, each RMK Fund, other than Regions Morgan Keegan
Select Mid Cap Growth Fund, Regions Morgan Keegan Select Growth Fund and
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund, will declare
and pay a distribution of its realized net capital gains for the taxable year
ending on the Closing Date, together with any undistributed investment company
taxable income and net tax-exempt income for such taxable year, to its
shareholders shortly before the applicable Reorganization. If you hold shares
in an RMK Fund, other than Regions Morgan Keegan Select Mid Cap Growth Fund,
Regions Morgan Keegan Select Growth Fund and Regions Morgan Keegan Select
Intermediate Tax Exempt Bond Fund, those distributions may affect the amount,
timing or character of taxable income that you realize in respect of your RMK
Fund shares. Additionally, following each Reorganization, the Pioneer Funds
will declare and pay before the end of 2009 one or more distributions of
realized net capital gains, investment company taxable income and net
tax-exempt income to its shareholders (including current shareholders of the
RMK Fund who will be shareholders of such Pioneer Fund following the
Reorganization). Those distributions will be reportable to you for tax
purposes, even though, in the case of Pioneer Funds other than Pioneer Mid Cap
Growth Fund II, Pioneer Growth Fund and Pioneer Intermediate Tax Free Income
Fund, the distributions may include income and gains that were realized by the
Pioneer Fund prior to the Closing Date.
What Happens if a Reorganization is Not Approved?
If the required approval of shareholders of your RMK Fund is not obtained,
the meeting may be adjourned as more fully described in this Proxy
Statement/Prospectus. If your RMK Fund's Reorganization is not approved, you
will remain a shareholder of your RMK Fund, and the RMK Board will consider
what further action may be appropriate. The consummation of each Reorganization
is not contingent on consummation of any other Reorganization.
Who is Eligible to Vote?
Shareholders of record of your RMK Fund on [ ], 2009 are entitled
to attend and vote at the meeting or any adjourned meeting. On each Proposal
with respect to an RMK Fund, all shareholders of the RMK Fund, regardless of
the class of shares held, will vote together as a single class. Each share is
entitled to one vote. Shares represented by properly executed proxies, unless
revoked before or at the meeting, will be voted according to shareholders'
instructions. If you sign a proxy but do not fill in a vote, your shares will
be voted to approve the applicable Plan. If any other business comes before the
meeting, your shares will be voted at the discretion of the persons named as
proxies.
7
TABLE OF CONTENTS
Page
----
INTRODUCTION ............................................................................. 2
PROPOSAL 1 -- Regions Morgan Keegan Select Mid Cap Growth Fund and Pioneer Mid Cap Growth 9
Fund II
PROPOSAL 2 -- Regions Morgan Keegan Select Growth Fund and Pioneer Growth Fund ........... 26
PROPOSAL 3 -- Regions Morgan Keegan Select Core Equity Fund and Pioneer Fund ............. 41
PROPOSAL 4 -- Regions Morgan Keegan Select Mid Cap Value Fund and Pioneer Mid Cap Value 59
Fund
PROPOSAL 5 -- Regions Morgan Keegan Select Value Fund and Pioneer Cullen Value Fund ...... 78
PROPOSAL 6 -- Regions Morgan Keegan Select Balanced Fund and Pioneer Classic Balanced 95
Fund
PROPOSAL 7 -- Regions Morgan Keegan Select Fixed Income Fund and Pioneer Bond Fund ....... 116
PROPOSAL 8 -- Regions Morgan Keegan Select Limited Maturity Fixed Income Fund and Pioneer 139
Short Term Income Fund
PROPOSAL 9 -- Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund and Pioneer
Intermediate Tax Free
Income Fund ............................................................................. 160
PROPOSAL 10 -- Regions Morgan Keegan Select Treasury Money Market Fund and Pioneer 176
Treasury Reserves Fund
PROPOSAL 11 -- Regions Morgan Keegan Select Money Market Fund and Pioneer Cash Reserves 186
Fund
OTHER IMPORTANT INFORMATION CONCERNING THE REORGANIZATIONS ............................... 198
PORTFOLIO SECURITIES ..................................................................... 199
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION ....................................... 199
TAX STATUS OF THE REORGANIZATION ......................................................... 200
VOTING RIGHTS AND REQUIRED VOTE .......................................................... 202
COMPARISON OF DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST .................. 202
FUNDAMENTAL INVESTMENT POLICIES OF THE FUNDS ............................................. 203
ADDITIONAL INFORMATION ................................................................... 215
FINANCIAL HIGHLIGHTS ..................................................................... 228
INFORMATION CONCERNING THE MEETING ....................................................... 248
OWNERSHIP OF SHARES OF THE FUNDS ......................................................... 250
EXPERTS .................................................................................. 252
AVAILABLE INFORMATION .................................................................... 252
EXHIBIT A-1 -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION .............................. A-1-1
EXHIBIT A-2 -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION .............................. A-2-1
EXHIBIT B -- PORTFOLIO MANAGER'S DISCUSSION OF PERFORMANCE ............................... B-1
8
Regions Morgan Keegan Select Mid Cap Growth Fund
and
Pioneer Mid Cap Growth Fund II
PROPOSAL 1
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-1 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 1 is approved, Regions Morgan Keegan Select Mid Cap Growth
Fund (the "RMK Fund") will be reorganized into Pioneer Mid Cap Growth Fund II,
a newly organized Pioneer fund that will commence operations upon consummation
of the proposed Reorganization (the "Pioneer Fund" and, together with the RMK
Fund, the "Funds"), as described above, and the Pioneer Fund will issue Class
A, Class C and Class Y shares, as applicable, to the RMK Fund in amounts equal
to the aggregate net asset value of the RMK Fund's Class A, Class C and Class I
shares, respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Mid Cap Growth Fund to Pioneer Mid
Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is long-term The fund's investment objective is long-term
capital appreciation. capital growth.
- ------------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in equity securities Normally, the fund invests at least 80% of its
investment strategies of mid-capitalization companies (i.e., net assets (plus the amount of borrowings, if
companies whose market capitalization falls any, for investment purposes) in equity
within the range tracked by the Russell Mid securities of mid-size companies. Mid-size
Cap Growth Index at the time of purchase). companies are those with market values, at
Under normal circumstances, the fund invests the time of investment, that do not exceed the
at least 80% of the value of its net assets in greater of the market capitalization of the
equity securities of mid-capitalization largest company within the Russell Midcap
companies. The fund will provide shareholders Growth Index or the 3-year rolling average of
with at least 60 days' prior notice of any the market capitalization of the largest
changes in this policy. As of February 29, company within the Russell Midcap Growth
2008, the capitalization of issuers included in Index as measured at the end of the preceding
the Russell Mid Cap Growth Index ranged from month, and are not less than the smallest
about $305 million to about $49.6 billion. The company within the index. The Russell Midcap
fund may also invest in larger companies that, Growth Index measures the performance of
in the opinion of MAM, present opportunities U.S. mid-cap growth stocks. The size of the
for price appreciation based on potential companies in the index changes with market
earnings and pricing patterns. conditions and the composition of the index.
For purposes of the fund's investment
policies, equity securities include common
stocks, convertible
- ------------------------------------------------------------------------------------------------------------------------------------
9
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Under normal market conditions, the fund debt and other equity instruments, such as
intends to invest in equity securities of exchange-traded funds (ETFs) that invest
companies with prospects for above-average primarily in equity securities, depositary
growth in revenues and/or earnings. MAM receipts, warrants, rights, equity interests in
looks for companies that have revenue growth. real estate investment trusts (REITs) and
While MAM does not have a set minimum preferred stocks.
revenue growth rate because individual stocks
and industries can change over time, MAM The fund will provide written notice to
looks for at least 10% growth, either from shareholders at least 60 days prior to any
historical sales or forecasted sales. MAM change to the requirement that it invest at
selects industry sectors that are experiencing least 80% of its assets in equity securities of
rapid growth based on the current state of the mid-size companies.
economy. Future growth prospects take
precedence over current valuation levels in the The fund uses a "growth" style of
stock selection process. Selected companies management and seeks to invest in securities
are expected to exhibit higher-than-average of issuers with above average potential for
price/earnings (P/E) and price-to-book ratios. earnings and revenue growth that are also
Dividends are not considered to be important trading at attractive market valuations. To
in the stock selection process. MAM seeks to select growth stocks, Pioneer employs
identify companies that have clearly established quantitative analysis, due diligence and
business strategies, achieve increases in fundamental research, an evaluation of the
revenues and market share and exploit market issuer based on its financial statements and
inefficiencies and opportunities. MAM operations. Pioneer relies on the knowledge,
periodically reviews market prices in relation to experience and judgment of its staff and the
target prices and adjusts the fund's holdings staff of its affiliates who have access to a
accordingly. 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 Market leadership in a company's primary
products and services
o Companies expected to benefit from long-
term trends in the economy and society
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
compared to historic standards
o Increasing earnings forecast
Pioneer generally sells a portfolio security
when it believes that the issuer no longer
offers the potential for above average earnings
and revenue growth. Pioneer makes that
determination based upon the same criteria it
uses to select portfolio securities.
- ------------------------------------------------------------------------------------------------------------------------------------
10
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may invest up to 10% of its total
assets in securities of non-U.S. issuers. The
fund will not invest more than 5% of its total
assets in the securities of emerging markets
issuers.
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, issued by both
U.S. and non-U.S. issuers. The fund invests in
debt securities when Pioneer believes they are
consistent with the fund's investment objective
of capital growth, to diversify the fund's
portfolio or for greater liquidity.
The fund may invest up to 20% of its net
assets in REITs.
- ------------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions its assets to meet its investment objective.
during adverse market conditions, the fund The fund may invest the remainder of its
may temporarily depart from its principal assets in securities with remaining maturities
investment strategy by investing up to 100% of less than one year or cash equivalents, or
of the fund's assets in cash and cash may hold cash. For temporary defensive
equivalents, including short-term bank purposes, including during periods of unusual
obligations, repurchase agreements and other cash flows, the fund may depart from its
money market instruments and securities principal investment strategies and invest part
issued and/or guaranteed as to payment of or all of its assets in these securities or may
principal and interest by the U.S. government, hold cash. During such periods, the fund may
its agencies or instrumentalities. This may not be able to achieve its investment
cause the fund to temporarily fail to meet its objective. The fund may adopt a defensive
goal and forego greater investment returns for strategy when Pioneer believes securities in
the safety of principal. which the fund normally invests have
extraordinary risks due to political or
economic factors and in other
extraordinary circumstances.
- ------------------------------------------------------------------------------------------------------------------------------------
11
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when the short time, if it no longer meets the fund's
investment adviser believes it is appropriate to investment criteria. The fund's annual portfolio
do so in light of the fund's investment goal. A turnover rate will vary based on many factors
higher portfolio turnover rate involves greater and may exceed 100%. If the fund does a lot
transaction expenses which must be borne of trading, it may incur additional operating
directly by the fund (and thus, indirectly by its expenses, which would reduce performance,
shareholders), and impact fund performance. and could cause shareowners to incur a
In addition, a high rate of portfolio turnover higher level of taxable income or capital gains.
may result in the realization of larger amounts
of net capital gains that, when distributed to
the fund's shareholders, are taxable to them.
- ------------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use
Derivative contracts are financial instruments futures and options on securities, indices and
that require payments based upon changes in currencies, forward foreign currency exchange
the values of designated (or underlying) contracts and other derivatives. A derivative is
securities, currencies, commodities, financial a security or instrument whose value is
indices or other assets. Some derivative determined by reference to the value or the
contracts (such as futures, forwards and change in value of one or more securities,
options) require payments relating to a future currencies, indices or other financial
trade involving the underlying asset. Other instruments. Although there is no specific
derivative contracts (such as swaps) require limitation on investing in derivatives, the fund
payments relating to the income or returns does not use derivatives as a primary
from the underlying asset. investment technique and generally limits their
use to hedging. However, the fund may use
The investment adviser may trade in options or derivatives for a variety of non-principal
futures in order to hedge the fund's portfolio purposes, including:
against market shifts as well as to increase
returns. 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
- ------------------------------------------------------------------------------------------------------------------------------------
12
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility of
the fund's net asset value. 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. Therefore, using
derivatives can disproportionately increase
losses and reduce opportunities for gain. If
changes in a derivative's value do not
correspond to changes in the value of the
fund's other investments or do not correlate
well with the underlying asset, rate or index,
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 issuer of the derivative defaults on its
obligation. Certain derivatives may be less
liquid, which may reduce the returns of the
fund if it cannot sell or terminate the
derivative at an advantageous time or price.
Some derivatives may involve the risk of
improper valuation. The fund will only invest
in derivatives to the extent Pioneer believes
these investments are consistent with the
fund's investment objective, but derivatives
may not perform as intended. Suitable
derivatives may not be available in all
circumstances or at reasonable prices and
may not be used by the fund for a variety of
reasons.
- ------------------------------------------------------------------------------------------------------------------------------------
13
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio managers
MAM Pioneer
Portfolio Managers: Portfolio Managers:
Day-to-day management of the fund's portfolio The fund has not yet commenced operations,
is the responsibility of Charles A. Murray, CFA and therefore, does not currently have any
and David P. McGrath, CFA. The portfolio portfolio managers. However, the fund will
managers are supported by MAM's equity commence operations upon the
and/or fixed income research teams which consummation of the proposed
provide fundamental research and quantitative Reorganization. At that time, day-to-day
analysis used to run MAM's internal investment management of the fund's portfolio will be the
models. responsibility of Ken Winston. Mr. Winston
will be supported by the domestic equity
Mr. Murray is a Senior Vice President, Senior team. Members of this team manage other
Portfolio Manager and Senior Equity Strategist Pioneer funds investing primarily in U.S.
for MAM. He has more than thirty years of equity securities. The portfolio manager and
experience in investment management, the team also may draw upon the research
research and banking. From 1978 to the and investment management expertise of the
present, Mr. Murray has served as a Portfolio global research teams, which provide
Manager for MAM and its predecessor, and fundamental and quantitative research on
currently serves as the Portfolio Manager for companies and include members from
the fund. From 1978 to 1988, Mr. Murray Pioneer's affiliate, Pioneer Investment
served as the portfolio manager of various Management Limited. Mr. Winston, a vice
common trust funds at a bank later acquired president, joined Pioneer in 2007 from
by Regions Financial Corporation. Mr. Murray Hartford Investment Management Company
has managed the fund from its inception in where he was senior vice president with
March 1999 to present. Mr. Murray received a portfolio management and analyst
B.S. in Finance from the University of Alabama responsibilities for small and mid cap growth
in 1970. He is a holder of the Chartered portfolios. From 2000 to 2006, he worked at
Financial Analyst designation. Lee Munder Capital Group as partner and
portfolio manager for small and mid cap
Mr. McGrath is a Vice President and Senior growth portfolios.
Portfolio Manager for MAM. He has more than
nine years experience in investment
management and research. From 2001 to
present, Mr. McGrath has served as Portfolio
Manager for the fund. From 1999 to 2004,
Mr. McGrath served as a Portfolio Manager for
MAM assisting with the fund as well as
managing various other accounts. Mr. McGrath
received a B.S. in Finance from The University
of Memphis in 1995 and a M.B.A. from Bryant
College in 1998. He is a holder of the
Chartered Financial Analyst designation.
- ------------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an A diversified series of Pioneer Series Trust I,
open-end management investment company an open-end management investment
organized as a Massachusetts business trust. company organized as a Delaware
statutory trust.
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $199,963,452 None
January 20, 2009)
- ------------------------------------------------------------------------------------------------------------------------------------
14
Classes of Shares, Fees and Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial sales Class A shares are offered with an initial sales
and fees charge up to 5.50% of the offering price, which charge up to 5.75% of the offering price, which
is reduced depending upon the amount is reduced or waived for large purchases as
invested as described below or, in certain described below and certain types of investors.
circumstances, waived. Class A shares bought At the time of your purchase, your investment
as part of an investment of $1 million or more firm may receive a commission from Pioneer
are not subject to an initial sales charge, but Funds Distributor, Inc. ("PFD"), the fund's
may be charged a contingent deferred sales distributor, of up to 5%, declining as the size of
charge of 1.00% if sold within one year of your investment increases.
purchase.
You pay the offering price (the net asset value
Your investment may qualify for a reduction or per share plus any initial sales charge) when
elimination of the sales charge, also known as you buy Class A shares unless you qualify to
a breakpoint discount. The following lists the purchase shares at net asset value. You pay a
sales charges, which will be applied to your lower sales charge as the size of your
Class A share purchase, subject to the investment increases. You do not pay a sales
breakpoint discounts indicated: charge when you reinvest dividends or capital
gain distributions paid by the fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Your As a % of As a % of Sales charge as % of
Investment Offering Price Net Amounts Amount of Offering Price Net Amounts
Invested purchase Invested
- ------------------------------------------------------------------------------------------------------------------------------------
Up to $49,999 5.50% 5.82% Less than 5.75% 6.10%
$ 50,000
$50,000 to 4.50% 4.71% $50,000 but 4.50% 4.71%
$ 99,999 less than
$100,000
$100,000 to 3.75% 3.90% $100,000 but 3.50% 3.63%
$249,999 less than
$250,000
$250,000 to 2.50% 2.56% $250,000 but 2.50% 2.56%
$499,999 less than
$500,000
$500,000 to 2.00% 2.04% $500,000 but 2.00% 2.04%
$999,999 less than
$1 million
$1 million or Net asset Net asset $1 million or -0- -0-
more value value more
- ------------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the Class A shares are subject to distribution and
fund's transfer agent of eligibility for any service (12b-1) fees of up to 0.25% of average
applicable breakpoint discount at the time of daily net assets. These fees are paid out of the
purchase. fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
Class A shares pay a shareholder servicing fee and may cost more than other types of sales
(non-12b-1) of up to 0.25% of average daily charges.
net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
15
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Class A sales charges There are no contingent deferred sales
and fees charges, except in certain circumstances when
the initial sales charge is waived. A contingent
deferred sales charge may be payable to PFD,
the fund's distributor, in the event of a share
redemption within 18 months following the
share purchase at the rate of 1.00% of the
lesser of the value of the shares redeemed or
the total cost of such shares, subject to
certain waivers.
- ------------------------------------------------------------------------------------------------------------------------------------
Class C sales charges and Class C shares are offered without an initial Class C shares are offered without an initial
fees sales charge. sales charge.
Class C shares are subject to a contingent Class C shares are subject to a contingent
deferred sales charge of 1.00% if sold within deferred sales charge of 1.00% if you sell
one year of purchase. your shares within one year of purchase. Your
investment firm may receive a commission
Class C shares pay a shareholder servicing fee from PFD, the fund's distributor, at the time of
(non-12b-1) of up to 0.25% of average daily your purchase of up to 1.00%.
net assets and a distribution (12b-1) fee of
0.75% of average daily net assets. Class C shares are subject to distribution and
service (12b-1) fees of up to 1.00% of
average daily net assets. These fees are paid
out of the fund's assets on an ongoing basis.
Over time these fees will increase the cost of
investments and may cost more than other
types of sales charges.
- ------------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y sales Class I shares are offered without an initial Class Y shares are offered without an initial
charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ------------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee The fund pays Pioneer a fee for managing the
equal to 0.75% of the fund's average daily net fund and to cover the cost of providing certain
assets. services to the fund.
Pioneer's annual fee is equal to 0.625% of the
fund's average daily net assets up to $500
million, 0.60% of the next $500 million and
0.575% of assets over $1 billion. The fee is
accrued daily and paid monthly.
- ------------------------------------------------------------------------------------------------------------------------------------
16
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the extent
required to reduce fund expenses to 1.25%
and 1.00% of the average daily net assets
attributable to Class A shares and Class Y
shares, respectively. Assuming the
Reorganization is approved, these expense
limitations will be in effect for a period of
three years after the closing of the
Reorganization. There can be no assurance
that Pioneer will extend the expense
limitations beyond such time.
- ------------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class
fee tables in the "The Funds' Fees and Expenses" section starting on page 22.
- ------------------------------------------------------------------------------------------------------------------------------------
17
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have the similar investment
objectives and investment strategies, they are subject to similar principal
risks. You could lose money on your investment in each Fund 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 Mid-cap or growth stocks fall out of favor with investors
o The Fund's investments do not have the growth potential originally
expected
Each Fund is subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks tend to have greater
volatility than debt securities. The Funds' portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Funds' share price will go up and down. Each Fund's
investment adviser attempts to manage market risk by limiting the amount the
Fund invests in any single company's equity securities. However,
diversification will not protect a Fund against widespread or prolonged
declines in the stock market.
Each Fund is subject to risks associated with investing in growth stocks.
Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development or an adverse market development. Further, since growth
companies often reinvest a high proportion of their earning in their own
businesses, growth stocks may not pay dividends or may pay lower dividends than
value stocks. This means they depend more on price change for returns and may
be more adversely affected in a down market compared to value stocks.
Each Fund is also subject to risks associated with investing in mid-sized
companies. Compared to large companies, mid-size companies, and the market for
their equity securities, are likely to
o Be more sensitive to changes in earnings results and investor
expectations
o Have more limited product lines and capital resources
o Experience sharper swings in market values
o Be harder to sell at the times and prices the Fund's investment adviser
thinks appropriate
o Offer greater potential for gain and loss
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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. Industries in the health care segment, such as health care
supplies, health care services, biotechnology and pharmaceuticals, may be
significantly affected by government regulation and reimbursement rates,
approval of products by government agencies, and patent expirations and
litigation. Industries in the consumer discretionary segment, such as consumer
durables, hotels, restaurants, media, retailing and automobiles, may be
significantly affected by the performance of the overall economy, interest
rates, competition, consumer confidence and spending, and changes in
demographics and consumer tastes. Each Fund may use derivatives. Derivatives
may be subject to market risk, interest rate risk and credit risk. Each Fund's
use of certain derivatives may, in some cases, involve forms of financial
leverage, which involves risk and may increase the volatility of the Fund's net
asset value. 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. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gain. If
changes in a derivative's value do not correspond to changes in the value of
the Fund's other investments or do not correlate well with the underlying
asset, rate or index, 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 issuer of the derivative defaults on its obligation.
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including securities of emerging markets issuers, it may be subject to the
risks below associated with investing in non-U.S. issuers. Some of these risks
do not apply to the larger, more developed non-U.S. markets. However, these
risks are more pronounced for issuers in emerging markets or to the extent that
the Pioneer Fund invests significantly in one region or country. These risks
may include:
18
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 Pioneer 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 Pioneer 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 Pioneer Fund's
return
Because the Pioneer Fund may invest in debt securities of corporate and
government issuers, it may be subject to the risks associated with investing in
debt securities. 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 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.
Because the Pioneer Fund may invest in REITs, it may be subject to certain
unique risks associated with investing in REITs. REITs 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.
19
The Funds' Past Performance
The Pioneer Fund is a newly-organized Pioneer fund that will commence
operations upon consummation of the proposed Reorganization, and therefore, has
no performance history. As accounting successor to the RMK Fund, the Pioneer
Fund will assume the RMK Fund's historical performance after the consummation
of the Reorganization. Set forth below is performance information for the RMK
Fund. The bar chart shows the year-by-year performance of the RMK Fund's Class
A shares for the past 10 calendar years. Class C shares and Class I shares of
the RMK Fund will have different performance because they have different
expenses. The Pioneer Fund has different fees and expenses and would,
therefore, have had different performance results. 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. The table shows average annual total return (before
and after taxes) for the RMK Fund over time for each class of shares (including
deductions for sales charges) compared with a broad-based securities market
index. The bar chart provides an indication of the risks of investing in the
RMK Fund, including the fact that you could incur a loss and experience
volatility of returns year to year. Past performance, before and after taxes,
does not indicate future results.
The RMK Fund began operations on March 12, 1999 as the successor to a
collective trust fund for which Regions Bank was the trustee. The performance
included in the bar chart and table below relating to the RMK Fund prior to
March 12, 1999 is that of the RMK Fund's predecessor, the inception date of
which was June 30, 1993. The collective trust fund was not registered under the
1940 Act, and therefore was not subject to certain investment restrictions that
are imposed by the 1940 Act. If the collective trust fund had been registered
under the 1940 Act, its performance may have been adversely affected.
Regions Morgan Keegan Select Mid Cap Growth Fund's
Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'99 41.89
'00 33.00
'01 -0.97
'02 -20.00
'03 39.62
'04 8.40
'05 18.48
'06 6.20
'07 18.98
'08 -39.76
- ----------
The highest quarterly return was 31.24% for the quarter ended December 31, 1999
The lowest quarterly return was (23.43)% for the quarter ended December 31, 2008
20
Regions Morgan Keegan Select Mid Cap Growth Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- ----------------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------------------------------
Class A(1) 06/30/93
- ----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 5.50% sales charge) (43.07)% (1.57)% 6.79% 9.91%
- ----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (43.63)% (2.77)% 4.92%
- ----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (28.26)% (1.01)% 5.36%
Fund Shares(2)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 01/07/02
- ----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (40.99)% (0.97)% N/A 0.66%
Deferred Sales Charge)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Class I 06/23/04
- ----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (39.58)% N/A N/A (1.24)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Russell Mid Cap Growth Index(3) (44.32)% (2.33)% (0.19)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of each
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on fund distributions. Actual
after-tax returns to an investor depend on the investor's own tax situation
and may differ from those shown. After-tax returns are not relevant to
investors holding shares through tax-deferred programs, such as individual
retirement accounts or 401(k) plans. After-tax returns are shown only for
Class A shares. After-tax returns for other classes will be different.
(3) The Russell Mid Cap Growth Index measures the performance of U.S. mid-cap
growth stocks. Total returns for the index shown are not adjusted to
reflect taxes, sales charges, expenses or other fees that the SEC requires
to be reflected in the Fund's performance. The index is unmanaged, and
unlike the Fund, is not affected by cashflows or trading and other
expenses. It is not possible to invest directly in an index.
The most recent portfolio managers' discussion of the RMK Fund is attached
as Exhibit B.
21
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below for the RMK Fund are based on the expenses of the RMK Fund for
the twelve-month period ended November 30, 2008. The Pioneer Fund is a
newly-organized Pioneer fund that will commence operations upon consummation of
the proposed Reorganization and has no performance history. Therefore, the Fees
and Expenses for the Pioneer Fund have been estimated using the Fund's proposed
fees and estimated expenses assuming the Reorganization occurred on November 30,
2008. For financial statement purposes, the RMK Fund will be the accounting
survivor of the Reorganization. As the accounting survivor, the RMK Fund's
operating history will be used for financial reporting purposes. The tables also
show the pro forma expenses of the combined Pioneer Fund after giving effect to
the Reorganization based on pro forma net assets as of November 30, 2008.
Regions Morgan
Keegan Select
Mid Cap
Growth Fund
(period ended Pioneer
November 30, Mid Cap
2008) Growth Fund II
------------- --------------
Shareholder transaction fees
(paid directly from your investment) .............. Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................. 5.50% 5.75%
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) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ..................................... 0.75% 0.63%
Distribution and Service (12b-1) Fee ............... 0.25% 0.25%
Other Expenses ..................................... 0.25% 0.21%
Total Annual Fund Operating Expenses ............... 1.25% 1.09%
- --------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........... 0.00% 0.00%
- --------------------------------------------------------------------------------------
Net Expenses ....................................... 1.25% 1.09%
- --------------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Combined Mid Cap Combined
Pioneer Growth Fund Pioneer
Mid Cap (period ended Pioneer Mid Cap
Growth Fund II November 30, Mid Cap Growth Fund II
(Pro Forma) 2008) Growth Fund II (Pro Forma)
-------------- ------------ -------------- --------------
Shareholder transaction fees
(paid directly from your investment) .......... Class A Class C Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. 5.75% None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None(2) 1.00%(3) 1.00% 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.63% 0.75% 0.63% 0.63%
Distribution and Service (12b-1) Fee ........... 0.25% 1.00% 1.00% 1.00%
Other Expenses ................................. 0.21% 0.25% 0.38% 0.38%
Total Annual Fund Operating Expenses ........... 1.09% 2.00% 2.01% 2.01%
- -------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00%(4) 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------------
Net Expenses ................................... 1.09% 2.00% 2.01% 2.01%
- -------------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Mid Cap Combined
Growth Fund Pioneer
(period ended Pioneer Mid Cap
November 30, Mid Cap Growth Fund II
2008) Growth Fund II (Pro Forma)
------------ ------- --------------
Shareholder transaction fees
(paid directly from your investment) ..................... Class I Class Y Class Y
Maximum sales charge (load) when you buy shares
as a percentage of offering price ........................ None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less .......... None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ............................................ 0.75% 0.63% 0.63%
Distribution and Service (12b-1) Fee ...................... 0.00% 0.00% 0.00%
Other Expenses ............................................ 0.25% 0.09% 0.09%
- -----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ...................... 1.00% 0.72% 0.72%
- -----------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .................. 0.00% 0.00% 0.00%(4)
Net Expenses .............................................. 1.00% 0.72% 0.72%
- -----------------------------------------------------------------------------------------------------------------
22
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Combined
Regions Morgan Pioneer
Keegan Select Mid Cap
Number of years Mid Cap Pioneer Mid Cap Growth Fund II
you own your shares Growth Fund Growth Fund II (Pro Forma)
- ------------------------------------- ---------------- ----------------- ---------------
Class A -- with or without redemption
Year 1 ............................. $ 670 $ 679 $ 679
Year 3 ............................. $ 925 $ 900 $ 900
Year 5 ............................. $1,199 $1,139 $1,139
Year 10 ............................ $1,978 $1,822 $1,822
Class C -- with redemption
Year 1 ............................. $ 303 $ 304 $ 304
Year 3 ............................. $ 627 $ 629 $ 629
Year 5 ............................. $1,078 $1,080 $1,080
Year 10 ............................ $2,327 $2,332 $2,332
Class C -- without redemption
Year 1 ............................. $ 203 $ 204 $ 204
Year 3 ............................. $ 627 $ 629 $ 629
Year 5 ............................. $1,078 $1,080 $1,080
Year 10 ............................ $2,327 $2,332 $2,332
Class I/Y
Year 1 ............................. $ 102 $ 73 $ 73
Year 3 ............................. $ 318 $ 229 $ 229
Year 5 ............................. $ 552 $ 398 $ 398
Year 10 ............................ $1,225 $ 889 $ 889
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption will
apply to Class C shares redeemed within one year of the purchase date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.25% and 1.00% of the
average daily net assets attributable to Class A shares and Class Y shares,
respectively. Assuming the Reorganization is approved, these expense
limitations will be in effect for a period of three years after the close
of the Reorganization. There can be no assurance that Pioneer will extend
the expense limitations beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 1.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
23
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A, Class C and Class Y shares are anticipated
to be 1.09%, 2.01% and 0.72%, respectively, after giving effect to Pioneer's
contractual expense limitation for Class A Shares, and the historical net
expense ratios for the corresponding classes of shares of your RMK Fund are
1.25%, 2.00% and 1.00%, respectively. Therefore, the expense ratio of the
combined Pioneer Fund is expected to be lower for Class A and Class Y shares of
the combined Pioneer Fund as compared to the corresponding classes of your RMK
Fund. In addition, the broader distribution arrangements of the Pioneer Fund
offer greater potential for further asset growth and further reduced per share
expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 1.25% and 1.00% of the average daily
net assets attributable to Class A shares and Class Y shares, respectively.
Assuming the shareholders of your RMK Fund approve the Reorganization, these
expense limitations will be in effect for the combined Pioneer Fund for a
period of three years from the Closing Date. There can be no assurance that
Pioneer will extend the expense limitations beyond such time.
Fourth, the Pioneer Fund's management fee (0.65% of average daily net
assets) is lower than the advisory fee of your RMK Fund (0.75% of average daily
net assets). The RMK Board noted that at November 30, 2008, the advisory fee
payable by your RMK Fund was 0.75%. The management fee of the combined Pioneer
Fund, had the Reorganization occurred on that date, would be 0.63%, which is
lower than your RMK Fund's fixed management fee.
Fifth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Sixth, the Class A, Class C and Class Y shares of the Pioneer Fund
received in the Reorganization will provide the RMK Fund shareholders with
exposure to substantially the same investment product as they have currently.
Seventh, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund.
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
24
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund as of
January 20, 2009. The Pioneer Fund is a newly formed fund that will commence
operations upon consummation of the proposed Reorganization. Therefore, the
Pioneer Fund had no assets or shares outstanding as of January 20, 2009. The
table also sets forth the pro forma combined capitalization of the combined
Pioneer Fund as if the Reorganization had occurred on January 20, 2009. If the
Reorganization is consummated, the actual exchange ratios on the Closing Date
may vary from the exchange ratios used in the computations below. This is due to
changes in the market value of the portfolio securities of the RMK Fund between
January 20, 2009 and the Closing Date, changes in the amount of undistributed
net investment income and net realized capital gains of the RMK Fund during that
period resulting from income and distributions, and changes in the accrued
liabilities of the RMK Fund during the same period.
Regions Morgan Pioneer
Keegan Select Pioneer Mid Cap
Mid Cap Mid Cap Growth Fund II
Growth Fund Growth Fund II Pro Forma
------------------ ---------------- ------------------
Net Assets
Class A ............................. $ 88,909,114 -- $ 88,909,114
Class C ............................. $ 4,220,253 -- $ 4,220,253
Class I/Y ........................... $ 106,834,085 -- $ 106,834,085
------------------------------------------------------
Total Net Assets of the Fund ......... $ 199,963,452 N/A $ 199,963,452
Net Asset Value Per Share
Class A ............................. $ 9.10 -- $ 9.10
Class C ............................. $ 8.62 -- $ 8.62
Class I/Y ........................... $ 9.21 -- $ 9.21
Shares Outstanding
Class A ............................. 9,769,303 -- 9,769,303
Class C ............................. 489,663 -- 489,663
Class I/Y ........................... 11,597,536 -- 11,597,536
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including tax
capital loss carryforwards, voting rights and required vote from the RMK Fund
shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 1 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
25
Regions Morgan Keegan Select Growth Fund
and
Pioneer Growth Fund
PROPOSAL 2
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-1 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each Agreement
and Plan of Reorganization" in the back of this Proxy Statement/Prospectus,
after the discussion of the various Proposals.
If Proposal 2 is approved, Regions Morgan Keegan Select Growth Fund (the
"RMK Fund") will be reorganized into Pioneer Growth Fund, a newly organized
Pioneer fund that will commence operations upon consummation of the proposed
Reorganization (the "Pioneer Fund" and, together with the RMK Fund, the
"Funds"), as described above, and the Pioneer Fund will issue Class A, Class C
and Class Y shares, as applicable, to the RMK Fund in amounts equal to the
aggregate net asset value of the RMK Fund's Class A, Class C and Class I shares,
respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Growth Fund to Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is growth of The fund's investment objective is long-term
capital and income. capital growth.
- ----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests in the common stocks of Normally, the fund invests at least 80% of its
investment strategies companies that are expected to achieve above- net assets (plus the amount of borrowings, if
average growth in earnings. MAM selects any, for investment purposes) in equity
industry sectors that MAM expects to have securities of large companies, that is,
favorable earnings growth, given the current companies similar in size to issuers included in
phase of the business cycle. Future growth the Russell 1000 Growth Index. The Russell
prospects take precedence over current 1000 Growth Index is a large capitalization
valuation levels in the stock selection process. index that measures the performance of those
Selected companies are expected to have large companies in the Russell 1000 Index with
market capitalizations and above-average higher price-to-book ratios and higher
price/earnings (P/E), price-to-book, and return- forecasted growth values. On November 30,
on-assets ratios. Dividend yields may be lower 2008, the index had a median market
than market averages, owing to the growth capitalization of approximately $3.3 billion. The
emphasis of the fund. size of the companies in the index may change
dramatically as a result of market conditions
and the composition of the index. The fund's
investments will not be confined to securities
issued by companies included in the index.
- ----------------------------------------------------------------------------------------------------------------------------------
26
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
In addition to seeking companies with above- The fund will provide written notice to
average potential for growth, MAM will seek to shareholders at least 60 days prior to any change
identify companies that have clearly defined to its policy to invest at least 80% of its
business strategies, produce consistent revenue assets in equity securities of large companies.
streams from an established customer base, enjoy
significant market share in their respective The fund may invest up to 20% of its total assets
industries, produce healthy cash flows, achieve in equity and debt securities of non- U.S.
consistent increases in sales, operating corporate issuers and debt securities of non-U.S.
margins, and corporate earnings, and have government issuers. The fund will not invest more
experienced management teams with consistent than 10% of its total assets in the securities of
records of delivering shareholder value. MAM emerging markets issuers.
periodically reviews market prices in relation
to the stock's target price and adjusts the The fund may invest in debt securities of U.S.
fund's holdings accordingly. 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 long-term capital growth, to diversify the
fund's portfolio or for greater liquidity. 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 uses a "growth" style of management and
seeks to invest in securities of issuers with
above average potential for earnings and revenue
growth. To select growth stocks, Pioneer employs
quantitative analysis, fundamental research, an
evaluation of the issuer based on its financial
statements and operations, utilizing a bottom-up
analytic style. 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 and
securities, not on economic sector or
market-timing strategies. Factors Pioneer looks
for in selecting investments include:
- ----------------------------------------------------------------------------------------------------------------------------------
27
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
o Companies with experienced management teams,
strong market positions and the potential to
support above average earnings growth
o A sustainable competitive advantage such as
brand name, customer base, proprietary
technology or economies of scale
o Favorable expected returns relative to
perceived risk
Pioneer generally sells a portfolio security when
it believes that the issuer no longer offers the
potential for above average earnings and revenue
growth. Pioneer makes that determination based
upon the same criteria it uses to select
portfolio securities.
- ----------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions during its assets to meet its investment objective. The
adverse market conditions, the fund may fund may invest the remainder of its assets in
temporarily depart from its principal investment securities with remaining maturities of less than
strategy by investing up to 100% of the fund's one year or cash equivalents, or may hold cash.
assets in cash and cash equivalents, including For temporary defensive purposes, including
short-term bank obligations, repurchase during periods of unusual cash flows, the fund
agreements and other money market instruments may depart from its principal investment
and securities issued and/or guaranteed as to strategies and invest part or all of its assets
payment of principal and interest by the U.S. in these securities or may hold cash. During such
government, its agencies or instrumentalities. periods, the fund may not be able to achieve its
This may cause the fund to temporarily fail to investment objective. The fund may adopt a
meet its goal and forego greater investment defensive strategy when Pioneer believes
returns for the safety of principal. securities in which the fund normally invests
have extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
- ----------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. The fund's annual portfolio
the fund's investment goal. A higher portfolio turnover rate will vary based on many factors and
turnover rate involves greater transaction has exceeded 100%. If the fund does a lot of
expenses which must be borne directly by the trading, it may incur additional operating
fund (and thus, indirectly by its shareholders), expenses, which would reduce performance, and
and impact fund performance. In addition, a high could cause shareowners to incur a higher level
rate of portfolio turnover may result in the of taxable income or capital gains.
realization of larger amounts of net capital
gains that, when distributed to the fund's
shareholders, are taxable to them.
- ----------------------------------------------------------------------------------------------------------------------------------
28
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use futures
Derivative contracts are financial instruments and options on securities, indices and
that require payments based upon changes in the currencies, forward foreign currency exchange
values of designated (or underlying) securities, contracts and other derivatives. A derivative is
currencies, commodities, financial indices or a security or instrument whose value is
other assets. Some derivative contracts (such as determined by reference to the value or the
futures, forwards and options) require payments change in value of one or more securities,
relating to a future trade involving the currencies, indices or other financial
underlying asset. Other derivative contracts instruments. Although there is no specific
(such as swaps) require payments relating to the limitation on investing in derivatives, the fund
income or returns from the underlying asset. does not use derivatives as a primary investment
technique and generally limits their use to
MAM may trade in options or futures in order to hedging. However, the fund may use derivatives
hedge the fund's portfolio against market shifts for a variety of non-principal purposes,
as well as to increase returns. 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
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility of
the fund's net asset value. 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. Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gain. If changes in a
derivative's value do not correspond to changes
in the value of the fund's other investments or
do not correlate well with the underlying asset,
rate or index, 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 issuer of the derivative
defaults on its obligation. Certain derivatives
may be less liquid, which may reduce the returns
of the fund if it cannot sell or terminate the
derivative at an advantageous time or price.
- ----------------------------------------------------------------------------------------------------------------------------------
29
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Some derivatives may involve the risk of improper
valuation. The fund will only invest in
derivatives to the extent Pioneer believes these
investments are not inconsistent with the fund's
investment objective, but derivatives may not
perform as intended. Suitable derivatives may not
be available in all circumstances or at
reasonable prices and may not be used by the fund
for a variety of reasons.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio managers MAM Pioneer
Portfolio Managers: Portfolio Manager:
Day-to-day management of the fund's portfolio is The fund has not yet commenced operations, and
the responsibility of Charles A. Murray, CFA and therefore, does not currently have any portfolio
David P. McGrath, CFA. The portfolio managers managers. However, the fund will commence
are supported by MAM's equity and/or fixed operations upon the consummation of the proposed
income research teams which provide fundamental Reorganization. At that time, day-to-day
research and quantitative analysis used to run management of the fund's portfolio is the
MAM's internal investment models. responsibility of Timothy Mulrenan. Mr. Mulrenan
is supported by the domestic equity team. Members
Mr. Murray is a Senior Vice President, Senior of this team manage other Pioneer funds investing
Portfolio Manager, and Senior Equity Strategist primarily in U.S. equity securities. The
for MAM. He has more than thirty years of portfolio manager and the team also may draw upon
experience in investment management, research the research and investment management expertise
and banking. From 1978 to the present, Mr. of the global research teams, which provide
Murray has served as a Portfolio Manager for MAM fundamental and quantitative research on
and its predecessor, and currently serves as the companies and include members from Pioneer's
Portfolio Manager for the fund. From 1978 to affiliate, Pioneer Investment Management Limited.
1988, Mr. Murray served as the portfolio manager Mr. Mulrenan, a vice president, joined Pioneer in
of various common trust funds at a bank later 1997 as an analyst and has managed portfolios
acquired by Regions Financial Corporation. Mr. since 1998.
Murray was the first portfolio manager of the
First Priority Equity Fund (the predecessor fund
to the fund) from 1992 to 1995. He assumed lead
manager of the fund in September 2001. Mr.
Murray received a B.S. in Finance from the
University of Alabama in 1970. He is a holder of
the Chartered Financial Analyst designation.
- ----------------------------------------------------------------------------------------------------------------------------------
30
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Mr. McGrath is a Vice President and Senior
Portfolio Manager for MAM. He has more than nine
years experience in investment management and
research. From 2001 to present, Mr. McGrath has
served as Portfolio Manager for the fund. From
1999 to 2004, Mr. McGrath served as a Portfolio
Manager for MAM assisting with the fund as well
as managing various other accounts. Mr. McGrath
received a B.S. in Finance from The University
of Memphis in 1995 and a M.B.A. from Bryant
College in 1998. He is a holder of the Chartered
Financial Analyst designation.
- ----------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an A diversified series of Pioneer Series Trust I,
open-end management investment company organized an open-end management investment company
as a Massachusetts business trust. organized as a Delaware statutory trust.
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $225,121,448 None
January 20, 2009)
- ----------------------------------------------------------------------------------------------------------------------------------
31
Classes of Shares, Fees and Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial sales Class A shares are offered with an initial sales
and fees charge up to 5.50% of the offering price, which charge up to 5.75% of the offering price, which
is reduced depending upon the amount invested as is reduced or waived for large purchases and
described below or, in certain circumstances, certain types of investors. At the time of your
waived. Class A shares bought as part of an purchase, your investment firm may receive a
investment of $1 million or more are not subject commission from PFD, the fund's distributor, of
to an initial sales charge, but may be charged a up to 5%, declining as the size of your
contingent deferred sales charge of 1.00% if investment increases.
sold within one year of purchase.
You pay the offering price (the net asset value
Your investment may qualify for a reduction or per share plus any initial sales charge) when you
elimination of the sales charge, also known as a buy Class A shares unless you qualify to purchase
breakpoint discount. The following lists the shares at net asset value. You pay a lower sales
sales charges, which will be applied to your charge as the size of your investment increases.
Class A share purchase, subject to the You do not pay a sales charge when you reinvest
breakpoint discounts indicated: dividends or capital gain distributions paid by
the fund.
-------------------------------------------------------------------------------------------------------
Your As a % of As a % of Net Sales charge as % of
Investment Offering Price Amounts ----------------------------------------------------
Invested Amount of Offering Price Net Amounts
purchase Invested
-------------------------------------------------------------------------------------------------------
Up to $49,999 5.50% 5.82% Less than 5.75% 6.10%
$ 50,000
-------------------------------------------------------------------------------------------------------
$50,000 to 4.50% 4.71% $50,000 but 4.50% 4.71%
$ 99,999 less than
$100,000
-------------------------------------------------------------------------------------------------------
$100,000 to 3.75% 3.90% $100,000 but 3.50% 3.63%
$249,999 less than
$250,000
-------------------------------------------------------------------------------------------------------
$250,000 to 2.50% 2.56% $250,000 but 2.50% 2.56%
$499,999 less than
$500,000
-------------------------------------------------------------------------------------------------------
$500,000 to 2.00% 2.04% $500,000 but 2.00% 2.04%
$999,999 less than
$1 million
-------------------------------------------------------------------------------------------------------
$1 million Net asset Net asset $1 million -0- -0-
or more value value or more
-------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales charges,
fund's transfer agent of eligibility for any except in certain circumstances when the initial
applicable breakpoint discount at the time of sales charge is waived. A contingent deferred
purchase. sales charge may be payable to PFD, the fund's
distributor, in the event of a share redemption
Class A shares pay a shareholder servicing fee within 18 months following the share purchase at
(non-12b-1) of up to 0.25% of average daily net the rate of 1.00% of the lesser of the value of
assets. the shares redeemed or the total cost of such
shares, subject to certain waivers.
- ----------------------------------------------------------------------------------------------------------------------------------
32
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial Class C shares are offered without an initial
and fees sales charge. sales charge.
Class C shares are subject to a contingent Class C shares are subject to a contingent
deferred sales charge of 1.00% if sold within deferred sales charge of 1.00% if you sell your
one year of purchase. shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing fee PFD, the fund's distributor, at the time of your
(non-12b-1) of up to 0.25% of average daily net purchase of up to 1.00%.
assets and a distribution (12b-1) fee of 0.75%
of average daily net assets. Class C shares are subject to distribution and
service (12b-1) fees of up to 1.00% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal The fund pays Pioneer a fee for managing the fund
to 0.75% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's annual fee is equal to 0.65% of the
fund's average daily net assets up to $1 billion
and 0.60% of assets over $1 billion. The fee is
accrued daily and paid monthly.
- ----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the extent
required to reduce fund expenses to 1.25%, 2.15%
and 0.85% of the average daily net assets
attributable to Class A shares, Class C shares
and Class Y shares, respectively. These expense
limitations are in effect through April 1, 2012
for Class A shares and through June 1, 2010 for
Class C shares and Class Y shares. In addition,
Pioneer has contractually agreed to limit
ordinary operating expenses to the extent
required to reduce fund expenses to
- ----------------------------------------------------------------------------------------------------------------------------------
33
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
1.25% and 1.00% of the average daily net assets
attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization
is approved, these expense limitations will be in
effect for a period of three years after the
closing of the Reorganization. There can be no
assurance that Pioneer will extend the expense
limitations beyond such time.
- ----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in the
"The Funds' Fees and Expenses" section starting on page 37.
- ----------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and investment strategies, they are subject to similar principal
risks. You could lose money on your investment in each Fund, 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 Large-size or growth stocks fall out of favor with investors
o The Fund's investments do not have the growth potential originally
expected
Each Fund is subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks tend to have greater
volatility than debt securities. The Funds' portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Funds' share price will go up and down. Each Fund's
investment adviser attempts to manage market risk by limiting the amount the
Fund invests in any single company's equity securities. However,
diversification will not protect a Fund against widespread or prolonged
declines in the stock market.
Each Fund is subject to risks associated with investing in growth stocks.
Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development or an adverse market development. Further, since growth
companies often reinvest a high proportion of their earning in their own
businesses, growth stocks may not pay dividends or may pay lower dividends than
value stocks. This means they depend more on price change for returns and may
be more adversely affected in a down market compared to value stocks.
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including in the securities of emerging markets issuers, it may be subject to
the risks below associated with investing in non-U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
Pioneer 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 Pioneer 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
Pioneer 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 Pioneer Fund's
return
Because the Pioneer Fund may invest in debt securities of corporate and
government issuers, it may be subject to risks associated with debt securities,
which include 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 Pioneer 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 the investment
adviser.
34
Generally, the Pioneer Fund acquires debt securities that are investment grade,
but the Fund may invest in below investment grade debt securities including
below investment grade convertible debt securities. Debt securities rated below
investment grade are commonly referred to as "junk bonds" and are considered
speculative. Below investment grade debt securities involve greater risk of
loss, are subject to greater price volatility and are less liquid, especially
during periods of economic uncertainty or change, than higher quality debt
securities.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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. Industries in the health care segment, such as health care
supplies, health care services, biotechnology and pharmaceuticals, may be
significantly affected by government regulation and reimbursement rates,
approval of products by government agencies, and patent expirations and
litigation.
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
The Funds' Past Performance
The Pioneer Fund is a newly-organized Pioneer fund that will commence
operations upon consummation of the proposed Reorganization, and therefore, has
no performance history. As accounting successor to the RMK Fund, the Pioneer
Fund will assume the RMK Fund's historical performance after the consummation
of the Reorganization. Set forth below is performance information for the RMK
Fund. The bar chart shows the year-by-year performance of the RMK Fund's Class
A shares for the past 10 calendar years. Class C and Class I shares of the RMK
Fund will have different performance because they have different expenses. The
Pioneer Fund has different fees and expenses and would, therefore, have had
different performance results. 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. The table shows average annual total return (before and after taxes)
for the RMK Fund over time for each class of shares (including deductions for
sales charges) compared with a broad-based securities market index. The bar
chart provides an indication of the risks of investing in the RMK Fund,
including the fact that you could incur a loss and experience volatility of
returns year to year. Past performance, before and after taxes, does not
indicate future results.
Regions Morgan Keegan Select Growth Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'99 28.57
'00 -21.60
'01 -19.20
'02 -20.43
'03 28.62
'04 0.65
'05 9.55
'06 6.60
'07 16.10
'08 -34.42
- ----------
The highest quarterly return was 20.67% for the quarter ended December 31, 1999
The lowest quarterly return was (19.30)% for the quarter ended March 31, 2001
35
Regions Morgan Keegan Select Growth Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- ---------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ---------------------------------------------------------------------------------------------------------------------------
Class A(1) 04/20/92
- ---------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 5.50% sales charge) (38.03)% (3.30)% (3.44)% 4.75%
- ---------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (38.03)% (3.41)% (3.65)%
- ---------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (24.71)% (2.74)% (2.83)%
Fund Shares(2)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Class C 01/07/02
- ---------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (35.73)% (2.80)% N/A (2.32)%
Deferred Sales Charge)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Class I 05/19/05
- ---------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (34.27)% N/A N/A (3.03)%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index(3) (37.00)% (2.19)% (1.38)%
- ---------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of each
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on fund distributions. Actual
after-tax returns to an investor depend on the investor's own tax situation
and may differ from those shown. After-tax returns are not relevant to
investors holding shares through tax-deferred programs, such as individual
retirement accounts or 401(k) plans. After-tax returns are shown only for
Class A shares. After-tax returns for other classes will be different.
(3) The Standard & Poor's 500 Index is a commonly used measure of the broad
U.S. stock market. Total returns for the index shown are not adjusted to
reflect taxes, sales charges, expenses or other fees that the SEC required
to be reflected in the Fund's performance. The index is unmanaged, and
unlike the RMK Fund, is not affected by cashflows or trading and other
expenses. It is not possible to invest directly in an index.
The most recent portfolio managers' discussion of the RMK Fund is attached
as Exhibit B.
36
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay if
you were to buy and hold shares of each Fund. The expenses in the tables
appearing below for the RMK Fund are based on the expenses of the RMK Fund for
the twelve-month period ended November 30, 2008. The Pioneer Fund is a
newly-organized Pioneer fund that will commence operations upon consummation of
the proposed Reorganization and has no performance history. Therefore, the Fees
and Expenses for the Pioneer Fund have been estimated using the Fund's proposed
fees and estimated expenses assuming the Reorganization occurred on November 30,
2008. For financial statement purposes, the RMK Fund will be the accounting
survivor of the Reorganization. As the accounting survivor, the RMK Fund's
operating history will be used for financial reporting purposes. The tables also
show the pro forma expenses of the combined Pioneer Fund after giving effect to
the Reorganization based on pro forma net assets as of November 30, 2008.
Regions Morgan
Keegan Select
Growth Fund Combined
(period ended Pioneer
November 30, Pioneer Growth Fund
2008) Growth Fund (Pro Forma)
------------ ----------- -----------
Shareholder transaction fees
(paid directly from your investment) .......... Class A Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. 5.50% 5.75% 5.75%
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) None(2) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.75% 0.65% 0.65%
Distribution and Service (12b-1) Fee ........... 0.25% 0.25% 0.25%
Other Expenses ................................. 0.25% 0.26% 0.26%
- -----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ........... 1.25% 1.16% 1.16%
- -----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses ................................... 1.25% 1.16% 1.16%
- -----------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Growth Fund Combined
(period ended Pioneer
November 30, Pioneer Growth Fund
2008) Growth Fund (Pro Forma)
--------------- --------------- ---------------
Shareholder transaction fees
(paid directly from your investment) .......... Class C Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less 1.00%(3) 1.00% 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.75% 0.65% 0.65%
Distribution and Service (12b-1) Fee ........... 1.00% 1.00% 1.00%
Other Expenses ................................. 0.25% 0.22% 0.22%
- -----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ........... 2.00% 1.87% 1.87%
- -----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00% 0.00%(4) 0.00%(4)
Net Expenses ................................... 2.00% 1.87% 1.87%
- -----------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Growth Fund Combined
(period ended Pioneer
November 30, Pioneer Growth Fund
2008) Growth Fund (Pro Forma)
--------------- --------------- ----------------
Shareholder transaction fees
(paid directly from your investment) ........................................... Class I Class Y Class Y
Maximum sales charge (load) when you buy shares as a percentage of offering price None None None
Maximum deferred sales charge (load) as a percentage of offering price or the
amount you receive when you sell shares, whichever is less ..................... None None None
Annual Fund operating expenses (deducted from fund assets) as a % of average
daily net assets
Management Fee .................................................................. 0.75% 0.65% 0.65%
Distribution and Service (12b-1) Fee ............................................ 0.00% 0.00% 0.00%
Other Expenses .................................................................. 0.25% 0.16% 0.16%
- -----------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............................................ 1.00% 0.81% 0.81%
- ------------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........................................ 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses .................................................................... 1.00% 0.81% 0.81%
- -----------------------------------------------------------------------------------------------------------------------------------
37
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's contractual
expense limitation is in effect for year one. Pro forma expenses are included
assuming a Reorganization of the Funds. The examples are for comparison purposes
only and are not a representation of either Fund's actual expenses or returns,
either past or future.
Combined
Regions Morgan Keegan Pioneer Pioneer Growth Fund
Number of years you own your shares Select Growth Fund Growth Fund (Pro Forma)
- ------------------------------------- ----------------------- ------------- --------------------
Class A -- with or without redemption
Year 1 ............................. $ 670 $ 686 $ 686
Year 3 ............................. $ 925 $ 922 $ 922
Year 5 ............................. $1,199 $1,177 $1,177
Year 10 ............................ $1,978 $1,903 $1,903
Class C -- with redemption
Year 1 ............................. $ 303 $ 290 $ 290
Year 3 ............................. $ 627 $ 588 $ 588
Year 5 ............................. $1,078 $1,011 $1,011
Year 10 ............................ $2,327 $2,190 $2,190
Class C -- without redemption
Year 1 ............................. $ 203 $ 190 $ 190
Year 3 ............................. $ 627 $ 588 $ 588
Year 5 ............................. $1,078 $1,011 $1,011
Year 10 ............................ $2,327 $2,190 $2,190
Class I/Y
Year 1 ............................. $ 102 $ 83 $ 83
Year 3 ............................. $ 318 $ 259 $ 259
Year 5 ............................. $ 552 $ 450 $ 450
Year 10 ............................ $1,225 $1,002 $1,002
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption will
apply to Class C shares redeemed within one year of the purchase date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.25%, 2.15% and 0.85% of
the average daily net assets attributable to Class A shares, Class C shares
and Class Y shares, respectively. These expense limitations are in effect
through April 1, 2012 for Class A shares and through June 1, 2010 for Class
C shares and Class Y shares. There can be no assurance that Pioneer will
extend the expense limitations beyond such time.
(5) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.25% and 1.00% of the
average daily net assets attributable to Class A shares and Class Y shares,
respectively. Assuming the Reorganization is approved, these expense
limitations will be in effect for a period of three years after the close
of the Reorganization. There can be no assurance that Pioneer will extend
the expense limitations beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 2.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for
38
MAM's mutual fund management business. After requests for proposals were
solicited, received and reviewed, MAM and Regions decided to recommend to the
RMK Board that the RMK Funds be reorganized into similar mutual funds managed
by Pioneer, as being in the best interest of shareholders of each of the RMK
Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A, Class C and Class Y shares are anticipated
to be 1.16%, 1.87% and 0.81%, respectively, after giving effect to Pioneer's
contractual expense limitation with respect to Class A and Class Y shares, and
the historical net expense ratios for the corresponding classes of shares of
your RMK Fund are 1.25%, 2.00% and 1.00%, respectively. Therefore, the expense
ratio of the combined Pioneer Fund is expected to be lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. In addition, the broader distribution arrangements of the
Pioneer Fund offer greater potential for further asset growth and further
reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 1.25%, 2.15% and 0.85% of the average
daily net assets attributable to Class A shares, Class C shares and Class Y
shares, respectively. These expense limitations are in effect through April 1,
2012 for Class A shares and through June 1, 2010 for Class C shares and Class Y
shares. In addition, Pioneer has contractually agreed to limit ordinary
operating expenses to the extent required to reduce fund expenses to 1.25% and
1.00% of the average daily net assets attributable to Class A shares and Class
Y shares, respectively. Assuming the shareholders of your RMK Fund approve the
Reorganization, these expense limitations will be in effect for the combined
Pioneer Fund for a period of three years from the Closing Date. There can be no
assurance that Pioneer will extend the expense limitations beyond such time.
Fourth, the combined Pioneer Fund's management fee (0.65% of average daily
net assets) is lower than the advisory fee of your RMK Fund (0.75% of average
daily net assets). The RMK Board noted that at November 30, 2008, the advisory
fee payable by your RMK Fund was 0.75%. The management fee of the combined
Pioneer Fund, had the Reorganization occurred on that date, would be 0.65%,
which is lower than your RMK Fund's fixed management fee.
Fifth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Sixth, the Class A, Class C and Class Y shares of the Pioneer Fund
received in the Reorganization will provide the RMK Fund shareholders with
exposure to substantially the same investment product as they have currently.
Seventh, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund.
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
39
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund as of
January 20, 2009. The Pioneer Fund is a newly formed fund that will commence
operations upon consummation of the proposed Reorganization. Therefore, the
Pioneer Fund had no assets or shares outstanding as of January 20, 2009. The
table also sets forth the pro forma combined capitalization of the combined
Pioneer Fund as if the Reorganization had occurred on January 20, 2009. If the
Reorganization is consummated, the actual exchange ratios on the Closing Date
may vary from the exchange ratios used in the computation below. This is due to
changes in the market value of the portfolio securities of the RMK Fund between
January 20, 2009 and the Closing Date, changes in the amount of undistributed
net investment income and net realized capital gains of the RMK Fund during that
period resulting from income and distributions, and changes in the accrued
liabilities of the RMK Fund during the same period.
Regions Morgan Keegan Pioneer Growth Fund
Select Growth Fund Pioneer Growth Fund Pro Forma
----------------------- --------------------- --------------------
Net Assets
Class A ......................... $ 85,751,233 -- $ 85,751,233
Class C ......................... $ 2,091,206 -- $ 2,091,206
Class I/Y ....................... $ 137,279,009 -- $ 137,279,009
---------------------------------------------------------------
Total Net Assets of Fund ......... $ 225,121,448 N/A $ 225,121,448
Net Asset Value Per Share
Class A ......................... $ 12.33 -- $ 12.33
Class C ......................... $ 11.82 -- $ 11.82
Class I/Y ....................... $ 12.30 -- $ 12.30
Shares Outstanding
Class A ......................... 6,954,194 -- 6,954,194
Class C ......................... 176,938 -- 176,938
Class I/Y ....................... 11,163,804 -- 11,163,804
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 2 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
40
Regions Morgan Keegan Select Core Equity Fund
and
Pioneer Fund
PROPOSAL 3
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each Agreement
and Plan of Reorganization" in the back of this Proxy Statement/Prospectus,
after the discussion of the various Proposals.
If Proposal 3 is approved, Regions Morgan Keegan Select Core Equity Fund
(the "RMK Fund") will be reorganized into Pioneer Fund (the "Pioneer Fund" and,
together with the RMK Fund, the "Funds"), as described above, and the Pioneer
Fund will issue Class A, Class C and Class Y shares, as applicable, to the RMK
Fund in amounts equal to the aggregate net asset value of the RMK Fund's Class
A, Class C and Class I shares, respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Core Equity Fund to Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is long-term The fund's investment objective is reasonable
growth of capital, current income and growth of income and capital growth.
income.
- ----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in common stocks that The fund invests in a broad list of carefully
investment strategies MAM believes have potential primarily for selected securities that Pioneer believes are
capital growth and secondarily for income. reasonably priced rather than in securities whose
Income includes both current income and the prices reflect a premium resulting from their
potential for growth of dividend income over current market popularity. The fund invests
time. Under normal circumstances, the fund predominantly in equity securities, primarily of
invests at least 80% of the value of its net U.S. issuers. For purposes of the fund's
assets in equity securities. The fund will investment policies, equity securities include
provide shareholders with at least 60 days' common stocks, convertible debt and other equity
prior notice of any changes to this policy. instruments, such as exchange- traded funds
(ETFs) that invest primarily in equity
The fund typically holds a combination of growth securities, equity interests in real estate
stocks and value stocks. By investing in a blend investment trusts (REITs), depositary receipts,
of stocks that demonstrate strong long-term warrants, rights and preferred stocks.
earnings potential and undervalued stocks, the
fund seeks to achieve strong returns with less The fund may invest up to 20% of its total assets
volatility. A portion of the fund's assets may in equity and debt securities of non- U.S.
also be invested in preferred stocks, bonds issuers. The fund will not invest more than 5% of
(primarily investment grade) convertible into its total assets in the securities of emerging
common stock and securities of foreign issuers markets issuers.
traded in U.S. securities
- ----------------------------------------------------------------------------------------------------------------------------------
41
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
markets. The fund's investment in foreign The fund may invest up to 20% of its net assets
issuers will be primarily through American in REITs. REITs are companies that invest
Depositary Receipts ("ADRs"). The fund expects primarily in real estate or real estate related
to earn current income mainly from dividends loans.
paid on common and preferred stocks and from
interest on convertible bonds. MAM also seeks to Pioneer uses a value approach to select the
identify companies that may increase their fund's investments. Using this investment style,
dividends over time. MAM utilizes both Pioneer seeks securities selling at reasonable
"top-down" and "bottom-up" approaches in prices or substantial discounts to their
constructing the fund's portfolio. This means underlying values and then holds these securities
MAM looks at the condition of the overall until the market values reflect their intrinsic
economy and industry segments in addition to values. Pioneer evaluates a security's potential
data on individual companies. MAM performs value, including the attractiveness of its market
fundamental analysis of companies by reviewing valuation, based on the company's assets and
historical and relative valuation along with prospects for earnings growth. In making that
historical and projected earnings growth rates. assessment, Pioneer employs fundamental research,
Quality and valuation ratings are assigned to an evaluation of the issuer based on its
those companies being followed. MAM selects financial statements and operations. Pioneer also
stocks with the intent of realizing long-term considers a security's potential to provide a
capital appreciation, not for quick turnover. reasonable amount of income. Pioneer relies on
MAM exercises patience and discipline in making the knowledge, experience and judgment of its
decisions to sell or continue to hold individual staff and the staff of its affiliates who have
stocks over time. Decisions to sell portfolio access to a wide variety of research. Pioneer
holdings are generally the result of changes in focuses on the quality and price of individual
MAM's assessment of a particular issue, changes issuers, not on economic sector or market-timing
in industry trends or other economic or strategies. Factors Pioneer looks for in
financial conditions that create more attractive selecting investments include:
alternatives in similar issues.
o Favorable expected returns relative to
perceived risk
o Above average potential for earnings and
revenue growth
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o A sustainable competitive advantage, such as
a brand name, customer base, proprietary
technology or economies of scale
The fund may invest a portion of its 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 issued by
both U.S. and non-U.S. corporate and government
issuers, including below
- ----------------------------------------------------------------------------------------------------------------------------------
42
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
investment grade convertible debt securities. The
fund invests in debt securities when Pioneer
believes they are consistent with the fund's
investment objective of reasonable income and
capital growth, to diversify the fund's portfolio
or for greater liquidity.
- ----------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions during its assets to meet its investment objective. The
adverse market conditions, the fund may fund may invest the remainder of its assets in
temporarily depart from its principal investment securities with remaining maturities of less than
strategy by investing up to 100% of the fund's one year or cash equivalents, or may hold cash.
assets in cash and cash equivalents, including For temporary defensive purposes, including
short-term bank obligations, repurchase during periods of unusual cash flows, the fund
agreements and other money market instruments may depart from its principal investment
and securities issued and/or guaranteed as to strategies and invest part or all of its assets
payment of principal and interest by the U.S. in these securities or may hold cash. During such
government, its agencies or instrumentalities. periods, the fund may not be able to achieve its
This may cause the fund to temporarily fail to investment objective. The fund may adopt a
meet its goal and forego greater investment defensive strategy when Pioneer believes
returns for the safety of principal. securities in which the fund normally invests
have extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
- ----------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. If the fund does a lot of
the fund's investment goal. A higher portfolio trading, it may incur additional operating
turnover rate involves greater transaction expenses, which would reduce performance, and
expenses which must be borne directly by the could cause shareowners to incur a higher level
fund (and thus, indirectly by its shareholders), of taxable income or capital gains.
and impact fund performance. In addition, a high
rate of portfolio turnover may result in the
realization of larger amounts of net capital
gains that, when distributed to the fund's
shareholders, are taxable to them.
- ----------------------------------------------------------------------------------------------------------------------------------
43
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use futures
Derivative contracts are financial instruments and options on securities, indices and
that require payments based upon changes in the currencies, forward foreign currency exchange
values of designated (or underlying) securities, contracts and other derivatives. A derivative is
currencies, commodities, financial indices or a security or instrument whose value is
other assets. Some derivative contracts (such as determined by reference to the value or the
futures, forwards and options) require payments change in value of one or more securities,
relating to a future trade involving the currencies, indices or other financial
underlying asset. Other derivative contracts instruments. Although there is no specific
(such as swaps) require payments relating to the limitation on investing in derivatives, the fund
income or returns from the underlying asset. does not use derivatives as a primary investment
technique and generally limits their use to
MAM may trade in options or futures in order to hedging. However, the fund may use derivatives
hedge the fund's portfolio against market shifts for a variety of non-principal purposes,
as well as to increase returns. 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
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility of
the fund's net asset value. 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. Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gain. If changes in a
derivative's value do not correspond to changes
in the value of the fund's other investments, 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, which may reduce the return of the fund
if it cannot sell or terminate the derivative at
an advantageous time or price. Some derivatives
may involve the risk of improper valuation. The
fund will only invest
- ----------------------------------------------------------------------------------------------------------------------------------
44
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
in derivatives to the extent Pioneer believes
these investments do not prevent the fund from
seeking its investment objective, but derivatives
may not perform as intended. Suitable derivatives
may not be available in all circumstances or at
reasonable prices and may not be used by the fund
for a variety of reasons.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio managers MAM Pioneer
Portfolio Managers: Portfolio Managers:
Day-to-day management of the fund's portfolio is Day-to-day management of the fund's portfolio is
the responsibility of Walter A. Hellwig and John the responsibility of John A. Carey, portfolio
B. Russell. The portfolio managers are supported manager, and Walter Hunnewell, Jr., assistant
by MAM's equity and/or fixed income research portfolio manager. Mr. Carey and Mr. Hunnewell
teams which provide fundamental research and are supported by the domestic equity team.
quantitative analysis used to run MAM's internal Members of this team manage other Pioneer funds
investment models. investing primarily in U.S. equity securities.
The portfolio managers and the team also may draw
Mr. Hellwig is a Senior Vice President and upon the research and investment management
Senior Portfolio Manager for MAM. He has more expertise of the global research teams, which
than thirty years experience in investment provide fundamental and quantitative research on
management and research. From 2004 to present, companies and include members from Pioneer's
Mr. Hellwig has served as the Portfolio Manager affiliate, Pioneer Investment Management Limited.
for the fund (formerly the LEADER Growth & Mr. Carey is director of portfolio management and
Income Fund). From 1997 to 2004, Mr. Hellwig an executive vice president of Pioneer. Mr. Carey
served as Senior Vice President and Senior joined Pioneer as an analyst in 1979. Mr.
Portfolio Manager at Union Planters Investment Hunnewell, a vice president of Pioneer, joined
Advisors and was also Chairman of the firm's Pioneer as a portfolio manager in August 2001 and
Equity Policy Committee. From 1994 to 1997, Mr. has been an investment professional since 1985.
Hellwig served as a Portfolio Manager for
Federated Investors, Inc. From 1986 to 1994, Mr.
Hellwig held several positions within Boatmen's
Investment Services and Boatmen's Trust
including Director of Investment Research and
Research Analyst. Prior to entering the
investment industry, Mr. Hellwig served as a
Vice President of Commercial Loans at a
Midwestern bank. Mr. Hellwig received a B.S. in
Business Administration in 1972 and an M.B.A.
from Washington University in St. Louis,
Missouri.
Mr. Russell is an Assistant Vice President and
Portfolio Manager for MAM. Prior to joining MAM
in 2002, Mr. Russell was part of a Financial
Management program with
- ----------------------------------------------------------------------------------------------------------------------------------
45
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
WorldCom, Inc., a global telecommunications
company. Mr. Russell graduated from Millsaps
College with a B.B.A. and a second major in
Spanish and received an M.B.A. from Millsaps
College with a focus in Finance.
- ----------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an The diversified sole series of an open-end
open-end management investment company organized management investment company organized as a
as a Massachusetts business trust. Delaware statutory trust with the same name.
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $3,499,595 $4,189,397,128
January 20, 2009)
- ----------------------------------------------------------------------------------------------------------------------------------
46
Classes of Shares, Fees and Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial sales Class A shares are offered with an initial sales
and fees charge up to 5.50% of the offering price, which charge up to 5.75% of the offering price, which
is reduced depending upon the amount invested as is reduced or waived for large purchases and
described below or, in certain circumstances, certain types of investors. At the time of your
waived. Class A shares bought as part of an purchase, your investment firm may receive a
investment of $1 million or more are not subject commission from Pioneer Funds Distributor, Inc.
to an initial sales charge, but may be charged a ("PFD"), the fund's distributor, of up to 5%,
contingent deferred sales charge of 1.00% if declining as the size of your investment
sold within one year of purchase. increases.
Your investment may qualify for a reduction or You pay the offering price (the net asset value
elimination of the sales charge, also known as a per share plus any initial sales charge) when you
breakpoint discount. The following lists the buy Class A shares unless you qualify to purchase
sales charges, which will be applied to your shares at net asset value. You pay a lower sales
Class A share purchase, subject to the charge as the size of your investment increases.
breakpoint discounts indicated: You do not pay a sales charge when you reinvest
dividends or capital gain distributions paid by
the fund.
-------------------------------------------------------------------------------------------------------
Your As a % of As a % of Net Sales charge as % of
Investment Offering Price Amounts ----------------------------------------------------
Invested Amount of Offering Price Net Amounts
purchase Invested
-------------------------------------------------------------------------------------------------------
Up to $49,999 5.50% 5.82% Less than 5.75% 6.10%
$ 50,000
-------------------------------------------------------------------------------------------------------
$50,000 to 4.50% 4.71% $50,000 but 4.50% 4.71%
$ 99,999 less than
$100,000
-------------------------------------------------------------------------------------------------------
$100,000 to 3.75% 3.90% $100,000 but 3.50% 3.63%
$249,999 less than
$250,000
-------------------------------------------------------------------------------------------------------
$250,000 to 2.50% 2.56% $250,000 but 2.50% 2.56%
$499,999 less than
$500,000
-------------------------------------------------------------------------------------------------------
$500,000 to 2.00% 2.04% $500,000 but 2.00% 2.04%
$999,999 less than
$1 million
-------------------------------------------------------------------------------------------------------
$1 million Net asset Net asset $1 million -0- -0-
or more value value or more
-------------------------------------------------------------------------------------------------------
47
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales charges,
fund's transfer agent of eligibility for any except in certain circumstances when the initial
applicable breakpoint discount at the time of sales charge is waived. A contingent deferred
purchase. sales charge may be payable to PFD, the fund's
distributor, in the event of a share redemption
Class A shares pay a shareholder servicing fee within 18 months following the share purchase at
(non-12b-1) of up to 0.25% of average daily net the rate of 1.00% of the lesser of the value of
assets. the shares redeemed or the total cost of such
shares, subject to certain waivers.
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial Class C shares are offered without an initial
and fees sales charge. sales charge.
Class C shares are subject to a contingent Class C shares are subject to a contingent
deferred sales charge of 1.00% if sold within deferred sales charge of 1.00% if you sell your
one year of purchase. shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing fee PFD, the fund's distributor, at the time of your
(non-12b-1) of up to 0.25% of average daily net purchase of up to 1.00%.
assets and a distribution (12b-1) fee of 0.75%
of average daily net assets. Class C shares are subject to distribution and
service (12b-1) fees of up to 1.00% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ----------------------------------------------------------------------------------------------------------------------------------
48
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal The fund pays Pioneer a fee for managing the fund
to 0.75% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's fee varies based on:
o The fund's assets. Pioneer earns an annual
basic fee equal to 0.60% of the fund's
average daily net assets up to $7.5 billion,
0.575% of the next $2.5 billion and 0.550% of
assets over $10 billion.
o The fund's performance. The investment
performance of the fund has been compared to
the Standard & Poor's 500 Growth Index. The
basic fee can increase or decrease by a
maximum of 0.10%, depending on the
performance of the fund's Class A shares
relative to the index. The performance
comparison is made for a rolling 36-month
period.
Pioneer's fee increases or decreases depending
upon whether the fund's performance is up and
down more or less than that of the index during
the rolling 36-month performance period. Each
percentage point of difference between the
performance of Class A shares and the index (to a
maximum of +/-10 percentage points) is multiplied
by a performance rate adjustment of 0.01%. As a
result, the maximum annualized rate adjustment is
+/-0.10% for the rolling 36-month performance
period. In addition, Pioneer contractually limits
any positive adjustment of the fund's management
fee to 0.10% of the fund's average daily net
assets on an annual basis (i.e., a maximum of
0.70% after the performance adjustment).
This performance comparison is made at the end of
each month. An appropriate percentage of this
rate (based on the number of days in the current
month) is then applied to the fund's average net
assets for the entire performance period, giving
a dollar amount that will be added to (or
subtracted from) the basic fee.
- ----------------------------------------------------------------------------------------------------------------------------------
49
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the extent
required to reduce fund expenses to 1.47% and
1.22% of the average daily net assets
attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization
is approved, these expense limitation will be in
effect for a period of three years after the
closing of the Reorganization. There can be no
assurance that Pioneer will extend the expense
limitations beyond such time.
- ----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in the
"The Funds' Fees and Expenses" section starting on page 55.
- ----------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, 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 remain undervalued or do not have the growth
potential originally expected
o Stocks selected for income do not perform as expected or as well as
other securities
Each Fund is subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks tend to have greater
volatility than debt securities. The Funds' portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Funds' share price will go up and down. Each Fund's
investment adviser attempts to manage market risk by limiting the amount the
Fund invests in any single company's equity securities. However,
diversification will not protect a Fund against widespread or prolonged
declines in the stock market.
Each Fund is subject to risks associated with investing in growth stocks.
Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development or an adverse market development. Further, since growth
companies often reinvest a high proportion of their earning in their own
businesses, growth stocks may not pay dividends or may pay lower dividends than
value stocks. This means they depend more on price change for returns and may
be more adversely affected in a down market compared to value stocks.
Each Fund is subject to risks associated with investing in value stocks.
Value stocks bear the risk that the companies issuing them may not overcome
adverse business or other developments that may caused the securities to be out
of favor or that the market does not recognize the value of the company, such
that the price of its securities declines or does not approach the value that
the Fund's investment adviser anticipates.
The RMK Fund may invest in securities of non-U.S. issuers, primarily
through American Depository Receipts. The Pioneer Fund may invest in securities
of non-U.S. issuers, including in the securities of emerging markets issuers.
Therefore, both Funds may be subject to the following risks associated with
investing in non-U.S. issuers. These risks are more pronounced for issuers in
emerging markets or to the extent that a 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, the Fund's investment adviser may not be able to sell
the Fund's portfolio securities at times, in amounts and at prices it
considers reasonable
50
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
Because the Pioneer Fund may invest REITs, it may be subject to certain
unique risks associated with investing in REITs. REITs are significantly
affected by the market for real estate and are dependent upon the management
skills of REIT managers and cash flow. In addition to its own expenses, the
Pioneer Fund will indirectly bear its proportionate share of any management and
other expenses paid by REITs in which it invests.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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.
Each Fund is also subject to company size risk, which relates to the
market capitalization of the company issuing the stock. Market capitalization
is determined by multiplying the number of a company's outstanding shares by
the current market price per share. Generally, the smaller the market
capitalization of a company, the fewer the number of shares traded daily, the
less liquid its stock and the more volatile its price. Stocks of small- and
mid-capitalization companies are also usually more sensitive to adverse
business developments and economic, political, regulatory and market factors
than stock of large-capitalization companies. Companies with smaller market
capitalizations also tend to have unproven track records, a limited product or
service base and limited access to capital. These factors also increase risks
and make these companies more likely to fail than companies with larger market
capitalizations. Each Fund may experience difficulty in purchasing or selling
securities of small- and mid-capitalization companies at the desired time and
price.
Because the Pioneer Fund may invest in equity and debt securities of
non-U.S. issuers, it may be subject to risks associated with debt securities,
which include 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 Pioneer 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.
Generally, the Pioneer Fund acquires debt securities that are investment grade,
but the Fund may invest in below investment grade debt securities. Debt
securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. Below investment grade debt securities
involve greater risk of loss, are subject to greater price volatility and are
less liquid, especially during periods of economic uncertainty or change, than
higher quality debt securities.
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of the Funds' Class A shares for the past 10
calendar years. Class C and Class I shares of the RMK Fund and Class C and
Class Y shares of the Pioneer Fund will have different performance because they
have different expenses. The charts do not reflect any sales charge you may pay
when you buy or sell Fund shares. Any sales charge will reduce your return. The
tables show average annual total return (before and after taxes) for each Fund
over time for each class of shares (including deductions for sales charges)
compared with broad-based securities market indices. The bar charts provide an
indication of the risks of investing in each Fund, including the fact that you
could incur a loss and experience volatility of returns year to year. Past
performance, before and after taxes, does not indicate future results.
The RMK Fund began operations on February 18, 2005 as the successor to a
substantially similar series of an investment company. On that date, the RMK
Fund merged with LEADER Growth & Income Fund, a series of LEADER Mutual Funds,
and assumed that series'
51
operating history and performance record. Therefore, the performance included
in the bar charts and tables below for the RMK Fund prior to February 19, 2005
is that of the Fund's predecessor, the inception dates of which were October
26, 2000 (Class A shares) and September 1, 1994 (Class I Shares). In addition,
the performance information of Class A shares of the RMK Fund for the period
prior to the commencement of operations of Class A shares is the net asset
value performance of the RMK Fund's Class I shares, which has been restated to
reflect differences in any applicable sales charges (but not differences in
expenses). If all the expenses of the RMK Fund were reflected, the performance
would be lower.
Regions Morgan Keegan Select Core Equity Fund's
Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'01 -11.40
'02 -19.98
'03 23.81
'04 6.74
'05 7.12
'06 2.35
'07 14.78
'08 -41.48
- ----------
The highest quarterly return was 12.37% for the quarter ended June 30, 2003
The lowest quarterly return was (21.65)% for the quarter ended December 31, 2008
Pioneer Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'99 15.54
'98 0.12
'01 -11.13
'02 -20.26
'03 24.58
'04 11.64
'05 6.39
'06 16.39
'07 4.71
'08 34.38
- ----------
The highest quarterly return was 14.45% for the quarter ended June 30, 2003
The lowest quarterly return was (22.10)% for the quarter ended December 31, 2008
52
Regions Morgan Keegan Select Core Equity Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A 10/26/00
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 5.50% sales charge) (44.70)% (5.77)% NA (5.69)%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(1) (50.19)% (8.94)% NA (7.79)%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (21.91)% (4.48)% NA (4.51)%
Fund Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class C 04/03/06
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (42.12)% N/A N/A (14.16)%
Deferred Sales Charge)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class I 09/01/94
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (41.31)% (4.45)% (2.79)% 4.75%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index(2) (37.00)% (2.19)% (1.38)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Large-Cap Core Funds Index(3) (37.07)% (2.73)% (1.90)%
- -----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of each
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on fund distributions. Actual
after-tax returns to an investor depend on the investor's own tax situation
and may differ from those shown. After-tax returns are not relevant to
investors holding shares through tax-deferred programs, such as individual
retirement accounts or 401(k) plans. After-tax returns are shown only for
Class I shares. After-tax returns for other classes will be different.
(2) The Standard & Poor's 500 Index is a commonly used measure of the broad
U.S. stock market. Total returns for the index shown are not adjusted to
reflect taxes, sales charges, expenses or other fees that the SEC requires
to be reflected in the Fund's performance. The index is unmanaged, and
unlike the RMK Fund, is not affected by cashflows or trading and other
expenses. It is not possible to invest directly in an index.
(3) The Lipper Large Cap Core Funds Index consists of managed mutual funds
that, by portfolio practice, invest at least 75% of their equity assets in
companies with market capitalization (on a three-year weighted basis) of
greater than 33% of the dollar-weighted median market capitalization of the
Standard & Poor's Mid Cap 400 Index. It is not possible to invest directly
in an index.
53
Pioneer Fund's Average Annual Total Returns(1)
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A 02/13/28
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (38.16)% (2.19)% (0.89)% 11.62%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (38.70)% (2.85)% (1.56)% 8.12%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (24.43)% (1.72)% (0.78)% 8.09%
Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class C 07/01/96
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes(3) (34.91)% (1.80)% (1.10)% 4.38%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class Y(4) 02/13/28(5)
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (34.07)% (0.60)% 0.10% 11.75%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (34.75)% (1.35)% (0.67)% 8.24%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (21.73)% (0.38)% 0.02% 8.21%
Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index (reflects no deduction (36.99)% (2.19)% (1.38)% N/A(7)
for fees, expenses or taxes)(6)
- -----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest all
of your dividends and distributions.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on 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.
(3) The performance of Class C shares does not reflect the 1.00% front-end
sales charge in effect prior to February 1, 2004. If you paid a 1.00% sales
charge, your returns would be lower than those shown above.
(4) The performance of Class Y shares for the period prior to the commencement
of operations of Class Y shares on May 6, 1999 is the net asset value
performance of the Fund's Class A shares, which has not been restated to
reflect any differences in expenses, including Rule 12b-1 fees applicable
to Class A shares. You do not pay a sales charge on purchases or
redemptions of Class Y shares.
(5) Inception date of Class A shares. Class Y shares commenced operations on
May 6, 1999.
(6) The Standard & Poor's 500 Index is a commonly used measure of the broad
U.S. stock market. Unlike the Fund, the index is not managed and does not
incur fees, expenses or taxes. You cannot invest directly in the index.
(7) Index return information is not available for prior periods. Return of the
index since the inception of Class C shares: 4.58%.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
54
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended December 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of December 31, 2008.
Regions Morgan
Keegan Select
Core Equity Fund Pioneer Fund
(period ended (period ended Combined
November 30, December 31, Pioneer Fund
2008) 2008) (Pro Forma)
------------ ------------ ------------
Shareholder transaction fees
(paid directly from your investment) ................ Class A Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 5.50% 5.75% 5.75%
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) None(2) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.75% 0.64% 0.64%
Distribution and Service (12b-1) Fee ................. 0.25% 0.25% 0.25%
Other Expenses ....................................... 0.47% 0.30% 0.27%
- ---------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.47% 1.19% 1.16%
- ---------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% 0.00% 0.00%(4)
Total Annual Fund Operating Expenses ................. 1.47% 1.19% 1.16%
- ---------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Core Equity Fund Pioneer Fund
(period ended (period ended Combined
November 30, December 31, Pioneer Fund
2008) 2008) (Pro Forma)
------------ ------------ ------------
Shareholder transaction fees
(paid directly from your investment) .......... Class C Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less 1.00%(3) 1.00% 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.75% 0.64% 0.64%
Distribution and Service (12b-1) Fee ........... 1.00% 1.00% 1.00%
Other Expenses ................................. 0.47% 0.33% 0.31%
- ---------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ........... 2.22% 1.97% 1.95%
- ---------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00% 0.00% 0.00%
Total Annual Fund Operating Expenses ........... 2.22% 1.97% 1.95%
- ---------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Core Equity Fund Pioneer Fund
(period ended (period ended Combined
November 30, December 31, Pioneer Fund
2008) 2008) (Pro Forma)
---- ---- ----
Shareholder transaction fees
(paid directly from your investment) ........................................... Class I Class Y Class Y
Maximum sales charge (load) when you buy shares as a percentage of offering price None None None
Maximum deferred sales charge (load) as a percentage of offering price or the
amount you receive when you sell shares, whichever is less ..................... None None None
Annual Fund operating expenses (deducted from fund assets) as a % of average
daily net assets
Management Fee .................................................................. 0.75% 0.64% 0.64%
Distribution and Service (12b-1) Fee ............................................ 0.00% 0.00% 0.00%
Other Expenses .................................................................. 0.47% 0.10% 0.08%
- -----------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............................................ 1.22% 0.74% 0.72%
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........................................ 0.00% 0.00% 0.00%(4)
Total Annual Fund Operating Expenses ............................................ 1.22% 0.74% 0.72%
- -----------------------------------------------------------------------------------------------------------------------------------
55
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Regions Morgan Keegan Combined Pioneer Fund
Number of years you own your shares Select Core Equity Fund Pioneer Fund (Pro Forma)
- ------------------------------------- ------------------------- -------------- ----------------------
Class A -- with or without redemption
Year 1 ............................. $ 691 $ 689 $ 686
Year 3 ............................. $ 989 $ 931 $ 922
Year 5 ............................. $1,309 $1,192 $1,177
Year 10 ............................ $2,211 $1,935 $1,903
Class C -- with redemption
Year 1 ............................. $ 325 $ 300 $ 298
Year 3 ............................. $ 694 $ 618 $ 612
Year 5 ............................. $1,190 $1,062 $1,052
Year 10 ............................ $2,554 $2,296 $2,275
Class C -- without redemption
Year 1 ............................. $ 225 $ 200 $ 198
Year 3 ............................. $ 694 $ 618 $ 612
Year 5 ............................. $1,190 $1,062 $1,052
Year 10 ............................ $2,554 $2,296 $2,275
Class I/Y
Year 1 ............................. $ 124 $ 76 $ 74
Year 3 ............................. $ 387 $ 237 $ 230
Year 5 ............................. $ 670 $ 411 $ 401
Year 10 ............................ $1,477 $ 918 $ 894
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption will
apply to Class C shares redeemed within one year of the purchase date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.47% and 1.22% of the
average daily net assets attributable to Class A shares and Class Y shares,
respectively. Assuming the Reorganization is approved, these expense
limitations will be in effect for a period of three years after the close
of the Reorganization. There can be no assurance that Pioneer will extend
the expense limitations beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 3.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A, Class C and Class Y shares are anticipated
to be 1.16%, 1.95% and 0.72%, respectively, after giving effect to Pioneer's
contractual expense limitation with
56
respect to Class A and Class Y shares, and the historical net expense ratios
for the corresponding classes of shares of your RMK Fund are 1.47%, 2.22% and
1.22%, respectively. Therefore, the expense ratio of the combined Pioneer Fund
is expected to be lower for each class of shares of the combined Pioneer Fund
as compared to the corresponding classes of your RMK Fund. In addition, the
broader distribution arrangements of the Pioneer Fund offer greater potential
for further asset growth and further reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 1.47% and 1.22% of the average daily
net assets attributable to Class A shares and Class Y shares, respectively.
Assuming the shareholders of your RMK Fund approve the Reorganization, these
expense limitations will be in effect for the combined Pioneer Fund for a
period of three years from the Closing Date. There can be no assurance that
Pioneer will extend the expense limitations beyond such time.
Fourth, the Pioneer Fund's management fee (0.60% of average daily net
assets before any performance adjustment and up to a maximum of 0.70% after all
performance adjustments) is lower than the advisory fee of your RMK Fund (0.75%
of average daily net assets). The RMK Board noted that at December 31, 2008,
the advisory fee payable by your RMK Fund was 0.75%. The performance-adjusted
management fee of the combined Pioneer Fund, had the Reorganization occurred on
that date, would be 0.64%, which is lower than your RMK Fund's fixed management
fee.
Fifth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Sixth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Seventh, the Class A, Class C and Class Y shares of the Pioneer Fund
received in the Reorganization will provide the RMK Fund shareholders with
exposure to substantially the same investment product as they have currently.
Eighth, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
57
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of January 20, 2009 and the pro forma combined capitalization
of the combined Pioneer Fund as if the Reorganization had occurred on that
date. If the Reorganization is consummated, the actual exchange ratios on the
Closing Date may vary from the exchange ratios used in the computation below.
This is due to changes in the market value of the portfolio securities of both
Funds between January 20, 2009 and the Closing Date, changes in the amount of
undistributed net investment income and net realized capital gains of both
Funds during that period resulting from income and distributions, and changes
in the accrued liabilities of both Funds during the same period.
Regions Morgan
Keegan Select Pioneer Fund
Core Equity Fund Pioneer Fund Pro Forma
------------------ -------------------- --------------------
Net Assets
Class A ......................... $ 1,256,332 $ 3,399,280,931 $ 3,400,537,263
Class B ......................... -- $ 118,697,966 $ 118,697,966
Class C ......................... $ 60 $ 153,092,916 $ 153,092,976
Class I/Y ....................... $ 2,243,203 $ 425,394,568 $ 427,637,771
Class R ......................... -- $ 92,878,475 $ 92,878,475
Class Z ......................... -- $ 52,272 $ 52,272
-----------------------------------------------------------
Total Net Assets of Fund ......... $ 3,499,595 $ 4,189,397,128 $ 4,192,896,723
Net Asset Value Per Share
Class A ......................... $ 3.92 $ 26.39 $ 26.39
Class B ......................... -- $ 25.74 $ 25.74
Class C ......................... $ 3.91 $ 25.32 $ 25.32
Class I/Y ....................... $ 3.96 $ 26.47 $ 26.47
Class R ......................... -- $ 26.42 $ 26.42
Class Z ......................... -- $ 26.45 $ 26.45
Shares Outstanding
Class A ......................... 320,673 128,814,261 128,861,867
Class B ......................... -- 4,611,865 4,611,865
Class C ......................... 15 6,047,373 6,047,375
Class I/Y ....................... 566,761 16,069,469 16,154,214
Class R ......................... -- 3,515,840 3,515,840
Class Z ......................... -- 1,976 1,976
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 3 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
58
Regions Morgan Keegan Select Mid Cap Value Fund
and
Pioneer Mid Cap Value Fund
PROPOSAL 4
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 4 is approved, Regions Morgan Keegan Select Mid Cap Value Fund
(the "RMK Fund") will be reorganized into Pioneer Mid Cap Value Fund (the
"Pioneer Fund" and, together with the RMK Fund, the "Funds"), as described
above, and the Pioneer Fund will issue Class A, Class C and Class Y shares, as
applicable, to the RMK Fund in amounts equal to the aggregate net asset value
of the RMK Fund's Class A, Class C and Class I shares, respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Mid Cap Value Fund
to Pioneer Mid Cap Value Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is long-term The fund's investment objective is capital
capital appreciation. appreciation by investing in a diversified
portfolio of securities consisting primarily of
common stocks.
- ----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in equity securities Normally, the fund invests at least 80% of its
investment strategies of mid-capitalization companies (i.e., companies total assets in equity securities of mid-size
whose market capitalization fall within the companies. Mid-size companies are those with
range tracked by the Russell Mid Cap Value Index market values, at the time of investment, that do
at the time of purchase) that are judged by the not exceed the greater of the market
fund's sub-adviser to be undervalued. Under capitalization of the largest company within the
normal circumstances, the fund invests at least Russell Mid Cap Value Index or the 3-year rolling
80% of the value of its net assets in equity average of the market capitalization of the
securities of mid- capitalization companies. The largest company within the Russell Mid Cap Value
fund will provide shareholders with at least 60 Index as measured at the end of the preceding
days' prior notice of any changes in this month and are not less than the smallest company
policy. As of February 29, 2008, the within the index. The Russell Mid Cap Value Index
capitalization of issuers included in the measures the performance of U.S. mid-cap value
Russell Mid Cap Value Index ranged from about stocks. The size of the companies in the index
$462 million to about $49.6 billion. changes with market conditions and the
composition of the index. The equity securities
The fund invests in common and preferred stocks in which the fund principally invests are common
of companies that are judged to be intrinsically stocks, preferred stocks, depositary receipts and
undervalued in one of two ways: either the convertible debt, but the fund may invest in
shares are undervalued when other types of equity securities
- ----------------------------------------------------------------------------------------------------------------------------------
59
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
compared to the underlying value of the firm's to a lesser extent, such as exchange-traded funds
assets or the shares are undervalued when (ETFs), that invest primarily in equity
compared to the growth prospects of the firm. securities, equity interests in real estate
"Undervalued" means that a portfolio company's investment trusts (REITs), warrants and rights.
stock is trading on average at a 40% discount at
the time of initial purchase when compared to The fund will provide written notice to
the sub-adviser's best internal estimate of its shareholders at least 60 days prior to any change
"intrinsic value." Intrinsic value is estimated to its policy to invest at least 80% of its
by the sub-adviser based on: (1) transactions assets in equity securities of mid-size
involving comparable companies; (2) discounted companies.
cash flow analysis; and/or (3) sum-of-the-parts
analysis-looking at the assets and operations of The fund may invest up to 20% of its total assets
a company in parts then totaling them to in debt securities of corporate and government
estimate its intrinsic value. The overall issuers. Generally the fund acquires debt
purpose of the sub-adviser's analysis and search securities that are investment grade, but the
for undervalued opportunities is to determine fund may invest up to 5% of its net assets in
what an independent, informed third party might below investment grade convertible debt
pay for an entire company and then to purchase securities issued by both U.S. and non-U.S.
the stock of that publicly traded company at a issuers. The fund invests in debt securities when
substantial discount to the sub-adviser's Pioneer believes they are consistent with the
valuation. fund's investment objective of capital
appreciation, to diversify the fund's portfolio
The sub-adviser seeks to identify companies that or for greater liquidity.
have clearly defined business strategies, enjoy
significant or growing market share in their The fund may invest up to 20% of its net assets in
respective industries, historically produce REITs. REITs are companies that invest primarily in
healthy cash flows and have experienced real estate or real estate related loans.
management teams with consistent records of
delivering shareholder value. The fund may invest up to 25% of its total assets
in equity and debt securities of non- U.S.
issuers. The fund will not invest more than 5% of
its total assets in the securities of emerging
markets issuers.
Pioneer uses a value approach to select the
fund's investments. Using this investment style,
Pioneer seeks securities selling at 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
growth. In making that assessment, Pioneer
employs due diligence and fundamental research,
an evaluation of the issuer based on its
financial statements and operations, employing a
bottom-up analytic style. 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
- ---------------------------------------------------------------------------------------------------------------------------------
60
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
the quality and price of individual issuers and
securities, not on economic sector or market-
timing strategies. Factors Pioneer looks for in
selecting investments include:
o Favorable expected returns relative to
perceived risk
o Management with demonstrated ability and
commitment to the company
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o Turnaround potential for companies that have
been through difficult periods
o Estimated private market value in excess of
current stock price. Private market value is
the price an independent investor would pay
to own the entire company
o Issuer's industry has strong fundamentals,
such as increasing or sustainable demand and
barriers to entry
A company's market value or capitalization is
calculated by multiplying the number of its
outstanding shares by the current market price of
a share.
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 changes the quality
rating assigned to one or more of the fund's
portfolio securities, Pioneer will consider if
any action is appropriate in light of the fund's
investment objective and policies. Credit ratings
are only the options of the companies issuing
them and are not absolute guarantees of quality.
- ---------------------------------------------------------------------------------------------------------------------------------
61
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions during its assets to meet its investment objective. The
adverse market conditions, the fund may fund may invest the remainder of its assets in
temporarily depart from its principal investment securities with remaining maturities of less than
strategy by investing up to 100% of the fund's one year or cash equivalents, or may hold cash.
assets in cash and cash equivalents, including For temporary defensive purposes, including
short-term bank obligations, repurchase during periods of unusual cash flows, the fund
agreements and other money market instruments may depart from its principal investment
and securities issued and/or guaranteed as to strategies and invest part or all of its assets
payment of principal and interest by the U.S. in these securities or may hold cash. During such
government, its agencies or instrumentalities. periods, the fund may not be able to achieve its
This may cause the fund to temporarily fail to investment objective. The fund may adopt a
meet its goal and forego greater investment defensive strategy when Pioneer believes
returns for the safety of principal. securities in which the fund normally invests
have extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
- ---------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when the short time, if it no longer meets the fund's
sub-adviser believes it is appropriate to do so investment criteria. If the fund does a lot of
in light of the fund's investment goal. A higher trading, it may incur additional operating
portfolio turnover rate involves greater expenses, which would reduce performance, and
transaction expenses which must be borne could cause shareowners to incur a higher level
directly by the fund (and thus, indirectly by of taxable income or capital gains.
its shareholders), and impact fund performance.
In addition, a high rate of portfolio turnover
may result in the realization of larger amounts
of net capital gains that, when distributed to
the fund's shareholders, are taxable to them.
- ---------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use futures
Derivative contracts are financial instruments and options on securities, indices and
that require payments based upon changes in the currencies, forward foreign currency exchange
values of designated (or underlying) securities, contracts and other derivatives. A derivative is
currencies, commodities, financial indices or a security or instrument whose value is
other assets. Some derivative contracts (such as determined by reference to the value or the
futures, forwards and options) require payments change in value of one or more securities,
relating to a future trade involving the currencies, indices or other financial
underlying asset. Other derivative contracts instruments. Although there is no specific
(such as swaps) require payments relating to the limitation on investing in derivatives, the fund
income or returns from the underlying asset. does not use derivatives as a primary investment
technique and generally limits their use to
The sub-adviser may trade in options or futures hedging. However, the fund may use derivatives
in order to hedge the fund's portfolio against for a variety of non-principal purposes,
market shifts as well as to increase returns. including:
- ---------------------------------------------------------------------------------------------------------------------------------
62
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
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
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility of
the fund's net asset value. 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, which may reduce the return of the fund
if it cannot sell or terminate the derivative at
an advantageous time or price. The fund will only
invest in derivatives to the extent Pioneer
believes these investments do not prevent the
fund from seeking its investment objective, but
derivatives may not perform as intended. Suitable
derivatives may not be available in all
circumstances or at reasonable prices, and may
not be used by the fund for a variety of reasons.
- ---------------------------------------------------------------------------------------------------------------------------------
63
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Investment adviser, Investment Adviser: Investment Adviser:
sub-adviser and portfolio MAM Pioneer
managers
Sub-adviser: Portfolio Managers:
Channing Capital Management, LLC ("CCM") serves Day-to-day management of the fund's portfolio is
as the fund's sub-adviser pursuant to an the responsibility of J. Rodman Wright, portfolio
investment sub-advisory agreement with MAM and manager, and Timothy Horan, assistant portfolio
the fund. CCM is an independent Chicago-based manager. Mr. Wright and Mr. Horan are supported
investment manager specializing in mid- and by the domestic equity team. Members of this team
small-cap equity investing for institutions and manage other Pioneer funds investing primarily in
individuals. Under the sub- advisory agreement, U.S. equity securities. The portfolio managers
CCM manages the fund, selects investments, and and the team also may draw upon the research and
places orders for purchases and sales of investment management expertise of the global
securities subject to the general supervision of research teams, which provide fundamental and
MAM and the RMK Board in accordance with the quantitative research on companies and include
fund's investment objective, policies, and members from Pioneer's affiliate, Pioneer
restrictions. Through its portfolio management Investment Management Limited. Mr. Wright is a
team, CCM makes the day-to-day investment senior vice president of Pioneer. He joined
decisions and continuously reviews and Pioneer in 1994 as an analyst and has been an
administers the investment programs of the fund. investment professional since 1988. Mr. Horan
CCM's address is 10 South LaSalle Street, Suite joined Pioneer in 2005 as an assistant portfolio
2650, Chicago, IL 60603. A discussion regarding manager. Prior to joining Pioneer, he was
the RMK Board's basis for approving the sub- employed at Boston Partners from 2004 to 2005 and
advisory agreement is available in the fund's at State Street Research from 1998 to 2004.
annual report to shareholders for the fiscal
year ended November 30, 2008.
Portfolio Manager:
Day-to-day management of the fund's portfolio is
the responsibility of Eric T. McKissack, CFA.
Mr. McKissack has served as President, CEO and
Chief Investment Officer of CCM since it was
established in 2003. Mr. McKissack has more than
twenty-two years experience in investment
management and research. From 2004 to present,
Mr. McKissack has served as the Portfolio
Manager for the fund. From 1986 to 2003, Mr.
McKissack was a principal at Ariel Capital
Management, LLC, a Chicago-based investment
management firm with over $10 billion in assets
under management. He served as its Vice Chairman
and Co-Chief Investment Officer for the last
eight years of his tenure. From 1981 to 1986,
Mr. McKissack worked as a research analyst for
First Chicago and First Chicago Investment
Advisors, then led by Gary Brinson. First
Chicago Investment Advisors later became Brinson
Partners, and is now part
- ----------------------------------------------------------------------------------------------------------------------------------
64
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
of UBS Global Asset Management. Mr. McKissack
received a B.S. in Management from Massachusetts
Institute of Technology in 1976 and an M.B.A.
from the University of California at Berkeley in
2004. He is a holder of the Chartered Financial
Analyst designation.
- ---------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an The diversified sole series of an open-end
open-end management investment company management investment company organized
organized as a Massachusetts business trust. as a Delaware statutory trust with the same
name.
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $29,918,419 $1,320,823,038
January 20, 2009)
- ---------------------------------------------------------------------------------------------------------------------------------
65
Classes of Shares, Fees and Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial sales Class A shares are offered with an initial sales
and fees charge up to 5.50% of the offering price, which charge up to 5.75% of the offering price, which
is reduced depending upon the amount invested as is reduced or waived for large purchases and
described below or, in certain circumstances, certain types of investors. At the time of your
waived. Class A shares bought as part of an purchase, your investment firm may receive a
investment of $1 million or more are not subject commission from Pioneer Funds Distributor, Inc.
to an initial sales charge, but may be charged a ("PFD"), the fund's distributor, of up to 5%,
contingent deferred sales charge of 1.00% if declining as the size of your investment
sold within one year of purchase. increases.
Your investment may qualify for a reduction or You pay the offering price (the net asset value
elimination of the sales charge, also known as a per share plus any initial sales charge) when you
breakpoint discount. The following lists the buy Class A shares unless you qualify to purchase
sales charges, which will be applied to your shares at net asset value. You pay a lower sales
Class A share purchase, subject to the charge as the size of your investment increases.
breakpoint discounts indicated: You do not pay a sales charge when you reinvest
dividends or capital gain distributions paid by
the fund.
-------------------------------------------------------------------------------------------------------
Your As a % of As a % of Net Sales charge as % of
Investment Offering Price Amounts ----------------------------------------------------
Invested Amount of Offering Price Net Amounts
purchase Invested
-------------------------------------------------------------------------------------------------------
Up to $49,999 5.50% 5.82% Less than 5.75% 6.10%
$ 50,000
-------------------------------------------------------------------------------------------------------
$50,000 to 4.50% 4.71% $50,000 but 4.50% 4.71%
$ 99,999 less than
$100,000
-------------------------------------------------------------------------------------------------------
$100,000 to 3.75% 3.90% $100,000 but 3.50% 3.63%
$249,999 less than
$250,000
-------------------------------------------------------------------------------------------------------
$250,000 to 2.50% 2.56% $250,000 but 2.50% 2.56%
$499,999 less than
$500,000
-------------------------------------------------------------------------------------------------------
$500,000 to 2.00% 2.04% $500,000 but 2.00% 2.04%
$999,999 less than
$1 million
-------------------------------------------------------------------------------------------------------
$1 million Net asset Net asset $1 million -0- -0-
or more value value or more
-------------------------------------------------------------------------------------------------------
66
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales charges,
fund's transfer agent of eligibility for any except in certain circumstances when the initial
applicable breakpoint discount at the time of sales charge is waived. A contingent deferred
purchase. sales charge may be payable to PFD, the fund's
distributor, in the event of a share redemption
Class A shares pay a shareholder servicing fee within 18 months following the share purchase at
(non-12b-1) of up to 0.25% of average daily net the rate of 1.00% of the lesser of the value of
assets. the shares redeemed or the total cost of such
shares, subject to certain waivers.
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial Class C shares are offered without an initial
and fees sales charge. sales charge.
Class C shares are subject to a contingent Class C shares are subject to a contingent
deferred sales charge of 1.00% if sold within deferred sales charge of 1.00% if you sell your
one year of purchase. shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing fee PFD, the fund's distributor, at the time of your
(non-12b-1) of up to 0.25% of average daily net purchase of up to 1.00%.
assets and a distribution (12b-1) fee of 0.75%
of average daily net assets. Class C shares are subject to distribution and
service (12b-1) fees of up to 1.00% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal The fund pays Pioneer a fee for managing the fund
to 0.75% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's fee varies based on:
- ----------------------------------------------------------------------------------------------------------------------------------
67
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
o The fund's assets. Pioneer earns an annual
basic fee equal to 0.70% of the fund's
average daily net assets up to $500 million,
0.65% of the next $500 million, 0.625% of the
next $3 billion and 0.60% of assets over $4
billion.
o The fund's performance. The investment
performance of the fund has been compared to
the Russell Mid Cap Value Index. The basic
fee can increase or decrease by a maximum of
0.10%, depending on the performance of the
fund's Class A shares relative to the index.
The performance comparison is made for a
rolling 36-month period.
Pioneer's fee increases or decreases depending
upon whether the fund's performance is up and
down more or less than that of the index during
the rolling 36-month performance period. Each
percentage point of difference between the
performance of Class A shares and the index (to a
maximum of +/-10 percentage points) is multiplied
by a performance rate adjustment of 0.01%. As a
result, the maximum annualized rate adjustment is
+/-0.10% for the rolling 36-month performance
period. In addition, Pioneer contractually limits
any positive adjustment of the fund's management
fee to 0.10% of the fund's average daily net
assets on an annual basis (i.e., a maximum of
0.80% after the performance adjustment).
This performance comparison is made at the end of
each month. An appropriate percentage of this
rate (based on the number of days in the current
month) is then applied to the fund's average net
assets for the entire performance period, giving
a dollar amount that will be added to (or
subtracted from) the basic fee.
- ---------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the
extent required to reduce fund expenses to 1.43%
and 1.18% of the average daily net assets
attributable to Class A shares and Class Y
- ---------------------------------------------------------------------------------------------------------------------------------
68
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
shares, respectively. Assuming the Reorganization
is approved, these expense limitations will be in
effect for a period of three years after the
closing of the Reorganization. There can be no
assurance that Pioneer will extend the expense
limitations beyond such time.
- ---------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in the
"The Funds' Fees and Expenses" section starting on page 74.
- ---------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, 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 remain undervalued or do not have the potential
value originally expected
Each Fund is subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks tend to have greater
volatility than debt securities. The Funds' portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Funds' share price will go up and down. Each Fund's
investment adviser attempts to manage market risk by limiting the amount the
Fund invests in any single company's equity securities. However,
diversification will not protect a Fund against widespread or prolonged
declines in the stock market.
Each Fund is also subject to risks associated with investing in mid-sized
companies. Compared to large companies, mid-size companies, and the market for
their equity securities, may
o Be more sensitive to changes in earnings results and investor
expectations
o Have more limited product lines and capital resources
o Experience sharper swings in market values
o Be harder to sell at the times and prices the Fund's investment
adviser thinks appropriate
o Offer greater potential for gain and loss
o Be more likely to fall out of favor with investors
Each Fund is subject to risks associated with investing in value stocks.
Value stocks bear the risk that the companies issuing them may not overcome
adverse business or other developments that may caused the securities to be out
of favor or that the market does not recognize the value of the company, such
that the price of its securities declines or does not approach the value that
the Fund's investment adviser anticipates. In addition, during certain time
periods, market dynamics may favor "growth" securities over "value" securities.
Disciplined adherence to a "value" investment mandate during such periods can
result in significant underperformance relative to overall market indices and
other managed investment vehicles that pursue growth style investments and/or
flexible style mandates.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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.
69
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including in the securities of emerging markets issuers, it may be subject to
the risks below associated with investing in non-U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
Pioneer 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 Pioneer 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 Pioneer 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 Pioneer Fund's
return
Because the Pioneer Fund may invest in REITs, it may be subject to certain
unique risks associated with investing in REITs. REITs are significantly
affected by the market for real estate and are dependent upon the management
skills of REIT managers and cash flow. In addition to its own expenses, the
Pioneer Fund will indirectly bear its proportionate share of any management and
other expenses paid by REITs in which it invests.
Because the Pioneer Fund may invest in equity and debt securities of
non-U.S. issuers, it may be subject to risks associated with debt securities,
which include 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 Pioneer 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 the investment
adviser. Generally, the Pioneer Fund acquires debt securities that are
investment grade, but the Fund may invest in below investment grade debt
securities. Debt securities rated below investment grade are commonly referred
to as "junk bonds" and are considered speculative. Below investment grade debt
securities involve greater risk of loss, are subject to greater price
volatility and are less liquid, especially during periods of economic
uncertainty or change, than higher quality debt securities.
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of the Funds' Class A shares for the past 10
calendar years or since inception, as applicable. Class C and Class I shares of
the RMK Fund and Class C and Class Y shares of the Pioneer Fund will have
different performance because they have different expenses. The charts do not
reflect any sales charge you may pay when you buy or sell Fund shares. Any
sales charge will reduce your return. The tables show average annual total
return (before and after taxes) for each Fund over time for each class of
shares (including deductions for sales charges) compared with a broad-based
securities market index. The bar charts provide an indication of the risks of
investing in each Fund, including the fact that you could incur a loss and
experience volatility of returns year to year. Past performance, before and
after taxes, does not indicate future results.
The Pioneer Fund began focusing on mid-cap securities during 1999.
70
Regions Morgan Keegan Select Mid Cap Value Fund's
Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'03 21.90
'04 22.38
'05 6.14
'06 12.41
'07 1.17
'08 -34.18
- ----------
The highest quarterly return was 14.29% for the quarter ended December 31, 2004
The lowest quarterly return was (21.38)% for the quarter ended December 31, 2008
Pioneer Mid Cap Value Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'99 12.60
'00 17.64
'01 5.56
'02 -11.99
'03 36.87
'04 21.67
'05 7.66
'06 12.33
'07 5.31
'08 -33.70
- ----------
The highest quarterly return was 17.27% for the quarter ended June 30, 2003
The lowest quarterly return was (21.57)% for the quarter ended December 31, 2008
71
Regions Morgan Keegan Select Mid Cap Value Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------------
Class A 12/09/02
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 5.50% sales charge) (37.80)% (1.68)% N/A 1.26%
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(1) (37.80)% (3.42)% N/A (0.44)%
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (24.56)% (1.62)% N/A 0.87%
Fund Shares(1)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 12/09/02
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (35.49)% (1.24)% N/A 1.59%
Deferred Sales Charge)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Class I 05/10/05
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (34.00)% N/A N/A (5.42)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Russell Mid Cap Value Index(2) (38.44)% 0.33% 4.44%
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of each
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on fund distributions. Actual
after-tax returns to an investor depend on the investor's own tax situation
and may differ from those shown. After-tax returns are not relevant to
investors holding shares through tax-deferred programs, such as individual
retirement accounts or 401(k) plans. After-tax returns are shown only for
Class I shares. After-tax returns for other classes will be different.
(2) The Russell Mid Cap Value Index measures the performance of U.S. mid-cap
value stocks. Total returns for the index shown are not adjusted to reflect
taxes, sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. The index is unmanaged, and unlike the
RMK Fund, is not affected by cashflows or trading and other expenses. It is
not possible to invest directly in an index.
72
Pioneer Mid Cap Value Fund's Average Annual Total Returns(1)
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------------
Class A 07/25/90
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (37.52)% (0.64)% 5.01% 9.30%
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (37.79)% (2.21)% 3.41% 7.39%
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (24.39)% (0.38)% 4.07% 7.54%
Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 01/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes(3) (34.24)% (0.30)% 4.73% 5.18%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Class Y(4) 07/25/90(5)
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (33.40)% 1.01% 6.14% 9.95%
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (33.83)% (0.64)% 4.50% 8.00%
- -----------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (21.72)% 0.97% 5.04% 8.12%
Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Russell Mid Cap Value Index (reflects no deduction (38.44)% 0.33% 4.44% 10.27%(7)
for fees, expenses or taxes)(6)
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest all
of your dividends and distributions.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on 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.
(3) The performance of Class C shares does not reflect the 1.00% front-end
sales charge in effect prior to February 1, 2004. If you paid a 1.00% sales
charge, your returns would be lower than those shown above.
(4) The performance of Class Y shares for the period prior to the commencement
of operations of Class Y shares on July 2, 1998 is the performance of the
Fund's Class A shares, which has not been restated to reflect any
differences in expenses, including Rule 12b-1 fees applicable to Class A
shares. You do not pay a sales charge on purchases or redemptions of Class
Y shares.
(5) Inception date of Class A shares. Class Y shares commenced operations on
July 2, 1998.
(6) The Russell Mid Cap Value Index measures the performance of U.S. mid-cap
value stocks. Unlike the Fund, the index is not managed and does not incur
fees, expenses or taxes. You cannot invest directly in the index.
(7) Index return information is not available for prior periods. Return of the
index since the inception of Class C shares: 7.55%.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
73
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended October 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of November 30, 2008.
Regions Morgan
Keegan Select Pioneer
Mid Cap Mid Cap Combined
Value Fund Value Fund Pioneer
(period ended (period ended Mid Cap
November 30, October 31, Value Fund
2008) 2008) (Pro Forma)
---------------- --------------- -------------
Shareholder transaction fees
(paid directly from your investment) ........... Class A Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. 5.50% 5.75% 5.75%
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) None(2) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.75% 0.60% 0.60%
Distribution and Service (12b-1) Fee ............ 0.25% 0.25% 0.25%
Other Expenses .................................. 0.43% 0.28% 0.28%
- -------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 1.43% 1.13% 1.13%
- -------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00% 0.00% 0.00%(4)
Total Annual Fund Operating Expenses ............ 1.43% 1.13% 1.13%
- -------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Pioneer
Mid Cap Mid Cap Combined
Value Fund Value Fund Pioneer
(period ended (period ended Mid Cap
November 30, October 31, Value Fund
2008) 2008) (Pro Forma)
--------------- --------------- ------------
Shareholder transaction fees
(paid directly from your investment) ........... Class C Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less 1.00%(3) 1.00% 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.75% 0.60% 0.60%
Distribution and Service (12b-1) Fee ............ 1.00% 1.00% 1.00%
Other Expenses .................................. 0.43% 0.38% 0.37%
- -------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 2.18% 1.98% 1.97%
- -------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00% 0.00% 0.00%
Total Annual Fund Operating Expenses ............ 2.18% 1.98% 1.97%
- -------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Pioneer Mid Cap Combined
Mid Cap Value Fund Value Fund Pioneer Mid Cap
(period ended (period ended Value Fund
November 30, 2008) October 31, 2008) (Pro Forma)
-------------------- ------------------- ----------------
Shareholder transaction fees
(paid directly from your investment) ............................ Class I Class Y Class Y
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............................... None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ................. None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................................... 0.75% 0.60% 0.60%
Distribution and Service (12b-1) Fee ............................. 0.00% 0.00% 0.00%
Other Expenses ................................................... 0.43% 0.11% 0.11%
- --------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............................. 1.18% 0.71% 0.71%
- --------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ......................... 0.00% 0.00% 0.00%(4)
Total Annual Fund Operating Expenses ............................. 1.18% 0.71% 0.71%
- --------------------------------------------------------------------------------------------------------------------------------
74
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Regions Morgan Combined
Keegan Select Pioneer Mid Cap
Mid Cap Pioneer Mid Cap Value Fund
Number of years you own your shares Value Fund Value Fund (Pro Forma)
- ------------------------------------- ---------------- ----------------- ----------------
Class A -- with or without redemption
Year 1 ............................. $ 688 $ 684 $ 684
Year 3 ............................. $ 978 $ 913 $ 913
Year 5 ............................. $1,289 $1,161 $1,161
Year 10 ............................ $2,169 $1,871 $1,871
Class C -- with redemption
Year 1 ............................. $ 321 $ 301 $ 300
Year 3 ............................. $ 682 $ 621 $ 618
Year 5 ............................. $1,169 $1,068 $1,062
Year 10 ............................ $2,513 $2,306 $2,296
Class C -- without redemption
Year 1 ............................. $ 221 $ 201 $ 200
Year 3 ............................. $ 682 $ 621 $ 618
Year 5 ............................. $1,169 $1,068 $1,062
Year 10 ............................ $2,513 $2,306 $2,296
Class I/Y
Year 1 ............................. $ 120 $ 73 $ 73
Year 3 ............................. $ 375 $ 227 $ 227
Year 5 ............................. $ 649 $ 395 $ 395
Year 10 ............................ $1,432 $ 883 $ 883
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption will
apply to Class C shares redeemed within one year of the purchase date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.43% and 1.18% of the
average daily net assets attributable to Class A shares and Class Y shares,
respectively. Assuming the Reorganization is approved, these expense
limitations will be in effect for a period of three years after the close
of the Reorganization. There can be no assurance that Pioneer will extend
the expense limitations beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 4.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
75
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A, Class C and Class Y shares are anticipated
to be 1.13%, 1.97% and 0.71%, respectively, after giving effect to Pioneer's
contractual expense limitation with respect to Class A and Class Y shares, and
the historical net expense ratios for the corresponding classes of shares of
your RMK Fund are 1.43%, 2.18% and 1.18%, respectively. Therefore, the expense
ratio of the combined Pioneer Fund is expected to be lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. In addition, the broader distribution arrangements of the
Pioneer Fund offer greater potential for further asset growth and further
reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 1.43% and 1.18% of the average daily
net assets attributable to Class A shares and Class Y shares, respectively.
Assuming the shareholders of your RMK Fund approve the Reorganization, these
expense limitations will be in effect for the combined Pioneer Fund for a
period of three years from the Closing Date. There can be no assurance that
Pioneer will extend the expense limitations beyond such time.
Fourth, the Pioneer Fund's management fee (0.70% of average daily net
assets before any performance adjustment and up to a maximum of 0.80% after all
performance adjustments) is lower than the advisory fee of your RMK Fund (0.75%
of average daily net assets). The RMK Board noted that at November 30, 2008,
the advisory fee payable by your RMK Fund was 0.75%. The performance-adjusted
management fee of the combined Pioneer Fund, had the Reorganization occurred on
that date, would be 0.60%, which is lower than your RMK Fund's fixed management
fee.
Fifth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Sixth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Seventh, the Class A, Class C and Class Y shares of the Pioneer Fund
received in the Reorganization will provide the RMK Fund shareholders with
exposure to substantially the same investment product as they have currently.
Eighth, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
76
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of January 20, 2009 and the pro forma combined capitalization
of the combined Pioneer Fund as if the Reorganization had occurred on that
date. If the Reorganization is consummated, the actual exchange ratios on the
Closing Date may vary from the exchange ratios used in the computation below.
This is due to changes in the market value of the portfolio securities of both
Funds between January 20, 2009 and the Closing Date, changes in the amount of
undistributed net investment income and net realized capital gains of both
Funds during that period resulting from income and distributions, and changes
in the accrued liabilities of both Funds during the same period.
Regions Morgan
Keegan Select Pioneer Mid Cap
Mid Cap Pioneer Mid Cap Value Fund
Value Fund Value Fund Pro Forma
----------------- -------------------- --------------------
Net Assets
Class A ......................... $ 8,803,209 $ 922,175,351 $ 930,978,560
Class B ......................... -- $ 59,116,771 $ 59,116,771
Class C ......................... $ 274,351 $ 77,575,137 $ 77,849,488
Class I/Y ....................... $ 20,840,859 $ 224,709,480 $ 245,550,339
Class R ......................... -- $ 37,246,299 $ 37,246,299
-----------------------------------------------------------
Total Net Assets of Fund ......... $ 29,918,419 $ 1,320,823,038 $ 1,350,741,457
Net Asset Value Per Share
Class A ......................... $ 6.16 $ 13.28 $ 13.28
Class B ......................... -- $ 11.11 $ 11.11
Class C ......................... $ 5.89 $ 11.01 $ 11.01
Class I/Y ....................... $ 6.16 $ 13.85 $ 13.85
Class R ......................... -- $ 13.10 $ 13.10
Shares Outstanding
Class A ......................... 1,429,589 69,448,777 70,111,669
Class B ......................... -- 5,321,571 5,321,571
Class C ......................... 46,596 7,047,494 7,072,412
Class I/Y ....................... 3,385,908 16,225,142 17,729,897
Class R ......................... -- 2,842,688 2,842,688
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 4 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
77
Regions Morgan Keegan Select Value Fund
and
Pioneer Cullen Value Fund
PROPOSAL 5
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 5 is approved, Regions Morgan Keegan Select Value Fund (the
"RMK Fund") will be reorganized into Pioneer Cullen Value Fund (the "Pioneer
Fund" and, together with the RMK Fund, the "Funds"), as described above, and
the Pioneer Fund will issue Class A, Class C and Class Y shares, as applicable,
to the RMK Fund in amounts equal to the aggregate net asset value of the RMK
Fund's Class A, Class C and Class I shares, respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Value Fund to Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective(s) The fund's investment objective is income and The fund's primary investment objective is
growth of capital. capital appreciation and the fund's secondary
investment objective is current income.
- ----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests in common and preferred stocks The fund invests primarily in equity securities.
investment strategies according to a sector-weighting strategy in The fund may invest a significant portion of its
which attractive market valuation levels are assets in equity securities of medium- and
assigned priority over prospects for future large-capitalization companies. Consequently, the
earnings growth. MAM attempts to identify those fund will be subject to the risks of investing in
sectors of the economy that, given the current companies with market capitalizations of $1.5
phase of the business cycle, are likely to billion or more.
realize gains in share prices as market
valuation factors readjust over time. Selected For purposes of the fund's investment policies,
sectors and companies will tend to possess equity securities include common stocks,
price-to-earnings (P/E) and price-to-book ratios convertible debt and other equity instruments,
below broad market averages, while dividend such as exchange-traded funds (ETFs) that invest
yields generally will be higher than market primarily in equity securities, depositary
averages. Common and preferred stocks are receipts, warrants, rights, equity interests in
expected to produce dividends, and selected real estate investment trusts (REITs) and
companies will generally possess market preferred stocks.
capitalizations of $2 billion or more at the
time of purchase. Convertible securities of
smaller companies may also be included in the
fund's portfolio.
- ----------------------------------------------------------------------------------------------------------------------------------
78
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
MAM seeks to identify companies that have The fund may invest up to 30% of its total assets
clearly defined business strategies, produce in securities of non-U.S. issuers. Up to 10% of
consistent revenue streams from an established the fund's total assets may be invested in
customer base, enjoy significant market share in securities of emerging market issuers. Non-U.S.
their respective industries, produce healthy securities may be issued by non-U.S. governments,
cash-flows, achieve consistent increases in banks or corporations or private issuers, and
sales, operating margins, and corporate certain supranational organizations, such as the
earnings, and have experienced management teams World Bank and the European Union. The fund may
with consistent records of delivering invest in securities of Canadian issuers to the
shareholder value. MAM periodically reviews same extent as securities of U.S. issuers.
market prices in relation to the stock's
intrinsic value and adjusts the fund's holdings Pioneer has engaged Cullen to act as the fund's
accordingly. sub-adviser under Pioneer's supervision. The fund
uses a "value" style of management. Using this
investment style, the sub-adviser seeks
securities the sub-adviser believes are selling
at substantial discounts to their underlying
values. The sub-adviser evaluates a security's
potential value, including the attractiveness of
its market valuation, based on the company's
assets and prospects for earnings growth. In
making that assessment, the sub-adviser employs
due diligence and fundamental research, an
evaluation of the issuer based on its financial
statements and operations. The sub-adviser also
considers a security's potential to provide
current income. The sub-adviser relies on the
knowledge, experience and judgment of its staff
who have access to a wide variety of research.
The sub-adviser focuses on the quality and price
of individual issuers, not on economic sector or
market-timing strategies. Factors the sub-adviser
looks for in selecting investments include:
o a below average price/earnings ratio as
compared to that of the Standard & Poor's
(S&P) 500 Stock Index; and
o above average projected earnings growth as
compared to that of the S&P 500 Stock Index.
The sub-adviser generally sells a portfolio
security when it believes that the security's
market value reflects its underlying value. The
sub-adviser makes that determination based upon
the same criteria it uses to select portfolio
securities.
- ----------------------------------------------------------------------------------------------------------------------------------
79
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
The fund may invest up to 10% of its total assets
in debt securities of U.S. and non-U.S. 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 the sub-adviser believes
they are consistent with the fund's investment
objectives of capital appreciation and,
secondarily, current income, to diversify the
fund's portfolio or for greater liquidity.
- ----------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions during its assets to meet its investment objectives. The
adverse market conditions, the fund may fund may invest the remainder of its assets in
temporarily depart from its principal investment securities with remaining maturities of less than
strategy by investing up to 100% of the fund's one year or cash equivalents, or may hold cash.
assets in cash and cash equivalents, including For temporary defensive purposes, including
short-term bank obligations, repurchase during periods of unusual cash flows, the fund
agreements and other money market instruments may depart from its principal investment
and securities issued and/or guaranteed as to strategies and invest part or all of its assets
payment of principal and interest by the U.S. in these securities or may hold cash. During such
government, its agencies or instrumentalities. periods, the fund may not be able to achieve its
This may cause the fund to temporarily fail to investment objectives. The fund may adopt a
meet its goal and forego greater investment defensive strategy when the sub-adviser believes
returns for the safety of principal. securities in which the fund normally invests
have extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
- ----------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. If the fund does a lot of
the fund's investment goal. A higher portfolio trading, it may incur additional operating
turnover rate involves greater transaction expenses, which would reduce performance, and
expenses which must be borne directly by the could cause shareowners to incur a higher level
fund (and thus, indirectly by its shareholders), of taxable income or capital gains.
and impact fund performance. In addition, a high
rate of portfolio turnover may result in the
realization of larger amounts of net capital
gains that, when distributed to the fund's
shareholders, are taxable to them.
- ----------------------------------------------------------------------------------------------------------------------------------
80
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use futures
Derivative contracts are financial instruments and options on securities, indices and
that require payments based upon changes in the currencies, forward foreign currency exchange
values of designated (or underlying) securities, contracts and other derivatives. A derivative is
currencies, commodities, financial indices or a security or instrument whose value is
other assets. Some derivative contracts (such as determined by reference to the value or the
futures, forwards and options) require payments change in value of one or more securities,
relating to a future trade involving the currencies, indices or other financial
underlying asset. Other derivative contracts instruments. Although there is no specific
(such as swaps) require payments relating to the limitation on investing in derivatives, the fund
income or returns from the underlying asset. does not use derivatives as a primary investment
technique and generally limits their use to
MAM may trade in options or futures in order to hedging. However, the fund may use derivatives
hedge the fund's portfolio against market shifts for a variety of non-principal purposes,
as well as to increase returns. 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
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility of
the fund's net asset value. 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. Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gain. If changes in a
derivative's value do not correspond to changes
in the value of the fund's other investments or
do not correlate well with the underlying asset,
rate or index, 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 issuer of the derivative
defaults on its obligation. Certain derivatives
may be less liquid, which may reduce the returns
of the fund if it cannot sell or terminate the
derivative at an advantageous time or price. Some
derivatives may involve the risk of improper
valuation. The fund will only invest
- ----------------------------------------------------------------------------------------------------------------------------------
81
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
in derivatives to the extent the sub-adviser
believes these investments are consistent with
the fund's investment objectives, but derivatives
may not perform as intended. Suitable derivatives
may not be available in all circumstances or at
reasonable prices and may not be used by the fund
for a variety of reasons.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment adviser, Investment Adviser: Investment Adviser:
sub-adviser and portfolio MAM Pioneer
managers
Portfolio Manager: Sub-adviser:
Day-to-day management of the fund's portfolio is Cullen Capital Management LLC ("Cullen") is an
the responsibility of Walter A. Hellwig. The investment advisory firm that was established in
portfolio manager is supported by MAM's equity 2000. As of [December 31], 2008, Cullen had
and/or fixed income research teams which provide approximately $[ ] billion in net assets under
fundamental research and quantitative analysis management. Cullen is located at 645 Fifth
used to run MAM's internal investment models. Avenue, New York, New York 10022.
Mr. Hellwig is a Senior Vice President and Portfolio Managers:
Senior Portfolio Manager for MAM. He has more Day-to-day management of the fund's portfolio is
than thirty years experience in investment the responsibility of James P. Cullen (lead
management and research. From 2004 to present, manager), President of Cullen (since 2000), John
Mr. Hellwig has served as the Portfolio Manager C. Gould, Executive Vice President of Cullen
for the fund. From 1997 to 2004, Mr. Hellwig (since 2000) and Brooks H. Cullen, Vice President
served as Senior Vice President and Senior of Cullen (since 2000).
Portfolio Manager at Union Planters Investment
Advisors and was also Chairman of the firm's
Equity Policy Committee. From 1994 to 1997, Mr.
Hellwig served as a Portfolio Manager for
Federated Investors, Inc. From 1986 to 1994, Mr.
Hellwig held several positions within Boatmen's
Investment Services and Boatmen's Trust
including Director of Investment Research and
Research Analyst. Prior to entering the
investment industry, Mr. Hellwig served as a
Vice President of Commercial Loans at a
Midwestern bank. Mr. Hellwig received a B.S. in
Business Administration in 1972 and an M.B.A.
from Washington University in St. Louis,
Missouri.
- ----------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an A diversified series of Pioneer Series Trust III,
open-end management investment company an open-end management investment
organized as a Massachusetts business trust. company organized as a Delaware
statutory trust.
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $132,398,319 $2,936,277,556
January 20, 2009)
82
Classes of Shares, Fees and Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial sales Class A shares are offered with an initial sales
and fees charge up to 5.50% of the offering price, which charge up to 5.75% of the offering price, which
is reduced depending upon the amount invested as is reduced or waived for large purchases and
described below or, in certain circumstances, certain types of investors. At the time of your
waived. Class A shares bought as part of an purchase, your investment firm may receive a
investment of $1 million or more are not subject commission from Pioneer Funds Distributor, Inc.
to an initial sales charge, but may be charged a ("PFD"), the fund's distributor, of up to 5%,
contingent deferred sales charge of 1.00% if declining as the size of your investment
sold within one year of purchase. increases.
Your investment may qualify for a reduction or You pay the offering price (the net asset value
elimination of the sales charge, also known as a per share plus any initial sales charge) when you
breakpoint discount. The following lists the buy Class A shares unless you qualify to purchase
sales charges, which will be applied to your shares at net asset value. You pay a lower sales
Class A share purchase, subject to the charge as the size of your investment increases.
breakpoint discounts indicated: 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.
-------------------------------------------------------------------------------------------------------
Your As a % of As a % of Net Sales charge as % of
Investment Offering Price Amounts ----------------------------------------------------
Invested Amount of Offering Price Net Amounts
purchase Invested
-------------------------------------------------------------------------------------------------------
Up to $49,999 5.50% 5.82% Less than 5.75% 6.10%
$ 50,000
-------------------------------------------------------------------------------------------------------
$50,000 to 4.50% 4.71% $50,000 but 4.50% 4.71%
$ 99,999 less than
$100,000
-------------------------------------------------------------------------------------------------------
$100,000 to 3.75% 3.90% $100,000 but 3.50% 3.63%
$249,999 less than
$250,000
-------------------------------------------------------------------------------------------------------
$250,000 to 2.50% 2.56% $250,000 but 2.50% 2.56%
$499,999 less than
$500,000
-------------------------------------------------------------------------------------------------------
$500,000 to 2.00% 2.04% $500,000 but 2.00% 2.04%
$999,999 less than
$1 million
-------------------------------------------------------------------------------------------------------
$1 million Net asset Net asset $1 million -0- -0-
or more value value or more
-------------------------------------------------------------------------------------------------------
83
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales charges,
fund's transfer agent of eligibility for any except in certain circumstances when the initial
applicable breakpoint discount at the time of sales charge is waived. A contingent deferred
purchase. sales charge may be payable to PFD, the fund's
distributor, in the event of a share redemption
Class A shares pay a shareholder servicing fee within 18 months following the share purchase at
(non-12b-1) of up to 0.25% of average daily net the rate of 1.00% of the lesser of the value of
assets. the shares redeemed or the total cost of such
shares, subject to certain waivers.
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial Class C shares are offered without an initial
and fees sales charge. sales charge.
Class C shares are subject to a contingent Class C shares are subject to a contingent
deferred sales charge of 1.00% if sold within deferred sales charge of 1.00% if you sell your
one year of purchase. shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing fee PFD, the fund's distributor, at the time of your
(non-12b-1) of up to 0.25% of average daily net purchase of up to 1.00%.
assets and a distribution (12b-1) fee of 0.75%
of average daily net assets. Class C shares are subject to distribution and
service (12b-1) fees of up to 1.00% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal The fund pays Pioneer a fee for managing the fund
to 0.75% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's fee is equal to 0.70% of the fund's
average daily net asset up to $1 billion, 0.65%
of the next $1 billion, 0.60% of the next $1
billion and 0.55% on assets over $3 billion. The
fee is accrued daily and paid monthly.
- ----------------------------------------------------------------------------------------------------------------------------------
84
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
For its services, Cullen is entitled to a sub-
advisory fee from Pioneer at an annual rate of
the fund's average daily net assets as following:
0.35% of the fund's average daily net asset up to
$1 billion, 0.325% of the next $1 billion, 0.30%
of the next $1 billion and 0.275% on assets over
$3 billion. The fee will be paid monthly in
arrears. The fund does not pay a fee to Cullen.
- ----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations 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 shares and Class C
shares, respectively. These expense limitations
are in effect through November 1, 2009 for Class
A and Class C shares. In addition, Pioneer has
contractually agreed to limit ordinary operating
expenses to the extent required to reduce fund
expenses to 1.26% and 1.01% of the average daily
net assets attributable to Class A shares and
Class Y shares, respectively. Assuming the
Reorganization is approved, these expense
limitations will be in effect for a period of
three years after the closing of the
Reorganization. There can be no assurance that
Pioneer will extend the expense limitations
beyond such time.
- ----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in the
"The Funds' Fees and Expenses" section starting on page 91.
- ----------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, 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 Large, mid-size or value stocks fall out of favor with investors
o The Fund's investments remain undervalued or do not have the potential
value originally expected
o The manager's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
Each Fund is subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks tend to have greater
volatility than debt securities. The Funds' portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Funds' share price will go up and down. Each Fund's
investment adviser attempts to manage market risk by limiting the amount the
Fund invests in any single company's equity securities. However,
diversification will not protect a Fund against widespread or prolonged
declines in the stock market.
85
Each Fund is subject to risks associated with investing in value stocks.
Value stocks bear the risk that the companies issuing them may not overcome
adverse business or other developments that may caused the securities to be out
of favor or that the market does not recognize the value of the company, such
that the price of its securities declines or does not approach the value that
the Fund's investment adviser anticipates. In addition, during certain time
periods, market dynamics may favor "growth" securities over "value" securities.
Disciplined adherence to a "value" investment mandate during such periods can
result in significant underperformance relative to overall market indices and
other managed investment vehicles that pursue growth style investments and/or
flexible style mandates.
Each Fund is also subject to company size risk, which relates to the
market capitalization of the company issuing the stock. Market capitalization
is determined by multiplying the number of a company's outstanding shares by
the current market price per share. Generally, the smaller the market
capitalization of a company, the fewer the number of shares traded daily, the
less liquid its stock and the more volatile its price. Stocks of small- and
mid-capitalization companies are also usually more sensitive to adverse
business developments and economic, political, regulatory and market factors
than stock of large-capitalization companies. Companies with smaller market
capitalizations also tend to have unproven track records, a limited product or
service base and limited access to capital. These factors also increase risks
and make these companies more likely to fail than companies with larger market
capitalizations. Each Fund may experience difficulty in purchasing or selling
securities of small- and mid-capitalization companies at the desired time and
price.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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. Industries in the consumer staples segment, such as food and drug
retailing, beverages, food and tobacco products, household products and
personal products, are subject to government regulation affecting ingredients
and production methods. These industries also may be affected by competition,
changes in consumer tastes and other factors affecting supply and demand, and
litigation.
The Pioneer Fund may invest in fewer than 40 securities and, as a result,
the Fund's performance may be more volatile than the performance of funds
holding more securities.
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including in the securities of emerging markets issuers, it may be subject to
the risks below associated with investing in non-U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
Pioneer 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 Pioneer 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 Pioneer Fund's investments or its ability to convert non-U.S.
currencies to U.S. dollars
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 Pioneer Fund's
return
To the extent either Fund invests in debt securities, it may be subject to
the risks associated with investing in debt securities. 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 the investment adviser.
Debt securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. Below investment grade debt securities
involve greater risk of loss, are subject to greater price volatility and are
less liquid, especially during periods of economic uncertainty or change, than
higher quality debt securities.
86
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of the Funds' Class A shares for the past 10
calendar years or since inception, as applicable. Class C and Class I shares of
the RMK Fund and Class C and Class Y shares of the Pioneer Fund will have
different performance because they have different expenses. The charts do not
reflect any sales charge you may pay when you buy or sell Fund shares. Any
sales charge will reduce your return. The tables show average annual total
return (before and after taxes) for each Fund over time for each class of
shares (including deductions for sales charges) compared with broad-based
securities market indices. The bar charts provide an indication of the risks of
investing in each Fund, including the fact that you could incur a loss and
experience volatility of returns year to year. Past performance, before and
after taxes, does not indicate future results.
The Pioneer Fund acquired the assets and liabilities of Cullen Value Fund
(the predecessor fund) on February 25, 2005. As a result of the reorganization,
the Pioneer Fund is the accounting successor of the predecessor fund. The
predecessor fund offered only one class of shares which was most similar to
Class A shares of the Pioneer Fund, except that the predecessor fund did not
impose a sales charge. In the reorganization, the predecessor fund exchanged
its assets for Class A shares of the Pioneer Fund. The performance of Class A,
Class C and Class Y shares of the Pioneer Fund includes the net asset value
performance of the predecessor fund's single class of shares prior to the
reorganization, which has been restated to reflect differences in any
applicable sales charges (but not differences in expenses). If all the expenses
of the Pioneer Fund were reflected, the performance would be lower.
87
Regions Morgan Keegan Select Value Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'99 5.75
'00 1.61
'01 -11.00
'02 -17.37
'03 22.15
'04 7.84
'05 12.63
'06 9.92
'07 19.22
'08 -41.02
- ----------
The highest quarterly return was 14.21% for the quarter ended June 30, 2003
The lowest quarterly return was (23.17)% for the quarter ended December 31, 2008
Pioneer Cullen Value Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[The following data was represented as a bar chart in the printed material]
'01 2.13
'02 -7.92
'03 38.07
'04 14.14
'05 13.34
'06 16.63
'07 6.82
'08 -31.87
- ----------
The highest quarterly return was 19.12% for the quarter ended December 31, 2003
The lowest quarterly return was (18.48)% for the quarter ended December 31, 2008
88
Regions Morgan Keegan Select Value Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A(1) 12/19/94
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 5.50% sales charge) (44.26)% (2.37)% (1.54)% 4.41%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (44.38)% (2.57)% (2.03)% N/A
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (28.61)% (1.96)% (1.44)% N/A
Fund Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class C 02/21/02
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (42.05)% (1.96)% N/A (0.98)%
Deferred Sales Charge)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class I 06/16/04
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (40.85)% NA N/A (0.98)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500/Citigroup Value Index(3) (39.22)% (1.31)% (0.25)%
- -----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of each
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on fund distributions. Actual
after-tax returns to an investor depend on the investor's own tax situation
and may differ from those shown. After-tax returns are not relevant to
investors holding shares through tax-deferred programs, such as individual
retirement accounts or 401(k) plans. After-tax returns are shown only for
Class I shares. After-tax returns for other classes will be different.
(3) The Standard & Poor's 500/Citigroup Value Index is a sub-index of the
Standard & Poor's 500 Index representing 50% of the Standard & Poor's 500
Index market capitalization and is comprised of those companies with value
characteristics based on a series of ratios. Total returns for the index
shown are not adjusted to reflect taxes, sales charges, expenses or other
fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged, and unlike the Fund, is not affected by cashflows or
trading and other expenses. It is not possible to invest directly in an
index.
89
Pioneer Cullen Value Fund's Average Annual Total Returns(1)
(for periods ended December 31, 2008)
- -------------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date(2)
- -------------------------------------------------------------------------------------------------------------------------------
Class A 07/01/00
- -------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (35.78)% 0.69% N/A 4.56%
- -------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(3) (36.08)% 0.30% N/A 4.28%
- -------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (23.26)% 0.47% N/A 3.86%
Shares(3)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Class C 07/01/00
- -------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (32.43)% 1.27% N/A 4.92%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Class Y 07/01/00
- -------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (31.63)% 2.14% N/A 5.45%
- -------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(3) (32.05)% 1.71% N/A 5.13%
- -------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (20.57)% 1.70% N/A 4.64%
Shares(3)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Standard & Poor's Index (reflects no deduction for (36.99)% (2.19)% N/A (3.62)%
fees, expenses or taxes)(4)
- -------------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest all
of your dividends and distributions.
(2) Inception date of the predecessor fund's single class of shares. Class A
and Class Y shares commenced operations on February 28, 2005.
(3) 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) The Standard & Poor's 500 Index is a commonly used measure of the broad
U.S. stock market. Unlike the Fund, the index is not managed and does not
incur fees, expenses or taxes. You cannot invest directly in the index.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
90
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended December 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of December 31, 2008.
Regions Morgan
Keegan Select Pioneer Cullen
Value Fund Value Fund Combined
(period ended (period ended Pioneer Cullen
November 30, December 31, Value Fund
2008) 2008) (Pro Forma)
---------------- ---------------- -----------------
Shareholder transaction fees
(paid directly from your investment) .......... Class A Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. 5.50% 5.75% 5.75%
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) None(2) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.75% 0.64% 0.63%
Distribution and Service (12b-1) Fee ........... 0.25% 0.25% 0.25%
Other Expenses ................................. 0.26% 0.24% 0.23%
- --------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ........... 1.26% 1.13% 1.11%
- --------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses ................................... 1.26% 1.13% 1.11%
- --------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Pioneer Cullen
Value Fund Value Fund Combined
(period ended (period ended Pioneer Cullen
November 30, December 31, Value Fund
2008) 2008) (Pro Forma)
--------------- --------------- --------------------
Shareholder transaction fees
(paid directly from your investment) .......... Class C Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less 1.00%(3) 1.00% 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.75% 0.64% 0.63%
Distribution and Service (12b-1) Fee ........... 1.00% 1.00% 1.00%
Other Expenses ................................. 0.26% 0.28% 0.27%
- ----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ........... 2.01% 1.92% 1.90%
- ----------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses ................................... 2.01% 1.92% 1.90%
- ----------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Pioneer Cullen Combined
Value Fund Value Fund Pioneer Cullen
(period ended (period ended Value Fund
November 30, 2008) December 31, 2008) (Pro Forma)
-------------------- -------------------- ---------------
Shareholder transaction fees
(paid directly from your investment) .......... Class I Class Y Class Y
Maximum sales charge (load) when you buy shares
as a percentage of offering price ............. None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ................................. 0.75% 0.64% 0.63%
Distribution and Service (12b-1) Fee ........... 0.00% 0.00% 0.00%
Other Expenses ................................. 0.26% 0.18% 0.16%
- ----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ........... 1.01% 0.82% 0.79%
- ----------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ....... 0.00% 0.00% 0.00%(5)
Net Expenses ................................... 1.01% 0.82% 0.79%
- ----------------------------------------------------------------------------------------------------------------
91
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Combined
Pioneer Cullen
Regions Morgan Keegan Pioneer Cullen Value Fund
Number of years you own your shares Select Value Fund Value Fund (Pro Forma)
- ------------------------------------- ----------------------- ---------------- ---------------
Class A -- with or without redemption
Year 1 ............................. $ 671 $ 684 $ 682
Year 3 ............................. $ 928 $ 913 $ 908
Year 5 ............................. $1,204 $1,161 $1,151
Year 10 ............................ $1,989 $1,871 $1,849
Class C -- with redemption
Year 1 ............................. $ 304 $ 295 $ 293
Year 3 ............................. $ 630 $ 603 $ 597
Year 5 ............................. $1,083 $1,037 $1,026
Year 10 ............................ $2,338 $2,243 $2,222
Class C -- without redemption
Year 1 ............................. $ 204 $ 195 $ 193
Year 3 ............................. $ 630 $ 603 $ 597
Year 5 ............................. $1,083 $1,037 $1,026
Year 10 ............................ $2,338 $2,243 $2,222
Class I/Y
Year 1 ............................. $ 103 $ 84 $ 81
Year 3 ............................. $ 322 $ 262 $ 252
Year 5 ............................. $ 558 $ 455 $ 439
Year 10 ............................ $1,236 $1,014 $ 978
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption will
apply to Class C shares redeemed within one year of the purchase date.
(4) 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 shares and Class C shares,
respectively. These expense limitations are in effect through November 1,
2009 for Class A and Class C shares. There can be no assurance that Pioneer
will extend the expense limitation beyond such time.
(5) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.26% and 1.01% of the
average daily net assets attributable to Class A shares and Class Y shares,
respectively. Assuming the Reorganization is approved, these expense
limitations will be in effect for a period of three years after the closing
of the Reorganization. There can be no assurance that Pioneer will extend
the expense limitations beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 5.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for
92
MAM's mutual fund management business. After requests for proposals were
solicited, received and reviewed, MAM and Regions decided to recommend to the
RMK Board that the RMK Funds be reorganized into similar mutual funds managed
by Pioneer, as being in the best interest of shareholders of each of the RMK
Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A, Class C and Class Y shares are anticipated
to be 1.11%, 1.90% and 0.79%, respectively, after giving effect to Pioneer's
contractual expense limitation with respect to Class A and Class Y shares, and
the historical net expense ratios for the corresponding classes of shares of
your RMK Fund are 1.26%, 2.01% and 1.01%, respectively. Therefore, the expense
ratio of the combined Pioneer Fund is expected to be lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. In addition, the broader distribution arrangements of the
Pioneer Fund offer greater potential for further asset growth and further
reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 1.25% and 2.15% of the average daily
net assets attributable to Class A and Class C shares, respectively. Assuming
the shareholders of your RMK Fund approve the Reorganization, this expense
limitation is in effect through November 1, 2009 for Class A and Class C
shares. In addition, Pioneer has contractually agreed to limit ordinary
operating expenses to the extent required to reduce fund expenses to 1.26% and
1.01% of the average daily net assets attributable to Class A shares and Class
Y shares, respectively. Assuming the shareholders of your RMK Fund approve the
Reorganization, these expense limitations will be in effect for the combined
Pioneer Fund for a period of three years from the Closing Date. There can be no
assurance that Pioneer will extend the expense limitations beyond such time.
Fourth, the Pioneer Fund's management fee (0.70% of average daily net
assets) is lower than the advisory fee of your RMK Fund (0.85% of average daily
net assets). The RMK Board noted that at November 30, 2008, the advisory fee
payable by your RMK Fund was 0.85%. The management fee of the combined Pioneer
Fund, had the Reorganization occurred on that date, would be 0.63%, which is
lower than your RMK Fund's management fee.
Fifth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Sixth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Seventh, the Class A, Class C and Class Y shares of the Pioneer Fund
received in the Reorganization will provide the RMK Fund shareholders with
exposure to substantially the same investment product as they have currently.
Eighth, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
93
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of January 20, 2009 and the pro forma combined capitalization
of the combined Pioneer Fund as if the Reorganization had occurred on that
date. If the Reorganization is consummated, the actual exchange ratios on the
Closing Date may vary from the exchange ratios used in the computation below.
This is due to changes in the market value of the portfolio securities of both
Funds between January 20, 2009 and the Closing Date, changes in the amount of
undistributed net investment income and net realized capital gains of both
Funds during that period resulting from income and distributions, and changes
in the accrued liabilities of both Funds during the same period.
Pioneer Cullen
Regions Morgan Keegan Pioneer Cullen Value Fund
Select Value Fund Value Fund Pro Forma
----------------------- -------------------- --------------------
Net Assets
Class A ......................... $ 35,046,861 $ 1,665,613,864 $ 1,700,660,725
Class B ......................... -- $ 65,785,859 $ 65,785,859
Class C ......................... $ 1,018,033 $ 399,724,622 $ 400,742,655
Class I/Y ....................... $ 96,333,425 $ 800,234,529 $ 896,567,954
Class R ......................... -- $ 4,834,559 $ 4,834,559
Class Z ......................... -- $ 84,123 $ 84,123
---------------------------------------------------------------
Total Net Assets of Fund ......... $ 132,398,319 $ 2,936,277,556 $ 3,068,675,875
Net Asset Value Per Share
Class A ......................... $ 10.76 $ 12.78 $ 12.78
Class B ......................... -- $ 12.73 $ 12.73
Class C ......................... $ 10.82 $ 12.69 $ 12.69
Class I/Y ....................... $ 10.75 $ 12.82 $ 12.82
Class R ......................... -- $ 12.68 $ 12.68
Class Z ......................... -- $ 12.73 $ 12.73
Shares Outstanding
Class A ......................... 3,255,889 130,309,067 133,051,388
Class B ......................... -- 5,168,067 5,168,067
Class C ......................... 94,057 31,502,414 31,582,637
Class I/Y ....................... 8,958,944 62,429,589 69,943,897
Class R ......................... -- 381,183 381,183
Class Z ......................... -- 6,609 6,609
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 5 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
94
Regions Morgan Keegan Select Balanced Fund
and
Pioneer Classic Balanced Fund
PROPOSAL 6
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each Agreement
and Plan of Reorganization" in the back of this Proxy Statement/Prospectus,
after the discussion of the various Proposals.
If Proposal 6 is approved, Regions Morgan Keegan Select Balanced Fund (the
"RMK Fund") will be reorganized into Pioneer Classic Balanced Fund (the
"Pioneer Fund" and, together with the RMK Fund, the "Funds"), as described
above, and the Pioneer Fund will issue Class A, Class C and Class Y shares, as
applicable, to the RMK Fund in amounts equal to the aggregate net asset value
of the RMK Fund's Class A, Class C and Class I shares, respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Balanced Fund to the Pioneer Classic
Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is total return The fund's investment objective is capital growth
through capital appreciation, dividends and and current income through a diversified
interest. portfolio of equity securities and bonds.
- ----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in common and Pioneer allocates the fund's assets between
investment strategies preferred stocks, convertible securities and equity and debt securities based on its
debt securities. Under normal market conditions, assessment of current business, economic and
the fund maintains at least 25% of its assets in market conditions. Normally, equity and debt
senior debt securities and at least 25% of its securities each represent 35% to 65% of the
assets in common stocks. The remaining 50% may fund's net assets. For purposes of the fund's
be invested in those securities, as well as investment policies, equity securities include
American Depository Receipts, collateralized common stocks, convertible debt, and securities
mortgage obligations, or other investments as with common stock characteristics, such as equity
determined by MAM based on its assessment of the interests in real estate investment trusts
economy and the markets. The fund's equity (REITs), exchange-traded funds (ETFs) that invest
allocation will focus on high-quality companies. primarily in equity securities, and preferred
Using a blend of growth and value styles, MAM stocks. The fund's investments in debt securities
seeks to identify companies that have clearly include U.S. government securities, corporate
defined business strategies, produce revenue debt securities, mortgage- and asset-backed
streams from an established customer base, enjoy securities, short term debt securities, cash and
significant market share in their respective cash equivalents. Cash and cash equivalents
industries, produce healthy cash-flows, achieve include cash balances, accrued interest and
consistent increases in sales, operating receivables for items such as the proceeds, not
margins, and corporate earnings, and have yet received, from the sale of the fund's
experienced management teams with portfolio investments.
- ----------------------------------------------------------------------------------------------------------------------------------
95
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
consistent records of delivering shareholder Debt securities in which the fund invests may
value. MAM periodically reviews market prices in have fixed or variable principal payments and all
relation to the stock's intrinsic value and types of interest rate payment and reset terms,
adjusts the fund's holdings accordingly. The including fixed rate, adjustable rate, floating
fund's debt security allocation focuses on rate, inverse floating rate, zero coupon,
intermediate-term debt securities, with an contingent, deferred, payment-in-kind and auction
emphasis on U.S. Treasury and governmental rate features.
agency issues. Investment grade corporate bond
issues may also be included as yield spreads The fund may invest up to 25% of its total assets
become attractive. in equity and debt securities of non- U.S.
issuers. The fund will not invest more than 5% of
its total assets in the securities of emerging
markets issuers. The fund invests in non-U.S.
securities to diversify its portfolio when they
offer similar or greater potential for capital
appreciation.
In selecting equity securities, Pioneer uses a
value approach to select the fund's investments.
Using this investment style, Pioneer 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 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
also considers a security's potential to provide
a reasonable amount of income. Pioneer focuses on
the quality and price of individual issuers, not
on economic sector or market- timing strategies.
Factors Pioneer looks for in selecting equity
investments include:
o Favorable expected returns relative to
perceived risk
o Above average potential for earnings and
revenue growth
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o A sustainable competitive advantage, such as
a brand name, customer base, proprietary
technology or economies of scale
- ----------------------------------------------------------------------------------------------------------------------------------
96
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
In selecting debt securities, Pioneer considers
both broad economic and issuer specific factors.
In assessing the appropriate maturity, rating and
sector weighting of the fund's portfolio, Pioneer
considers a variety of factors that are expected
to influence economic activity and interest
rates. These factors include fundamental economic
indicators, such as the rates of economic growth
and inflation, Federal Reserve monetary policy
and the relative value of the U.S. dollar
compared to other currencies. Once Pioneer
determines the preferable portfolio
characteristics, Pioneer selects individual
securities based upon the terms of the securities
(such as yields compared to U.S. Treasuries or
comparable issues), liquidity and rating, sector
and issuer diversification. Pioneer also employs
fundamental research and due diligence to assess
an issuer's credit quality, taking into account
financial condition and profitability, future
capital needs, potential for change in rating,
industry outlook, the competitive environment and
management ability. In making portfolio
decisions, 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.
Up to 10% of the fund's total assets may be
invested in debt securities rated below
investment grade, including convertible debt. 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 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. The fund may invest in
debt securities rated "D" or better, or
comparable unrated securities.
- ----------------------------------------------------------------------------------------------------------------------------------
97
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
For purposes of the fund's credit quality
policies, if a security receives different
ratings from nationally recognized statistical
rating organizations, the fund will use the
rating chosen by the portfolio manager as most
representative of the security's credit quality.
The ratings of nationally recognized statistical
rating organizations represent their opinions as
to the quality of the securities that they
undertake to rate and may not accurately describe
the risks of the security. If a rating
organization changes the quality rating assigned
to one or more of the fund's portfolio
securities, Pioneer will consider if any action
is appropriate in light of the fund's investment
objective and policies.
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 the management
skills of the REIT managers 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.
Floating rate loans are provided by banks and
other financial institutions to large corporate
customers. These loans are rated below investment
grade, but typically are secured with specific
collateral and have a senior position in the
capital structure of the borrower. These loans
typically have rates of interest that are reset
periodically by reference to a base lending rate,
such as the London Interbank Offered Rate
(LIBOR), plus a premium. Floating rate loans may
not be readily marketable or may be subject to
restrictions on resale. For the purpose of this
prospectus, the term "securities" includes loans
and other instruments and obligations.
- ----------------------------------------------------------------------------------------------------------------------------------
98
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
The fund may invest in "event-linked" bonds,
which sometimes are referred to as
"insurance-linked" or "catastrophe" bonds.
Event-linked bonds are debt obligations for which
the return of principal and the payment of
interest are contingent on the non- occurrence of
a pre-defined "trigger" event, such as a
hurricane or an earthquake of a specific
magnitude. For some event-linked bonds, the
trigger event's magnitude may be based on losses
to a company or industry, industry indexes or
readings of scientific instruments rather than
specified actual losses. If a trigger event, as
defined within the terms of an event-linked bond,
involves losses or other metrics exceeding a
specific magnitude in the geographic region and
time period specified therein, the fund may lose
a portion or all of its accrued interest and/or
principal invested in such event-linked bond. The
fund is entitled to receive principal and
interest payments so long as no trigger event
occurs of the description and magnitude specified
by the instrument.
Event-linked bonds may be issued by government
agencies, insurance companies, reinsurers,
special purpose corporations or other on-shore or
off-shore entities. In addition to the specified
trigger events, event- linked bonds may also
expose the fund to other risks, including but not
limited to issuer (credit) default, adverse
regulatory or jurisdictional interpretations and
adverse tax consequences. Event-linked bonds are
subject to the risk that the model used to
calculate the probability of a trigger event was
not accurate and underestimated the likelihood of
a trigger event. Upon the occurrence or possible
occurrence of a trigger event, and until the
completion of the processing and auditing of
applicable loss claims, the fund's investment in
such event-linked bond may be priced using fair
value methods. As a relatively new type of
financial instrument, there is limited trading
history for these securities, and there can be no
assurance that a liquid market in these
instruments will develop.
- ----------------------------------------------------------------------------------------------------------------------------------
99
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Event-linked bonds are typically rated by at
least one nationally recognized statistical
rating agency, but also may be unrated. The
rating for an event-linked bond primarily
reflects the rating agency's calculated
probability that a pre-defined trigger event will
occur. This rating also assesses the event-
linked bond's credit risk and model used to
calculate the probability of a trigger event.
- ----------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions during its assets to meet its investment objective. The
adverse market conditions, the fund may fund may invest the remainder of its assets in
temporarily depart from its principal investment securities with remaining maturities of less than
strategy by investing up to 100% of the fund's one year or cash equivalents, or may hold cash.
assets in cash and cash equivalents, including For temporary defensive purposes, including
short-term bank obligations, repurchase during periods of unusual cash flows, the fund
agreements and other money market instruments may depart from its principal investment
and securities issued and/or guaranteed as to strategies and invest part or all of its assets
payment of principal and interest by the U.S. in these securities or may hold cash. During such
government, its agencies or instrumentalities. periods, the fund may not be able to achieve its
This may cause the fund to temporarily fail to investment objective. The fund may adopt a
meet its goal and forego greater investment defensive strategy when Pioneer believes
returns for the safety of principal. securities in which the fund normally invests
have extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
- ----------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. The fund's annual portfolio
the fund's investment goal. A higher portfolio turnover rate will vary based on many factors and
turnover rate involves greater transaction may exceed 100%. If the fund does a lot of
expenses which must be borne directly by the trading, it may incur additional operating
fund (and thus, indirectly by its shareholders), expenses, which would reduce performance, and
and impact fund performance. In addition, a high could cause shareowners to incur a higher level
rate of portfolio turnover may result in the of taxable income or capital gains.
realization of larger amounts of net capital
gains that, when distributed to the fund's
shareholders, are taxable to them.
- ----------------------------------------------------------------------------------------------------------------------------------
100
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use futures
Derivative contracts are financial instruments and options on securities, indices and
that require payments based upon changes in the currencies, forward foreign currency exchange
values of designated (or underlying) securities, contracts and other derivatives. A derivative is
currencies, commodities, financial indices or a security or instrument whose value is
other assets. Some derivative contracts (such as determined by reference to the value or the
futures, forwards and options) require payments change in value of one or more securities,
relating to a future trade involving the currencies, indices or other financial
underlying asset. Other derivative contracts instruments. Although there is no specific
(such as swaps) require payments relating to the limitation on investing in derivatives, the fund
income or returns from the underlying asset. does not use derivatives as a primary investment
technique and generally limits their use to
MAM may trade in options or futures in order to hedging. However, the fund may use derivatives
hedge the fund's portfolio against market shifts for a variety of non-principal purposes,
as well as to increase returns. 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
The fund may enter into credit default swaps,
which can be used to transfer the credit risk of
a security without buying or selling the
security.
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility of
the fund's net asset value. 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. Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gain. If changes in a
derivative's value do not correspond to changes
in the value of the fund's other investments or
do not correlate well with the underlying asset,
rate or index, the fund may not fully benefit
from or could lose money on the derivative
position. In addition, some derivatives involve
risk of loss
- ----------------------------------------------------------------------------------------------------------------------------------
101
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
if the issuer of the derivative defaults on its
obligation. Certain derivatives may be less
liquid, which may reduce the return of the fund
if it cannot sell or terminate the derivative at
an advantageous time or price. Some derivatives
may involve the risk of improper valuation. The
fund will only invest in derivatives to the
extent Pioneer believes these investments do not
prevent the fund from seeking its investment
objective, but derivatives may not perform as
intended. Suitable derivatives may not be
available in all circumstances or at reasonable
prices and may not be used by the fund for a
variety of reasons.
- ----------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio managers MAM Pioneer
Portfolio Manager: Portfolio Managers:
Day-to-day management of the fund's portfolio is Day-to-day management of the fund's portfolio is
the responsibility of Charles A. Murray, CFA. the responsibility of co-managers John A. Carey
The portfolio manager is supported by MAM's and Walter Hunnewell, Jr. (equity securities) and
equity and/or fixed income research teams which Kenneth J. Taubes and Richard Schlanger (fixed
provide fundamental research and quantitative income securities). Mr. Carey, Mr. Hunnewell, Mr.
analysis used to run MAM's internal investment Taubes and Mr. Schlanger are supported by the
models. domestic equity team and the fixed income team.
Members of these teams manage other Pioneer funds
Mr. Murray is a Senior Vice President, Senior that invest primarily in fixed income securities
Portfolio Manager, and Senior Equity Strategist and U.S. equity securities, respectively. The
for MAM. He has more than thirty years of portfolio managers and the teams also may draw
experience in investment management, research upon the research and investment management
and banking. From 1978 to the present, Mr. expertise of the global research teams, which
Murray has served as a Portfolio Manager for MAM provide fundamental and quantitative research on
and its predecessor, and currently serves as the companies and include members from Pioneer's
Portfolio Manager for the fund. From 1978 to affiliate, Pioneer Investment Management Limited.
1988, Mr. Murray served as the portfolio manager Mr. Carey, a senior vice president, joined
of various common trust funds at a bank later Pioneer as an analyst in 1979. Mr. Hunnewell, a
acquired by Regions Financial Corporation. Mr. vice president, joined Pioneer in August 2001 and
Murray was the first portfolio manager of the has been an investment professional since 1985.
First Priority Equity Fund (the predecessor fund Mr. Taubes is responsible for overseeing the U.S.
to the fund) from 1992 to 1995. He assumed lead and global fixed income teams. He joined Pioneer
manager of the fund in September 2001. Mr. as a senior vice president in September 1998 and
Murray received a B.S. in Finance from the has been an investment professional since 1982.
University of Alabama in 1970. He is a holder of Mr. Schlanger, a vice president, joined Pioneer
the Chartered Financial Analyst designation. as a portfolio manager in 1988.
- ----------------------------------------------------------------------------------------------------------------------------------
102
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an A diversified series of Pioneer Series Trust IV,
open-end management investment company an open-end management investment
organized as a Massachusetts business trust. company organized as a Delaware
statutory trust.
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $122,955,943 $114,147,687
January 20, 2009)
- ----------------------------------------------------------------------------------------------------------------------------------
Classes of Shares, Fees and Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial sales Class A shares are offered with an initial sales
and fees charge up to 5.50% of the offering price, which charge up to 4.50% of the offering price, which
is reduced depending upon the amount invested as is reduced or waived for large purchases and
described below or, in certain circumstances, certain types of investors. At the time of your
waived. Class A shares bought as part of an purchase, your investment firm may receive a
investment of $1 million or more are not subject commission from Pioneer Funds Distributor, Inc.
to an initial sales charge, but may be charged a ("PFD"), the fund's distributor, of up to 4.00%,
contingent deferred sales charge of 1.00% if declining as the size of your investment
sold within one year of purchase. increases.
Your investment may qualify for a reduction or You pay the offering price (the net asset value
elimination of the sales charge, also known as a per share plus any initial sales charge) when you
breakpoint discount. The following lists the buy Class A shares unless you qualify to purchase
sales charges, which will be applied to your shares at net asset value. You pay a lower sales
Class A share purchase, subject to the charge as the size of your investment increases.
breakpoint discounts indicated: You do not pay a sales charge when you reinvest
dividends or capital gain distributions paid by
the fund.
-------------------------------------------------------------------------------------------------------
Your As a % of As a % of Net Sales charge as % of
Investment Offering Price Amounts ----------------------------------------------------
Invested Amount of Offering Price Net Amounts
purchase Invested
-------------------------------------------------------------------------------------------------------
Up to $49,999 5.50% 5.82% Less than 4.50% 4.71%
$100,000
-------------------------------------------------------------------------------------------------------
$50,000 to 4.50% 4.71% $100,000 but 3.50% 3.63%
$ 99,999 less than
$250,000
-------------------------------------------------------------------------------------------------------
$100,000 to 3.75% 3.90% $250,000 but 2.50% 2.56%
$249,999 less than
$500,000
-------------------------------------------------------------------------------------------------------
$250,000 to 2.50% 2.56% $500,000 but 2.00% 2.04%
$499,999 less than
$1 million
-------------------------------------------------------------------------------------------------------
$500,000 to 2.00% 2.04% $1 million -0- -0-
$999,999 or more
-------------------------------------------------------------------------------------------------------
$1 million Net asset Net asset
or more value value
-------------------------------------------------------------------------------------------------------
103
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales charges,
fund's transfer agent of eligibility for any except in certain circumstances when the initial
applicable breakpoint discount at the time of sales charge is waived. A contingent deferred
purchase. sales charge may be payable to PFD, the fund's
distributor, in the event of a share redemption
Class A shares pay a shareholder servicing fee within 18 months following the share purchase at
(non-12b-1) of up to 0.25% of average daily net the rate of 1.00% of the lesser of the value of
assets. the shares redeemed or the total cost of such
shares, subject to certain waivers.
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial Class C shares are offered without an initial
and fees sales charge. sales charge.
Class C shares are subject to a contingent Class C shares are subject to a contingent
deferred sales charge of 1.00% if sold within deferred sales charge of 1.00% if you sell your
one year of purchase. shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing fee PFD, the fund's distributor, at the time of your
(non-12b-1) of up to 0.25% of average daily net purchase of up to 1.00%.
assets and a distribution (12b-1) fee of 0.75%
of average daily net assets. Class C shares are subject to distribution and
service (12b-1) fees of up to 1.00% of average
daily net assets. These fees are paid out of the
fund's assets on an ongoing basis. Over time
these fees will increase the cost of investments
and may cost more than other types of sales
charges.
- ----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal The fund pays Pioneer a fee for managing the fund
to 0.75% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's fee is equal to 0.65% of the fund's
average daily net asset up to $1 billion, 0.60%
of the next $4 billion and 0.55% on assets over
$5 billion. The fee is accrued daily and paid
monthly.
- ----------------------------------------------------------------------------------------------------------------------------------
104
- ----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Balanced Fund Pioneer Classic Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the extent
required to reduce fund expenses to 1.16% and
2.06% of the average daily net assets
attributable to Class A shares and Class C
shares, respectively. These expense limitations
are in effect through December 1, 2011 for Class
A shares and through December 1, 2010 for Class C
shares. In addition, Pioneer has contractually
agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to
1.33% and 1.08% of the average daily net assets
attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization
is approved, these expense limitations will be in
effect for a period of three years after the
closing of the Reorganization. There can be no
assurance that Pioneer will extend the expense
limitations beyond such time.
- ----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in the
"The Funds' Fees and Expenses" section starting on page 113.
- ----------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, 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 or growth stocks fall out of favor with investors
o The Fund's equity investments remain undervalued or do not have the
potential value originally expected
o The manager's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
Each Fund is subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks tend to have greater
volatility than debt securities. The Funds' portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Funds' share price will go up and down. Each Fund's
investment adviser attempts to manage market risk by limiting the amount the
Fund invests in any single company's equity securities. However,
diversification will not protect a Fund against widespread or prolonged
declines in the stock market.
Each Fund may be subject to risks associated with investing in growth
stocks. Due to their relatively high valuations, growth stocks are typically
more volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development or an adverse market development. Further, since growth
companies often reinvest a high proportion of their earning in their own
businesses, growth stocks may not pay dividends or may pay lower dividends than
value stocks. This means they depend more on price change for returns and may
be more adversely affected in a down market compared to value stocks.
Each Fund may be subject to risks associated with investing in value
stocks. Value stocks bear the risk that the companies issuing them may not
overcome adverse business or other developments that may caused the securities
to be out of favor or that the market does not recognize the value of the
company, such that the price of its securities declines or does not approach
the value that the Fund's investment adviser anticipates. In addition, during
certain time periods, market dynamics may favor "growth" securities over
"value"
105
securities. Disciplined adherence to a "value" investment mandate during such
periods can result in significant underperformance relative to overall market
indices and other managed investment vehicles that pursue growth style
investments and/or flexible style mandates.
Each Fund is subject to risks associated with investing in debt
securities. Each Fund could under perform other investments if:
o Interest rates go up causing the value of the Fund's portfolio to
decline. This is known as interest rate risk (this risk may be greater
for securities with longer maturities)
o The issuer of a debt security owned by the Fund defaults on its
obligation to pay principal or interest, has its credit rating
downgraded or is perceived to be less creditworthy, or the credit
quality or value of any underlying asset declines. This is known as
credit risk
o During periods of declining interest rates, the issuer of a security
may exercise its option to prepay principal earlier than scheduled,
forcing the Fund to reinvest in lower yielding securities. This is
known as call or prepayment risk
o During periods of rising interest rates, the average life of certain
types of securities may be extended because of slower than expected
principal payments. This may lock in a below market interest rate,
increase the security's duration (the estimated period until the
security is paid in full) and reduce the value of the security. This
is known as extension risk
Each Fund may invest in mortgage-based and asset-backed securities, which
are subject to special risks. The repayment of certain mortgage-related
securities depends primarily on the cash collections received from the issuer's
underlying asset portfolio and, in certain cases, the issuer's ability to issue
replacement securities (such as asset-backed commercial paper). As a result,
there could be losses to the Fund in the event of credit or market value
deterioration in the issuer's underlying portfolio, mismatches in the timing of
the cash flows of the underlying asset interests and the repayment obligations
of maturing securities, or the issuer's inability to issue new or replacement
securities. This is also true for other asset-backed securities. Upon the
occurrence of certain triggering events or defaults, the investors in a
security held by the Fund may become the holders of underlying assets at a time
when those assets may be difficult to sell or may be sold only at a loss. In
the event of a default, the value of the underlying collateral may be
insufficient to pay certain expenses, such as litigation and foreclosure
expenses. Certain debt instruments may only pay principal at maturity or may
only represent the right to receive payments of principal or interest on
underlying pools of mortgage or government securities, but not both. The value
of these types of instruments may change more drastically than debt securities
that pay both principal and interest during periods of changing interest rates.
Principal only instruments generally increase in value if interest rates
decline, but are also subject to the risk of prepayment. Interest only
instruments generally increase in value in a rising interest rate environment
when fewer of the underlying mortgages are prepaid, but remain subject to
prepayment risk, which would be a loss of any expected interest payments, even
though there is no default on the underlying financial asset. For mortgage
derivatives and structured securities that have imbedded leverage features,
small changes in interest or prepayment rates may cause large and sudden price
movements. Mortgage-related securities can also become illiquid and hard to
value in volatile or declining markets. Privately issued mortgage-related
securities are not traded on an exchange and may have a limited market. Without
an active trading market, these securities may be particularly difficult to
value given the complexities in valuing the underlying collateral.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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.
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including in the securities of emerging markets issuers, it may be subject to
the risks below associated with investing in non-U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
Pioneer 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 Pioneer 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 Pioneer Fund's investments or its ability to convert non-U.S.
currencies to U.S. dollars
106
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 Pioneer Fund's
return
Because the Pioneer Fund may invest in debt securities rated below
investment grade, including convertible debt securities, it may be subject to
the risks associated with below investment grade securities. Debt securities
rated below investment grade are commonly referred to as "junk bonds" and are
considered speculative. Below investment grade debt securities involve greater
risk of loss, are subject to greater price volatility and are less liquid,
especially during periods of economic uncertainty or change, than higher
quality debt securities.
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of the Funds' Class A shares for the past 10
calendar years. Class C and Class I shares of the RMK Fund and Class C and
Class Y shares of the Pioneer Fund will have different performance because they
have different expenses. The charts do not reflect any sales charge you may pay
when you buy or sell Fund shares. Any sales charge will reduce your return. The
tables show average annual total return (before and after taxes) for each Fund
over time for each class of shares (including deductions for sales charges)
compared with broad-based securities market indices. The bar charts provide an
indication of the risks of investing in each Fund, including the fact that you
could incur a loss and experience volatility of returns year to year. Past
performance, before and after taxes, does not indicate future results.
The Pioneer Fund acquired the assets and liabilities of AmSouth Balanced
Fund (the predecessor fund) on September 23, 2005. As a result of the
reorganization, the Pioneer Fund is the accounting successor of the predecessor
fund. The predecessor fund offered classes of shares similar to the Pioneer
Fund's Class A shares and Class Y shares. In the reorganization, the
predecessor fund exchanged its assets for Class A and Class Y shares of the
Pioneer Fund. The performance of Class A shares and Class Y shares of the
Pioneer Fund includes the net asset value performance of the predecessor fund's
Class A shares and Class I shares, respectively, prior to the reorganization,
which has been restated to reflect differences in any applicable sales charges
(but not differences in expenses) with respect to Class A shares and any
differences in expenses with respect to Class Y shares. The predecessor fund
did not offer Class C shares. The performance of the Pioneer Fund's Class C
shares is based upon the net asset value performance of the predecessor fund's
Class B shares, which has been restated to reflect sales charges applicable to
Class C shares (but not other differences in expenses). If all the expenses of
the Pioneer Fund were reflected, the performance would be lower.
107
Regions Morgan Keegan Select Balanced Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
'99 8.82
'00 -2.86
'01 -3.19
'02 -7.4
'03 13.5
'04 2.54
'05 11.39
'06 6.92
'07 12.9
'08 -17.9
- ----------
The highest quarterly return was 7.56% for the quarter ended June 30, 2003
The lowest quarterly return was (9.80)% for the quarter ended September 30, 2008
Pioneer Classic Balanced Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
'99 1.32
'00 10.18
'01 4.61
'02 -6.86
'03 15.7
'04 7.6
'05 4.6
'06 13.33
'07 4.82
'08 -24.84
- ----------
The highest quarterly return was 10.62% for the quarter ended June 30, 2003
The lowest quarterly return was (12.71)% for the quarter ended December 31, 2008
108
Regions Morgan Keegan Select Balanced Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- --------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------------------------------------------------
Class A(1) 12/18/94
- --------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 5.50% sales charge) (22.42)% 1.36% 1.41% 5.84%
- --------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (22.79)% 0.61% 0.51%
- --------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (14.46)% 1.04% 0.85%
Fund Shares(2)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Class C 01/14/02
- --------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (19.29)% 1.76% N/A 1.74%
Deferred Sales Charge)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Class I 09/01/05
- --------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (17.64)% N/A N/A 0.77%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index(3) (37.00)% (2.19)% (1.38)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Barclays Capital (formerly, Lehman Brothers) 5.70% 4.64% 5.64%
Government/Credit Total Index(4)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500/Merrill Lynch 1-10 Year (17.56)% 1.29% 2.32%
Government/Corporate A Rated and Above
Index(5)
- --------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of
each period, and shows the effect of any taxable gain (or offsetting loss)
on redemption, as well as the effects of taxes on fund distributions.
Actual after-tax returns to an investor depend on the investor's own tax
situation and may differ from those shown. After-tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as individual retirement accounts or 401(k) plans. After-tax returns are
shown only for Class I shares. After-tax returns for other classes will be
different.
(3) The Standard & Poor's 500 Index is a commonly used measure of the broad
U.S. stock market. Total returns for the index shown are not adjusted to
reflect taxes, sales charges, expenses or other fees that the SEC required
to be reflected in the Fund's performance. The index is unmanaged, and
unlike the RMK Fund, is not affected by cashflows or trading and other
expenses. It is not possible to invest directly in an index.
(4) The Barclays Capital (formerly, Lehman Brothers) Government/Credit Total
Index is comprised of approximately 5,000 issues which include:
non-convertible bonds publicly issued by the U.S. government or its
agencies; corporate bonds guaranteed by the U.S. government and
quasi-federal corporations; and publicly issued, fixed rate,
non-convertible domestic bonds of companies in industry, public utilities,
and finance. Total returns for
109
the index shown are not adjusted to reflect taxes, sales charges, expenses
or other fees that the SEC requires to be reflected in the RMK Fund's
performance. The index is unmanaged, and unlike the RMK Fund, is not
affected by cashflows or trading and other expenses. It is not possible to
invest directly in an index.
(5) The Standard & Poor's 500/Merrill Lynch 1-10 Year Government/Corporate A
Rated and Above Index is a 50%/50% weight between the two indexes. Total
returns for the index shown are not adjusted to reflect taxes, sales
charges, expenses or other fees that the SEC required to be reflected in
the RMK Fund's performance. The index is unmanaged, and unlike the RMK
Fund, is not affected by cashflows or trading and other expenses. It is not
possible to invest directly in an index.
110
Pioneer Classic Balanced Fund's Average Annual Total Returns(1)
(for periods ended December 31, 2008)
- ----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------------------------
Class A 12/19/91
- ----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (28.25)% (0.81)% 1.91% 6.56%
- ----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (29.21)% (2.99)% (0.30)% 4.24%
- ----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (18.28)% (1.02)% 0.93% 4.76%
Shares(2)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Class C 09/03/97
- ----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (25.61)% (0.63)% 1.62% 2.78%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Class Y 12/19/91(3)
- ----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (24.61)% 0.38% 2.61% 7.01%
- ----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (25.70)% (1.91)% 0.29% 4.61%
- ----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (15.90)% (0.06)% 1.46% 5.12%
Shares(2)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index (reflects no deduction (36.99)% (2.19)% (1.38)% 6.73%
for fees, expenses or taxes)(4)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Barclays Capital (formerly, Lehman Brothers) 5.70% 4.64% 5.64% 6.55%
Government/Credit Bond Index (reflects no
deduction for fees, expenses or taxes)(5)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest
all of your dividends and distributions.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on 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.
(3) Inception date of the predecessor fund's Class I shares. Class Y shares
commenced operations on September 23, 2005.
(4) The Standard & Poor's 500 Index is a commonly used measure of the broad
U.S. stock market. Unlike the Fund, the index is not managed and does not
incur fees, expenses or taxes. You cannot invest directly in the index.
(5) The Barclays Capital (formerly, Lehman Brothers) Government/Credit Bond
Index is an unmanaged index representative of U.S. government, U.S.
Treasury and agency securities and corporate bonds. Unlike the Fund, the
index is not managed and does not incur fees, expenses or taxes. You
cannot invest directly in the index.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
111
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended July 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of November 30, 2008.
Regions Morgan
Keegan Select Pioneer Classic
Balanced Fund Balanced Fund
(period ended (period ended
November 30, July 31,
2008) 2008)
--------------- ---------------
Shareholder transaction fees
(paid directly from your investment) Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ...................... 5.50% 4.50%
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) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .......................................... 0.75% 0.65%
Distribution and Service (12b-1) Fee .................... 0.25% 0.25%
Other Expenses .......................................... 0.33% 0.40%
- -------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................... 1.33% 1.30%
- -------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................ 0.00% (0.14)%(4)
Net Expenses ............................................ 1.33% 1.16%
- -------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Pioneer Classic
Combined Balanced Fund Balanced Fund
Pioneer Classic (period ended (period ended
Balanced Fund November 30, July 31,
(Pro Forma) 2008) 2008)
--------------- --------------- ---------------
Shareholder transaction fees
(paid directly from your investment) Class A Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ...................... 4.50% None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ........ None(2) 1.00%(3) 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .......................................... 0.65% 0.75% 0.65%
Distribution and Service (12b-1) Fee .................... 0.25% 1.00% 1.00%
Other Expenses .......................................... 0.29% 0.33% 0.45%
- ----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................... 1.19% 2.08% 2.10%
- ----------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................ (0.03)%(4)(5) 0.00% (0.04)%(4)
Net Expenses ............................................ 1.16% 2.08% 2.06%
- ----------------------------------------------------------------------------------------------------------------
Combined
Pioneer Classic
Balanced Fund
(Pro Forma)
---------------
Shareholder transaction fees
(paid directly from your investment) Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ...................... None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ........ 1.00%
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .......................................... 0.65%
Distribution and Service (12b-1) Fee .................... 1.00%
Other Expenses .......................................... 0.36%
- ------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................... 2.01
- ------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................ 0.00%(4)(5)
Net Expenses ............................................ 2.01%
- ------------------------------------------------------------------------------
Regions Morgan
Keegan Select
Balanced Fund
(period ended
November 30, 2008)
------------------
Shareholder transaction fees
(paid directly from your investment) Class I
Maximum sales charge (load) when you buy shares as a percentage of offering price None
Maximum deferred sales charge (load) as a percentage of offering price or the
amount you receive when you sell shares, whichever is less ..................... None
Annual Fund operating expenses (deducted from fund assets) as a % of average
daily net assets
Management Fee .................................................................. 0.75%
Distribution and Service (12b-1) Fee ............................................ 0.00%
Other Expenses .................................................................. 0.33%
- -----------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............................................ 1.08%
- -----------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........................................ 0.00%
Net Expenses .................................................................... 1.08%
- -----------------------------------------------------------------------------------------------------
Pioneer Classic Combined
Balanced Fund Pioneer Classic
(period ended Balanced Fund
July 31, 2008) (Pro Forma)
---------------- ---------------
Shareholder transaction fees
(paid directly from your investment) Class Y Class Y
Maximum sales charge (load) when you buy shares as a percentage of offering price None None
Maximum deferred sales charge (load) as a percentage of offering price or the
amount you receive when you sell shares, whichever is less ..................... None None
Annual Fund operating expenses (deducted from fund assets) as a % of average
daily net assets
Management Fee .................................................................. 0.65% 0.65%
Distribution and Service (12b-1) Fee ............................................ 0.00% 0.00%
Other Expenses .................................................................. 0.15% 0.15%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............................................ 0.80% 0.80%
- --------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........................................ 0.00% 0.00%(5)
Net Expenses .................................................................... 0.80% 0.80%
- --------------------------------------------------------------------------------------------------------------------
112
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Combined
Pioneer Classic
Regions Morgan Keegan Pioneer Classic Balanced Fund
Number of years you own your shares Select Balanced Fund Balanced Fund (Pro Forma)
- ----------------------------------- --------------------- --------------- ---------------
Class A -- with or without redemption
Year 1 ............................. $ 678 $ 563 $ 563
Year 3 ............................. $ 948 $ 830 $ 808
Year 5 ............................. $1,239 $1,118 $1,072
Year 10 ............................ $2,063 $1,935 $1,826
Class C -- with redemption
Year 1 ............................. $ 311 $ 309 $ 304
Year 3 ............................. $ 652 $ 654 $ 630
Year 5 ............................. $1,119 $1,125 $1,083
Year 10 ............................ $2,410 $2,428 $2,338
Class C -- without redemption
Year 1 ............................. $ 211 $ 209 $ 204
Year 3 ............................. $ 652 $ 654 $ 630
Year 5 ............................. $1,119 $1,125 $1,083
Year 10 ............................ $2,410 $2,428 $2,338
Class I/Y
Year 1 ............................. $ 110 $ 82 $ 82
Year 3 ............................. $ 343 $ 255 $ 255
Year 5 ............................. $ 595 $ 444 $ 444
Year 10 ............................ $1,317 $ 990 $ 990
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption
will apply to Class C shares redeemed within one year of the purchase
date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.16% and 2.06% of the
average daily net assets attributable to Class A shares and Class C
shares, respectively. These expense limitations are in effect through
December 1, 2011 for Class A shares and through December 1, 2010 for Class
C shares. There can be no assurance that Pioneer will extend the expense
limitations beyond such time.
(5) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.33% and 1.08% of the
average daily net assets attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization is approved, these
expense limitations will be in effect for a period of three years after
the close of the Reorganization. There can be no assurance that Pioneer
will extend the expense limitations beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 6.
113
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A, Class C and Class Y shares are anticipated
to be 1.16%, 2.01% and 0.84%, respectively, after giving effect to Pioneer's
contractual expense limitation with respect to Class A and Class Y shares, and
the historical net expense ratios for the corresponding classes of shares of
your RMK Fund are 1.33%, 2.08% and 1.08%, respectively. Therefore, the expense
ratio of the combined Pioneer Fund is expected to be lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. In addition, the broader distribution arrangements of the
Pioneer Fund offer greater potential for further asset growth and further
reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 1.16% and 2.06% of the average daily
net assets attributable to Class A and Class C shares. These expense
limitations are in effect through December 1, 2011 for Class A shares and
through December 1, 2010 for Class C shares. In addition, Pioneer has
contractually agreed to limit ordinary operating expenses to the extent
required to reduce fund expenses to 1.33% and 1.08% of the average daily net
assets attributable to Class A shares and Class Y shares, respectively.
Assuming the shareholders of your RMK Fund approve the Reorganization, these
expense limitations will be in effect for the combined Pioneer Fund for a
period of three years from the Closing Date. There can be no assurance that
Pioneer will extend the expense limitations beyond such time.
Fourth, the Pioneer Fund's management fee (0.65% of average daily net
assets) is lower than the advisory fee of your RMK Fund (0.75% of average daily
net assets). The RMK Board noted that at November 30, 2008, the advisory fee
payable by your RMK Fund was 0.75%. The performance-adjusted management fee of
the combined Pioneer Fund, had the Reorganization occurred on that date, would
be 0.65%, which is lower than your RMK Fund's management fee.
Fifth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Sixth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Seventh, the Class A, Class C and Class Y shares of the Pioneer Fund
received in the Reorganization will provide the RMK Fund shareholders with
exposure to substantially the same investment product as they have currently.
Eighth, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
114
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of January 20, 2009 and the pro forma combined capitalization
of the combined Pioneer Fund as if the Reorganization had occurred on that
date. If the Reorganization is consummated, the actual exchange ratios on the
Closing Date may vary from the exchange ratios used in the computation below.
This is due to changes in the market value of the portfolio securities of both
Funds between January 20, 2009 and the Closing Date, changes in the amount of
undistributed net investment income and net realized capital gains of both
Funds during that period resulting from income and distributions, and changes
in the accrued liabilities of both Funds during the same period.
Regions Morgan Pioneer Classic
Keegan Select Pioneer Classic Balanced Fund
Balanced Fund Balanced Fund Pro Forma
-------------- --------------- ---------------
Net Assets
Class A ......................... $ 24,191,717 $ 80,631,441 $ 104,823,158
Class B ......................... -- $ 14,439,292 $ 14,439,292
Class C ......................... $ 2,137,935 $ 6,932,329 $ 9,070,264
Class I/Y ....................... $ 96,626,291 $ 12,144,625 $ 108,770,916
-------------- -------------- --------------
Total Net Assets of Fund ......... $ 122,955,943 $ 114,147,687 $ 237,103,630
Net Asset Value Per Share
Class A ......................... $ 12.16 $ 6.63 $ 6.63
Class B ......................... -- $ 6.60 $ 6.60
Class C ......................... $ 12.18 $ 6.62 $ 6.62
Class I/Y ....................... $ 12.17 $ 6.63 $ 6.63
Shares Outstanding
Class A ......................... 1,990,043 12,155,295 15,804,121
Class B ......................... -- 2,189,393 2,189,393
Class C ......................... 175,549 1,046,780 1,369,731
Class I/Y ....................... 7,938,568 1,830,834 16,404,935
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 6 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
115
Regions Morgan Keegan Select Fixed Income Fund
and
Pioneer Bond Fund
PROPOSAL 7
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 7 is approved, Regions Morgan Keegan Select Fixed Income Fund
(the "RMK Fund") will be reorganized into Pioneer Bond Fund (the "Pioneer Fund"
and, together with the RMK Fund, the "Funds"), as described above, and the
Pioneer Fund will issue Class A shares to the RMK Fund in amounts equal to the
aggregate net asset value of the RMK Fund's Class A and Class C shares and the
Pioneer Fund will issue Class Y shares to the RMK Fund in amounts equal to the
aggregate net asset value of the RMK Fund's Class I shares, as applicable.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Fixed Income Fund
to Pioneer Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------
Investment objectives The fund's investment objective is current The fund's investment objective is to provide
income, with capital appreciation as a current income from an investment grade
secondary objective. portfolio with due regard to preservation
of capital and prudent investment risk. The
fund also seeks a relatively stable level of
dividends; however, the level of dividends
will be maintained only if consistent with
preserving the investment grade quality of
the fund's portfolio.
- ----------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests a majority of its total assets The fund invests primarily in:
investment strategies in investment grade debt securities. Under
normal circumstances, the fund invests at least o debt securities issued or guaranteed by
80% of the value of its net assets in debt the U.S. government or its agencies and
securities. These securities include debt instrumentalities,
securities of the U.S. Treasury and government
agencies, mortgage-backed and asset-backed o debt securities, including convertible debt,
securities, and corporate bonds. The fund will of corporate and other issuers rated at least
provide shareholders with at least 60 days' investment grade at the time of investment,
prior notice of any changes in this policy. and comparably rated commercial paper,
o cash and cash equivalents, certificates of
deposit, repurchase agreements maturing in
one week or less and bankers' acceptances.
- ----------------------------------------------------------------------------------------------------------------------------
116
- -----------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund may invest up to 10% of its total Normally, the fund invests at least 80% of its
investment strategies assets in below investment grade debt net assets (plus the amount of borrowings,
securities. The debt securities purchased if any, for investment purposes) in these
by the fund will be rated, at the time of securities.
investment, at least CCC (or a comparable
rating) by at least one nationally recognized The fund will provide written notice to
statistical rating organization ("NRSRO") or, shareholders at least 60 days prior to any
if unrated, determined by MAM to be of change to the requirement that it invest at
comparable quality. least 80% of its assets as described above.
MAM employs a "top down" strategy in The fund may invest a substantial portion of
selecting investment securities. Key factors its assets in mortgage-related securities, which
include economic trends, inflation expectations, represent interests in pools of mortgage loans
interest rate momentum, and yield spreads. assembled for sale to investors by various U.S.
When investing in non-governmental securities, governmental agencies, government-related
MAM will conduct a credit analysis of the organizations and private issuers.
issuer, and will compare current yield spreads
to historical norms. The net asset value of the Cash and cash equivalents include cash
fund is expected to fluctuate with changes in balances, accrued interest and receivables for
interest rates and bond market conditions. items such as the proceeds, not yet received,
MAM will attempt to minimize principal from the sale of the fund's portfolio
fluctuation and increase return through, investments.
among other things, diversification, careful
credit analysis and security selection, and U.S. government securities include U.S.
adjustments of the fund's average portfolio Treasury obligations, such as bills, bonds
maturity. and notes, and obligations issued or
guaranteed by U.S. government agencies or
The average maturity of the fund's debt instrumentalities. These obligations may be
securities generally will be in the range of supported by:
three to ten years. When interest rates are at
higher levels and lower rates are forecasted for o the full faith and credit of the U.S. Treasury,
the future, MAM may choose to lengthen the such as securities issued by the Government
fund's effective duration. Likewise, when rising National Mortgage Association (GNMA);
interest rates are expected, the duration of
the fund's bond portfolio may be shortened. o the authority of the U.S. government to
Consistent with the fund's primary objective of purchase certain obligations of the issuer,
producing current income, the fund will focus such as securities issued by the Federal
on investment-grade, intermediate-term debt National Mortgage Association (Fannie Mae)
securities. and the Federal Home Loan Mortgage
Corporation (Freddie Mac);
o the limited authority of the issuer to borrow
from the U.S. Treasury; or
o only the credit of the issuer.
In addition, the fund may invest up to 20% of
its net assets in debt securities rated below
investment grade or, if unrated, of equivalent
credit quality as determined by Pioneer.
- -----------------------------------------------------------------------------------------------------------------------------
117
- -----------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------
The fund's investments may have fixed or
variable principal payments and all types of
interest rate payment and reset terms,
including fixed rate, floating rate, inverse
floating rate, zero coupon, contingent,
deferred and payment in kind and auction rate
features. The fund may invest and has in the
past invested in securities with a broad range
of maturities and maintains an average
portfolio maturity which varies based upon
the judgment of Pioneer.
Pioneer considers both broad economic and
issuer specific factors in selecting a portfolio
designed to achieve the fund's investment
objectives. In assessing the appropriate
maturity, rating and sector weighting of the
fund's portfolio, Pioneer considers a variety
of factors that are expected to influence
economic activity and interest rates. These
factors include fundamental economic
indicators, such as the rates of economic
growth and inflation, Federal Reserve
monetary policy and the relative value of the
U.S. dollar compared to other currencies.
Once Pioneer determines the preferable
portfolio characteristics, Pioneer selects
individual securities based upon the terms
of the securities (such as yields compared
to U.S. Treasuries or comparable issues),
liquidity and rating, sector and issuer
diversification. Pioneer also employs
fundamental research and due diligence to
assess an issuer's credit quality, taking into
account financial condition and profitability,
future capital needs, potential for change in
rating, industry outlook, the competitive
environment and management ability. In
making these portfolio decisions, 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.
A debt security is considered investment
grade if it is: rated BBB or higher at the time
of purchase by Standard & Poor's Ratings
Group; rated the equivalent rating by a
nationally recognized statistical rating
organization; or determined to be of equivalent
credit quality by Pioneer.
- -----------------------------------------------------------------------------------------------------------------------------
118
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Securities in the lowest category of investment
grade are considered to have speculative
characteristics.
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 changes the quality
rating assigned to one or more of the fund's
portfolio securities, Pioneer will consider if
any action is appropriate in light of the fund's
investment objectives and policies.
In general, the ratings of nationally recognized
statistical rating organizations represent the
opinions of those organizations as to the
quality of the securities they rate. These
ratings are relative and subjective and are not
absolute standards or guarantees of quality.
The fund may invest up to 20% of its net
assets in debt securities rated below
investment grade or, if unrated, of equivalent
quality as determined by Pioneer. Debt
securities rated below investment grade are
commonly referred to as "junk bonds" and are
considered speculative. Below investment
grade debt securities involve greater risk of
loss, are subject to greater price volatility and
are less liquid, especially during periods of
economic uncertainty or change, than higher
quality debt securities. The fund may invest in
debt securities rated "D" or better, or
comparable unrated securities.
The fund may invest in mortgage-backed and
asset-backed securities. Mortgage-backed
securities may be issued by private issuers,
by government-sponsored entities such as
Fannie Mae or Freddie Mac or by agencies
of the U.S. government, such as GNMA.
Mortgage-backed securities represent direct or
indirect participation in, or are collateralized
by and payable from, mortgage loans secured
by real property. Asset-backed securities
represent participations in, or are secured by
and payable from, assets such as installment
sales or loan contracts, leases, credit card
receivables and other categories of
- -------------------------------------------------------------------------------------------------------------------------------
119
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
receivables. The fund's investments in
mortgage-related securities may include
mortgage derivatives and structured securities.
Unlike mortgage-related securities issued or
guaranteed by the U. S. government or its
agencies and instrumentalities, mortgage-
related securities issued by private issuers
do not have a government or government-
sponsored entity guarantee (but may have
other credit enhancement), and may, and
frequently do, have less favorable collateral,
credit risk or other characteristics. The fund
may invest in other mortgage-related
securities, including mortgage derivatives and
structured securities. These securities typically
are not secured by real property. Because
these securities have imbedded leverage
features, small changes in interest or
prepayment rates may cause large and sudden
price movements. These securities also can
become illiquid and difficult to value in volatile
or declining markets.
The fund may invest in securities that are
subordinated or "junior" to more senior
securities of the issuer. The investor in a
subordinated security is entitled to payment
after other holders. As a result, subordinated
securities may be disproportionately adversely
affected by a default or even a perceived
decline in creditworthiness of the issuer, or,
in the case of a pooled investment, issuers
of underlying obligations.
Floating rate loans are provided by banks and
other financial institutions to large corporate
customers. These loans are rated below
investment grade, but typically are secured
with specific collateral and have a senior
position in the capital structure of the
borrower. These loans typically have rates of
interest that are reset periodically by reference
to a base lending rate, such as the London
Interbank Offered Rate (LIBOR), plus a
premium. The value of collateral, if any,
securing a floating rate loan can decline, may
be insufficient to meet the issuer's obligations
or may be difficult to obtain. Floating rate
loans may not be readily marketable or may
be subject to restrictions on resale. For the
purpose of this prospectus, the term
- -------------------------------------------------------------------------------------------------------------------------------
120
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
The fund may invest in inverse floating rate
obligations (a type of derivative instrument).
The interest rate on inverse floating rate
obligations will generally decrease as short-
term interest rates increase, and increase as
short-term rates decrease. Due to their
leveraged structure, the sensitivity of the
market value of an inverse floating rate
obligation to changes in interest rates is
generally greater than a comparable long-term
bond issued by the same issuer and with
similar credit quality, redemption and maturity
provisions. Inverse floating rate obligations
may be volatile and involve leverage risk.
The fund may invest up to 15% of its total
assets in equity and debt securities of non-
U.S. corporate issuers and in debt securities
of non-U.S. government issuers. The fund will
not invest more than 5% of its total 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 to provide income and
capital gains compared to U.S. securities. The
fund may invest in securities of Canadian
issuers to the same extent as securities of
U.S. issuers (non-U.S. issuers does not
include Canadian issuers).
The fund may invest in "event-linked"
bonds, which sometimes are referred to as
"insurance-linked" or "catastrophe" bonds.
Event-linked bonds are debt obligations for
which the return of principal and the payment
of interest are contingent on the non-
occurrence of a pre-defined "trigger" event,
such as a hurricane or an earthquake of a
specific magnitude. For some event-linked
bonds, the trigger event's magnitude may be
based on losses to a company or industry,
industry indexes or readings of scientific
instruments rather than specified actual
losses. If a trigger event, as defined within
the terms of an event-linked bond, involves
losses or other metrics exceeding a specific
magnitude in the geographic region and time
period specified therein, the fund may lose a
portion or all of its accrued interest and/or
- -------------------------------------------------------------------------------------------------------------------------------
121
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
principal invested in such event-linked bond.
The fund is entitled to receive principal and
interest payments so long as no trigger event
occurs of the description and magnitude
specified by the instrument.
Event-linked bonds may be issued by
government agencies, insurance companies,
reinsurers, special purpose corporations or
other on-shore or off-shore entities. In
addition to the specified trigger events, event-
linked bonds may also expose the fund to
other risks, including but not limited to
issuer (credit) default, adverse regulatory or
jurisdictional interpretations and adverse tax
consequences. Event-linked bonds are subject
to the risk that the model used to calculate
the probability of a trigger event was not
accurate and underestimated the likelihood
of a trigger event. Upon the occurrence or
possible occurrence of a trigger event, and
until the completion of the processing and
auditing of applicable loss claims, the fund's
investment in such event-linked bond may
be priced using fair value methods. As a
relatively new type of financial instrument,
there is limited trading history for these
securities, and there can be no assurance
that a liquid market in these instruments
will develop.
Event-linked bonds are typically rated by at
least one nationally recognized rating agency,
but also may be unrated. The rating for an
event-linked bond primarily reflects the rating
agency's calculated probability that a pre-
defined trigger event will occur. This rating
also assesses the event-linked bond's credit
risk and model used to calculate the
probability of a trigger event.
122
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions its assets to meet its investment objective.
during adverse market conditions, the fund The fund may invest the remainder of its
may temporarily depart from its principal assets in securities with remaining maturities
investment strategy by investing up to 100% of less than one year or cash equivalents, or
of the fund's assets in cash and cash may hold cash. For temporary defensive
equivalents, including short-term bank purposes, including during periods of unusual
obligations, repurchase agreements and other cash flows, the fund may depart from its
money market instruments and securities principal investment strategies and invest part
issued and/or guaranteed as to payment of or all of its assets in these securities or may
principal and interest by the U.S. government, hold cash. During such periods, the fund may
its agencies or instrumentalities. This may not be able to achieve its investment
cause the fund to temporarily fail to meet its objectives. The fund may adopt a defensive
goal and forego greater investment returns for strategy when Pioneer believes securities in
the safety of principal. which the fund normally invests have
extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
- -------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. If the fund does a lot of
the fund's investment goal. A higher portfolio trading, it may incur additional operating
turnover rate involves greater transaction expenses, which would reduce performance,
expenses which must be borne directly by the and could cause shareowners to incur a
fund (and thus, indirectly by its shareholders), higher level of taxable income or capital gains.
and impact fund performance. In addition, a
high rate of portfolio turnover may result in the
realization of larger amounts of net capital
gains that, when distributed to the fund's
shareholders, are taxable to them.
- -------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use
Derivative contracts are financial instruments futures and options on securities, indices and
that require payments based upon changes currencies, forward foreign currency exchange
in the values of designated (or underlying) contracts and other derivatives. A derivative
securities, currencies, commodities, financial is a security or instrument whose value is
indices or other assets. Some derivative determined by reference to the value or the
contracts (such as futures, forwards and change in value of one or more securities,
options) require payments relating to a future currencies, indices or other financial
trade involving the underlying asset. Other instruments. Although there is no specific
derivative contracts (such as swaps) require limitation on investing in derivatives, the
payments relating to the income or returns fund does not use derivatives as a primary
from the underlying asset. investment technique and generally limits their
use to hedging. However, the fund may use
MAM may trade in options or futures in order
to hedge the fund's portfolio against market
shifts as well as to increase returns.
- -------------------------------------------------------------------------------------------------------------------------------
123
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
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
The fund may enter into credit default swaps,
which can be used to transfer the credit risk
of a security without buying or selling the
security.
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility
of the fund's net asset value. 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. Therefore, using
derivatives can disproportionately increase
losses and reduce opportunities for gain.
If changes in a derivative's value do not
correspond to changes in the value of the
fund's other investments or do not correlate
well with the underlying asset, rate or index,
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 issuer of the derivative defaults on its
obligation. Certain derivatives may be less
liquid, which may reduce the returns of the
fund if it cannot sell or terminate the
derivative at an advantageous time or price.
Some derivatives may involve the risk of
improper valuation. The fund will only invest
in derivatives to the extent Pioneer believes
these investments are consistent with the
fund's investment objectives, but derivatives
may not perform as intended. Suitable
derivatives may not be available in all
circumstances or at reasonable prices and
may not be used by the fund for a variety
of reasons.
- -------------------------------------------------------------------------------------------------------------------------------
124
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio managers MAM Pioneer
Portfolio Managers: Portfolio Manager:
Day-to-day management of the fund's portfolio Day-to-day management of the fund's portfolio
is the responsibility of William C. Rice, CFA is the responsibility of Kenneth J. Taubes.
and Scott M. Flurry, CFA. The portfolio Mr. Taubes is supported by the fixed income
managers are supported by MAM's equity team. Members of this team manage other
and/or fixed income research teams which Pioneer funds investing primarily in fixed
provide fundamental research and quantitative income securities. The portfolio manager and
analysis used to run MAM's internal investment the team also may draw upon the research
models. and investment management expertise of
the global research teams, which provide
fundamental and quantitative research on
Mr. Rice is a Senior Vice President, Fixed companies and include members from
Income Portfolio Manager and Research Pioneer's affiliate, Pioneer Investment
Analyst for MAM. He has more than 30 years Management Limited. Mr. Taubes is
experience in investment management and responsible for overseeing the U.S. and
research. From 2006 to present, Mr. Rice global fixed income teams. He joined Pioneer
has served as a member of MAM's taxable as a senior vice president in September 1998
fixed-income team. He currently holds and has been an investment professional
portfolio management and research analyst since 1982.
responsibilities. Mr. Rice joined AmSouth Bank
in April 1984 as Portfolio Manager of AmSouth
Bank's Investment Portfolio and was named
Chief Investment Officer in 1995. As Chief
Investment Officer, Mr. Rice was responsible
for managing fixed-income assets representing
a significant portion of the corporation's
assets. This portfolio, comprised mostly of
mortgage securities, ranged in value from
$6 billion to $12 billion and included a variety
of mortgage-backed securities, asset-backed
securities, and commercial mortgage-backed
securities both fixed and floating. From 1979
to 1984, Mr. Rice was a Senior Trust
Investment Officer at a large regional banking
institution where he managed fixed-income
portfolios. From 1972 to 1979, Mr. Rice was
a Fixed Income Trust Investment Officer at
another large regional banking institution.
Mr. Rice received a B.S. degree in Accounting
and an M.B.A. from Auburn University.
Mr. Rice is a CFA charter holder and a
member of the CFA Society of Alabama.
- -------------------------------------------------------------------------------------------------------------------------------
125
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Mr. Flurry is a Vice President and Senior
Portfolio Manager for MAM. He has more than
14 years experience in investment management
and research. From 2003 to present, Mr. Flurry
has served as a fixed income Portfolio
Manager responsible for managing domestic
fixed income portfolios for institutional clients.
Prior to joining MAM in 2003, Mr. Flurry
worked for Compass Bank in various
capacities. From 1998 to 2003, he served as a
Vice President, managing both fixed-income
and equity portfolios for institutional clients.
Additionally, from 2001 to 2003, Mr. Flurry
served as a Portfolio Manager of the
Expedition Equity Income Fund. From 1993 to
1998, Mr. Flurry served as a credit analyst in
the Investment Credit department of Compass
Bank and served as the Head of the Credit
Department for the last three years of that
tenure. Mr. Flurry received a B.S. in Corporate
Finance and Investment Management from the
University of Alabama in 1990. Mr. Flurry is a
holder of the Chartered Financial Analyst
designation and an officer of the CFA Society
of Alabama.
- -------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an The diversified sole series of an open-end
open-end management investment company management investment company organized as
organized as a Massachusetts business trust. a Delaware statutory trust with the same name.
- -------------------------------------------------------------------------------------------------------------------------------
Net assets $126,931,511 $844,634,238
(as of January 20, 2009)
- -------------------------------------------------------------------------------------------------------------------------------
126
Classes of Shares, Fees and Expenses
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial Class A shares are offered with an initial sales
and fees sales charge up to 2.00% of the offering price, charge up to 4.50% of the offering price, which
which is reduced depending upon the amount is reduced or waived for large purchases and
invested as described below or, in certain certain types of investors. At the time of your
circumstances, waived. Class A shares bought purchase, your investment firm may receive a
as part of an investment of $1 million or more commission from PFD, the fund's distributor,
are not subject to an initial sales charge, but of up to 4.00%, declining as the size of your
may be charged a contingent deferred sales investment increases.
charge of 1.00% if sold within one year of
purchase. You pay the offering price (the net asset value
per share plus any initial sales charge) when
Your investment may qualify for a reduction or you buy Class A shares unless you qualify to
elimination of the sales charge, also known as purchase shares at net asset value. You pay
a breakpoint discount. The following lists the a lower sales charge as the size of your
sales charges, which will be applied to your investment increases. You do not pay a sales
Class A share purchase, subject to the charge when you reinvest dividends or capital
breakpoint discounts indicated: gain distributions paid by the fund.
------------------------------------------------- ------------------------------------------------
Your As a % of As a % of Net Sales charge as % of
Investment Offering Price Amounts ------------------------------------------------
Invested Amount of Offering Price Net Amounts
------------------------------------------------- purchase Invested
Up to $49,999 2.00% 2.04% ------------------------------------------------
------------------------------------------------- Less than 4.50% 4.71%
$50,000 to 1.75% 1.78% $100,000
$ 99,999 ------------------------------------------------
------------------------------------------------- $100,000 but 3.50% 3.63%
$100,000 to 1.50% 1.52% less than
$249,999 $250,000
------------------------------------------------- ------------------------------------------------
$250,000 to 1.00% 1.01% $250,000 but 2.50% 2.56%
$499,999 less than
------------------------------------------------- $500,000
$500,000 to 0.75% 0.76% ------------------------------------------------
$999,999 $500,000 but 2.00% 2.04%
------------------------------------------------- less than
$1 million or Net asset Net asset $1 million
more value value ------------------------------------------------
------------------------------------------------- $1 million or -0- -0-
Your investment professional must notify the more
fund's transfer agent of eligibility for any ------------------------------------------------
applicable breakpoint discount at the time of There are no contingent deferred sales charges,
purchase. except in certain circumstances when the initial
sales charge is waived. A contingent deferred
Class A shares pay a shareholder servicing fee sales charge may be payable to PFD, the fund's
(non-12b-1) of up to 0.25% of average daily distributor, in the event of a share redemption
net assets. within 18 months following the share purchase
at the rate of 1.00% of the lesser of the value
of the shares redeemed or the total cost of
such shares, subject to certain waivers.
- -------------------------------------------------------------------------------------------------------------------------------
127
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
Class A shares are subject to distribution
and service (12b-1) fees of up to 0.25% of
average daily net assets. These fees are paid
out of the fund's assets on an ongoing basis.
Over time these fees will increase the cost of
investments and may cost more than other
types of sales charges.
- -------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial The Pioneer Fund will issue Class A shares to
and fees sales charge. the RMK Fund in exchange for the Class C
shares of the RMK Fund. Please see the
Class C shares are subject to a contingent Pioneer Fund's Class A sales charges and
deferred sales charge of 1.00% if sold within fees above.
one year of purchase.
Class C shares pay a shareholder servicing fee
(non-12b-1) of up to 0.25% of average daily
net assets and a distribution (12b-1) fee of
0.75% of average daily net assets.
- -------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y sales Class I shares are offered without an initial Class Y shares are offered without an initial
charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- -------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee The fund pays Pioneer a fee for managing the
equal to 0.50% of the fund's average daily fund and to cover the cost of providing certain
net assets. services to the fund.
Pioneer's annual fee is equal to 0.50% of
the fund's average daily net assets up to
$1 billion, 0.45% of the next $1 billion and
0.40% on assets over $2 billion. Prior to
January 1, 2008, Pioneer's annual fee was
equal to 0.50% of the fund's average daily
net assets. The fee is accrued daily and
paid monthly.
- -------------------------------------------------------------------------------------------------------------------------------
128
- -----------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
- -----------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the extent
required to reduce fund expenses to 0.85% of
the average daily net assets attributable to
Class A shares. This expense limitation is in
effect through November 1, 2013. In addition,
Pioneer has contractually agreed to limit
ordinary operating expenses to the extent
required to reduce fund expenses to 1.01%
and 0.76% of the average daily net assets
attributable to Class A shares and Class Y
shares, respectively. Assuming the
Reorganization is approved, these expense
limitations will be in effect for a period
of three years after the closing of the
Reorganization. There can be no assurance
that Pioneer will extend the expense
limitations beyond such time.
- -----------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see
the class fee tables in the "The Funds' Fees and Expenses" section
starting on page 136.
- -----------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, or not
make as much as if you invested elsewhere if:
o Interest rates go up, causing the value of the Fund's investments to
decline. This is known as interest rate risk (this risk may be greater for
securities with longer maturities)
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest, has its credit rating downgraded or is
perceived to be less creditworthy, or the credit quality or value of any
underlying assets declines. This is known as credit risk
o During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing
the fund to reinvest in lower yielding securities. This is known as call
or prepayment risk
o During periods of rising interest rates, the average life of certain types
of securities may be extended because of slower than expected principal
payments. This may lock in a below market interest rate, increase the
security's duration (the estimated period until the security is paid in
full) and reduce the value of the security. This is known as extension
risk
o Particular investments held by the Fund may be difficult to sell, and as a
result the Fund's portfolio may be harder to value, especially in changing
markets. The market for certain investments may become less liquid or
illiquid under adverse market or economic conditions independent of any
specific adverse changes in the conditions of a particular issuer. This is
known as liquidity risk
o The manager's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
o To the extent that the Fund invests in high yield securities, its exposure
to the credit risks associated with such securities may be greater, its
income and net asset value may be more volatile and it may be more
difficult to achieve preservation of principal
Government sponsored entities such as Fannie Mae, Freddie Mac and the
Federal Home Loan Banks ("FHLBs"), although chartered or sponsored by Congress,
are not funded by congressional appropriations and the debt and mortgage-backed
securities issued by them are neither guaranteed nor issued by the U.S.
government. Although the U.S. government has provided financial support to
Fannie Mae and Freddie Mac, there can be no assurance that it will support
these or other government sponsored entities in the future.
129
To the extent either Fund invests significantly in mortgage-backed and
mortgage related securities, its exposure to prepayment and extension risks may
be greater than if it invested in other fixed income securities.
To the extent that either Fund invests in debt securities rated below
investment grade, its exposure to the credit risks associated with such
securities may be greater, its income and net asset value may be more volatile
and it may be more difficult to achieve preservation of principal. Debt
securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. Below investment grade debt securities
involve greater risk of loss, are subject to greater price volatility and are
less liquid, especially during periods of economic uncertainty or change, than
higher quality debt securities.
Each Fund may invest in mortgage- and asset-backed securities and,
therefore, each Fund may be subject to the risks associated with investing in
such securities. The repayment of certain mortgage-backed and asset-backed
securities depends primarily on the cash collections received from the issuer's
underlying asset portfolio and, in certain cases, the issuer's ability to issue
replacement securities. As a result, there could be losses to a Fund in the
event of credit or market value deterioration in the issuer's underlying
portfolio, mismatches in the timing of the cash flows of the underlying asset
interests and the repayment obligations of maturing securities, or the issuer's
inability to issue new or replacement securities. Upon the occurrence of
certain triggering events or defaults, the investors in a security held by a
Fund may become the holders of underlying assets at a time when those assets
may be difficult to sell or may be sold only at a loss. In the event of a
default, the value of the underlying collateral may be insufficient to pay
certain expenses, such as litigation and foreclosure expenses, and inadequate
to pay any unpaid principal or interest. Privately issued mortgage-backed and
asset-backed securities are not traded on an exchange and may have a limited
market. Without an active trading market, these securities may be particularly
difficult to value given the complexities in valuing the underlying collateral.
Certain mortgage-backed and asset-backed securities may pay principal only at
maturity or may represent only the right to receive payments of principal or
interest on the underlying obligations, but not both. The value of these types
of instruments may change more drastically than debt securities that pay both
principal and interest during periods of changing interest rates. Principal
only instruments generally increase in value if interest rates decline, but are
also subject to the risk of prepayment. Interest only instruments generally
increase in value in a rising interest rate environment when fewer of the
underlying obligations are prepaid. Interest only instruments could lose their
entire value in a declining interest rate environment if the underlying
obligations are prepaid. A Fund's mortgage-related investments may include
mortgage-related derivative securities such as collateralized mortgage
obligations (CMOs). A CMO is a mortgage-backed bond that separates mortgage
pools into different maturity classes. The holder of an interest in a CMO is
entitled to receive specified cash flows from a pool of mortgages. Depending
upon the category of CMO purchased, the holder may be entitled to payment
before the cash flow from the pool is used to fund other CMOs or,
alternatively, the holder may be paid only to the extent that there is cash
remaining after the cash flow has been used to fund other CMOs first. A
subordinated interest may serve as a credit support for the senior securities
purchased by other investors. If there are defaults on the underlying mortgage
loans, a Fund will be less likely to receive payments of principal and
interest, and will be more likely to suffer a loss. This risk may be increased
to the extent the underlying mortgages include sub-prime mortgages. Each Fund
may invest in asset-backed securities issued by special entities, such as
trusts, that are backed by a pool of financial assets. Each Fund may invest in
collateralized debt obligations ("CDOs"), which include collateralized bond
obligations ("CBOs"), collateralized loan obligations ("CLOs") and other
similarly structured securities. A CDO is a trust backed by a pool of fixed
income securities. The trust typically is split into two or more portions,
called tranches, which vary in credit quality, yield, credit support and right
to repayment of principal and interest. Lower tranches pay higher interest
rates but represent lower degrees of credit quality and are more sensitive to
the rate of defaults in the pool of obligations. The risks of an investment in
a CDO depend largely on the type of the underlying obligations (e.g., an
underlying obligation may decline in quality or default) and the tranche of the
CDO in which a Fund invests (e.g., a Fund may invest in a tranche of CDO that
is subordinate to other tranches). Investments in CDOs may be characterized by
a Fund as illiquid securities, which may be difficult to sell at an
advantageous time or price.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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.
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
130
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including in the securities of emerging markets issuers, it may be subject to
the risks below associated with investing in non-U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
Pioneer 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 Pioneer 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
Pioneer 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 Pioneer Fund's return
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of each Fund's Class A shares for the past 10
calendar years. Class C and Class I shares of the RMK Fund and Class Y shares
of the Pioneer Fund will have different performance because they have different
expenses. The charts do not reflect any sales charge you may pay when you buy
or sell Fund shares. Any sales charge will reduce your return. The tables show
average annual total return (before and after taxes) for each Fund over time
for each class of shares (including deductions for sales charges) compared with
a broad-based securities market index. The bar charts provide an indication of
the risks of investing in each Fund, including the fact that you could incur a
loss and experience volatility of returns year to year. Past performance,
before and after taxes, does not indicate future results.
Regions Morgan Keegan Select Fixed Income Fund's Annual Returns
-- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'99 -0.31
'00 10.34
'01 8.17
'02 9.69
'03 1.84
'04 0.61
'05 1.09
'06 3.67
'07 -1.28
'08 -2.82
- ----------
The highest quarterly return was 4.93% for the quarter ended September 30, 2001
The lowest quarterly return was (4.21)% for the quarter ended September 30, 2008
131
Pioneer Bond Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'99 -3.2
'00 8.45
'01 7.54
'02 8.77
'03 8.85
'04 5.71
'05 2.46
'06 3.55
'07 6.09
'08 -4.36
- ----------
The highest quarterly return was 4.65% for the quarter ended June 30, 2003
The lowest quarterly return was (3.05)% for the quarter ended December 31, 2008
Regions Morgan Keegan Select Fixed Income Fund's Average Annual Total Returns
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A(1) 04/20/92
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 2.00% sales charge) (4.76)% (0.17)% 2.80% 4.41%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (6.19)% (1.64)% 1.07%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (3.08)% (0.97)% 1.37%
Fund Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class C 12/03/01
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent (4.51)% (0.52)% N/A 0.89%
Deferred Sales Charge)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class I 08/14/05
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (2.68)% N/A N/A 0.13%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Domestic Master Index(3) 6.20% 4.91% 5.76%
- -----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of
each period,
132
and shows the effect of any taxable gain (or offsetting loss) on redemption,
as well as the effects of taxes on fund distributions. Actual after-tax
returns to an investor depend on the investor's own tax situation and may
differ from those shown. After-tax returns are not relevant to investors
holding shares through tax-deferred programs, such as individual retirement
accounts or 401(k) plans. After-tax returns are shown only for Class A
shares. After-tax returns for other classes will be different.
(3) The Merrill Lynch Domestic Master Index is composed of U.S. Dollar
denominated, SEC-registered investment grade public corporate and
government debt. Treasuries, mortgage-backed securities, global bonds
(debt issued simultaneously in the Eurobond and U.S. domestic bond
markets) and some Yankee Bonds (debt of foreign issuers issued in the U.S.
domestic market) are included in the Merrill Lynch Domestic Master Index.
Total returns for the index shown are not adjusted to reflect taxes, sales
charges, expenses or other fees that the SEC required to be reflected in
the Fund's performance. The index is unmanaged, and unlike the RMK Fund,
is not affected by cashflows or trading and other expenses. It is not
possible to invest directly in an index.
133
Pioneer Bond Fund's Average Annual Total Returns(1)
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A 10/31/78
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (8.62)% 1.68% 3.80% 7.43%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (10.59)% (0.08)% 1.71% 3.77%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale (5.34)% 0.45% 1.97% 3.85%
of Shares(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Class Y(3) 10/31/78(4)
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (4.05)% 3.03% 4.59% 7.69%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions (6.26)% 1.11% 2.34% 3.98%
- -----------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale (2.35)% 1.51% 2.56% 4.05%
of Shares
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Barclays Capital (formerly, Lehman Brothers) 5.24% 4.65% 5.63% 8.60%(6)
Aggregate Bond Index (reflects no deduction
for fees, expenses or taxes)(5)
- -----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest
all of your dividends and distributions.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on 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.
(3) 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 A shares, which has not been restated to reflect any
differences in expenses, including Rule 12b-1 fees applicable to Class A
shares. You do not pay a sales charge on purchases or redemptions of Class
Y shares.
(4) Inception date of Class A shares. Class Y shares commenced operations on
September 20, 2001.
(5) The Barclays Capital (formerly, Lehman Brothers) Aggregate Bond Index is a
widely recognized market value-weighted index composed of the Barclays
Capital (formerly, Lehman Brothers) Government/Credit, Mortgage-Backed,
Asset-Backed and Commercial Mortgage-Backed securities indices. Unlike the
Fund, the index is not managed and does not incur fees, expenses or taxes.
You cannot invest directly in the index.
(6) Return of the index since the inception of Class A shares.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
134
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended December 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of December 31, 2008.
Regions
Morgan
Keegan
Select Fixed Pioneer
Income Fund Bond Fund
(period ended (period ended
November 30, December 31,
2008) 2008)
-------------- -------------
Shareholder transaction fees
(paid directly from your investment) Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 2.00% 4.50%
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) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.50% 0.50%
Distribution and Service (12b-1) Fee ................. 0.25% 0.25%
Other Expenses ....................................... 0.26% 0.33%
- ----------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.01% 1.08%
- ----------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% (0.23)%(4)
Net Expenses ......................................... 1.01% 0.85%
- ----------------------------------------------------------------------------------------
Regions
Morgan
Keegan
Select Fixed Pioneer
Combined Income Fund Bond Fund
Pioneer (period ended (period ended
Bond Fund November 30, December 31,
(Pro Forma) 2008) 2008)
----------- ------------- -------------
Shareholder transaction fees
(paid directly from your investment) Class A Class C Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 4.50% None 4.50%
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ..... None(2) 1.00%(3) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fee ................. 0.25% 1.00% 0.25%
Other Expenses ....................................... 0.26% 0.26% 0.33%
- ------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.01% 1.76% 1.08%
- ------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. (0.16)%(4)(5) 0.00% (0.23)%(4)
Net Expenses ......................................... 0.85% 1.76% 0.85%
- ------------------------------------------------------------------------------------------------------------------
Combined
Pioneer
Bond Fund
(Pro Forma)
-----------
Shareholder transaction fees
(paid directly from your investment) Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 4.50%
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ..... None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.50%
Distribution and Service (12b-1) Fee ................. 0.25%
Other Expenses ....................................... 0.26%
- ------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.01%
- ------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. (0.16)%(4)(5)
Net Expenses ......................................... 0.85%
- ------------------------------------------------------------------------------
Regions Morgan
Keegan Select Fixed Pioneer Combined
Income Fund Bond Fund Pioneer
(period ended (period ended Bond Fund
November 30, 2008) December 31, 2008) (Pro Forma)
-------------------- ------------------ -----------
Shareholder transaction fees
(paid directly from your investment) Class I Class Y Class Y
Maximum sales charge (load) when you buy shares
as a percentage of offering price ....................... None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ......... None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ........................................... 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fee ..................... 0.00% 0.00% 0.00%
Other Expenses ........................................... 0.26% 0.18% 0.15%
- ----------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ..................... 0.76% 0.68% 0.65%
- ----------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................. 0.00% 0.00% 0.00%(5)
Net Expenses ............................................. 0.76% 0.68% 0.65%
- ----------------------------------------------------------------------------------------------------------------------------
135
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Combined
Regions Morgan Keegan Pioneer Pioneer Bond Fund
Number of years you own your shares Select Fixed Income Fund Bond Fund (Pro Forma)
----------------------------------- ------------------------ --------- -----------------
Class A -- with or without redemption
Year 1 ............................. $ 301 $ 533 $ 533
Year 3 ............................. $ 515 $ 756 $ 742
Year 5 ............................. $ 747 $ 997 $ 968
Year 10 ............................ $1,412 $1,688 $1,617
Class C -- with redemption
Year 1 ............................. $ 279 (6) --
Year 3 ............................. $ 554 (6) --
Year 5 ............................. $ 954 (6) --
Year 10 ............................ $2,073 (6) --
Class C -- without redemption
Year 1 ............................. $ 179 (6) --
Year 3 ............................. $ 554 (6) --
Year 5 ............................. $ 954 (6) --
Year 10 ............................ $2,073 (6) --
Class I/Y
Year 1 ............................. $ 78 $ 69 $ 66
Year 3 ............................. $ 243 $ 218 $ 208
Year 5 ............................. $ 422 $ 379 $ 362
Year 10 ............................ $ 942 $ 847 $ 810
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption
will apply to Class C shares redeemed within one year of the purchase
date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 0.85% of the average daily
net assets attributable to Class A shares. This expense limitation is in
effect through November 1, 2013. There can be no assurance that Pioneer
will extend the expense limitation beyond such time.
(5) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.01% and 0.76% of the
average daily net assets attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization is approved, these
expense limitations will be in effect for a period of three years after
the close of the Reorganization. There can be no assurance that Pioneer
will extend the expense limitations beyond such time.
(6) The Pioneer Fund will issue Class A shares to the RMK Fund in exchange for
the Class C shares of the RMK Fund.
136
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 7.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A and Class Y shares are anticipated to be
0.85% and 0.65%, respectively, after giving effect to Pioneer's contractual
expense limitation with respect to Class A and Class Y shares, and the
historical net expense ratios for the corresponding classes of shares of your
RMK Fund are 1.01%, 1.76% and 0.76%, respectively. Therefore, the expense ratio
of the combined Pioneer Fund is expected to be lower for each class of shares
of the combined Pioneer Fund as compared to the corresponding classes of your
RMK Fund. In addition, the broader distribution arrangements of the Pioneer
Fund offer greater potential for further asset growth and further reduced per
share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 0.85% of the average daily net assets
attributable to Class A shares. This expense limitation is in effect through
November 1, 2013. In addition, Pioneer has contractually agreed to limit
ordinary operating expenses of the combined Pioneer Fund to the extent required
to reduce the fund expenses to 1.01% and 0.76% of the average daily net assets
attributable to Class A shares and Class Y shares, respectively. Assuming the
shareholders of your RMK Fund approve the Reorganization, these expense
limitations will be in effect for the combined Pioneer Fund for a period of
three years from the Closing Date. There can be no assurance that Pioneer will
extend the expense limitations beyond such time.
Fourth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Fifth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Sixth, the Class A and Y shares of the Pioneer Fund received in the
Reorganization will provide the RMK Fund shareholders with exposure to
substantially the same investment product as they have currently.
Seventh, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
137
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of
January 20, 2009 and the pro forma combined capitalization of the combined
Pioneer Fund as if the Reorganization had occurred on that date. If the
Reorganization is consummated, the actual exchange ratios on the Closing Date
may vary from the exchange ratios used in the computation below. This is due to
changes in the market value of the portfolio securities of both Funds between
January 20, 2009 and the Closing Date, changes in the amount of undistributed
net investment income and net realized capital gains of both Funds during that
period resulting from income and distributions, and changes in the accrued
liabilities of both Funds during the same period.
Regions Morgan Pioneer
Keegan Select Fixed Pioneer Bond Fund
Income Fund Bond Fund Pro Forma
------------------- ------------- -------------
Net Assets
Class A .......................... $ 56,055,940 $ 267,455,879 $ 325,083,389
Class B .......................... -- $ 29,941,594 $ 29,941,594
Class C .......................... $ 1,571,570 $ 41,595,666 $ 41,595,666
Class I/Y ........................ $ 69,304,001 $ 493,837,424 $ 563,141,425
Class R .......................... -- $ 11,710,517 $ 11,710,517
Class Z .......................... -- $ 93,158 $ 93,158
-------------------------------------------------------
Total Net Assets of Fund ......... $ 126,931,511 $ 844,634,238 $ 971,565,749
Net Asset Value Per Share
Class A .......................... $ 9.02 $ 8.28 $ 8.28
Class B .......................... -- $ 8.23 $ 8.23
Class C .......................... $ 9.02 $ 8.20 $ 8.20
Class I/Y ........................ $ 9.02 $ 8.21 $ 8.21
Class R .......................... -- $ 8.36 $ 8.36
Class Z .......................... -- $ 8.28 $ 8.28
Shares Outstanding
Class A .......................... 6,213,315 32,308,386 39,268,230
Class B .......................... -- 3,637,832 3,637,832
Class C .......................... 174,203 5,072,431 5,072,431
Class I/Y ........................ 7,684,420 60,170,083 68,611,496
Class R .......................... -- 1,401,345 1,401,345
Class Z .......................... -- 11,249 11,249
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 7 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
138
REGIONS MORGAN KEEGAN SELECT LIMITED MATURITY FIXED INCOME FUND
AND
PIONEER SHORT TERM INCOME FUND
PROPOSAL 8
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 8 is approved, Regions Morgan Keegan Select Limited Maturity
Fixed Income Fund (the "RMK Fund") will be reorganized into Pioneer Short Term
Income Fund (the "Pioneer Fund" and, together with the RMK Fund, the "Funds"),
as described above, and the Pioneer Fund will issue Class A shares to the RMK
Fund in amounts equal to the aggregate net asset value of the RMK Fund's Class
A and Class C shares and the Pioneer Fund will issue Class Y shares to the RMK
Fund in amounts equal to the aggregate net asset value of the RMK Fund's Class
I shares, as applicable.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Limited Maturity Fixed Income Fund to
Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is current The fund's investment objective is a high level
income. of current income to the extent consistent with
a relatively high level of stability of
principal. The fund invests primarily in:
- ---------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests in investment grade debt
investment strategies securities. Under normal circumstances, the fund o Debt securities issued or guaranteed by the
invests at least 80% of the value of its net U.S. government or its agencies and
assets in debt securities. These securities instrumentalities
include debt securities of the U.S. Treasury and
government agencies, mortgage-backed and o Debt securities, including convertible debt,
asset-backed securities, and corporate bonds. of U.S. and non-U.S. issuers and commercial
The fund will provide shareholders with at least paper
60 days' prior notice of any changes in this
policy. o Mortgage-backed and asset-backed securities of
U.S. and non-U.S. issuers
The fund may invest up to 10% of its total
assets in below investment grade debt o Short-term money market instruments of U.S.
securities. The debt securities purchased by the and non-U.S. issuers
fund will be rated, at the time of investment,
at least CCC (or a comparable rating) by at Normally, at least 80% of the fund's net assets
least one NRSRO or, if unrated, determined by are invested in debt securities that are rated
MAM to be of comparable quality. investment grade at the time of purchase or cash
and cash equivalents. Cash and cash equivalents
include cash balances, accrued
- ---------------------------------------------------------------------------------------------------------------------------------
139
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
MAM employs a "top down" strategy in selecting interest and receivables for items such as the
investment securities. Key factors include proceeds, not yet received, from the sale of the
economic trends, inflation expectations, fund's portfolio investments. The fund normally
interest rate momentum, and yield spreads. will maintain a dollar-weighted average
When investing in non-governmental securities, portfolio maturity of no more than 3 years.
MAM will conduct a credit analysis of the
issuer, and will compare current yield spreads Up to 10% of the fund's net assets may be below
to historical norms. The net asset value of the investment grade. A debt security is investment
fund is expected to fluctuate with changes in grade if it is rated in one of the top four
interest rates and bond market conditions. MAM categories by at least one nationally recognized
will attempt to minimize principal fluctuation statistical rating organization or Pioneer
and increase return through, among other things, determines that the security is of equivalent
diversification, careful credit analysis and credit quality. Debt securities rated below
security selection, and adjustments of the investment grade are commonly referred to as
fund's average portfolio maturity. "junk bonds" and are considered speculative.
Lower quality debt securities involve greater
The average maturity of the fund's debt risk of loss, are subject to greater price
securities generally will be in the range of one volatility and are less liquid, especially
to three years. When interest rates are at during periods of economic uncertainty or
higher levels and lower rates are forecasted for change, than high quality debt securities. The
the future, MAM may choose to lengthen the fund may invest in debt securities rated "D" or
fund's effective duration. Likewise, when rising better, or comparable unrated securities.
interest rates are expected, the duration of the
fund's bond portfolio may be shortened. The fund's investments may have fixed or
Consistent with the fund's objective of variable principal payments and all types of
producing current income, the fund will focus on interest rate payment and reset terms, including
investment grade debt securities with short- to fixed rate, adjustable rate, floating rate, zero
intermediate-term maturities. coupon, contingent, deferred, payment in kind
and auction rate features.
The fund may invest up to 20% of its total
assets in securities of non-U.S. issuers. Up to
5% of the fund's total assets may be invested in
debt securities of emerging market issuers.
Non-U.S. securities may be issued by non-U.S.
governments, banks or corporations and certain
supranational organizations, such as the World
Bank and the European Union. The fund may
invest in securities of Canadian issuers to the
same extent as securities of U.S. issuers.
Investing in Canadian and other non-U.S. issuers,
particularly issuers in emerging markets, may
involve unique risks compared to investing in
the securities of U.S. issuers.
Pioneer considers both broad economic and issuer
specific factors in selecting a portfolio
designed to achieve the fund's investment
objective. In assessing the appropriate
maturity, rating and sector weighting of the
fund's portfolio, Pioneer considers a variety of
broad
- ---------------------------------------------------------------------------------------------------------------------------------
140
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
economic factors that are expected to influence
economic activity and interest rates. These
factors include fundamental economic
indicators, Federal Reserve monetary policy and
the relative value of the U.S. dollar compared
to other currencies. Once Pioneer determines
the preferable portfolio characteristic,
Pioneer selects individual securities based
upon the terms of the securities (such as
yields compared to U.S. Treasuries or
comparable issuers), liquidity and rating,
sector and issuer diversification. Pioneer also
employs due diligence and fundamental research,
an evaluation of the issuer based on its
financial statements and operations, to assess
an issuer's credit quality, taking into account
financial condition and profitability, future
capital needs, potential for change in rating,
industry outlook, the competitive environment
and management ability. In making these
portfolio decisions, 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.
U.S. government securities include obligations:
o Directly issued by or supported by the full
faith and credit of the U.S. government, like
Treasury bills, notes and bonds and Government
National Mortgage Association certificates
o Supported by the right of the issuer to
borrow from the U.S. Treasury, like those of
the Federal Home Loan Banks ("FHLBs")
o Supported by the discretionary authority of
the U.S. government to purchase the agency's
securities, like those of the Federal National
Mortgage Association ("FNMA")
o Supported only by the credit of the issuer
itself, like the Tennessee Valley Authority
o A debt security is considered investment grade
if it is:
o Rated BBB or higher at the time of purchase
by Standard & Poor's Ratings Group;
o Rated the equivalent rating by another
nationally recognized statistical rating
organization; or
- ---------------------------------------------------------------------------------------------------------------------------------
141
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
o Determined to be of equivalent credit quality
by Pioneer
Securities in the lowest category of investment
grade are considered to have speculative
characteristics.
The fund may invest in mortgage-backed and
asset-backed securities. Mortgage-backed
securities may be issued by private companies
or issued or guaranteed by the U.S. government
or agencies or instrumentalities of the U.S.
government and represent direct or indirect
participation in, or are collateralized by and
payable from, mortgage loans secured by real
property. Asset-backed securities represent
participations in, or are secured by and
payable from, assets such as installment sales
or loan contracts, leases, credit card
receivables and other categories of
receivables. The fund's investments in
mortgage-related securities may include
mortgage derivatives and structured securities.
The fund may invest in securities that are
subordinated or "junior" to more senior
securities of the issuer. The investor in a
subordinated security is entitled to payment
after other holders. As a result, subordinated
securities may be disproportionately adversely
affected by a default or even a perceived
decline in creditworthiness of the issuers of
underlying obligations.
Unlike mortgage-related securities issued or
guaranteed by the U. S. government or its
agencies and instrumentalities,
mortgage-related securities issued by private
issuers do not have a government or
government-sponsored entity guarantee (but may
have other credit enhancement), and may, and
frequently do, have less favorable collateral,
credit risk or other characteristics. The fund
may invest in other mortgage-related
securities, including mortgage derivatives and
structured securities. These securities
typically are not secured by real property.
Because these securities have imbedded leverage
features, small changes in interest or
prepayment rates may cause large and sudden
price movements. These securities also can
become illiquid and difficult to value in
volatile or declining markets.
- ---------------------------------------------------------------------------------------------------------------------------------
142
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
The fund's mortgage-related investments may
include mortgage-related derivative securities
such as collateralized mortgage obligations
("CMOs"). A CMO is a mortgage-backed bond that
separates mortgage pools into different
maturity classes. The holder of an interest in
a CMO is entitled to receive specified cash
flows from a pool of mortgages. Depending upon
the category of CMO purchased, the holder may
be entitled to payment before the cash flow
from the pool is used to fund other CMOs or,
alternatively, the holder may be paid only to
the extent that there is cash remaining after
the cash flow has been used to fund other CMOs
first. A subordinated interest may serve as a
credit support for the senior securities
purchased by other investors. If there are
defaults on the underlying mortgage loans, the
fund will be less likely to receive payments of
principal and interest, and will be more likely
to suffer a loss. The risk may be increased to
the extent the underlying mortgages include
sub- prime mortgages.
The fund may invest in asset-backed securities
issued by special entities, such as trusts,
that are backed by a pool of financial assets.
The fund may invest in collateralized debt
obligations ("CDOs"), which include
collateralized bond obligations ("CBOs"),
collateralized loan obligations ("CLOs") and
other similarly structured securities. A CDO is
a trust backed by a pool of fixed income
securities. The trust typically is split into
two or more portions, called tranches, which
vary in credit quality, yield, credit support
and right to repayment of principal and
interest. Lower tranches pay higher interest
rates but represent lower degrees of credit
quality and are more sensitive to the rate of
defaults in the pool of obligations. The risks
of an investment in a CDO depend largely on the
type of the underlying obligations (e.g., an
underlying obligation may decline in quality or
default) and the tranche of the CDO in which
the fund invests (e.g., the fund may invest in
a tranche of CDO that is subordinate to other
tranches). Investments in CDOs may be
characterized by the fund as illiquid
securities, which may be difficult to sell at
an advantageous time or price.
143
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Floating rate loans are provided by banks and
other financial institutions to large corporate
customers. These loans are rated below
investment grade, but typically are secured
with specific collateral and have a senior
position in the capital structure of the
borrower. These loans typically have rates of
interest that are reset periodically by
reference to a base lending rate, such as the
London Interbank Offered Rate (LIBOR), plus a
premium. The value of collateral, if any,
securing a floating rate loan can decline, may
be insufficient to meet the issuer's
obligations or may be difficult to obtain.
Floating rate loans may not be readily
marketable or may be subject to restrictions on
resale. For the purpose of this prospectus, the
term "securities" includes loans and other
instruments and obligations.
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 changes the
quality rating assigned to one or more of the
fund's portfolio securities, Pioneer will
consider if any action is appropriate in light
of the fund's investment objective and
policies. Credit ratings are only the options
of the companies issuing them and are not
absolute guarantees of quality.
The fund may invest in "event-linked" bonds,
which sometimes are referred to as "insurance-
linked" or "catastrophe" bonds. Event-linked
bonds are debt obligations for which the return
of principal and the payment of interest are
contingent on the non-occurrence of a pre-
defined "trigger" event, such as a hurricane or
an earthquake of a specific magnitude. For some
event-linked bonds, the trigger event's
magnitude may be based on losses to a company
or industry, industry indexes or readings of
scientific instruments rather than specified
actual losses. If a trigger event, as defined
within the terms of an event-linked bond,
involves losses or other metrics exceeding a
specific magnitude in the geographic region and
time period specified therein, the fund may
lose a portion or all of its
- ---------------------------------------------------------------------------------------------------------------------------------
144
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
accrued interest and/or principal invested in
such event-linked bond. The fund is entitled to
receive principal and interest payments so long
as no trigger event occurs of the description
and magnitude specified by the instrument.
Event-linked bonds may be issued by government
agencies, insurance companies, reinsurers,
special purpose corporations or other on-shore
or off-shore entities. In addition to the
specified trigger events, event-linked bonds
may also expose the fund to other risks,
including but not limited to issuer (credit)
default, adverse regulatory or jurisdictional
interpretations and adverse tax consequences.
Event-linked bonds are subject to the risk that
the model used to calculate the probability of
a trigger event was not accurate and
underestimated the likelihood of a trigger
event. Upon the occurrence or possible
occurrence of a trigger event, and until the
completion of the processing and auditing of
applicable loss claims, the fund's investment
in such event- linked bond may be priced using
fair value methods. As a relatively new type of
financial instrument, there is limited trading
history for these securities, and there can be
no assurance that a liquid market in these
instruments will develop.
Event-linked bonds are typically rated by at
least one nationally recognized rating agency,
but also may be unrated. The rating for an
event-linked bond primarily reflects the rating
agency's calculated probability that a pre-
defined trigger event will occur. This rating
also assesses the event-linked bond's credit
risk and model used to calculate the
probability of a trigger event.
The fund may also invest in event-linked swaps
or similar event-linked derivative instruments,
which typically are contingent or formulaically
related to defined trigger events. Event-linked
derivative instruments are subject to risks in
addition to the risks of investing in
event-linked bonds, including counterparty risk
and leverage risk.
145
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions its assets to meet its investment objective.
during adverse market conditions, the fund may The fund may invest the remainder of its assets
temporarily depart from its principal in securities with remaining maturities of less
investment strategy by investing up to 100% of than one year or cash equivalents, or may hold
the fund's assets in cash and cash equivalents, cash. For temporary defensive purposes,
including short-term bank obligations, including during periods of unusual cash flows,
repurchase agreements and other money market the fund may depart from its principal
instruments and securities issued and/or investment strategies and invest part or all of
guaranteed as to payment of principal and its assets in these securities or may hold
interest by the U.S. government, its agencies cash. During such periods, the fund may not be
or instrumentalities. This may cause the fund able to achieve its investment objectives. The
to temporarily fail to meet its goal and forego fund may adopt a defensive strategy when
greater investment returns for the safety of Pioneer believes securities in which the fund
principal. normally invests have extraordinary risks due
to political or economic factors and in other
extraordinary circumstances.
- ---------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. If the fund does a lot of
the fund's investment goal. A higher portfolio trading, it may incur additional operating
turnover rate involves greater transaction expenses, which would reduce performance, and
expenses which must be borne directly by the could cause shareowners to incur a higher level
fund (and thus, indirectly by its of taxable income or capital gains.
shareholders), and impact fund performance. In
addition, a high rate of portfolio turnover may
result in the realization of larger amounts of
net capital gains that, when distributed to the
fund's shareholders, are taxable to them.
- ---------------------------------------------------------------------------------------------------------------------------------
146
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use
Derivative contracts are financial instruments futures and options on securities, indices and
that require payments based upon changes in the currencies, forward foreign currency exchange
values of designated (or underlying) contracts and other derivatives. A derivative
securities, currencies, commodities, financial is a security or instrument whose value is
indices or other assets. Some derivative determined by reference to the value or the
contracts (such as futures, forwards and change in value of one or more securities,
options) require payments relating to a future currencies, indices or other financial
trade involving the underlying asset. Other instruments. Although there is no specific
derivative contracts (such as swaps) require limitation on investing in derivatives, the
payments relating to the income or returns from fund does not use derivatives as a primary
the underlying asset. investment technique and generally limits their
use to hedging. However, the fund may use
MAM may trade in options or futures in order to derivatives for a variety of non-principal
hedge the fund's portfolio against market purposes, including:
shifts as well as to increase returns.
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
The fund may enter into credit default swaps,
which can be used to transfer the credit risk
of a security without buying or selling the
security.
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. Therefore, using
derivatives can disproportionately increase
losses and reduce opportunities for gain. If
changes in a derivative's value do not
correspond to changes in the value of the
fund's other investments, 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, but derivatives may not perform as
intended.
- ---------------------------------------------------------------------------------------------------------------------------------
147
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio managers
MAM Pioneer
Portfolio Manager: Portfolio Managers:
Day-to-day management of the fund's portfolio Day-to-day management of the fund's portfolio
is the responsibility of Scott M. Flurry, CFA is the responsibility of Richard Schlanger and
and George R. McCurdy, IV, CFA. The portfolio Charles Melchreit. Mr. Schlanger and Mr.
managers are supported by MAM's equity and/or Melchreit are supported by the fixed income
fixed income research teams which provide team. Members of this team manage other Pioneer
fundamental research and quantitative analysis funds investing primarily in fixed income
used to run MAM's internal investment models. securities. The portfolio managers and the team
may also draw upon the research and investment
Mr. Flurry is a Vice President and Senior management expertise of the global research
Portfolio Manager for MAM. He has more than 14 teams, which provide fundamental and
years experience in investment management and quantitative research on companies and include
research. From 2003 to present, Mr. Flurry has members from Pioneer's affiliate, Pioneer
served as a fixed income Portfolio Manager Investment Management Limited.
responsible for managing domestic fixed income
portfolios for institutional clients. Prior to Mr. Schlanger, a vice president, joined Pioneer
joining MAM in 2003, Mr. Flurry worked for as a portfolio manager in 1988. Mr. Melchreit,
Compass Bank in various capacities. From 1998 a vice president, joined Pioneer in 2006. From
to 2003, he served as a Vice President, 2003 to 2004 Mr. Melchreit was a managing
managing both fixed-income and equity director at Cigna Investment Management. Prior
portfolios for institutional clients. thereto, he was a senior vice president and
Additionally, from 2001 to 2003, Mr. Flurry portfolio manager at Aeltus Investment
served as a Portfolio Manager of the Expedition Management. Mr. Melchreit received an MS degree
Equity Income Fund. From 1993 to 1998, Mr. in Statistics from Yale University in 2005.
Flurry served as a credit analyst in the
Investment Credit department of Compass Bank
and served as the Head of the Credit Department
for the last three years of that tenure. Mr.
Flurry received a B.S. in Corporate Finance and
Investment Management from the University of
Alabama in 1990. Mr. Flurry is a holder of the
Chartered Financial Analyst designation and an
officer of the CFA Society of Alabama.
- ---------------------------------------------------------------------------------------------------------------------------------
148
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Mr. McCurdy is a Senior Portfolio Manager for
MAM. He has more than seven years experience in
investment management and banking. From 2007 to
present, Mr. McCurdy served as the Portfolio
Manager for Regions Morgan Keegan Select
Treasury Money Market Fund. From 2005 to 2007,
Mr. McCurdy served as the Assistant Portfolio
Manager for Regions Morgan Keegan Select
Treasury Money Market Fund. From 2003 to 2005,
Mr. McCurdy served as an Equity Research
Analyst and Portfolio Manager of personal trust
accounts for MAM. From 2002 to 2003, Mr.
McCurdy was an Accounting Manager for
SouthTrust Bank, where his primary
responsibilities were business unit
profitability analysis and reporting. From 2000
to 2002, Mr. McCurdy worked as a Finance
Officer with State Street Bank, where he
focused on Investor Relations support and
business unit reporting. Mr. McCurdy received a
B.S. in Finance from the University of Alabama
in 1997 and an M.B.A. from Auburn University at
Montgomery in 1998. He is a holder of the
Chartered Financial Analyst designation.
- ---------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an The diversified sole series of an open-end
open-end management investment company management investment company organized as a
organized as a Massachusetts business trust. Delaware statutory trust with the same name.
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets (as of
January 20, 2009) $3,939,293 $121,127,409
- ---------------------------------------------------------------------------------------------------------------------------------
149
Classes of Shares, Fees and Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial Class A shares are offered with an initial
and fees sales charge up to 1.50% of the offering price, sales charge up to 2.50% of the offering price,
which is reduced depending upon the amount which is reduced or waived for large purchases
invested as described below or, in certain and certain types of investors. At the time of
circumstances, waived. Class A shares bought as your purchase, your investment firm may receive
part of an investment of $1 million or more are a commission from PFD, the fund's distributor,
not subject to an initial sales charge, but may of up to 2%, declining as the size of your
be charged a contingent deferred sales charge investment increases.
of 1.00% if sold within one year of purchase.
You pay the offering price (the net asset value
Your investment may qualify for a reduction or per share plus any initial sales charge) when
elimination of the sales charge, also known as you buy Class A shares unless you qualify to
a breakpoint discount. The following lists the purchase shares at net asset value. You pay a
sales charges, which will be applied to your lower sales charge as the size of your investment
Class A share purchase, subject to the increases. You do not pay a sales charge when you
breakpoint discounts indicated: reinvest dividends or capital gain distributions
-----------------------------------------------------paid by the fund.
Your As a % of As a % of Net -------------------------------------------------
Investment Offering Price Amounts Sales charge as % of
Invested -------------------------------------------------
----------------------------------------------------- Amount of Offering Price Net Amounts
Up to $49,999 1.50% 1.52% purchase Invested
------------------------------------------------------------------------------------------------------
$50,000 to 1.25% 1.27% Less than 2.50% 2.56%
$ 99,999 $50,000
------------------------------------------------------------------------------------------------------
$100,000 to 1.00% 1.01% $50,000 but 2.00% 2.06%
$249,999 less than
----------------------------------------------------- $100,000
$250,000 to 0.75% 0.76% -------------------------------------------------
$499,999 $100,000 but 1.50% 1.52%
----------------------------------------------------- less than
$500,000 to 0.50% 0.50% $250,000
$999,999 -------------------------------------------------
----------------------------------------------------- $250,000 but 1.00% 1.01%
$1 million or Net asset Net asset less than $1
more value value million
------------------------------------------------------------------------------------------------------
Your investment professional must notify the $1 million or -0- -0-
fund's transfer agent of eligibility for any more
applicable breakpoint discount at the time of -------------------------------------------------
purchase. There are no contingent deferred sales charges,
except in certain circumstances when the
Class A shares pay a shareholder servicing fee initial sales charge is waived. A contingent
(non-12b-1) of up to 0.25% of average daily net deferred sales charge may be payable to PFD,
assets. the fund's distributor, in the event of a share
redemption within 18 months following the share
purchase at the rate of 1.00% of the lesser of
the value of the shares redeemed or the total
cost of such shares, subject to certain
waivers.
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of
the fund's assets on an ongoing basis. Over
time these fees will increase the cost of
investments and may cost more than other types
of sales charges.
- ---------------------------------------------------------------------------------------------------------------------------------
150
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial The Pioneer Fund will issue Class A shares to
and fees sales charge. the RMK Fund in exchange for the Class C shares
of the RMK Fund. Please see the Pioneer Fund's
Class C shares are subject to a contingent Class A sales charges and fees above.
deferred sales charge of 1.00% if sold within
one year of purchase.
Class C shares pay a shareholder servicing fee
(non-12b-1) of up to 0.25% of average daily net
assets and a distribution (12b-1) fee of 0.75%
of average daily net assets.
- ---------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution Class Y shares are not subject to distribution
and service (12b-1) fees. and service (12b-1) fees.
- ---------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal The fund pays Pioneer a fee for managing the
to 0.40% of the fund's average daily net fund and to cover the cost of providing certain
assets. services to the fund.
Pioneer's annual fee is equal to 0.40% of the
fund's average daily net assets. The fee is
accrued daily and paid monthly.
- ---------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense Effective April 1, 2008, MAM has voluntarily Pioneer has contractually agreed to limit
limitations agreed to waive fees and reimburse expenses to ordinary operating expenses to the extent
the extent that the fund's total annual required to reduce fund expenses to 0.90% of
operating expenses (excluding brokerage, the average daily net assets attributable to
interest, taxes and extraordinary expenses) Class A shares. This expense limitation is in
exceed 1.00%, 1.75% and 0.75% of net assets of effect through January 1, 2012. In addition,
Class A shares, Class C shares and Class I Pioneer has contractually agreed to limit
shares, respectively, on an annualized basis ordinary operating expenses to the extent
for the period that the voluntary waiver is in required to reduce fund expenses to 1.04% and
effect. MAM will evaluate the continuance of 0.79% of the average daily net assets
this voluntary waiver at each month-end and it attributable to Class A shares and Class Y
can terminate this voluntary waiver at any time. shares, respectively. Assuming the
Reorganization is approved, these expense
limitations will be in effect for a period of
three years after the closing of the
Reorganization. There can be no assurance that
Pioneer will extend the expense limitations
beyond such time.
- ---------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in
the "The Funds' Fees and Expenses" section starting on page 157.
- ---------------------------------------------------------------------------------------------------------------------------------
151
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, or not
make as much as if you invested elsewhere if:
o Interest rates go up, causing the value of the Fund's investments to
decline. This is known as interest rate risk (this risk may be greater for
securities with longer maturities)
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest, has its credit rating downgraded or is
perceived to be less creditworthy, or the credit quality or value of any
underlying assets declines. This is known as credit risk
o During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing
the fund to reinvest in lower yielding securities. This is known as call
or prepayment risk
o During periods of rising interest rates, the average life of certain types
of securities may be extended because of slower than expected principal
payments. This may lock in a below market interest rate, increase the
security's duration (the estimated period until the security is paid in
full) and reduce the value of the security. This is known as extension
risk
o The manager's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
Government sponsored entities such as the, FNMA and the FHLBs, although
chartered or sponsored by Congress, are not funded by congressional
appropriations and the debt and mortgage-backed securities issued by them are
neither guaranteed nor issued by the U.S. government.
Government sponsored entities such as Federal Home Loan Mortgage
Corporation ("Freddie Mac"), FNMA and the FHLBs, although chartered or
sponsored by Congress, are not funded by congressional appropriations and the
debt and mortgage-backed securities issued by them are neither guaranteed nor
issued by the U.S. government. Although the U.S. government has provided
financial support to FNMA and Freddie Mac, there can be no assurance that it
will support these or other government sponsored entities in the future.
To the extent either Fund invests significantly in asset-backed and
mortgage-related securities, the Fund's exposure to prepayment and extension
risks may be greater than other investments in fixed income securities.
Each Fund may invest in mortgage- and asset-backed securities and,
therefore, each Fund may be subject to the risks associated with investing in
such securities. The repayment of certain mortgage-backed and asset-backed
securities depends primarily on the cash collections received from the issuer's
underlying asset portfolio and, in certain cases, the issuer's ability to issue
replacement securities. As a result, there could be losses to a Fund in the
event of credit or market value deterioration in the issuer's underlying
portfolio, mismatches in the timing of the cash flows of the underlying asset
interests and the repayment obligations of maturing securities, or the issuer's
inability to issue new or replacement securities. Upon the occurrence of
certain triggering events or defaults, the investors in a security held by a
Fund may become the holders of underlying assets at a time when those assets
may be difficult to sell or may be sold only at a loss. Privately issued
mortgage-backed and asset-backed securities are not traded on an exchange and
may have a limited market. Without an active trading market, these securities
may be particularly difficult to value given the complexities in valuing the
underlying collateral. Certain mortgage-backed and asset-backed securities may
pay principal only at maturity or may represent only the right to receive
payments of principal or interest on the underlying obligations, but not both.
The value of these types of instruments may change more drastically than debt
securities that pay both principal and interest during periods of changing
interest rates. Principal only instruments generally increase in value if
interest rates decline, but are also subject to the risk of prepayment.
Interest only instruments generally increase in value in a rising interest rate
environment when fewer of the underlying obligations are prepaid. Interest only
instruments could lose their entire value in a declining interest rate
environment if the underlying obligations are prepaid.
Each Fund's mortgage-related investments may include mortgage-related
derivative securities such as collateralized mortgage obligations ("CMOs"). A
CMO is a mortgage-backed bond that separates mortgage pools into different
maturity classes. The holder of an interest in a CMO is entitled to receive
specified cash flows from a pool of mortgages. Depending upon the category of
CMO purchased, the holder may be entitled to payment before the cash flow from
the pool is used to fund other CMOs or, alternatively, the holder may be paid
only to the extent that there is cash remaining after the cash flow has been
used to fund other CMOs first. A subordinated interest may serve as a credit
support for the senior securities purchased by other investors. If there are
defaults on the underlying mortgage loans, the Fund will be less likely to
receive payments of principal and interest, and will be more likely to suffer a
loss. The risk may be increased to the extent the underlying mortgages include
sub-prime mortgages.
152
Each Fund may invest in asset-backed securities issued by special
entities, such as trusts, that are backed by a pool of financial assets. Each
Fund may invest in collateralized debt obligations ("CDOs"), which include
collateralized bond obligations ("CBOs"), collateralized loan obligations
("CLOs") and other similarly structured securities. A CDO is a trust backed by
a pool of fixed income securities. The trust typically is split into two or
more portions, called tranches, which vary in credit quality and yield. Lower
tranches pay higher interest rates but represent lower degrees of credit
quality and are more sensitive to the rate of defaults in the pool of
obligations. The risks of an investment in a CDO depend largely on the type of
the underlying obligations (e.g., an underlying obligation may decline in
quality or default) and the tranche of the CDO in which a Fund invests (e.g.,
the Fund may invest in a tranche of CDO that is subordinate to other tranches).
Investments in CDOs may be characterized by the Funds as illiquid securities,
which may be difficult to sell at an advantageous time or price.
Because the Pioneer Fund may invest in securities of non-U.S. issuers,
including in the securities of emerging markets issuers, it may be subject to
the risks below associated with investing in non-U.S. issuers. These risks are
more pronounced for issuers in emerging markets or to the extent that the
Pioneer 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 Pioneer 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
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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.
Each Fund may use derivatives. Derivatives involve special risks and costs
and may result in losses to the Fund. Each Fund's use of certain derivatives
may, in some cases, involve forms of financial leverage, which involves risk
and may increase the volatility of the Fund's net asset value. Even a small
investment in derivatives can have a disproportionate impact on the Fund. Using
derivatives can increase losses and reduce opportunities for gains when market
prices, interest rates or currencies, or the derivative instruments themselves,
behave in a way not anticipated by the Fund. If changes in a derivative's value
do not correspond to changes in the value of the Fund's other investments or do
not correlate well with the underlying asset, rate or index, 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 issuer of the derivative defaults
on its obligation.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of each Fund's Class A shares for the past 10
calendar years or since inception, as applicable. Class C and Class I shares of
the RMK Fund and Class Y shares of the Pioneer Fund will have different
performance because they have different expenses. The charts do not reflect any
sales charge you may pay when you buy or sell Fund shares. Any sales charge
will reduce your return. The tables show average annual total return (before
and after taxes) for each Fund over time for each class of shares (including
deductions for sales charges) compared with a broad-based securities market
index. The bar charts provide an indication of the risks of investing in each
Fund, including the fact that you could incur a loss and experience volatility
of returns year to year. Past performance, before and after taxes, does not
indicate future results.
153
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund's
Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'99 2.28
'00 7.84
'01 7.35
'02 4.85
'03 0.92
'04 -0.33
'05 1.43
'06 3.66
'07 -5.01
'08 -6.6
The highest quarterly return was 3.00% for the quarter ended September 30, 2001
The lowest quarterly return was (3.25)% for the quarter ended June 30, 2007
Pioneer Short Term Income Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'05 1.4
'06 3.8
'07 4.96
'08 -4.18
The highest quarterly return was 1.87% for the quarter ended September 30, 2006
The lowest quarterly return was (3.61)% for the quarter ended December 31, 2008
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund's Average
Annual Total Returns
(for periods ended December 31, 2008)
- ---------------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ---------------------------------------------------------------------------------------------------------------------------------
Class A(1) 12/12/93
- ---------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 1.50% sales charge) (8.00)% (1.75)% 1.38% 2.60%
- ---------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (9.25)% (2.99)% (0.10)%
- ---------------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (5.18)% (2.14)% 0.32%
Fund Shares(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 12/14/01
- ---------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable (8.23)% (2.18)% N/A (0.95)%
Contingent Deferred Sales Charge)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Class I 09/01/05
- ---------------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (6.65)% N/A N/A (2.31)%
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch 1-3 Year Government/Corporate A 5.18% 3.82% 4.74%
Rate and Above Index(3)
- ---------------------------------------------------------------------------------------------------------------------------------
154
- ----------
(1) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of
each period, and shows the effect of any taxable gain (or offsetting loss)
on redemption, as well as the effects of taxes on fund distributions.
Actual after-tax returns to an investor depend on the investor's own tax
situation and may differ from those shown. After-tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as individual retirement accounts or 401(k) plans. After-tax returns are
shown only for Class A shares. After-tax returns for other classes will be
different.
(3) The Merrill Lynch 1-3 Year Government/Corporate A Rated and Above Index is
an unmanaged index composed of U.S. government and U.S. dollar denominated
SEC registered corporate bonds with an invest grade rating of "A" or
higher. Issuers have a maturity of between 1 and 3 years. Total returns
for the index shown are not adjusted to reflect taxes, sales charges,
expenses or other fees that the SEC required to be reflected in the Fund's
performance. The index is unmanaged, and unlike the RMK Fund, is not
affected by cashflows or trading and other expenses. It is not possible to
invest directly in an index.
Pioneer Short Term Income Fund's Average Annual Total Returns(1)
(for periods ended December 31, 2008)
- ------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ------------------------------------------------------------------------------------------------------------------------
Class A 07/08/04
- ------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (6.57)% N/A N/A 0.86%
- ------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (8.23)% N/A N/A (0.54)%
- ------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale (4.23)% N/A N/A (0.05)%
of Shares(2)
- ------------------------------------------------------------------------------------------------------------------------
Class Y 07/08/04
- ------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes (4.02)% N/A N/A 1.79%
- ------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (5.86)% N/A N/A 0.24%
- ------------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale (2.58)% N/A N/A 0.65%
of Shares(2)
- ------------------------------------------------------------------------------------------------------------------------
Barclays Capital (formerly, Lehman Brothers) 1-3 4.97% N/A N/A 4.21%
Year Government /Credit Index (reflects no
deduction for fees, expenses or taxes)(3)
- ------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest
all of your dividends and distributions.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on 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.
(3) The Barclays Capital (formerly, Lehman Brothers) 1-3 Year Government/Credit
Index measures the performance of the short-term (1 to 3 years) government
and investment-grade corporate bond markets. Unlike the Fund, the index is
not managed and does not incur fees, expenses or taxes. You cannot invest
directly in the index.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
155
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended August 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of November 30, 2008.
Regions
Morgan
Keegan Select
Limited Pioneer Short
Maturity Fixed Term Income
Income Fund Fund (period
(period ended ended
November 30, August 31,
2008) 2008)
-------------- -------------
Shareholder transaction fees
(paid directly from your investment) Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 1.50% 2.50%
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) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.40% 0.40%
Distribution and Service (12b-1) Fee ................. 0.25% 0.25%
Other Expenses ....................................... 1.23% 0.35%
- -------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.88% 1.00%
- -------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. (0.84)%(4) (0.10)%(5)
Net Expenses ......................................... 1.04% 0.90%
- -------------------------------------------------------------------------------------------
Regions
Morgan
Keegan Select
Limited Pioneer Short
Combined Maturity Fixed Term Income
Pioneer Short Income Fund Fund (period
Term Income (period ended ended
Fund November 30, August 31,
(Pro Forma) 2008) 2008)
----------------- ------------------ -----------------
Shareholder transaction fees
(paid directly from your investment) Class A Class C Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 2.50% None 2.50%
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ..... None(2) 1.00%(3) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.40% 0.40% 0.40%
Distribution and Service (12b-1) Fee ................. 0.25% 1.00% 0.25%
Other Expenses ....................................... 0.27% 1.23% 0.35%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 0.92% 2.63% 1.00%
- --------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. (0.02)%(5)(6) (0.84)%(4) (0.10)%(5)
Net Expenses ......................................... 0.90% 1.79% 0.90%
- --------------------------------------------------------------------------------------------------------------------
Combined
Pioneer Short
Term Income
Fund
(Pro Forma)
------------------------
Shareholder transaction fees
(paid directly from your investment) Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... 2.50%
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ..... None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.40%
Distribution and Service (12b-1) Fee ................. 0.25%
Other Expenses ....................................... 0.27%
- ------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 0.92%
- ------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. (0.02)%(5)(6)
Net Expenses ......................................... 0.90%
- ------------------------------------------------------------------------------
Regions Morgan Keegan
Select Limited Maturity Fixed
Income Fund
(period ended
November 30, 2008)
------------------------------
Shareholder transaction fees
(paid directly from your investment) Class I
Maximum sales charge (load) when you buy shares as a
percentage of offering price ......................... None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less ............................ None
Annual Fund operating expenses (deducted from fund
assets) as a % of average daily net assets
Management Fee ........................................ 0.40%
Distribution and Service (12b-1) Fee .................. 0.00%
Other Expenses ........................................ 1.23%
- ------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................. 1.63%
- ------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .............. (0.84)%(4)
Net Expenses .......................................... 0.79%
- ------------------------------------------------------------------------------
Pioneer Short Term Income Combined Pioneer Short
Fund (period ended Term Income Fund
August 31, 2008) (Pro Forma)
--------------------------- -----------------------
Shareholder transaction fees
(paid directly from your investment) Class Y Class Y
Maximum sales charge (load) when you buy shares as a
percentage of offering price ......................... None None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less ............................ None None
Annual Fund operating expenses (deducted from fund
assets) as a % of average daily net assets
Management Fee ........................................ 0.40% 0.40%
Distribution and Service (12b-1) Fee .................. 0.00% 0.00%
Other Expenses ........................................ 0.15% 0.15%
- -----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................. 0.55% 0.55%
- -----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .............. 0.00% 0.00%(6)
Net Expenses .......................................... 0.55% 0.55%
- -----------------------------------------------------------------------------------------------------------
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
156
Regions Morgan Keegan Combined Pioneer Short
Number of years Select Limited Maturity Pioneer Short Term Term Income Fund
you own your shares Fixed Income Fund Income Fund (Pro Forma)
- ------------------------------------- ------------------------- -------------------- ------------------------
Class A -- with or without redemption
Year 1 ............................. $ 254 $ 340 $ 340
Year 3 ............................. $ 652 $ 551 $ 534
Year 5 ............................. $1,074 $ 779 $ 745
Year 10 ............................ $2,250 $1,435 $1,351
Class C -- with redemption
Year 1 ............................. $ 282 (7) --
Year 3 ............................. $ 738 (7) --
Year 5 ............................. $1,320 (7) --
Year 10 ............................ $2,902 (7) --
Class C -- without redemption
Year 1 ............................. $ 182 (7) --
Year 3 ............................. $ 738 (7) --
Year 5 ............................. $1,320 (7) --
Year 10 ............................ $2,902 (7) --
Class I/Y
Year 1 ............................. $ 81 $ 56 $ 56
Year 3 ............................. $ 432 $ 176 $ 176
Year 5 ............................. $ 807 $ 307 $ 307
Year 10 ............................ $1,862 $ 689 $ 689
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption
will apply to Class C shares redeemed within one year of the purchase
date.
(4) Effective April 1, 2008, MAM has voluntarily agreed to waive fees and
reimburse expenses to the extent that the fund's total annual operating
expenses (excluding brokerage, interest, taxes, and extraordinary
expenses) exceed 1.00%, 1.75% and 0.75% of net assets of Class A shares,
Class C shares and Class I shares, respectively, on an annualized basis
for the period that the voluntary waiver is in effect. MAM will evaluate
the continuance of this voluntary waiver at each month-end and it can
terminate this voluntary waiver at any time.
(5) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 0.90% of the average daily
net assets attributable to Class A shares. This expense limitation is in
effect through January 1, 2012. There can be no assurance that Pioneer
will extend the expense limitation beyond such time.
(6) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 1.04% and 0.79% of the
average daily net assets attributable to Class A shares and Class Y
shares, respectively. These expense limitations will be in effect for a
period of three years after the close of the Reorganization. There can be
no assurance that Pioneer will extend the expense limitations beyond such
time.
(7) The Pioneer Fund will issue Class A shares to the RMK Fund in exchange for
the Class C shares of the RMK Fund.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 8.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided
157
to recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A and Class Y shares are anticipated to be
0.90% and 0.55%, respectively, after giving effect to Pioneer's contractual
expense limitation with respect to Class A and Class Y shares, and the
historical net expense ratios for the corresponding classes of shares of your
RMK Fund are 1.04%, 1.79% and 0.79%, respectively. Therefore, the expense ratio
of the combined Pioneer Fund is expected to be lower for each class of shares
of the combined Pioneer Fund as compared to the corresponding classes of your
RMK Fund. In addition, the broader distribution arrangements of the Pioneer
Fund offer greater potential for further asset growth and further reduced per
share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 0.90% of the average daily net assets
attributable to Class A shares. This expense limitation is in effect through
January 1, 2012. In addition, Pioneer has contractually agreed to limit
ordinary operating expenses of the combined Pioneer Fund to the extent required
to reduce the fund expenses to 1.04% and 0.79% of the average daily net assets
attributable to Class A shares and Class Y shares, respectively. Assuming the
shareholders of your RMK Fund approve the Reorganization, these expense
limitations will be in effect for the combined Pioneer Fund for a period of
three years from the Closing Date. There can be no assurance that Pioneer will
extend the expense limitations beyond such time.
Fourth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Fifth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Sixth, the Class A and Y shares of the Pioneer Fund received in the
Reorganization will provide the RMK Fund shareholders with exposure to
substantially the same investment product as they have currently.
Seventh, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of
January 20, 2009 and the pro forma combined capitalization of the combined
Pioneer Fund as if the Reorganization had occurred on that date. If the
Reorganization is consummated, the actual exchange ratios on the Closing Date
may vary from the exchange ratios used in the computation below. This is due to
changes in the market value of the portfolio securities of both Funds between
January 20, 2009 and the Closing Date, changes in the amount of undistributed
net investment income and net realized capital gains of both Funds during that
period resulting from income and distributions, and changes in the accrued
liabilities of both Funds during the same period.
158
Regions Morgan Keegan Pioneer Short Term
Select Limited Maturity Pioneer Short Term Income Fund
Fixed Income Fund Income Fund Pro Forma
------------------------- -------------------- --------------------
Net Assets
Class A ......................... $ 3,603,365 $ 12,297,986 $ 16,168,138
Class B ......................... -- $ 6,387,358 $ 6,387,358
Class C ......................... $ 266,787 $ 5,641,822 $ 5,641,822
Class I/Y ....................... $ 69,141 $ 96,800,243 $ 96,869,384
----------------------------------------------------------
Total Net Assets of Fund ......... $ 3,939,293 $ 121,127,409 $ 125,066,702
Net Asset Value Per Share
Class A ......................... $ 7.86 $ 9.00 $ 9.00
Class B ......................... -- $ 8.99 $ 8.99
Class C ......................... $ 7.86 $ 8.98 $ 8.98
Class I/Y ....................... $ 7.86 $ 8.99 $ 8.99
Shares Outstanding
Class A ......................... 458,466 1,366,395 1,796,412
Class B ......................... -- 710,531 710,531
Class C ......................... 33,946 628,184 628,184
Class I/Y ....................... 8,792 10,766,746 10,774,437
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 8 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
159
REGIONS MORGAN KEEGAN SELECT INTERMEDIATE TAX EXEMPT BOND FUND
AND
PIONEER INTERMEDIATE TAX FREE INCOME FUND
PROPOSAL 9
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-1 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 9 is approved, Regions Morgan Keegan Select Intermediate Tax
Exempt Bond Fund (the "RMK Fund") will be reorganized into Pioneer Intermediate
Tax Free Income Fund, a newly organized Pioneer fund that will commence
operations upon consummation of the proposed Reorganization (the "Pioneer Fund"
and, together with the RMK Fund, the "Funds"), as described above, and the
Pioneer Fund will issue Class A shares to the RMK Fund in amounts equal to the
aggregate net asset value of the RMK Fund's Class A and Class C shares and the
Pioneer Fund will issue Class Y shares to the RMK Fund in amounts equal to the
aggregate net asset value of the RMK Fund's Class I shares, as applicable.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund to
Pioneer Intermediate Tax Free Income Fund
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- -------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is current The fund's investment objective is current
income that is exempt from federal income tax. income exempt from federal income tax.
- -------------------------------------------------------------------------------------------------------------------------------
160
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in a highly Normally, the fund invests at least 80% of its
investment strategies diversified portfolio of tax-exempt bonds. The net assets (plus the amount of borrowings, if
fund normally invests its assets so that at any, for investment purposes) in securities
least 80% of the income that it distributes is that provide income that is exempt from regular
exempt from federal income tax and is not a tax federal income tax and is not subject to the
preference item for purposes of the alternative alternative minimum tax (AMT). These
minimum tax. This policy may not be changed investments include bonds, notes and other debt
without shareholder approval. instruments issued by or on behalf of states,
counties, municipalities, territories and
A primary consideration of the fund is to possessions of the United States and the
invest a large portion of its assets in District of Columbia and their authorities,
securities of issuers located within the political subdivisions, agencies or
southern United States. Key factors in the instrumentalities. This policy may not be
security selection process include regional changed without shareholder approval.
economic trends and demographic patterns,
national economic trends, interest rate The fund invests primarily in investment grade
momentum, and yield spreads. The fund generally securities. Under normal circumstances, it is
will invest a large portion of its assets in anticipated that the dollar-weighted average
direct general obligation bonds consistent with maturity of the fund's portfolio will be
MAM's economic forecast. Revenue bonds will be between three and ten years. The fund may
used to add additional yield, particularly in invest in securities of any maturity. The fund
periods of economic growth. When investing in may invest 25% or more of its assets in issuers
tax- exempt securities, MAM will conduct a in any one or more states or securities the
credit analysis of the issuer and will compare payments on which are derived from gas,
current yield spreads to historical norms. The electric, telephone, sewer and water segments
debt securities in which the fund invests will of the municipal bond market. The fund also may
have a minimum credit rating of "A" (or a invest up to 20% of its assets in industrial
comparable rating) by at least one NRSRO at the development bonds.
time of purchase.
The fund's investments may have fixed or
The average maturity of the fund's debt variable principal payments and all types of
securities generally will be in the range of interest rate payment and reset terms,
three to ten years. When interest rates are at including fixed rate, inverse floating rate,
higher levels and lower rates are forecasted floating rate, zero coupon, contingent,
for the future, MAM may choose to lengthen the deferred and payment in kind and auction rate
fund's effective duration. Likewise, when features. The fund's investments may include
rising interest rates are expected, the instruments that allow for balloon payments or
duration of the fund's bond portfolio may be negative amortization payments. Such
shortened and its allocation to revenue bonds investments permit the borrower to avoid paying
increased. currently a portion of the interest accruing on
the instrument. While these features make the
debt instrument more affordable to the borrower
in the near term, they increase the risk that
the borrower will be unable to make the
resulting higher payment or payments that
become due at the maturity of the loan.
- ---------------------------------------------------------------------------------------------------------------------------------
161
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Pioneer considers both broad economic factors
and issuer specific factors in selecting a
portfolio designed to achieve the fund's
investment objective. In assessing the
appropriate maturity and rating weighting of
the fund's portfolio, Pioneer considers a
variety of factors that are expected to
influence economic activity and interest rates.
These factors include fundamental economic
indicators, such as the rates of economic
growth and inflation, Federal Reserve monetary
policy and the relative value of the U.S.
dollar compared to other currencies. Once
Pioneer determines the preferable portfolio
characteristics, Pioneer selects individual
securities based upon the terms of the
securities (such as yields compared to U.S.
Treasuries or comparable issues), liquidity and
rating and issuer diversification. Pioneer also
employs due diligence and fundamental research,
an evaluation of the issuer based on its
financial statements and operations to assess
the issuer's credit quality, taking into
account financial condition, future capital
needs and potential for change in rating. In
making these portfolio decisions, 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.
A debt security is considered investment grade
if it is:
o Rated BBB or higher at the time of purchase
by Standard & Poor's Ratings Group;
o Rated the equivalent rating by another
nationally recognized statistical rating
organization; or
o Determined to be of equivalent credit quality
by Pioneer
Securities in the lowest category of investment
grade are considered to have speculative
characteristics.
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 changes the
quality rating
- ---------------------------------------------------------------------------------------------------------------------------------
162
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
assigned to one or more of the fund's portfolio
securities, Pioneer will consider if any action
is appropriate in light of the fund's
investment objective and policies. Credit
ratings are only the opinions of the companies
issuing them and are not absolute guarantees of
quality.
The fund may invest up to 20% of its net assets
in taxable investments, including securities of
other investment companies, investment grade
commercial paper, U.S. government securities,
U.S. or foreign bank instruments and repurchase
agreements.
The fund may invest up to 20% of its net assets
in debt securities rated below investment grade
or, if unrated, of equivalent quality as
determined by Pioneer. Debt securities rated
below investment grade are commonly referred to
as "junk bonds" and are considered speculative.
Below investment grade debt securities involve
greater risk of loss, are subject to greater
price volatility and are less liquid,
especially during periods of economic
uncertainty or change, than higher quality debt
securities. The fund may invest in debt
securities rated "D" or better, or comparable
unrated securities.
The fund may invest in asset-backed securities
issued by special entities, such as trusts,
that are backed by a pool of financial assets.
The fund may invest in collateralized debt
obligations ("CDOs"), which include
collateralized bond obligations ("CBOs"),
collateralized loan obligations ("CLOs") and
other similarly structured securities. A CDO is
a trust backed by a pool of fixed income
securities. The trust typically is split into
two or more portions, called tranches, which
vary in credit quality and yield. Lower
tranches pay higher interest rates but
represent lower degrees of credit quality and
are more sensitive to the rate of defaults in
the pool of obligations. The risks of an
investment in a CDO depend largely on the type
of the underlying obligations (e.g., an
underlying obligation may decline in quality or
default) and the tranche of the CDO in which
the fund invests (e.g., the fund may invest in
a tranche of CDO that is subordinate to other
tranches). Investments in CDOs may be
characterized by
- ---------------------------------------------------------------------------------------------------------------------------------
163
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
the fund as illiquid securities, which may be
difficult to sell at an advantageous time or
price.
The fund may invest up to 10% of its net assets
in inverse floating rate obligations (a type of
derivative instrument). Inverse floating rate
obligations represent interests in tax exempt
bonds. The interest rate on inverse floating
rate obligations will generally decrease as
short-term interest rates increase, and
increase as short-term rates decrease. Due to
their leveraged structure, the sensitivity of
the market value of an inverse floating rate
obligation to changes in interest rates is
generally greater than a comparable long-term
bond issued by the same municipality and with
similar credit quality, redemption and maturity
provisions. Inverse floating rate obligations
may be volatile and involve leverage risk.
- ---------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all of
temporary investments liquidity to meet shareholder redemptions its assets to meet its investment objective.
during adverse market conditions, the fund may The fund may invest the remainder of its assets
temporarily depart from its principal in securities with remaining maturities of less
investment strategy by investing up to 100% of than one year or cash equivalents, or may hold
the fund's assets in cash and cash equivalents, cash. For temporary defensive purposes,
including short-term bank obligations, including during periods of unusual cash flows,
repurchase agreements and other money market the fund may depart from its principal
instruments and securities issued and/or investment strategies and invest part or all of
guaranteed as to payment of principal and its assets in these securities or may hold
interest by the U.S. government, its agencies cash. During such periods, the fund may not be
or instrumentalities. This may cause the fund able to achieve its investment objectives. The
to temporarily fail to meet its goal and forego fund may adopt a defensive strategy when the
greater investment returns for the safety of sub-adviser believes securities in which the
principal. fund normally invests have extraordinary risks
due to political or economic factors and in
other extraordinary circumstances.
- ---------------------------------------------------------------------------------------------------------------------------------
Short-term trading Although the fund does not intend to invest for The fund usually does not trade for short-term
the purpose of seeking short-term profits, profits. The fund will sell an investment,
securities will be sold without regard to the however, even if it has only been held for a
length of time they have been held when MAM short time, if it no longer meets the fund's
believes it is appropriate to do so in light of investment criteria. If the fund does a lot of
the fund's investment goal. A higher portfolio trading, it may incur additional operating
turnover rate involves greater transaction expenses, which would reduce performance, and
expenses which must be borne directly by the could cause shareowners to incur a higher level
fund (and thus, indirectly by its of taxable income or capital gains.
shareholders), and impact fund performance. In
addition, a high rate of portfolio turnover may
result in the realization of larger amounts of
net capital gains that, when distributed to the
fund's shareholders, are taxable to them.
- ---------------------------------------------------------------------------------------------------------------------------------
164
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may not trade in futures and options. The fund may, but is not required to, use
futures and options on securities, indices 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
Derivatives may be subject to market risk,
interest rate risk and credit risk. The fund's
use of certain derivatives may, in some cases,
involve forms of financial leverage, which
involves risk and may increase the volatility
of the fund's net asset value. Even a small
investment in derivatives can have a
significant impact on the fund's investment
exposure to the market prices of securities,
interest rates or currency exchange rates.
Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gain. If changes in a
derivative's value do not correspond to changes
in the value of the fund's other investments or
do not correlate well with the underlying
asset, rate or index, 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 issuer
of the derivative defaults on its obligation.
Certain derivatives may be less liquid, which
may reduce the returns of the fund if it cannot
sell or terminate the derivative at an
advantageous time or price. Some derivatives
may involve the risk of improper valuation. The
fund will only invest in derivatives to the
extent Pioneer believes these
- ---------------------------------------------------------------------------------------------------------------------------------
165
- ---------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
investments do not prevent the fund from
seeking its investment objective, but
derivatives may not perform as intended.
Suitable derivatives may not be available in
all circumstances or at reasonable prices and
may not be used by the fund for a variety of
reasons.
- ---------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio manager
MAM Pioneer
Portfolio Manager: Portfolio Managers:
Day-to-day management of the fund's portfolio The fund has not yet commenced operations, and
is the responsibility of Dorothy E. Thomas, therefore, does not currently have any
CFA. The portfolio manager is supported by portfolio managers. However, the fund will
MAM's equity and/or fixed income research teams commence operations upon the consummation of
which provide fundamental research and the proposed Reorganization. At that time,
quantitative analysis used to run MAM's day-to-day management of the fund's portfolio
internal investment models. will be the responsibility of co-managers David
Eurkus, lead portfolio manager. Mr. Eurkus will
Ms. Thomas is a Senior Vice President and be supported by Timothy Pynchon, portfolio
Director of Tax-Exempt Fixed Income for MAM. manager and the fixed income team. Members of
Ms. Thomas has more than 30 years experience in this team manage other Pioneer funds investing
investment research, trading and portfolio primarily in fixed income securities. The
management. From 1983 to present, Ms. Thomas portfolio managers and the team also may draw
has overseen tax-exempt bond investments at upon the research and investment management
AmSouth Asset Management, Inc., which expertise of Pioneer's affiliate, Pioneer
subsequently merged into MAM. From 1997 to Investment Management Limited. Mr. Eurkus
2005, Ms. Thomas served as a portfolio manager joined Pioneer as a senior vice president in
to the AmSouth Mutual Funds. From 1983 to 2001, January 2001 and has been an investment
Ms. Thomas served as a Trust Portfolio Manager professional since 1969. Mr. Pynchon joined
and from 1983 to 1989 as an Equity Analyst at Pioneer as a vice president in 2000 and has
AmSouth. From 1973 to 1983, Ms. Thomas served been an investment professional since 1982.
as a Bond Analyst and Corporate Finance Manager
at AmSouth. Ms. Thomas received a B.A. in
Economics from Stanford University and an
M.B.A. from the University of Alabama at
Birmingham. She is a holder of the Chartered
Financial Analyst designation.
- ---------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an A diversified series of Pioneer Series Trust I,
open-end management investment company an open-end management investment company
organized as a Massachusetts business trust. organized as a Delaware statutory trust.
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $26,472,313 None
January 20, 2009)
- ---------------------------------------------------------------------------------------------------------------------------------
166
Classes of Shares, Fees and Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are offered with an initial Class A shares are offered with an initial
and fees sales charge up to 2.00% of the offering price, sales charge up to 4.50% of the offering price,
which is reduced depending upon the amount which is reduced or waived for large purchases
invested as described below or, in certain and certain types of investors. At the time of
circumstances, waived. Class A shares bought as your purchase, your investment firm may receive
part of an investment of $1 million or more are a commission from PFD, the fund's distributor,
not subject to an initial sales charge, but may of up to 4.00%, declining as the size of your
be charged a contingent deferred sales charge investment increases.
of 1.00% if sold within one year of purchase.
Your investment may qualify for a reduction or You pay the offering price (the net asset value
elimination of the sales charge, also known as per share plus any initial sales charge) when
a breakpoint discount. The following lists the you buy Class A shares unless you qualify to
sales charges, which will be applied to your purchase shares at net asset value. You pay a
Class A share purchase, subject to the lower sales charge as the size of your investment
breakpoint discounts indicated: increases. You do not pay a sales charge when you
-----------------------------------------------------reinvest dividends or capital gain distributions
Your As a % of As a % of Net paid by the fund.
Investment Offering Price Amounts ----------------------------------------------------
Invested Sales charge as % of
---------------------------------------------------------------------------------------------------------
Up to $49,999 2.00% 2.04% Amount of Offering Price Net Amounts
----------------------------------------------------- purchase Invested
$50,000 to 1.75% 1.78% ----------------------------------------------------
$ 99,999 Less than 4.50% 4.71%
----------------------------------------------------- $100,000
$100,000 to 1.50% 1.52% ----------------------------------------------------
$249,999 $100,000 but 3.50% 3.63%
----------------------------------------------------- less than
$250,000 to 1.00% 1.01% $250,000
$499,999 ----------------------------------------------------
----------------------------------------------------- $250,000 but 2.50% 2.56%
$500,000 to 0.75% 0.76% less than
$999,999 $500,000
---------------------------------------------------------------------------------------------------------
$1 million or Net asset Net asset $500,000 but 2.00% 2.04%
more value value less than $1
----------------------------------------------------- million
Your investment professional must notify the ----------------------------------------------------
fund's transfer agent of eligibility for any $1 million or -0- -0-
applicable breakpoint discount at the time of more
purchase. ----------------------------------------------------
There are no contingent deferred sales charges,
Class A shares pay a shareholder servicing fee except in certain circumstances when the
(non-12b-1) of up to 0.25% of average daily net initial sales charge is waived. A contingent
assets. deferred sales charge may be payable to PFD,
the fund's distributor, in the event of a share
redemption within 18 months following the share
purchase at the rate of 1.00% of the lesser of
the value of the shares redeemed or the total
cost of such shares, subject to certain
waivers.
Class A shares are subject to distribution and
service (12b-1) fees of up to 0.25% of average
daily net assets. These fees are paid out of
the fund's assets on an ongoing basis. Over
time these fees will increase the cost of
investments and may cost more than other types
of sales charges.
167
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Class C sales charges Class C shares are offered without an initial The Pioneer Fund will issue Class A shares to the
and fees sales charge. RMK Fund in exchange for the Class C shares of the
RMK Fund. Please see the Pioneer Fund's Class A
Class C shares are subject to a contingent sales charges and fees above.
deferred sales charge of 1.00% if sold within one
year of purchase.
Class C shares pay a shareholder servicing fee
(non-12b-1) of up to 0.25% of average daily net
assets and a distribution (12b-1) fee of 0.75% of
average daily net assets.
- -----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution and Class Y shares are not subject to distribution and
service (12b-1) fees. service (12b-1) fees.
- -----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal to The fund pays Pioneer a fee for managing the fund
0.25% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's annual fee is equal to 0.50% of the
fund's average daily net assets up to $500 million
and 0.45% on assets over $500 million. The fee is
accrued daily and paid monthly.
- -----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense None Pioneer has contractually agreed to limit ordinary
limitations operating expenses to the extent required to
reduce fund expenses to 0.82% and 0.55% of the
average daily net assets attributable to Class A
shares and Class Y shares, respectively. These
expense limitations are in effect through April 1,
2012 for Class A shares and through June 1, 2010
for Class Y shares. In addition, Pioneer has
contractually agreed to limit ordinary operating
expenses to the extent required to reduce fund
expenses to 0.93% and 0.68% of the average daily
net assets attributable to Class A shares and
Class Y shares, respectively. Assuming the
Reorganization is approved, these expense
limitations will be in effect for a period of
three years after the closing of the
Reorganization. There can be no assurance that
Pioneer will extend the expense limitations beyond
such time.
- -----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in
the "The Funds' Fees and Expenses" section starting on page 173.
- -----------------------------------------------------------------------------------------------------------------------------------
168
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. You could lose money on your investment in each Fund, or not
make as much as if you invested elsewhere if:
o Interest rates go up, causing the value of the Fund's investments to
decline. This is known as interest rate risk (this risk may be greater
for securities with longer maturities)
o The issuer of a security owned by the Fund defaults on its obligation to
pay principal and/or interest, has its credit rating downgraded or is
perceived to be less creditworthy, or the credit quality or value of any
underlying assets or credit support declines. This is known as credit
risk
o New federal or state legislation or other developments adversely affects
the tax-exempt status of securities held by the Fund or the financial
ability of municipalities to replay these obligations
o The issuer of a security owned by the Fund may not be able to make
timely payments because of a general economic downturn or increased
governmental costs
o To the extent the Fund concentrates its investments in a single state or
securities the payments on which are dependent upon a single industry,
the Fund will be more susceptible to risks associated with that state or
industry
o The manager is incorrect in its expectation of changes in interest rates
or the credit quality of an issuer
Although distributions of interest income from the a Fund's tax-exempt
securities are generally exempt from federal income tax, distributions from
other sources, including capital gain distributions, and any gains on the sale
of an investor's shares, are not. Each investor should consult a tax adviser
about whether an alternative minimum tax applies to the investor and about
state and local taxes on the investor's fund distributions.
Each Fund may invest in debt securities. Therefore, to the extent each
Fund invests in non-municipal debt securities, the Fund may also be subject to
the following risks relating to investment in debt securities:
o During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing
the Fund to reinvest in lower yielding securities. This is known as call
or prepayment risk
o During periods of rising interest rates, the average life of certain
types of securities may be extended because of slower than expected
principal payments. This may lock in a below market interest rate,
increase the security's duration (the estimated period until the
security is paid in full) and reduce the value of the security. This is
known as extension risk
Each Fund may invest in securities of non-U.S. issuers. To the extent that
a Fund invests in securities of non-U.S. issuers, the Fund will be subject to a
greater degree to the unique risks associated with investing in such
securities. These risks may include:
o Inadequate financial information
o Small, less liquid and more volatile markets
o Political and economic upheavals
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of the industries in that segment, and may experience greater market
fluctuation, than a fund without the same focus.
The Pioneer Fund may use derivatives. Derivatives involve special risks
and costs and may result in losses to the Pioneer Fund. The Pioneer Fund's use
of certain derivatives may, in some cases, involve forms of financial leverage,
which involves risk and may increase the volatility of the Fund's net asset
value. Even a small investment in derivatives can have a disproportionate
impact on the Pioneer Fund. Using derivatives can increase losses and reduce
opportunities for gains when market prices, interest rates or currencies, or
the derivative instruments themselves, behave in a way not anticipated by the
Pioneer Fund. If changes in a derivative's value do not correspond to changes
in the value of the Pioneer Fund's other investments or do not correlate well
with the underlying asset, rate or index, 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 issuer of the derivative defaults on its
obligation.
169
The Funds' Past Performance
The Pioneer Fund is a newly-organized Pioneer fund that will commence
operations upon consummation of the proposed Reorganization, and therefore, has
no performance history. As accounting successor to the RMK Fund, the Pioneer
Fund will assume the RMK Fund's historical performance after the consummation
of the Reorganization. Set forth below is performance information for the RMK
Fund. The bar chart shows the year-by-year performance of the RMK Fund's Class
A shares since inception. Class C shares and Class I shares of the RMK Fund
will have different performance because they have different expenses. The
Pioneer Fund has different fees and expenses and would, therefore, have had
different performance results. 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. The table shows average annual total return (before and after taxes)
for the RMK Fund over time for each class of shares (including deductions for
sales charges) compared with a broad-based securities market index. The bar
chart provides an indication of the risks of investing in the RMK Fund,
including the fact that you could incur a loss and experience volatility of
returns year to year. Past performance, before and after taxes, does not
indicate future results.
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund's Annual Returns
-- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'05 0.9
'06 2.92
'07 3.51
'08 3.53
The highest quarterly return was 2.93% for the quarter ended December 31, 2008
The lowest quarterly return was (0.91)% for the quarter ended March 31, 2005
170
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund's Average Annual
Total Returns
(for periods ended December 31, 2008)
- ----------------------------------------------------------------------------------------------------------
1 Year Since Inception Inception Date
- ----------------------------------------------------------------------------------------------------------
Class A(1) 02/09/04
- ----------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 2.00% sales charge) 1.46% 1.97%
- ----------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) 1.41% 1.93%
- ----------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of 2.07% 2.12%
Fund Shares(2)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Class C 02/09/04
- ----------------------------------------------------------------------------------------------------------
-- Return Before Taxes (with applicable Contingent 1.51% 1.98%
Deferred Sales Charge)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Class I 02/09/04
- ----------------------------------------------------------------------------------------------------------
-- Return Before Taxes 3.68% 2.53%
- ----------------------------------------------------------------------------------------------------------
Merrill Lynch 3-7 Year Municipal Index(3) 5.92%
- ----------------------------------------------------------------------------------------------------------
- ----------
(1) After-tax returns are calculated using the historical highest individual
federal marginal income and capital gains tax rates and do not reflect the
impact of any applicable state and local taxes. Return after taxes on
distributions assumes a continued investment in the RMK Fund and shows the
effect of taxes on fund distributions. Return after taxes on distributions
and sale of fund shares assumes all shares were redeemed at the end of
each period, and shows the effect of any taxable gain (or offsetting loss)
on redemption, as well as the effects of taxes on fund distributions.
Actual after-tax returns to an investor depend on the investor's own tax
situation and may differ from those shown. After-tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as individual retirement accounts or 401(k) plans. After-tax returns are
shown only for Class A shares. After-tax returns for other classes will be
different.
(2) The Merrill Lynch 3-7 Year Municipal Index is a total performance benchmark
for the intermediate-term municipal bond market. Total returns for the
index shown are not adjusted to reflect taxes, sales charges, expenses or
other fees that the SEC required to be reflected in the Fund's
performance. The index is unmanaged, and unlike the RMK Fund, is not
affected by cashflows or trading and other expenses. It is not possible to
invest directly in an index.
The most recent portfolio managers' discussion of the RMK Fund is attached
as Exhibit B.
171
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below for the RMK Fund are based on the expenses of the RMK Fund for
the twelve-month period ended November 30, 2008. The Pioneer Fund is a
newly-organized Pioneer fund that will commence operations upon consummation of
the proposed Reorganization and has no performance history. Therefore, the Fees
and Expenses for the Pioneer Fund have been estimated using the Fund's proposed
fees and estimated expenses assuming the Reorganization occurred on November
30, 2008. For financial statement purposes, the RMK Fund will be the accounting
survivor of the Reorganization. As the accounting survivor, the RMK Fund's
operating history will be used for financial reporting purposes. The tables
also show the pro forma expenses of the combined Pioneer Fund after giving
effect to the Reorganization based on pro forma net assets as of November 30,
2008.
Regions
Morgan
Keegan Select
Intermediate
Tax Exempt
Bond Fund Pioneer
(period ended Intermediate
November 30, Tax Free
2008) Income Fund
------------- ------------
Shareholder transaction fees
(paid directly from your investment) Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. 2.00% 4.50%
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) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.25% 0.50%
Distribution and Service (12b-1) Fee ............ 0.25% 0.25%
Other Expenses .................................. 0.43% 0.40%
- ------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 0.93% 1.15%
- ------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00% (0.33)%(4)
Net Expenses .................................... 0.93% 0.82%
- ------------------------------------------------------------------------------------
Regions
Morgan
Keegan Select
Intermediate
Combined Tax
Pioneer Exempt
Intermediate Bond
Tax Free Fund
Income (period Pioneer
Fund ended Intermediate
(Pro November 30, Tax Free
Forma) 2008) Income Fund
------------------------ -------------- ------------------
Shareholder transaction fees
(paid directly from your investment) Class A Class C Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. 4.50% None 4.50%
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None(2) 1.00%(3) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.50% 0.25% 0.50%
Distribution and Service (12b-1) Fee ............ 0.25% 1.00% 0.25%
Other Expenses .................................. 0.40% 0.43% 0.40%
- -----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 1.15% 1.68% 1.15%
- -----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ (0.33)%(4)(5) 0.00% (0.33)%(4)
Net Expenses .................................... 0.82% 1.68% 0.82%
- -----------------------------------------------------------------------------------------------------------
Combined
Pioneer
Intermediate
Tax Free
Income Fund
(Pro Forma)
----------------
Shareholder transaction fees
(paid directly from your investment) Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. 4.50%
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.50%
Distribution and Service (12b-1) Fee ............ 0.25%
Other Expenses .................................. 0.40%
- -------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 1.15%
- -------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ (0.33)%(4)(5)
Net Expenses .................................... 0.82%
- -------------------------------------------------------------------------
Regions Morgan Keegan
Select Intermediate Tax
Exempt Bond Fund
(period ended
November 30, 2008)
------------------------
Shareholder transaction fees
(paid directly from your investment) Class I
Maximum sales charge (load) when you buy shares as a
percentage of offering price ......................... None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less ............................ None
Annual Fund operating expenses (deducted from fund
assets) as a % of average daily net assets
Management Fee ........................................ 0.25%
Distribution and Service (12b-1) Fee .................. 0.00%
Other Expenses ........................................ 0.43%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................. 0.68%
- --------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .............. 0.00%
Net Expenses .......................................... 0.68%
- --------------------------------------------------------------------------------
Combined Pioneer
Pioneer Intermediate Tax Free Intermediate Tax Free Income
Income Fund Fund (Pro Forma)
------------------------------- -----------------------------
Shareholder transaction fees
(paid directly from your investment) Class Y Class Y
Maximum sales charge (load) when you buy shares as a
percentage of offering price ......................... None None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less ............................ None None
Annual Fund operating expenses (deducted from fund
assets) as a % of average daily net assets
Management Fee ........................................ 0.50% 0.50%
Distribution and Service (12b-1) Fee .................. 0.00% 0.00%
Other Expenses ........................................ 0.40% 0.40%
- -------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................. 0.90% 0.90%
- -------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .............. (0.35)%(4) (0.35)%(4)(5)
Net Expenses .......................................... 0.55% 0.55%
- -------------------------------------------------------------------------------------------------------------------
172
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Regions Morgan Keegan Combined Pioneer Intermediate
Number of years Select Intermediate Tax Pioneer Intermediate Tax Tax Free Income
you own your shares Exempt Bond Fund Free Income Fund Fund (Pro Forma)
- ------------------- ----------------------- ------------------------ -----------------------------
Class A -- with or without redemption
Year 1 ............................. $ 293 $ 530 $ 530
Year 3 ............................. $ 490 $ 768 $ 768
Year 5 ............................. $ 704 $1,024 $1,024
Year 10 ............................ $1,320 $1,757 $1,757
Class C -- with redemption
Year 1 ............................. $ 271 (6) --
Year 3 ............................. $ 530 (6) --
Year 5 ............................. $ 913 (6) --
Year 10 ............................ $1,987 (6) --
Class C -- without redemption
Year 1 ............................. $ 171 (6) --
Year 3 ............................. $ 530 (6) --
Year 5 ............................. $ 913 (6) --
Year 10 ............................ $1,987 (6) --
Class I/Y
Year 1 ............................. $ 69 $ 56 $ 56
Year 3 ............................. $ 218 $ 252 $ 252
Year 5 ............................. $ 379 $ 464 $ 464
Year 10 ............................ $ 847 $1,076 $1,076
- ----------
(1) On purchases of Class A shares of $1 million or more, a contingent deferred
sales charge of 1.00% of the lower of the purchase price of the shares or
their net asset value at the time of redemption will apply to Class A
shares redeemed within one year of purchase.
(2) 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 1.00%.
(3) A contingent deferred sales charge of 1.00% of the lower of the purchase
price of the shares or their net asset value at the time of redemption
will apply to Class C shares redeemed within one year of the purchase
date.
(4) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 0.82% and 0.55% of the
average daily net assets attributable to Class A shares and Class Y
shares, respectively. These expense limitations are in effect through
April 1, 2012 for Class A shares and through June 1, 2010 for Class Y
shares. There can be no assurance that Pioneer will extend the expense
limitations beyond such time.
(5) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 0.93% and 0.68% of the
average daily net assets attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization is approved, these
expense limitations will be in effect for a period of three years after
the close of the Reorganization. There can be no assurance that Pioneer
will extend the expense limitations beyond such time.
(6) The Pioneer Fund will issue Class A shares to the RMK Fund in exchange for
the Class C shares of the RMK Fund.
173
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 9.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A and Class Y shares are anticipated to be
0.82% and 0.55%, respectively, after giving effect to Pioneer's contractual
expense limitation with respect to Class A and Class Y shares, and the
historical net expense ratios for the corresponding classes of shares of your
RMK Fund are 0.93%, 1.68% and 0.68%, respectively. Therefore, the expense ratio
of the combined Pioneer Fund is expected to be the same or lower for Class A
and Class Y shares of the combined Pioneer Fund as compared to the
corresponding classes of your RMK Fund. In addition, the broader distribution
arrangements of the Pioneer Fund offer greater potential for further asset
growth and further reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 0.82% and 0.55% of the average daily
net assets attributable to Class A shares and Class Y shares, respectively.
These expense limitations are in effect through April 1, 2012 for Class A
shares and through June 1, 2010 for Class Y shares. In addition, Pioneer has
contractually agreed to limit ordinary operating expenses to the extent
required to reduce fund expenses to 0.93% and 0.68% of the average daily net
assets attributable to Class A shares and Class Y shares, respectively.
Assuming the shareholders of your RMK Fund approve the Reorganization, these
expense limitations will be in effect for the combined Pioneer Fund for a
period of three years from the Closing Date. There can be no assurance that
Pioneer will extend the expense limitations beyond such time.
Fourth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Fifth, the Class A and Y shares of the Pioneer Fund received in the
Reorganization will provide the RMK Fund shareholders with exposure to
substantially the same investment product as they have currently.
Sixth, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund.
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund as of
January 20, 2009. The Pioneer Fund is a newly formed fund that will commence
operations upon consummation of the proposed Reorganization. Therefore, the
Pioneer Fund had no assets or shares outstanding as of January 20, 2009. The
table also sets forth the pro forma combined capitalization of the combined
Pioneer Fund as if the Reorganization had occurred on January 20, 2009. If the
Reorganization is consummated, the actual exchange ratios on the Closing Date
may vary from the exchange ratios used in the computation below. This is due to
changes in the market value of the portfolio securities of the RMK Fund between
January 20, 2009 and the Closing Date, changes in the amount of undistributed
net investment income and net realized capital gains of the RMK Fund during
that period resulting from income and distributions, and changes in the accrued
liabilities of the RMK Fund during the same period.
174
Regions Morgan Keegan Pioneer Intermediate Tax
Select Intermediate Tax Pioneer Intermediate Tax Free Income Fund
Exempt Bond Fund Free Income Fund Pro Forma
----------------------- ------------------------ ------------------------
Net Assets
Class A .......................... $0,021,772 -- $20,346,465
Class C .......................... $ 324,693 -- (1)
Class I/Y ........................ $6,125,848 -- $6,125,848
---------------------------------------------------------------------------
Total Net Assets of Funds ......... $6,472,313 N/A $26,472,313
Net Asset Value Per Share
Class A .......................... $ 9.72 -- $ 9.72
Class C .......................... $ 9.72 -- (1)
Class I/Y ........................ $ 9.71 -- $ 9.71
Shares Outstanding
Class A .......................... 2,060,870 -- 2,094,275
Class C .......................... 33,417 -- (1)
Class I/Y ........................ 630,833 -- 630,833
- ----------
(1) The Pioneer Fund will issue Class A shares to the RMK Fund in exchange for
Class C shares of the RMK Fund.
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 9 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
175
REGIONS MORGAN KEEGAN SELECT TREASURY MONEY MARKET FUND
AND
PIONEER TREASURY RESERVES FUND
PROPOSAL 10
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 10 is approved, Regions Morgan Keegan Select Treasury Money
Market Fund (the "RMK Fund") will be reorganized into Pioneer Treasury Reserves
Fund (the "Pioneer Fund" and, together with the RMK Fund, the "Funds"), as
described above, and the Pioneer Fund will issue Class A and Class Y shares, as
applicable, to the RMK Fund in amounts equal to the aggregate net asset value
of the RMK Fund's Class A and Class I shares, respectively. Prior to the
proposed Reorganization, all Class I shares of the RMK Fund will be redeemed by
the RMK Fund.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Treasury Money Market Fund to
Pioneer Treasury Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Treasury
Money Market Fund Pioneer Treasury Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is current income The fund's investment objective is current income,
with stability of principal and liquidity. preservation of capital and liquidity through
investments in high quality short-term securities.
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in U.S. Treasury The fund is a money market fund. The fund seeks to
investment strategies obligations maturing in 397 days or less and in maintain a constant net asset value of $1.00 per
repurchase agreements collateralized by U.S. share by investing in high-quality, U.S. dollar
Treasury obligations. Under normal circumstances, denominated money market securities. Normally, the
the fund invests at least 80% of the value of its fund invests at least 80% of its net assets (plus
net assets in U.S. Treasury investments. The fund the amount of borrowings, if any, for investment
will provide shareholders with at least 60 days' purposes) in U.S. Treasury bills, notes and bonds,
prior notice of any changes in this policy. The and repurchase agreements with respect to these
fund also may invest in short-term AAA-rated securities. U.S. Treasury securities are direct
securities of other investment companies, and obligations of the U.S. government.
engage in when-issued and delayed-delivery
transactions. Consistent with the fund's AAA The fund will provide written notice to
rating by S&P, the fund will maintain an average shareholders at least 60 days prior to any change
maturity of 60 days or less. To the extent that to the requirement that it invest at least 80% of
fund income is derived from investments in U.S. its assets as described above.
Treasury securities, interest earned from the fund
may be exempt from state income taxation. In addition, the fund may invest up to 20% of its
net assets in obligations issued by agencies and
The fund will comply with the requirements of Rule instrumentalities of the U.S. government,
2a-7 under the 1940 Act, which sets forth repurchase agreements with respect to these
portfolio quality and diversification restrictions securities and other eligible money market
for money market mutual funds. securities.
- -----------------------------------------------------------------------------------------------------------------------------------
176
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Treasury
Money Market Fund Pioneer Treasury Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
The fund invests exclusively in securities with a
maximum remaining maturity of 397 days and
maintains a dollar-weighted average portfolio
maturity of 90 days or less.
In selecting the fund's portfolio, Pioneer
complies with the rating, maturity and
diversification requirements applicable to money
market funds. Within those limits, Pioneer's
assessment of broad economic factors that are
expected to affect economic activity and interest
rates influence its securities selection. Pioneer
also employs fundamental research and evaluation
of the issuer based on its financial statements
and operations, to assess an issuer's credit
quality.
The fund may enter into reverse repurchase
agreements pursuant to which the fund transfers
securities to a counterparty in return for cash,
and the fund agrees to repurchase the securities
at a later date and for a higher price. Reverse
repurchase agreements are treated as borrowings by
the fund, are a form of leverage and may make the
value of an investment in the fund more volatile
and increase the risks of investing in the fund.
This is because leverage generally magnifies the
effect of any increase or decrease in the value of
the fund's underlying asset or creates investment
risk with respect to a larger pool of assets than
the fund would otherwise have. The fund also may
borrow money from banks or other lenders for
temporary purposes. Entering into reverse
repurchase agreements and other borrowing
transactions may cause the fund to liquidate
positions when it may not be advantageous to do so
to satisfy its obligations or meet segregation
requirements.
- -----------------------------------------------------------------------------------------------------------------------------------
177
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Treasury
Money Market Fund Pioneer Treasury Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio manager
MAM Pioneer
Portfolio Manager: Portfolio Manager:
Day-to-day management of the fund's portfolio is Day-to-day management of the fund's portfolio is
the responsibility of George R. McCurdy, IV, CFA. the responsibility of Seth Roman. Mr. Roman is
The portfolio manager is supported by MAM's equity supported by the fixed income team. Members of
and/or fixed income research teams which provide this team manage other Pioneer funds investing
fundamental research and quantitative analysis primarily in fixed income securities. The
used to run MAM's internal investment models. portfolio manager and the team also may draw upon
the research and investment management expertise
Mr. McCurdy is a Senior Portfolio Manager for MAM. of Pioneer's affiliate, Pioneer Investment
He has more than seven years experience in Management Limited. Mr. Roman joined Pioneer as a
investment management and banking. From 2007 to portfolio manager in March 2006 and has been an
present, Mr. McCurdy has served as the Portfolio investment professional for over 10 years. Prior
Manager for the fund. From 2005 to 2007, Mr. to joining Pioneer, Mr. Roman was a fixed income
McCurdy served as the Assistant Portfolio Manager trader for Fidelity Management and Research
for the fund. From 2003 to 2005, Mr. McCurdy Company.
served as an Equity Research Analyst and Portfolio
Manager of personal trust accounts for MAM. From
2002 to 2003, Mr. McCurdy was an Accounting
Manager for SouthTrust Bank, where his primary
responsibilities were business unit profitability
analysis and reporting. From 2000 to 2002, Mr.
McCurdy worked as a Finance Officer with State
Street Bank, where he focused on Investor
Relations support and business unit reporting. Mr.
McCurdy received a B.S. in Finance from the
University of Alabama in 1997 and an M.B.A. from
Auburn University at Montgomery in 1998. He is a
holder of the Chartered Financial Analyst
designation.
- -----------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an open-end A diversified series of Pioneer Series Trust IV,
management investment company organized as a an open-end management investment company
Massachusetts business trust. organized as a Delaware statutory trust.
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $853,993,225 $131,666,290
January 20, 2009)
- -----------------------------------------------------------------------------------------------------------------------------------
178
Classes of Shares, Fees and Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Treasury
Money Market Fund Pioneer Treasury Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are sold at net asset value with no Class A shares are sold with no initial sales
and fees initial sales charge; however, if you subsequently charge, but you may pay a sales charge if you
exchange those shares for Class A shares of exchange your shares for Class A shares of another
another fund which imposes an initial sales Pioneer mutual fund.
charge, an initial sales charge will be imposed on
the Class A shares received in the exchange. Class A shares are subject to distribution and
service (12b-1) fees of up to 0.15% of average
Class A shares pay a shareholder servicing fee daily net assets. These fees are paid out of the
(non-12b-1) of up to 0.25% of average daily net fund's assets on an ongoing basis. Over time these
assets. fees will increase the cost of investments and may
cost more than other types of sales charges.
- -----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution and Class Y shares are not subject to distribution and
service (12b-1) fees. service (12b-1) fees.
- -----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal to The fund pays Pioneer a fee for managing the fund
0.20% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's annual fee is equal to 0.40% of the
fund's average daily net assets up to $1 billion
and 0.35% on assets over $1 billion. The fee is
accrued daily and paid monthly.
- -----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense Effective November 20, 2008, MAM has agreed to Pioneer has contractually agreed to limit ordinary
limitations waive fees and reimburse expenses to the extent operating expenses to the extent required to
necessary to prevent a negative yield for each reduce fund expenses to 0.65% of the average daily
class of shares of the fund. This undertaking is net assets attributable to Class A shares.
voluntary and may be modified or discontinued by Assuming the Reorganization is approved, this
MAM at any time. expense limitation will be in effect for a period
of two years after the closing of the
Reorganization. There can be no assurance that
Pioneer will extend the expense limitation beyond
such time.
- -----------------------------------------------------------------------------------------------------------------------------------
179
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Treasury
Money Market Fund Pioneer Treasury Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
In addition, Pioneer may limit the fund's expenses
for any class of shares or waive a portion of its
management fee to maintain a net asset value of
$1.00. From time to time, Pioneer and its
affiliates may limit the expenses of one or more
classes for the purpose of avoiding a negative
yield or increasing the fund's yield during the
period of the limitation. These expense limitation
policies are voluntary and temporary and may be
revised or terminated by Pioneer at any time
without notice.
- -----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in
the "The Funds' Fees and Expenses" section starting on page 184.
- -----------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. Although each Fund seeks to preserve a $1.00 net asset value
per share, you could lose money on your investment in each Fund, or not make as
much as if you invested elsewhere if:
o Interest rates go up, causing the value of the Fund's investments to
decline. This is known as interest rate risk (this risk may be greater
for securities with longer term maturities)
o When interest rates are very low, the Fund's expenses would absorb all
or a significant portion of the Fund's income
o The manager's judgment about the credit quality, attractiveness or
relative value of a particular security provide to be incorrect
o A counterparty in a repurchase agreement fails to honor the terms of its
agreement
To the extent each Fund in securities of government sponsored entities,
the Fund will be subject to risks unique to such entities. Government sponsored
entities, such as the Federal Home Loan Mortgage Corporation ("Freddie Mac"),
the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan
Banks ("FHLBs"), the Private Export Funding Corporation ("PEFCO"), the Federal
Farm Credit Banks ("FFCB") and the Tennessee Valley Authority ("TVA"), although
chartered or sponsored by Congress, are not funded by congressional
appropriations and the debt and mortgage-backed securities issued by them are
neither guaranteed nor issued by the U.S. government. The U.S. government
recently provided financial support to Fannie Mae and Freddie Mac, but there
can be no assurance that it will support these or other government-sponsored
enterprises in the future.
Each Fund is subject to credit risk. Credit risk refers to an issuer's
ability to make payments of principal and interest when they are due.
Investment grade securities are considered less risky than debt securities
whose ratings are below investment grade; however, ratings are no guarantee of
quality. Prices of debt securities typically decline if the issuer's credit
quality deteriorates. Lower grade debt securities may experience high default
rates. Money market funds attempt to minimize these risks by investing in
securities with high credit quality.
Each Fund is subject to income risk. It is possible that a Fund's income
will decline over time because of a decrease in interest rates or other
factors. Income risk is generally lower for longer-term debt instruments and
higher for shorter-term debt instruments. Because interest rates vary, it is
impossible to predict the income or yield of a Fund for any particular period.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of the Funds' Class A shares for the past 10
calendar years. Class I shares of the RMK Fund and Class Y shares of the
Pioneer Fund will have different performance because they have different
expenses. The tables show average annual total return for each Fund over time
for each class of shares. The table relating to the Pioneer Fund compares the
Fund's average annual total return against the 90-day U.S. Treasury Bill. The
bar charts provide an indication of the risks of investing in each Fund,
including the fact that you could incur a loss and experience volatility of
returns year to year. Past performance does not indicate future results.
180
Historically, the RMK Fund has maintained a constant $1.00 net asset value
per share. The RMK Fund's shares are not sold subject to a sales (load) charge;
therefore, the total returns displayed below are based upon net asset value.
The Pioneer Fund acquired the assets and liabilities of AmSouth Treasury
Reserve Money Market Fund (the predecessor fund) on September 23, 2005. As a
result of the reorganization, the Pioneer Fund is the accounting successor of
the predecessor fund. The predecessor fund offered classes of shares similar to
the Pioneer Fund's Class A shares and Class Y shares. In the reorganization,
the predecessor fund exchanged its assets for Class A shares and Class I shares
of the Pioneer Fund. The performance of Class A shares and Class Y shares of
the Pioneer Fund includes the net asset value performance of the predecessor
fund's Class A shares and Class I shares, respectively, prior to the
reorganization, which has been restated to reflect differences in any
applicable sales charges (but not differences in expenses).
Regions Morgan Keegan Select Treasury Money Market Fund's Annual Returns --
Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'99 4.28
'00 5.6
'01 3.62
'02 1.04
'03 0.43
'04 0.63
'05 2.41
'06 4.21
'07 4.07
'08 1.25
The highest quarterly return was 1.47% for the quarter ended December 31, 2000
The lowest quarterly return was 0.08% for the quarter ended March 31, 2004
Pioneer Treasury Reserves Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'99 4.36
'00 5.53
'01 3.42
'02 0.96
'03 0.29
'04 0.62
'05 2.38
'06 4.2
'07 4.12
'08 1.62
The highest quarterly return was 1.43% for the quarter ended December 31, 2000
The lowest quarterly return was 0.04% for the quarter ended September 30, 2003
181
Regions Morgan Keegan Select Treasury Money Market Fund's
Average Annual Total Returns
(for periods ended December 31, 2008)(1)
- ---------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ---------------------------------------------------------------------------------------------
Class A(2) 04/14/92
- ---------------------------------------------------------------------------------------------
-- Return Before Taxes 1.25% 2.50% 2.74% 3.34%
- ---------------------------------------------------------------------------------------------
Class I 04/03/06
- ---------------------------------------------------------------------------------------------
-- Return Before Taxes 1.51% N/A N/A 3.16%
- ---------------------------------------------------------------------------------------------
- ----------
(1) The RMK Fund's 7-day yield for the period December 25, 2008 through
December 31, 2008 was: Class A: 0.004%; Class I: 0.254%. Please contact
the Fund at 1-877-757-7424 to obtain the Fund's current 7-day yield.
(2) Effective June 4, 2004, all Class B shares of the RMK Fund converted to
Class A shares. Historical total return information for the RMK Fund for
any period or portion thereof prior to the commencement of investment
operations of Class A shares on May 20, 1998 is that of Class B shares and
reflects all charges, expenses and fees incurred by Class B shares, which
were generally higher than the expenses of Class A shares, during such
periods.
Pioneer Treasury Reserves Fund's Average Annual Total Returns(1)(2)
(for periods ended December 31, 2008)
- -----------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A 03/29/94(3)
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes 1.62% 2.57% 2.74% 3.39%
- -----------------------------------------------------------------------------------------------------------------------------
Class Y 03/29/94(4)
- -----------------------------------------------------------------------------------------------------------------------------
-- Return Before Taxes 1.80% 2.72% 2.86% 3.51%
- -----------------------------------------------------------------------------------------------------------------------------
90-day U.S. Treasury Bill (reflects no deduction for 1.40% 2.97% 3.16% 3.79%
fees, expenses or taxes)
- -----------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest
all of your dividends and distributions.
(2) The Pioneer Fund's 7-day yield for the period December 24, 2008 through
December 31, 2008 was: Class A: 0.05%; Class Y: 0.05%. Please contact
Pioneer at 1-800-225-6296 to obtain the Fund's current 7-day yield.
(3) Inception date of the predecessor fund's Class A shares.
(4) Inception date of the predecessor fund's Class I shares. Class Y shares
commenced operations on September 23, 2005.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
182
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended July 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of November 30, 2008.
Regions
Morgan
Keegan Select
Treasury
Money Market Pioneer
Fund Treasury
(period ended Reserves Fund
November 30, (period ended
2008) July 31, 2008)
--------------- ----------------
Shareholder transaction fees
(paid directly from your investment) Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.20% 0.40%
Distribution and Service (12b-1) Fee ............ 0.25% 0.15%
Other Expenses .................................. 0.20% 0.30%
- ---------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 0.65% 0.85%
- ---------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00%(1) 0.00%(2)
Net Expenses .................................... 0.65% 0.85%
- ---------------------------------------------------------------------------------
Regions
Morgan
Keegan Select
Treasury
Combined Money Market Pioneer Combined
Pioneer Fund Treasury Pioneer
Treasury (period ended Reserves Fund Treasury
Reserves Fund November 30, (period ended Reserves Fund
(Pro Forma) 2008) July 31, 2008) (Pro Forma)
--------------------- --------------- ---------------- ---------------------
Shareholder transaction fees
(paid directly from your investment) Class A Class I Class Y Class Y
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. None None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.40% 0.20% 0.40% 0.40%
Distribution and Service (12b-1) Fee ............ 0.15% 0.00% 0.00% 0.00%
Other Expenses .................................. 0.10% 0.20% 0.20% 0.08%
- -------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 0.65% 0.40% 0.60% 0.48%
- -------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00%(2)(3) 0.00%(1) 0.00%(2) 0.00%(2)(3)
Net Expenses .................................... 0.65% 0.40% 0.60% 0.48%
- -------------------------------------------------------------------------------------------------------------------------------
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Regions Morgan Keegan Combined Pioneer Treasury
Select Treasury Pioneer Treasury Reserves Fund
Money Market Fund Reserves Fund (Pro Forma)
Number of years you own your shares ----------------------- ------------------ --------------------------
Class A -- with or without redemption
Year 1 ............................. $ 66 $ 87 $ 66
Year 3 ............................. $ 208 $ 271 $ 208
Year 5 ............................. $ 362 $ 471 $ 362
Year 10 ............................ $ 810 $1,049 $ 810
Class I/Y
Year 1 ............................. $ 41 $ 61 $ 49
Year 3 ............................. $ 128 $ 192 $ 154
Year 5 ............................. $ 224 $ 335 $ 269
Year 10 ............................ $ 505 $ 750 $ 604
- ----------
(1) Effective November 20, 2008, MAM has agreed to waive fees and reimburse
expenses to the extent necessary to prevent a negative yield for each
class of shares of the RMK Fund. This undertaking is voluntary and may be
modified or discontinued by MAM at any time.
(2) Pioneer may limit the fund's expenses for any class of shares or waive a
portion of its management fee to maintain a net asset value of $1.00. From
time to time, Pioneer and its affiliates may limit the expenses of one or
more classes for the purpose of avoiding a negative yield or increasing
the
183
Pioneer Fund's yield during the period of the limitation. These expense
limitation policies are voluntary and temporary and may be revised or
terminated by Pioneer at any time without notice.
(3) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce Fund expenses to 0.65% of the average daily
net assets attributable to Class A shares. Assuming the Reorganization is
approved, this expense limitation will be in effect for a period of two
years after the close of the Reorganization. There can be no assurance
that Pioneer will extend the expense limitation beyond such time.
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 10.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 0.65% of the average daily net assets
attributable to Class A shares. Assuming the shareholders of your RMK Fund
approve the Reorganization, this expense limitation will be in effect for the
combined Pioneer Fund for a period of two years from the Closing Date. There
can be no assurance that Pioneer will extend the expense limitation beyond such
time. In addition, Pioneer may limit the combined Pioneer Fund's expenses for
any class of shares or waive a portion of its management fee to maintain a net
asset value of $1.00. Assuming the shareholders of your RMK Fund approve the
Reorganization, this expense limitation will also be in effect for the combined
Pioneer Fund. These expense limitation policies are voluntary and temporary and
may be revised or terminated by Pioneer at any time without notice.
Third, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [ ] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Fourth, the larger size of the combined Pioneer Fund will offer greater
opportunity for diversification of the investment portfolio, which should help
to reduce risks and provide benefits to the shareholders of the Fund from the
long-term economies of scale that may result from consummation of the
Reorganization.
Fifth, the Class A and Y shares of the Pioneer Fund received in the
Reorganization will provide the RMK Fund shareholders with exposure to
substantially the same investment product as they have currently.
Sixth, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
184
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of January 20, 2009 and the pro forma combined capitalization
of the combined Pioneer Fund as if the Reorganization had occurred on that
date. If the Reorganization is consummated, the actual exchange ratios on the
Closing Date may vary from the exchange ratios used in the computation below.
This is due to changes in the market value of the portfolio securities of both
Funds between January 20, 2009 and the Closing Date, changes in the amount of
undistributed net investment income and net realized capital gains of both
Funds during that period resulting from income and distributions, and changes
in the accrued liabilities of both Funds during the same period.
Regions Morgan Keegan Pioneer Treasury
Select Treasury Pioneer Treasury Reserves Fund
Money Market Fund Reserves Fund Pro Forma
----------------------- ------------------ -----------------
Net Assets
Class A .......................... $ 848,991,400 $ 98,155,450 $ 947,146,850
Class I/Y ........................ $ 5,001,825 $ 33,510,840 $ 38,512,665
----------------------------------------------------------
Total Net Assets of Fund ......... $ 853,993,225 $ 131,666,290 $ 985,659,515
Net Asset Value Per Share
Class A .......................... $ 1.00 $ 1.00 $ 1.00
Class I/Y ........................ $ 1.00 $ 1.00 $ 1.00
Shares Outstanding
Class A .......................... 848,841,784 98,087,052 946,928,836
Class I/Y ........................ 5,001,092 33,407,419 38,408,511
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 10 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
185
Regions Morgan Keegan Select Money Market Fund
and
Pioneer Cash Reserves Fund
PROPOSAL 11
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the exhibits, which
include additional information that is not included in the summary and are a
part of this Proxy Statement/Prospectus. Exhibit A-2 is the form of Agreement
and Plan of Reorganization. For a discussion of the terms of the Agreement and
Plan of Reorganization, please see the section entitled "Terms of Each
Agreement and Plan of Reorganization" in the back of this Proxy
Statement/Prospectus, after the discussion of the various Proposals.
If Proposal 11 is approved, Regions Morgan Keegan Select Money Market Fund
(the "RMK Fund") will be reorganized into Pioneer Cash Reserves Fund (the
"Pioneer Fund" and, together with the RMK Fund, the "Funds"), as described
above, and the Pioneer Fund will issue Class A and Class Y shares, as
applicable, to the RMK Fund in amounts equal to the aggregate net asset value
of the RMK Fund's Class A and Class I shares, respectively.
The RMK Fund and the Pioneer Fund have similar investment objectives,
primary investment strategies and related risks. The table below provides a
comparison of certain features of the two Funds.
Comparison of Regions Morgan Keegan Select Money Market Fund to Pioneer Cash
Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Investment objective The fund's investment objective is maximum current The fund's investment objective is high current
income with preservation of capital and liquidity. income, preservation of capital and liquidity
through investment in high-quality short-term
securities.
- -----------------------------------------------------------------------------------------------------------------------------------
186
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests in a variety of U.S. dollar- The fund is a money market fund. The fund seeks to
investment strategies denominated high-quality money market instruments, maintain a constant net asset value of $1.00 per
including U.S. government securities, taxable share by investing in high-quality, U.S. dollar
municipal debt, commercial paper and other denominated money market securities of U.S. and
corporate debt obligations, certificates of non-U.S. issuers, including those issued by:
deposit, repurchase agreements, bankers'
acceptances and other dollar-denominated bank o U.S. and non-U.S. banks
obligations, including obligations issued by U.S.
banks, their foreign branches and/or foreign o U.S. and non-U.S. corporate or private issuers
banks. At the time of purchase, all of the fund's
investments (other than U.S. government securities o The U.S. government and its agencies and
and related repurchase agreements) will be rated instrumentalities
in the highest short-term rating category by a
NRSRO (for example, A-1 or A-1+ by S&P) or, if o Non-U.S. governments
unrated, deemed by the MAM to be of comparable
quality. In addition, all fund investments will be o Multinational organizations such as the World
deemed to have a maturity of 397 days or less, and Bank
the fund's average maturity will not exceed 90
days. While the fund typically holds securities The fund may invest more than 25% of its total
until maturity, decisions to sell portfolio assets in U.S. government securities and
holdings are generally the result of a change in obligations of U.S. banks. The fund may invest in
financial condition of the issuer of a security, any money market instrument that is a permissible
for liquidity purposes, or to rebalance the investment for a money market fund under the rules
portfolio. of the Securities and Exchange Commission,
including commercial paper, certificates of
deposit, time deposits, bankers' acceptances,
The fund will comply with the requirements of Rule mortgage-backed and asset-backed securities,
2a-7 under the 1940 Act, which sets forth repurchase agreements, municipal obligations and
portfolio quality and diversification restrictions other short-term debt securities. These
for money market mutual funds. investments may include instruments specifically
structured so that they are eligible for purchase
by money market funds, including securities that
have demand, tender or put features, or interest
rate reset features. Structured instruments are a
type of derivative instrument. The fund's
investments also may include U.S. dollar
denominated securities issued by non- U.S.
governments and multinational issuers, such as the
World Bank.
- -----------------------------------------------------------------------------------------------------------------------------------
187
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
The fund invests in U.S. government obligations
and money market securities rated in one of the
two highest rating categories for short-term debt
by a nationally recognized statistical rating
organization or, if unrated, determined to be of
equivalent credit quality by Pioneer. If rating
organizations differ in the rating assigned to a
security, the fund will only treat the security as
having the higher rating if at least two rating
organizations assigned that rating. If a rating
organization downgrades the quality rating
assigned to one or more of the fund's portfolio
securities, Pioneer will promptly reassess whether
the downgraded security presents minimal credit
risk to the fund.
The fund invests exclusively in securities with a
maximum remaining maturity of 397 days and
maintains a dollar-weighted average portfolio
maturity of 90 days or less. The fund's
investments may have fixed, floating or variable
interest rates.
In selecting the fund's portfolio, Pioneer
complies with the rating, maturity and
diversification requirements applicable to money
market funds. Within those limits, Pioneer's
assessment of broad economic factors that are
expected to affect economic activity and interest
rates influence its securities selection. Pioneer
also employs due diligence and fundamental
research, an evaluation of the issuer based on its
financial statements and operations, to assess an
issuer's credit quality.
Money market securities include:
o Securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities
o Corporate debt securities, including commercial
paper
o Obligations of U.S. and non-U.S. banks
o Repurchase agreements
o Mortgage and asset-backed securities
o Securities issued by non-U.S. governments and
non-U.S. corporate issuers
o Municipal obligations
- -----------------------------------------------------------------------------------------------------------------------------------
188
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may not trade in futures. The fund may No stated strategy.
trade in options in order to hedge the fund's
portfolio against market shifts as well as to
increase returns.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment adviser and Investment Adviser: Investment Adviser:
portfolio manager
MAM Pioneer
Portfolio Manager: Portfolio Manager:
Day-to-day management of the fund's portfolio is Day-to-day management of the fund's portfolio is
the responsibility of George R. McCurdy, IV, CFA. the responsibility of Seth Roman. Mr. Roman is
The portfolio manager is supported by MAM's equity supported by the fixed income team. Members of
and/or fixed income research teams which provide this team manage other Pioneer funds investing
fundamental research and quantitative analysis primarily in fixed income securities. The
used to run MAM's internal investment models. portfolio manager and the team also may draw upon
the research and investment management expertise
Mr. McCurdy is a Senior Portfolio Manager for MAM. of Pioneer's affiliate, Pioneer Investment
He has more than seven years experience in Management Limited. Mr. Roman joined Pioneer as a
investment management and banking. From 2007 to portfolio manager in March 2006 and has been an
present, Mr. McCurdy has served as the Portfolio investment professional for over 10 years. Prior
Manager for the fund. From 2005 to 2007, Mr. to joining Pioneer, Mr. Roman was a fixed income
McCurdy served as the Assistant Portfolio Manager trader for Fidelity Management and Research
for the fund. From 2003 to 2005, Mr. McCurdy Company.
served as an Equity Research Analyst and Portfolio
Manager of personal trust accounts for MAM. From
2002 to 2003, Mr. McCurdy was an Accounting
Manager for SouthTrust Bank, where his primary
responsibilities were business unit profitability
analysis and reporting. From 2000 to 2002, Mr.
McCurdy worked as a Finance Officer with State
Street Bank, where he focused on Investor
Relations support and business unit reporting. Mr.
McCurdy received a B.S. in Finance from the
University of Alabama in 1997 and an M.B.A. from
Auburn University at Montgomery in 1998. He is a
holder of the Chartered Financial Analyst
designation.
- -----------------------------------------------------------------------------------------------------------------------------------
Business A diversified series of the RMK Trust, an open-end A diversified series of Pioneer Money Market
management investment company organized as a Trust, an open-end management investment company
Massachusetts business trust. organized as a Delaware statutory trust.
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $99,975,993 $961,074,429
January 20, 2009)
- -----------------------------------------------------------------------------------------------------------------------------------
189
Classes of Shares, Fees and Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Class A sales charges Class A shares are sold at net asset value with no Class A shares are sold with no initial sales
and fees initial sales charge; however, if you subsequently charge, but you may pay a sales charge if you
exchange those shares for Class A shares of exchange your shares for Class A shares of another
another fund which imposes an initial sales Pioneer mutual fund.
charge, an initial sales charge will be imposed on
the Class A shares received in the exchange. Class A shares are subject to distribution and
service (12b-1) fees of up to 0.15% of average
Class A shares pay a shareholder servicing fee daily net assets. These fees are paid out of the
(non-12b-1) of up to 0.25% of average daily net fund's assets on an ongoing basis. Over time these
assets. fees will increase the cost of investments and may
cost more than other types of sales charges.
- -----------------------------------------------------------------------------------------------------------------------------------
Class I and Class Y Class I shares are offered without an initial Class Y shares are offered without an initial
sales charges and fees sales charge. sales charge.
Class I shares are not subject to a contingent Class Y shares are not subject to a contingent
deferred sales charge. deferred sales charge.
Class I shares are not subject to distribution and Class Y shares are not subject to distribution and
service (12b-1) fees. service (12b-1) fees.
- -----------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee equal to The fund pays Pioneer a fee for managing the fund
0.25% of the fund's average daily net assets. and to cover the cost of providing certain
services to the fund.
Pioneer's annual fee is equal to 0.40% of the
fund's average daily net assets up to $1 billion
and 0.35% on assets over $1 billion. The fee is
accrued daily and paid monthly.
- -----------------------------------------------------------------------------------------------------------------------------------
Fee waiver and expense Effective January 27, 2009, MAM has agreed to Pioneer has contractually agreed to limit ordinary
limitations waive fees and reimburse expenses to the extent operating expenses to the extent required to
necessary to prevent a negative yield for each reduce fund expenses to 0.70% and 0.45% of the
class of shares of the fund. This undertaking is average daily net assets attributable to Class A
voluntary and may be modified or discontinued by shares and Class Y shares, respectively. Assuming
MAM at any time. the Reorganization is approved, these expense
limitations will be in effect for a period of two
years after the closing of the Reorganization.
There can be no assurance that Pioneer will extend
the expense limitations beyond such time.
- -----------------------------------------------------------------------------------------------------------------------------------
190
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- -----------------------------------------------------------------------------------------------------------------------------------
In addition, Pioneer has agreed to limit the
fund's expenses for any class of shares or waive a
portion of its management fee to maintain a net
asset value of $1.00. From time to time, Pioneer
and its affiliates may limit the expenses of one
or more classes for the purpose of avoiding a
negative yield or increasing the fund's yield
during the period of the limitation. These expense
limitation policies are voluntary and temporary
and may be revised or terminated by Pioneer at any
time without notice.
- -----------------------------------------------------------------------------------------------------------------------------------
For a comparison of the gross and net expenses of both funds, please see the class fee tables in the
"The Funds' Fees and Expenses" section starting on page 195.
- -----------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds
Because the RMK Fund and the Pioneer Fund have similar investment
objectives and primary investment strategies, they are subject to similar
principal risks. Although each Fund seeks to preserve a $1.00 net asset value
per share, you could lose money on your investment in each Fund, or not make as
much as if you invested elsewhere if:
o Interest rates go up, causing the value of the Fund's investments to
decline. This is known as interest rate risk (this risk may be greater
for securities with longer term maturities)
o The issuer of a security owned by the fund fails to pay principal and/or
interest or otherwise defaults or is perceived to be less creditworthy,
the security's credit rating is downgraded or the quality or value of
any underlying assets declines. This is known as credit risk
o The manager's judgment about the credit quality, attractiveness or
relative value of a particular security provide to be incorrect
Each Fund is subject to credit risk. Credit risk refers to an issuer's
ability to make payments of principal and interest when they are due.
Investment grade securities are considered less risky than debt securities
whose ratings are below investment grade; however, ratings are no guarantee of
quality. Prices of debt securities typically decline if the issuer's credit
quality deteriorates. Lower grade debt securities may experience high default
rates. Money market funds attempt to minimize these risks by investing in
securities with high credit quality.
Each Fund is subject to income risk. It is possible that a Fund's income
will decline over time because of a decrease in interest rates or other
factors. Income risk is generally lower for longer-term debt instruments and
higher for shorter-term debt instruments. Because interest rates vary, it is
impossible to predict the income or yield of a Fund for any particular period.
To the extent either Fund emphasizes, from time to time, investments in a
particular market segment, the Fund will be subject to a greater degree to the
risks of 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, with
respect to the Pioneer Fund only, real estate investment trusts (REITs), may be
sensitive to changes in interest rates and general economic activity and are
subject to extensive government regulation.
Because each Fund may invest in securities of non-U.S. issuers, it may be
subject to the risks below associated with investing in non-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, the Fund's investment adviser may not be able to sell
the Fund's portfolio securities at times, in amounts and at prices it
considers reasonable
o Economic, political and social developments may adversely affect the
securities markets
191
The RMK Fund may use options. Derivatives involve special risks and costs
and may result in losses to the Fund. Derivatives, such as options, may be
subject to market risk, interest rate risk and credit risk. The RMK Fund's use
of options involves risk and may increase the volatility of the Fund's net
asset value. Even a small investment in derivatives can have a disproportionate
impact on the Fund. Using derivatives can increase losses and reduce
opportunities for gains when market prices, interest rates or currencies, or
the derivative instruments themselves, behave in a way not anticipated by the
Fund.
The Funds' Past Performance
Set forth below is performance information for each Fund. The bar charts
show the year-by-year performance of the Funds' Class A shares for the past 10
calendar years or since inception, as applicable. Class I shares of the RMK
Fund and Class Y shares of the Pioneer Fund will have different performance
because they have different expenses. The tables show average annual total
return for each Fund over time for each class of shares. The table relating to
the Pioneer Fund compares the Fund's average annual total return against the
90-day U.S. Treasury Bill. The bar charts provide an indication of the risks of
investing in each Fund, including the fact that you could incur a loss and
experience volatility of returns year to year. Past performance does not
indicate future results.
The RMK Fund began operations on February 18, 2005 as the successor to a
substantially similar investment company. On that date, the fund merged with
LEADER Money Market Fund, a series of LEADER Mutual Funds, and assumed that
portfolio's operating history and performance record. The performance included
in the bar chart and table below relating to the RMK Fund for the periods prior
to February 18, 2005 is that of the RMK Fund's predecessor, the inception date
of which was October 4, 2000 (Class A shares). Historically, the RMK Fund has
maintained a constant $1.00 net asset value per share. The RMK Fund's shares
are not sold subject to a sales (load) charge; therefore, the total returns
displayed below are based upon net asset value.
Regions Morgan Keegan Select Money Market Fund's Annual Returns --
Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'01 3.29
'02 0.87
'03 0.27
'04 0.44
'05 2.28
'06 4.13
'07 4.52
'08 1.97
The highest quarterly return was 1.21% for the quarter ended March 31, 2001
The lowest quarterly return was 0.03% for the quarter ended March 31, 2004
Pioneer Cash Reserves Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE DATA BELOW WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
'99 4.23
'00 5.53
'01 3.32
'02 1.15
'03 0.26
'04 0.45
'05 2.37
'06 4.38
'07 4.72
'08 2.46
The highest quarterly return was 1.45% for the quarter ended December 31, 2000
The lowest quarterly return was 0.01% for the quarter ended December 31, 2003
192
Regions Morgan Keegan Select Money Market Fund's Average Annual Total Returns
(for periods ended December 31, 2008)(1)
- ----------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date(2)
- ----------------------------------------------------------------------------------------------------
Class A -- Return Before Taxes 1.97% 2.66% N/A 2.31% 10/04/00
- ----------------------------------------------------------------------------------------------------
Class I -- Return Before Taxes 2.23% 3.00% N/A 3.08% 07/07/99
- ----------------------------------------------------------------------------------------------------
- ----------
(1) The RMK Fund's 7-day yield for the period December 25, 2008 through
December 31, 2008 was: Class A: 0.576%; Class I: 0.828%. Please contact
the Fund at 1-877-757-7424 to obtain the Fund's current 7-day yield.
(2) Dates that the RMK Fund's Class A shares (including the predecessor fund's
Class A shares) and Class I shares (including the predecessor fund's Class
I shares) commenced investment operations.
Pioneer Cash Reserves Fund's Average Annual Total Returns(1) (2)
(for periods ended December 31, 2008)
- ------------------------------------------------------------------------------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date
- ------------------------------------------------------------------------------------------------------------------------------
Class A -- Return Before Taxes 2.46% 2.86% 2.87% 4.15% 06/22/87
- ------------------------------------------------------------------------------------------------------------------------------
Class Y -- Return Before Taxes 2.70% 3.02% 2.95% 4.19% 06/22/87(3)
- ------------------------------------------------------------------------------------------------------------------------------
90-day U.S. Treasury Bill (reflects no deduction for 1.40% 2.97% 3.16% 4.41%
fees, expenses or taxes)
- ------------------------------------------------------------------------------------------------------------------------------
- ----------
(1) The table reflects sales charges applicable to the class, assumes that you
sell your shares at the end of the period and assumes that you reinvest
all of your dividends and distributions.
(2) The Pioneer Fund's 7-day yield for the period December 24, 2008 through
December 31, 2008 was: Class A: 1.20%; Class Y: 1.45%. Please contact
Pioneer at 1-800-225-6296 to obtain the Fund's current 7-day yield.
(3) Inception date of the Pioneer Fund's Class I shares. Class Y shares
commenced operations on September 23, 2005.
(4) Since the inception of Class A shares.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
The Funds' Fees and Expenses
Shareholders of both Funds pay various fees and expenses, either directly
or indirectly. The tables below show the fees and expenses that you would pay
if you were to buy and hold shares of each Fund. The expenses in the tables
appearing below are based on (i) for the RMK Fund, the expenses of the RMK Fund
for the period ended November 30, 2008, and (ii) for the Pioneer Fund, the
expenses of the Pioneer Fund for the period ended December 31, 2008. Future
expenses for all share classes may be greater or less. The tables also show the
pro forma expenses of the combined Pioneer Fund after giving effect to the
Reorganization based on pro forma net assets as of December 31, 2008.
193
Regions
Morgan
Keegan Select
Money Market Pioneer Cash
Fund Reserves Fund Combined
(period ended (period ended Pioneer Cash
November 30, December 31, Reserves Fund
2008) 2008) (Pro Forma)
--------------- --------------- ---------------------
Shareholder transaction fees
(paid directly from your investment) Class A Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ..... None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.25% 0.40% 0.40%
Distribution and Service (12b-1) Fee ................. 0.15% 0.15% 0.15%
Other Expenses ....................................... 0.30% 0.18% 0.14%
- ----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 0.70% 0.73% 0.69%
- ----------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00%(1) 0.00%(2) 0.00%(2)(3)
Net Expenses ......................................... 0.70% 0.73% 0.69%
- ----------------------------------------------------------------------------------------------------------------
Regions
Morgan
Keegan Select
Money Market Pioneer Cash
Fund Reserves Fund Combined
(period ended (period ended Pioneer Cash
November 30, December 31, Reserves Fund
2008) 2008) (Pro Forma)
--------------- --------------- ------------------------
Shareholder transaction fees
(paid directly from your investment) Class I Class Y Class Y
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... None None None
Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less ..... None None None
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee ....................................... 0.25% 0.40% 0.40%
Distribution and Service (12b-1) Fee ................. 0.00% 0.00% 0.00%
Other Expenses ....................................... 0.20% 0.12% 0.08%
- -------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 0.45% 0.52% 0.48%
- -------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00%(1) 0.00%(2) (0.03)%(2)(3)
Net Expenses ......................................... 0.45% 0.52% 0.45%
- -------------------------------------------------------------------------------------------------------------------
The hypothetical example below helps you compare the cost of investing in
each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each Fund's total operating expenses
remain the same, and (e) with respect to the Pioneer Fund, Pioneer's
contractual expense limitation is in effect for year one. Pro forma expenses
are included assuming a Reorganization of the Funds. The examples are for
comparison purposes only and are not a representation of either Fund's actual
expenses or returns, either past or future.
Regions Morgan Keegan Combined Pioneer
Number of years Select Money Pioneer Cash Cash Reserves Fund
you own your shares Market Fund Reserves Fund (Pro Forma)
- ------------------- ----------------------- --------------- -------------------
Class A -- with or without redemption
Year 1 ............................. $ 72 $ 75 $ 70
Year 3 ............................. $ 224 $ 233 $ 221
Year 5 ............................. $ 390 $ 406 $ 384
Year 10 ............................ $ 871 $ 906 $ 859
Class I/Y
Year 1 ............................. $ 46 $ 53 $ 46
Year 3 ............................. $ 144 $ 167 $ 151
Year 5 ............................. $ 252 $ 291 $ 266
Year 10 ............................ $ 567 $ 653 $ 601
- ----------
(1) Effective January 27, 2009, MAM has agreed to waive fees and reimburse
expenses to the extent necessary to prevent a negative yield for each
class of shares of the fund. This undertaking is voluntary and may be
modified or discontinued by MAM at any time.
(2) Pioneer has agreed to limit fund expenses for any class of shares or waive
a portion of its management fee to maintain a net asset value of $1.00.
From time to time, Pioneer and its affiliates may limit the expenses of
one or more classes for the purpose of avoiding a negative yield or
increasing the Pioneer Fund's yield during the period of the limitation.
These expense limitation policies are voluntary and temporary and may be
revised or terminated by Pioneer at any time without notice.
(3) Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce fund expenses to 0.70% and 0.45% of the
average daily net assets attributable to Class A shares and Class Y
shares, respectively. Assuming the Reorganization is approved, these
expense limitations will be in effect for a period of two years after the
close of the Reorganization. There can be no assurance that Pioneer will
extend the expense limitations beyond such time.
194
Reasons for the Proposed Reorganization
The RMK Trustees believe that the proposed Reorganization is in the best
interests of the RMK Fund and its shareholders. The RMK Trustees considered the
following matters, among others, in approving this Proposal 11.
First, MAM, the investment adviser to the RMK Fund, informed the RMK Board
that engaging in the business of investment adviser to the RMK Funds is not a
core business that MAM intends to continue and that Regions would be conducting
a search for a buyer for MAM's mutual fund management business. After requests
for proposals were solicited, received and reviewed, MAM and Regions decided to
recommend to the RMK Board that the RMK Funds be reorganized into similar
mutual funds managed by Pioneer, as being in the best interest of shareholders
of each of the RMK Funds.
Second, the RMK Board considered that the pro forma net expense ratios for
the combined Pioneer Fund's Class A and Class Y shares are anticipated to be
0.70% and 0.45%, respectively, after giving effect to Pioneer's contractual
expense limitation with respect to Class A and Class Y shares, and the
historical net expense ratios for the corresponding classes of shares of your
RMK Fund are 0.69% and 0.45%, respectively. Therefore, the expense ratio of the
combined Pioneer Fund is expected to be lower or the same for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. In addition, the broader distribution arrangements of the
Pioneer Fund offer greater potential for further asset growth and further
reduced per share expenses.
Third, the RMK Board considered that Pioneer has contractually agreed to
limit ordinary operating expenses of the combined Pioneer Fund to the extent
required to reduce the fund expenses to 0.70% and 0.45% of the average daily
net assets attributable to Class A shares and Class Y shares, respectively.
Assuming the shareholders of your RMK Fund approve the Reorganization, these
expense limitations will be in effect for the combined Pioneer Fund for a
period of two years from the Closing Date. There can be no assurance that
Pioneer will extend the expense limitations beyond such time. In addition,
Pioneer may limit the combined Pioneer Fund's expenses for any class of shares
or waive a portion of its management fee to maintain a net asset value of
$1.00. Assuming the shareholders of your RMK Fund approve the Reorganization,
this expense limitation will also be in effect for the combined Pioneer Fund.
These expense limitation policies are voluntary and temporary and may be
revised or terminated by Pioneer at any time without notice.
Fourth, the reputation, financial strength, resources and capabilities of
Pioneer will benefit RMK Fund shareholders. At December 31, 2008, Pioneer
managed over [__] investment companies and accounts with approximately $50
billion in assets. Pioneer is an indirect, wholly owned subsidiary of UniCredit
S.p.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of December 31,
2008, assets under management of the group were approximately $206 billion
worldwide. Shareholders of your RMK Fund would become part of a significantly
larger family of funds that offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over [ ] funds, including domestic and international equity and fixed
income funds and money market funds that will be available to your RMK Fund's
shareholders through exchanges. In addition, your RMK Fund may reduce the level
of its operational expenses for administrative, compliance and portfolio
management services if it becomes part of a large mutual fund complex.
Fifth, the substantially larger size of the combined Pioneer Fund will
offer greater opportunity for diversification of the investment portfolio,
which should help to reduce risks and provide benefits to the shareholders of
the Fund from the long-term economies of scale that may result from
consummation of the Reorganization.
Sixth, the Class A and Y shares of the Pioneer Fund received in the
Reorganization will provide the RMK Fund shareholders with exposure to
substantially the same investment product as they have currently.
Seventh, the transaction is structured to qualify as a tax-free
reorganization under Section 368(a) of the Code and therefore you will not
recognize gain or loss for federal income tax purposes on the exchange of your
shares for corresponding shares of the Pioneer Fund. [Although the
Reorganization will result in a per share increase in net unrealized capital
gains and decrease in capital loss carryforwards, the potential negative tax
consequences of these aspects of the Reorganization are outweighed by the
advantages of the Reorganization.]
Pioneer and MAM have agreed to share the fees and expenses associated with
the Funds' participation in the Reorganization.
The RMK Trustees also considered that Pioneer and MAM will benefit from
the Reorganization. See "Will Pioneer and MAM Benefit from the
Reorganizations?"
195
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of January 20, 2009 and the pro forma combined capitalization
of the combined Pioneer Fund as if the Reorganization had occurred on that
date. If the Reorganization is consummated, the actual exchange ratios on the
Closing Date may vary from the exchange ratios used in the computation below.
This is due to changes in the market value of the portfolio securities of both
Funds between January 20, 2009 and the Closing Date, changes in the amount of
undistributed net investment income and net realized capital gains of both
Funds during that period resulting from income and distributions, and changes
in the accrued liabilities of both Funds during the same period.
Regions Morgan Keegan Pioneer Cash
Select Money Pioneer Cash Reserves Fund
Market Fund Reserves Fund Pro Forma
----------------------- ------------------ --------------------
Net Assets
Class A .......................... $ 88,740,984 $659,281,048 $ 748,022,032
Class B .......................... -- $ 55,160,296 $ 55,160,296
Class C .......................... -- $ 64,113,087 $ 64,113,087
Class I/Y ........................ $ 11,235,099 $180,676,093 $ 191,911,102
Class R .......................... -- $ 1,843,905 $ 1,843,905
-----------------------------------------------------------
Total Net Assets of Fund ......... $ 99,975,993 $961,074,429 $1,061,050,422
Net Asset Value Per Share
Class A .......................... $ 1.00 $ 1.00 $ 1.00
Class B .......................... -- $ 1.00 $ 1.00
Class C .......................... -- $ 1.00 $ 1.00
Class I/Y ........................ $ 1.00 $ 1.00 $ 1.00
Class R .......................... -- $ 1.00 $ 1.00
Shares Outstanding
Class A .......................... 88,789,786 659,660,120 748,499,906
Class B .......................... -- 55,138,917 55,138,917
Class C .......................... -- 64,117,375 64,117,375
Class I/Y ........................ 11,223,933 180,676,527 191,900,460
Class R .......................... -- 1,844,369 1,844,369
It is impossible to predict how many shares of the Pioneer Fund will
actually be received and distributed by your RMK Fund on the Closing Date. The
table should not be relied upon to determine the amount of Pioneer Fund shares
that will actually be received and distributed.
ADDITIONAL INFORMATION
Each of the Funds has been accepted as a participant in the U.S. Treasury
Department's Temporary Guarantee Program (the "Program") for money market
funds. The Program seeks to guarantee the $1.00 net asset value of certain
shares of money market funds as of September 19, 2008. The guarantee would be
triggered in the event the market-based net asset value of a participating
fund's share falls below $0.995 and that situation has not been cured. Recovery
under the Program would require the participating fund to liquidate. Upon
liquidation, and subject to the availability of assets under the Program,
eligible shareholders who have continued to maintain accounts would be entitled
to receive a payment equal to any shortfall between the amount received by a
shareholder in the liquidation and $1.00 per share. Only shareholders of record
of each Fund as of September 19, 2008 are eligible to participate in the
guarantee. Any increase in the number of shares held in a Fund in excess of
shares held at the close of business on September 19, 2008 will not be covered.
If, following September 19, 2008, the number of shares held in an account
fluctuates, shareholders will be covered for either the number of shares held
as of the close of business on September 19, 2008 or the number of shares held
on the date of the trigger event, whichever is less. RMK Fund shareholders will
continue to benefit from the RMK Fund's participation in the guarantee
following consummation of the proposed Reorganization to the extent of the RMK
Fund's participation. The Program's expiration date has been extended from
December 18, 2008 to April 30, 2009 and may be extended further by the
Treasury. If the Program were extended beyond April 30, 2009, eligible funds
would have to renew their participation to maintain coverage. There is no
assurance that the Pioneer Fund will participate in the Program if it is
extended beyond April 30, 2009.
Participation in the initial three month period of the Program required a
payment to the U.S. Treasury Department in the amount of 0.01% of each Fund's
net asset value as of the close of business on September 19, 2008. This expense
has been borne by the Pioneer
196
Fund without regard to any expense limitation currently in effect for the
Pioneer Fund. For the RMK Fund, this expense has been borne by MAM. The amount
of the payment for the extension period was based on each Fund's net asset
value as of the close of business on September 19, 2008. As each Fund had a
market-based net asset value greater than or equal to 99.75% of its stable
share price on that date, the payment was 0.015%, multiplied by the number of
shares outstanding on September 19. This extension expense was borne by the
Pioneer Fund without regard to any expense limitation currently in effect for
the Pioneer Fund. For the RMK Fund, this expense has been borne by MAM. Any
additional cost to participate in the Program also may be borne by the Pioneer
Fund.
For information relating to each Fund and the Reorganization, including
tax capital loss carryforwards, voting rights and required vote from the RMK
Fund shareholders and information concerning the meeting of your RMK Fund
shareholders, the tax status of the Reorganization, a comparison of Delaware
statutory trusts and Massachusetts business trusts, a comparison of the
fundamental investment policies of the Funds, how to buy, sell or exchange Fund
shares, how each Pioneer Fund values its securities, financial highlights
information for each Pioneer Fund and ownership of shares of the Funds, please
see the sections immediately following the discussion of Proposal 11.
RMK BOARD'S EVALUATION AND RECOMMENDATION
For the reasons described above, the RMK Trustees, including the
Independent RMK Trustees, approved the Reorganization. In particular, the RMK
Trustees have concluded that participation in the Reorganization is in the best
interests of the RMK Fund and that the interests of the RMK Fund's existing
shareholders will not be diluted as a result of the Reorganization. Similarly,
the Board of Trustees of the Pioneer Fund, including its Independent Trustees,
approved the Reorganization. They also determined that the Reorganization is in
the best interests of the Pioneer Fund.
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 11 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
197
OTHER IMPORTANT INFORMATION
CONCERNING THE REORGANIZATIONS
Tax Capital Loss Carryforwards
Federal income tax law permits a regulated investment company to carry
forward its net capital losses for a period of up to eight taxable years. Each
RMK Fund is presently entitled to net capital loss carryforwards for federal
income tax purposes in the amounts set forth below. Each Reorganization, other
than the Reorganizations involving the Regions Morgan Keegan Select Growth
Fund, the Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund, and
the Regions Morgan Keegan Select Mid Cap Growth Fund, is expected to result in
a limitation on the applicable Pioneer Fund's ability to use carryforwards of
the corresponding RMK Fund and, potentially, to use unrealized capital losses
inherent in the tax basis of the assets acquired, once realized. That
limitation, imposed by Section 382 of the Code, will apply if the shareholders
of the RMK Fund own less than 50% of the Pioneer Fund immediately after the
Reorganization, and will be imposed on an annual basis. The annual Section 382
limitation for periods following a Reorganization that is subject to such a
limitation generally will equal the product of the net asset value of the
applicable RMK Fund immediately prior to the Reorganization and the "long-term
tax-exempt rate," published by the Internal Revenue Service, in effect at the
time of the Reorganization. Each Pioneer Fund may also be prohibited, under
Section 384 of the Code, from using the corresponding RMK Fund's loss
carryforwards and unrealized losses against the unrealized gains of the Pioneer
Fund at the time of the applicable Reorganization, to the extent such gains are
recognized within five years following the Reorganization. Therefore, you may
pay more taxes, or pay taxes sooner, than you otherwise would if your RMK
Fund's Reorganization did not occur.
As of November 30, 2008, the RMK Funds had the following unused capital
loss carryforwards:
Expiring in Expiring in Expiring in Expiring in
Fund 2009 2010 2011 2012
- ---- ----------- ----------- ----------- -----------
Growth Fund ................ $ -- $-- $ -- $ --
Mid Cap Value Fund ......... -- -- -- --
Value Fund ................. -- -- -- --
Balanced Fund .............. -- -- -- --
Fixed Income Fund .......... -- -- -- 1,419,944
Limited Maturity Fixed
Income Fund ............... -- -- 433,974 2,704,075
Money Market Fund .......... 2,572 54 18,234 24,650
Expiring in Expiring in Expiring in Expiring in
Fund 2013 2014 2015 2016 Total
- ---- ----------- ----------- ----------- ----------- -----
Growth Fund ................ $ -- $ -- $ -- $4,033,731 $ 4,033,731
Mid Cap Value Fund ......... -- -- -- 3,024,567 3,024,567
Value Fund ................. -- -- -- 7,257,224 7,257,224
Balanced Fund .............. -- -- -- 818,419 818,419
Fixed Income Fund .......... 209,164 3,069,321 10,886,297 7,351,686 22,936,412
Limited Maturity Fixed
Income Fund ............... 1,268,755 1,335,125 2,440,082 1,900,905 10,082,916
Money Market Fund .......... 149,661 13 2,890 2,687 200,761
As of November 30, 2008, Fixed Income Fund and Money Market Fund had
capital loss carryforwards of $214,873 and $31, respectively, subject to any
applicable limitations on availability to offset future capital gains, if any,
as the successor of a merger.
The Reorganizations of Regions Morgan Keegan Select Growth Fund, the
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund and the Regions
Morgan Keegan Select Mid Cap Growth Fund will not affect the timing or
usability of those Funds' capital loss carryforwards. The other Reorganizations
would impact the use of loss carryforwards in the following manner: (1) the
loss carryforwards will benefit the shareholders of the combined Pioneer Fund,
rather than only the shareholders of the applicable RMK Fund; (2) if limited by
the Section 382 rules described above, the amount of an RMK Fund's capital loss
carryforwards that can be utilized in any taxable year will be limited to the
product of the long-term tax-exempt rate at the time of the Reorganization and
the aggregate net asset value of the RMK Fund at the time of Reorganization;
and (3) if a Reorganization closes on a date other than the applicable RMK
Fund's regular year end, it will cause the RMK Fund's losses to expire one year
earlier than the time they otherwise would have expired. Consequently, a
significant percentage of one or more RMK Funds' tax capital loss carryforwards
may expire unutilized.
Since the Reorganizations are not expected to close until [ ], 2009, the
capital loss carryforwards and limitations described above may change
significantly between now and the completion of the Reorganizations. Further,
the ability of each Pioneer Fund to use these losses (even in the absence of a
Reorganization) depends on factors other than loss limitations, such as the
future realization of capital gains or losses.
198
PORTFOLIO SECURITIES
If a Reorganization is effected, Pioneer will analyze and evaluate the
portfolio securities of the RMK Fund being transferred to the corresponding
Pioneer Fund. Consistent with each Pioneer Fund's investment objective and
policies, any restrictions imposed by the Code and in the best interests of
each Pioneer Fund's shareholders (including former shareholders of the
corresponding RMK Fund), Pioneer will influence the extent and duration to
which the portfolio securities of the corresponding RMK Fund will be maintained
by the Pioneer Fund. It is possible that there may be dispositions of some of
the portfolio securities of one or more RMK Funds following the
Reorganizations. Subject to market conditions at the time of any such
disposition, the disposition of the portfolio securities by each combined
Pioneer Fund may result in a capital gain or loss. The actual tax consequences
of any disposition of portfolio securities will vary depending upon the
specific security(ies) being sold and the combined Pioneer Fund's ability to
use any available tax loss carryforwards. The disposition of portfolio
securities also may result in significant brokerage expense to the combined
Pioneer Fund.
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o Each RMK Fund will transfer all of its assets to a corresponding Pioneer
Fund. In exchange, each Pioneer Fund will assume the corresponding RMK
Fund's stated liabilities. In no case will any Pioneer Fund assume any
unknown liabilities of the respective RMK Fund under the terms of the
applicable Reorganization. Each RMK Fund then will be liquidated and
terminated.
o Each RMK Fund (other than Regions Morgan Keegan Select Treasury Money
Market Fund and Regions Morgan Keegan Select Money Market Fund (each, an
"RMK Money Market Fund")) offers Class A, Class C and Class I shares. In
each Reorganization not involving Regions Morgan Keegan Select Fixed
Income Fund, Regions Morgan Keegan Select Limited Maturity Fixed Income
Fund, Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund or an
RMK Money Market Fund, the Pioneer Fund will issue Class A, Class C and
Class Y shares, as applicable, to the corresponding RMK Fund in amounts
equal to the aggregate net asset value of the RMK Fund's Class A, Class C
and Class I shares, respectively. In each Reorganization involving Regions
Morgan Keegan Select Fixed Income Fund, Regions Morgan Keegan Select
Limited Maturity Fixed Income Fund or Regions Morgan Keegan Select
Intermediate Tax Exempt Bond Fund, the Pioneer Fund will issue Class A
shares to the corresponding RMK Fund in amounts equal to the aggregate net
asset value of the RMK Fund's Class A and Class C shares and Class Y
shares to the corresponding RMK Fund in amounts equal to the aggregate net
asset value of the RMK Fund's Class I shares. In each Reorganization
involving an RMK Money Market Fund, the Pioneer Fund will issue Class A
and Class Y shares, as applicable, to the corresponding RMK Money Market
Fund in amounts equal to the aggregate net asset value of the RMK Money
Market Fund's Class A and Class I shares, respectively.
o Shareholders of each RMK Fund will receive shares of the corresponding
Pioneer Fund in proportion to the relative net asset value of their share
holdings of the RMK Fund on the Closing Date. Therefore, on the Closing
Date, each RMK Fund shareholder will hold shares of a corresponding
Pioneer Fund with the same aggregate net asset value as the shares of the
RMK Fund that the shareholder held immediately prior to the
Reorganization. The net asset value attributable to a class of shares of
an RMK Fund will be determined using the RMK Funds' valuation policies and
procedures and the net asset value attributable to a class of shares of a
Pioneer Fund will be determined using the Pioneer Funds' valuation
policies and procedures.
o No sales load, contingent deferred sales charge, commission, redemption
fee or other transactional fee will be charged as a result of the
Reorganizations. After the Reorganizations, for purposes of determining
any contingent deferred sales charge, the same sales charge and schedule
that applied to the shares of your RMK Fund will apply to the shares of
the corresponding Pioneer Fund you received in the Reorganization and the
holding period for determining the contingent deferred sales charge will
be calculated from the date the shares were initially issued by your RMK
Fund.
o Following the Reorganizations, Pioneer will continue to act as investment
adviser to each Pioneer Fund and MAM will not be involved in the
management of the Pioneer Funds.
o Each Reorganization generally will not result in income, gain or loss
being recognized for federal income tax purposes by any RMK Fund or
Pioneer Fund or their shareholders and will not take place unless both
Funds involved in the Reorganization receive a satisfactory opinion
concerning the tax consequences of the Reorganization from Bingham
McCutchen LLP, counsel to the Pioneer Funds.
199
o If each of the Reorganizations is approved by the shareholders of the RMK
Funds, the RMK Trust will file with the SEC an application for
deregistration on Form N-8F under the 1940 Act, and will cease to exist as
an investment company when such application is approved.
Agreement and Plan of Reorganization
The shareholders of each RMK Fund are being asked to approve an Agreement
and Plan of Reorganization substantially in the form attached as Exhibit A-1,
with respect to Proposals 1, 2 and 9, and Exhibit A-2, with respects to
Proposals 3 through 8, 10 and 11 (each, a "Plan"). The description of the Plans
contained herein includes the material provisions of the Plans, but this
description is qualified in its entirety by the attached copies, as
appropriate.
Determination of Net Asset Value. If a Reorganization is approved, the
applicable Pioneer Fund will issue to the corresponding RMK Fund the number of
Pioneer Fund shares, including fractional shares, of each class with an
aggregate net asset value equal to the net asset value of the RMK Fund
attributable to the corresponding class of the RMK Fund's shares. The net asset
value per share of each class of such Pioneer Fund shall be computed using the
Pioneer Funds' valuation procedures and the net asset value per share of each
class of such RMK Fund shall be computed using the RMK Funds' valuation
policies and procedures. The number of Pioneer Fund shares to be issued
(including fractional shares, if any) in exchange for the RMK Fund's assets
shall be determined, with respect to each class, by dividing the RMK Fund's net
asset value with respect to that class by the net asset value per share of the
corresponding class of the Pioneer Fund. The number of full and fractional
shares of a Pioneer Fund to be received by each corresponding RMK Fund
shareholder in a Reorganization will be equal in aggregate net asset value to
the aggregate net asset value of the shares of the RMK Fund held by such
shareholder on the Closing Date.
Conditions to Closing Each Reorganization. The obligation of each Fund to
consummate a given Reorganization is subject to the satisfaction of certain
conditions, including the Fund's performance of all of its obligations under
the Plan, the receipt of certain documents and financial statements from the
subject RMK Fund and the receipt of all consents, orders and permits necessary
to consummate the Reorganization (see Sections 6, 7 and 8 of the Plan). The
consummation of each Reorganization is not contingent on consummation of any
other Reorganization. The obligations of a Pioneer Fund and a corresponding RMK
Fund are subject to the approval of the Plan by the necessary vote of the
outstanding shares of the RMK Fund with respect to the Reorganization of that
RMK Fund, in accordance with the provisions of the RMK Trust's declaration of
trust and by-laws. The Funds' obligations are also subject to the receipt of a
favorable opinion of Bingham McCutchen LLP as to the United States federal
income tax consequences of the Reorganizations (see Section 8.5 of the Plan).
Termination of the Plan. The RMK Board or the Board of Trustees of a
corresponding Pioneer Fund may terminate a Plan (even if the shareholders of
the RMK Fund have already approved it) at any time before the Closing Date, if
such Board believes in good faith that proceeding with the Reorganization would
no longer be in the best interests of the Fund's shareholders. A Plan may also
be terminated because of a material breach of any representation, warranty,
covenant or agreement contained in the Plan to be performed at or prior to the
Closing Date, because a condition to be fulfilled prior to the obligations of a
party to the Plan has not been and reasonably appears will not and cannot be
met and if the Reorganizations have not occurred on or prior to December 31,
2009.
TAX STATUS OF THE REORGANIZATION
Each Reorganization is conditioned upon the receipt by the RMK Trust and
the applicable Pioneer Fund (or, in the case of a Pioneer Fund that is a series
of an open-end management investment company, the applicable Pioneer trust) of
an opinion from Bingham McCutchen LLP, counsel to the Pioneer Funds,
substantially to the effect that, for federal income tax purposes:
o The transfer of all of the applicable RMK Fund's assets to the Pioneer
Fund in exchange solely for the issuance of the Pioneer Fund shares to the
RMK Fund and the assumption of the RMK Fund's stated liabilities by the
Pioneer Fund, followed by the distribution of the Pioneer Fund shares to
the RMK Fund shareholders in complete liquidation of the RMK Fund, will
constitute a "reorganization" within the meaning of Section 368(a) of the
Code, and each of the Funds will be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
o No gain or loss will be recognized by the applicable RMK Fund upon (1) the
transfer of all of its assets to the Pioneer Fund as described above or
(2) the distribution by the RMK Fund of the Pioneer Fund shares to the RMK
Fund's shareholders, except for (A) gain or loss that may be recognized on
the transfer of "section 1256 contracts" as defined in Section 1256(b) of
the Code, (B) gain that may be recognized on the transfer of stock in a
"passive foreign investment company" as defined in Section 1297(a) of the
Code, or (C) any other gain that may be required to be recognized as a
result of the closing of the RMK Fund's taxable year;
200
o The tax basis of each asset of the applicable RMK Fund in the hands of the
Pioneer Fund will be the same as the tax basis of that asset in the hands
of the RMK Fund immediately before the transfer of the asset, increased by
the amount of gain (or decreased by the amount of loss), if any,
recognized by the RMK Fund on the transfer;
o The holding period of each asset of the applicable RMK Fund in the hands
of the Pioneer Fund, other than assets with respect to which gain or loss
is required to be recognized, will include the RMK Fund's holding period
for that asset;
o No gain or loss will be recognized by the Pioneer Fund upon its receipt of
the assets of the applicable RMK Fund solely in exchange for shares of the
Pioneer Fund and the assumption of the stated liabilities;
o No gain or loss will be recognized by the RMK Fund shareholders upon the
exchange of their RMK Fund shares for Pioneer Fund shares as part of the
Reorganization.
o The aggregate tax basis of the Pioneer Fund shares received by the
applicable RMK Fund shareholders in the Reorganization will be the same as
the aggregate tax basis of the shares of the RMK Fund surrendered in
exchange therefor; and
o The holding period of Pioneer Fund shares received by each RMK Fund
shareholder will include the holding period of the shares of the RMK Fund
that were surrendered in exchange therefor, provided that the shareholder
held the RMK Fund shares as capital assets on the date of the exchange.
In rendering such opinion, counsel shall rely upon, among other things,
certain facts, assumptions and representations of the RMK Trust, on behalf of
the applicable RMK Fund, and of the applicable Pioneer Fund (or Pioneer trust).
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with each Reorganization. An opinion of counsel
is not binding on the IRS or a court, and no assurance can be given that the
IRS would not assert, or a court would not sustain, a contrary position.
Immediately prior to the Reorganization, each RMK Fund, other than Regions
Morgan Keegan Select Mid Cap Growth Fund, Regions Morgan Keegan Select Growth
Fund and Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund, will
declare and pay a dividend, which, together with all previous dividends, is
intended to have the effect of distributing to the RMK Fund shareholders all of
the RMK Fund's investment company taxable income for taxable years ending on or
prior to the Closing Date (computed without regard to any deduction for
dividends paid), all of its net tax-exempt income and all of its net capital
gain, if any, realized in taxable years ending on or prior to the Closing Date
(after reduction for any available capital loss carryover). Such distributions
may result in taxable income to an RMK Fund shareholder.
Under a proposed regulation promulgated by the Massachusetts Department of
Revenue, shareholders of the RMK Funds that are Massachusetts residents or
corporations doing business in Massachusetts may be subject to adverse
Massachusetts tax consequences as a result of the status of the RMK Trust as a
Massachusetts business trust. In particular, if such a shareholder sells or
otherwise disposes of RMK Fund shares prior to the Reorganization, the
shareholder would be treated under the proposed regulation as having received a
taxable distribution equal to the shareholder's proportionate share of the
applicable Fund's accumulated and undistributed earnings and profits as of the
time of the distribution.
A similar set of Massachusetts tax consequences will attach to ownership
of shares of Pioneer Mid Cap Growth Fund II, Pioneer Growth Fund, and Pioneer
Intermediate Tax Free Income Fund by Massachusetts taxpayers following the
Reorganizations: A Massachusetts taxpayer who sells or otherwise disposes of
such Pioneer Fund shares after the Reorganizations but before the close of the
Pioneer Fund's taxable year on November 30, 2009 would be treated under the
proposed regulation as having received a taxable distribution equal to the
shareholder's proportionate share of the corresponding RMK Fund's accumulated
and undistributed earnings and profits as of the date of the Reorganization.
Shareholders generally should not suffer such adverse consequences if they
continue to hold their Pioneer Fund shares through November 30, 2009, so long
as the earnings distributed by the applicable Pioneer Fund for the taxable year
ended November 30, 2009 equal or exceed the accumulated and undistributed
earnings and profits as of the date of the Reorganization.
The Massachusetts tax consequences of the ownership and disposition of RMK
Fund or Pioneer Fund shares may differ if the Massachusetts Department of
Revenue issues a final regulation that differs from the current proposed
regulation. Shareholders subject to Massachusetts personal income or corporate
excise tax should consult with their tax advisers regarding the potential
Massachusetts tax consequences of the ownership and disposition of RMK Fund and
Pioneer Fund shares.
The foregoing discussion is very general. The foregoing consequences may
not apply to certain classes of taxpayers who are subject to special
circumstances, such as shareholders who are not citizens or residents of the
United States, insurance companies, tax-exempt organizations, financial
institutions, dealers in securities or foreign currencies, or persons who hold
their shares as part of a straddle or
201
conversion transaction. Except as expressly set forth above, this discussion
does not address any state, local or foreign tax consequences of the
Reorganization. You should consult your tax adviser for the particular tax
consequences to you of the transaction, including the applicability of any
state, local or foreign tax laws.
VOTING RIGHTS AND REQUIRED VOTE
Each share of each RMK Fund is entitled to one vote. A quorum is required
to conduct business at the meeting. With respect to each RMK Fund, the presence
in person or by proxy of more than 50% of the total number of outstanding
shares of the RMK Fund entitled to vote at the meeting will constitute a quorum
with respect to the RMK Fund. A favorable vote of more than fifty percent of
the outstanding shares of the applicable RMK Fund is required to approve each
Proposal.
The table below shows how shares will be treated for the purposes of
quorum and voting requirements.
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Quorum Voting
- ------------------------------------------------------------------------------------------------------------------------------------
In General All shares "present" in person or by proxy are Shares "present" in person will be voted in
counted toward a quorum. person at the meeting. Shares present by
proxy will be voted in accordance
with instructions.
- ------------------------------------------------------------------------------------------------------------------------------------
Signed Proxy with no Voting Considered "present" at meeting for purposes Voted "for" the Proposal.
Instruction (other than Broker of quorum.
Non-Vote)
- ------------------------------------------------------------------------------------------------------------------------------------
Broker Non-Vote (where the Considered "present" at meeting for purposes Broker non-votes do not count as a vote "for"
underlying holder had not of quorum. the Proposal and have the same effect as a
voted and the broker does not vote "against" the Proposal.
have discretionary authority to
vote the shares)
- ------------------------------------------------------------------------------------------------------------------------------------
Vote to Abstain Considered "present" at meeting for purposes Abstentions do not constitute a vote "for" the
of quorum. Proposal and have the same effect as a vote
"against" the Proposal.
- ------------------------------------------------------------------------------------------------------------------------------------
If the required approval of shareholders of an RMK Fund is not obtained,
the meeting may be adjourned as to that RMK Fund as more fully described in
this Proxy Statement/Prospectus, and the RMK Fund will continue to engage in
business as a separate mutual fund and the RMK Board will consider what further
action may be appropriate.
COMPARISON OF DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST
Although federal law, and particularly the 1940 Act, regulates many of the
aspects of the governance of a mutual fund, some state laws apply because each
mutual fund also is organized as an entity under state law. Each of the RMK
Funds is a series of a Massachusetts business trust. Each of the Pioneer Funds
is a Delaware statutory trust or a series thereof. The federal laws governing
mutual funds apply to both the RMK Funds and the Pioneer Funds. However, there
are differences between Delaware state law and Massachusetts state law, and
shareholders should consider these differences when considering each Proposal.
The following is a summary of the principal differences between Delaware
statutory trusts and Massachusetts business trusts.
A fund organized as a Massachusetts business trust is governed by its
declaration of trust or similar instrument. Massachusetts law allows the
trustees of a business trust to set the terms of a fund's governance in its
declaration. All power and authority to manage the fund and its affairs
generally reside with the trustees, and shareholder voting and other rights are
limited to those provided to the shareholders in the declaration. The
flexibility inherent to the Massachusetts business trust has led to it becoming
a common form of organization for mutual funds. That flexibility also means
that the Massachusetts business trust law may be open to interpretation
although, in resolving such matters, courts may look by analogy to
Massachusetts corporate law.
A fund organized as a Delaware statutory trust, on the other hand, is
governed both by the Delaware Statutory Trust Act (the "Delaware Act") and the
fund's governing instrument. For a Delaware statutory trust, unlike a
Massachusetts business trust, the law specifically addresses many aspects of
corporate governance. The body of Delaware law on the topic is consequently
more detailed than in Massachusetts. This detail provides somewhat clearer
guidelines as to the rights and obligations of the trust, trustees, and
shareholders.
202
Under the Delaware Act, shareholders generally are shielded from personal
liability for the trust's debts or obligations to the same extent a shareholder
is shielded from a corporation's debts. Shareholders of a Massachusetts
business trust, on the other hand, are shielded only to the extent provided in
the declaration of trust. In practice, declarations of trust typically provide
that a shareholder will not be personally liable for the fund's debts or
obligations and will be indemnified if found personally liable.
The Delaware Act permits a shareholder to bring a derivative action on
behalf of the trust if the trustees refuse to do so, but that power can be
restricted by such standards and restrictions as are set forth in the
declaration of trust. Massachusetts courts generally have required shareholders
of business trusts to follow the provisions of the Massachusetts Business
Corporation Act with respect to derivative lawsuits, meaning that derivative
lawsuits are permitted but can be dismissed by the decision of an independent
court appointee, by a vote of a majority of the outstanding shares, by a vote
of a majority of the independent trustees constituting a quorum, or by a vote
of a committee established by the independent trustees.
A Delaware statutory trust and a Massachusetts business trust are similar
in many ways. Both can limit a trustee's personal liability in the declaration
of trust. Both may issue an unlimited number of authorized shares and have
multiple classes and series. Neither is required to hold shareholder meetings
or get shareholder approval for certain actions unless the declaration of trust
requires it.
FUNDAMENTAL INVESTMENT POLICIES OF THE FUNDS
Each 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.
Under the 1940 Act, the vote of a majority of the outstanding voting securities
means the affirmative vote of the lesser of (i) 67% or more of the shares of
the applicable RMK Fund represented at the meeting, if at least 50% of all
outstanding shares of the RMK Fund are represented at the meeting, or (ii) 50%
or more of the outstanding shares of the RMK Fund entitled to vote at the
meeting. The following table lists the fundamental investment restrictions for
each RMK Fund and each Pioneer Fund. For a more complete discussion of each
Fund's other investment policies and fundamental and non-fundamental investment
restrictions, please see the statement of additional information for this Proxy
Statement/Prospectus.
203
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap Growth Fund
Regions Morgan Keegan Select Growth Fund
Regions Morgan Keegan Select Mid Cap Value Fund
Regions Morgan Keegan Select Value Fund
Regions Morgan Keegan Select Balanced Fund
Regions Morgan Keegan Select Fixed Income Fund
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund
Regions Morgan Keegan Select Treasury Money Market Fund
- -------------------------------------------------------------------------------------------------------------------------------
Issuing Senior Each RMK Fund may issue senior securities to the
Securities maximum extent permitted under the 1940 Act.
- -------------------------------------------------------------------------------------------------------------------------------
Borrowing Each RMK Fund may borrow money, directly or
indirectly, to the maximum extent permitted under the
1940 Act.
- -------------------------------------------------------------------------------------------------------------------------------
Lending Each RMK Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing
debt obligations, entering into repurchase agreements,
lending its assets to broker-dealers or institutional
investors and investing in loans, including assignments
and participation interests.
- -------------------------------------------------------------------------------------------------------------------------------
Investing in Each RMK Fund may not purchase or sell physical
Commodities commodities, provided that the Fund may purchase
securities of companies that deal in commodities. As a
non-fundamental policy, for purposes of this restriction,
investments in transactions involving futures contracts
and options, forward currency contracts, swap
transactions and other financial contracts that settle by
payment of cash are not deemed to be investments in
commodities.
- -------------------------------------------------------------------------------------------------------------------------------
Investing in Real Each RMK Fund may not purchase or sell real estate,
Estate provided that this restriction does not prevent the Fund
from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or
interests therein, or investing in securities that are
secured by real estate or interests therein. Each RMK
Fund may exercise its rights under agreements relating
to such securities, including the right to enforce
security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Pioneer Mid Cap Growth Fund II
Pioneer Growth Fund
Pioneer Mid Cap Value Fund
Pioneer Cullen Value Fund
Pioneer Classic Balanced Fund
Pioneer Bond Fund
Pioneer Short Term Income Fund
Pioneer Intermediate Tax Free Income Fund
Pioneer Treasury Reserves Fund
- -------------------------------------------------------------------------------------------------------------------------------
Issuing Senior Each Pioneer Fund may not issue senior securities
Securities except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Borrowing Each Pioneer Fund may not borrow money except
as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Lending Each Pioneer Fund may lend money or other
assets to the extent permitted by (i) the 1940 Act,
or interpretations or modifications by the SEC,
SEC staff or other authority of competent
jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other
authority of competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Investing in Each Pioneer Fund may purchase or sell
Commodities commodities or contracts related to commodities
to the extent permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Investing in Real Each Pioneer Fund may not purchase or sell real
Estate estate except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
204
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap Growth Fund
Regions Morgan Keegan Select Growth Fund
Regions Morgan Keegan Select Mid Cap Value Fund
Regions Morgan Keegan Select Value Fund
Regions Morgan Keegan Select Balanced Fund
Regions Morgan Keegan Select Fixed Income Fund
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund
Regions Morgan Keegan Select Treasury Money Market Fund
- -------------------------------------------------------------------------------------------------------------------------------
Diversification of With respect to securities comprising 75% of the value
Investments of its total assets, each RMK Fund will not purchase
securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and
securities of other investment companies) if, as a result,
more than 5% of the value of its total assets would be
invested in securities of that issuer, or the Fund would
own more than 10% of the outstanding voting
securities of that issuer.
- -------------------------------------------------------------------------------------------------------------------------------
Concentration of Each RMK Fund will not make investments that will
Investments result in the concentration of their investments in the
securities of issuers primarily engaged in the same
industry. Government securities, municipal securities
and bank instruments will not be deemed to constitute
an industry. To conform to the current view of the SEC
staff that only domestic bank instruments may be
excluded from industry concentration limitations, as a
matter of non-fundamental policy, each RMK Fund will
not exclude foreign bank instruments from industry
concentration tests so long as the policy of the SEC
remains in effect. As a non-fundamental operating
policy, each RMK Fund will consider concentration to be
the investment of more than 25% of the value of its
total assets in any one industry.
- -------------------------------------------------------------------------------------------------------------------------------
Underwriting Each RMK Fund may not underwrite the securities of
other issuers, except that the Fund may engage in
transactions involving the acquisition, disposition or
resale of their portfolio securities, under circumstances
where it may be considered to be an underwriter under
the Securities Act of 1933.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Pioneer Mid Cap Growth Fund II
Pioneer Growth Fund
Pioneer Mid Cap Value Fund
Pioneer Cullen Value Fund
Pioneer Classic Balanced Fund
Pioneer Bond Fund
Pioneer Short Term Income Fund
Pioneer Intermediate Tax Free Income Fund
Pioneer Treasury Reserves Fund
- -------------------------------------------------------------------------------------------------------------------------------
Diversification of No stated policy. However, each Pioneer Fund is
Investments currently classified as a diversified fund under the
1940 Act. This means that each Pioneer Fund
may not purchase securities of any one issuer
(other than cash, cash items, securities issued or
guaranteed by the U.S. government, its agencies
or instrumentalities or any certificate of deposit
thereof, and securities of other investment
companies) if, as a result, with respect to 75% of
the value of its total assets, (a) more than 5% of
the value of each Pioneer Fund's total assets
would be invested in securities of that issuer, or
(b) each Pioneer Fund would hold more than 10%
of the outstanding voting securities of that issuer.
The 1940 Act requires any change from
diversified to non-diversified status of a fund to
be approved in advance by fund shareholders.
- -------------------------------------------------------------------------------------------------------------------------------
Concentration of For all Funds except Pioneer Treasury Reserves
Investments Fund:
Except as permitted by exemptive or other relief
or permission from the SEC, SEC staff or other
authority of competent jurisdiction, each Pioneer
Fund may not make any investment if, as a result,
each Pioneer Fund's investments will be
concentrated in any one industry.
For Pioneer Treasury Reserves Fund:
Except as permitted by exemptive or other relief
or permission from the SEC, SEC staff or other
authority of competent jurisdiction, the Fund may
not make any investment if, as a result, the
Fund's investments will be concentrated in any
one industry, except the Fund may invest without
limitation in obligations issued by banks.
- -------------------------------------------------------------------------------------------------------------------------------
Underwriting Each Pioneer Fund may not engage in the
business of underwriting the securities of other
issuers except as permitted by (i) the 1940 Act,
or interpretations or modifications by the SEC,
SEC staff or other authority of competent
jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other
authority of competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
205
***
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity Fund
- -------------------------------------------------------------------------------------------------------------------------------
Issuing Senior The RMK Fund may not issue senior securities. For the
Securities purpose of this restriction none of the following is
deemed to be a senior security: any pledge or other
encumbrance of assets; any borrowing permitted by the
Fund's investment limitation on borrowing; any collateral
arrangements with respect to options, futures contracts
and options on futures contracts and with respect to
initial and variation margin; and the purchase or sale of
options, forward contracts, futures contracts or options
on futures contracts.
- -------------------------------------------------------------------------------------------------------------------------------
Borrowing The RMK Fund may not borrow money in excess of
10% of its total assets (taken at cost) or 5% of its total
assets (taken at current value), whichever is lower, nor
borrow any money except as a temporary measure for
extraordinary or emergency purposes. The Fund may
not issue senior securities. For the purpose of this
restriction none of the following is deemed to be a
senior security: any pledge or other encumbrance of
assets; any borrowing permitted by the Fund's
investment limitation on borrowing; any collateral
arrangements with respect to options, futures contracts
and options on futures contracts and with respect to
initial and variation margin; and the purchase or sale of
options, forward contracts, futures contracts or options
on futures contracts.
- -------------------------------------------------------------------------------------------------------------------------------
Lending The RMK Fund may not make loans, provided that for
purposes of this investment restriction, the following
will not be considered the making of a loan: (a) entering
into repurchase agreements, (b) purchasing bonds,
debentures, commercial paper, corporate notes and
similar evidences of indebtedness, which are a part of
an issue to the public or a type commonly purchased
by financial institutions, and (c) lending portfolio
securities.
- -------------------------------------------------------------------------------------------------------------------------------
Investing in The RMK Fund may not invest in oil, gas or other
Commodities mineral leases, rights or royalty contracts or
commodities or commodity contracts. This restriction
does not prevent the Fund from investing in issuers that
invest or deal in the foregoing types of assets.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Pioneer Fund
- -------------------------------------------------------------------------------------------------------------------------------
Issuing Senior The Pioneer Fund may not issue senior securities
Securities except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Borrowing The Pioneer Fund may not borrow money except
as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Lending The Pioneer Fund may lend money or other
assets to the extent permitted by (i) the 1940 Act,
or interpretations or modifications by the SEC,
SEC staff or other authority of competent
jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other
authority of competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Investing in The Pioneer Fund may purchase or sell
Commodities commodities or contracts related to commodities
to the extent permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
206
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity Fund
- -------------------------------------------------------------------------------------------------------------------------------
Investing in Real The RMK Fund may not invest in real estate. This
Estate restriction does not prevent the Fund from investing in
issuers that invest or deal in real estate or purchasing
securities that are secured by real estate.
- -------------------------------------------------------------------------------------------------------------------------------
Diversification of With respect to securities comprising 75% of the value
Investments of its total assets, the RMK Fund will not purchase
securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and
securities of other investment companies) if, as a result,
more than 5% of the value of its total assets would be
invested in securities of that issuer, or the Fund would
own more than 10% of the outstanding voting
securities of that issuer.
- -------------------------------------------------------------------------------------------------------------------------------
Concentration of The RMK Fund may not purchase any security (other
Investments than U.S. government securities) if, as a result, 25% or
more of the Fund's total assets (taken at current value)
would be invested in any one industry (in the utilities
category, gas, electric, water and telephone companies
will be considered as being in separate industries). For
purposes of this restriction, telephone, gas and electric
public utilities are each regarded as separate industries
and finance companies whose financing activities are
related primarily to the activities of their parent
companies are classified in the industry of their parents.
- -------------------------------------------------------------------------------------------------------------------------------
Underwriting The RMK Fund may not act as underwriter, except to
the extent that, in connection with the disposition of
portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Pioneer Fund
- -------------------------------------------------------------------------------------------------------------------------------
Investing in Real The Pioneer Fund may not purchase or sell real
Estate estate except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
Diversification of No stated policy. However, the Pioneer Fund is
Investments currently classified as a diversified fund under the
1940 Act. This means that the Pioneer Fund may
not purchase securities of any one issuer (other
than cash, cash items, securities issued or
guaranteed by the U.S. government, its agencies
or instrumentalities or any certificate of deposit
thereof, and securities of other investment
companies) if, as a result, with respect to 75% of
the value of its total assets, (a) more than 5% of
the value of the Fund's total assets would be
invested in securities of that issuer, or (b) the
Fund would hold more than 10% of the
outstanding voting securities of that issuer. The
1940 Act requires any change from diversified to
non-diversified status of a fund to be approved in
advance by fund shareholders.
- -------------------------------------------------------------------------------------------------------------------------------
Concentration of Except as permitted by exemptive or other relief
Investments or permission from the SEC, SEC staff or other
authority of competent jurisdiction, the Pioneer
Fund may not make any investment if, as a result,
the Fund's investments will be concentrated in any
one industry.
- -------------------------------------------------------------------------------------------------------------------------------
Underwriting The Pioneer Fund may not engage in the business
of underwriting the securities of other issuers
except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- -------------------------------------------------------------------------------------------------------------------------------
207
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity Fund Pioneer Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Buying on The RMK Fund may not purchase securities on margin The Pioneer Fund may not purchase securities on
Margin (except such short term credits as are necessary for margin.
clearance of transactions); or make short sales (except
where, by virtue of ownership of other securities, it has
the right to obtain, without payment of additional
consideration, securities equivalent in kind and amount
to those sold).
Except with respect to borrowing money, if a percentage
limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any
change in value or net assets will not result in a
violation of such restriction. For purposes of its policies
and limitations, the RMK Fund considers instruments
(such as certificates of deposit and demand and time
deposits) issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and
undivided profits in excess of $100,000,000 at the time
of investment to be cash items.
- ------------------------------------------------------------------------------------------------------------------------------------
***
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market Fund Pioneer Cash Reserves Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Issuing Senior The RMK Fund may not issue senior securities. For the The Pioneer Fund may not issue senior securities
Securities purpose of this restriction none of the following is except as permitted by (i) the 1940 Act, or
deemed to be a senior security: any pledge or other interpretations or modifications by the SEC, SEC
encumbrance of assets; any borrowing permitted by the staff or other authority of competent jurisdiction,
Fund's investment limitation on borrowing; any collateral or (ii) exemptive or other relief or permission
arrangements with respect to options, futures contracts from the SEC, SEC staff or other authority of
and options on futures contracts and with respect to competent jurisdiction.
initial and variation margin; and the purchase or sale of
options, forward contracts, futures contracts or options
on futures contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing The RMK Fund may not borrow money, except as a The Pioneer Fund may not borrow money except
temporary measure for extraordinary or emergency as permitted by (i) the 1940 Act, or
purposes (but not for the purpose of investment), in interpretations or modifications by the SEC, SEC
excess of 10% of its total assets (taken at cost) or 5% staff or other authority of competent jurisdiction,
of such total assets (taken at current value), whichever or (ii) exemptive or other relief or permission
is lower. from the SEC, SEC staff or other authority of
competent jurisdiction.
- ------------------------------------------------------------------------------------------------------------------------------------
Lending The RMK Fund may not make loans, provided that for The Pioneer Fund may lend money or other
purposes of this investment restriction, the following assets to the extent permitted by (i) the 1940 Act,
will not be considered the making of a loan: (a) entering or interpretations or modifications by the SEC,
into repurchase agreements, (b) purchasing bonds, SEC staff or other authority of competent
debentures, commercial paper, corporate notes and jurisdiction, or (ii) exemptive or other relief or
similar evidences of indebtedness, which are a part of permission from the SEC, SEC staff or other
an issue to the public or a type commonly purchased authority of competent jurisdiction.
by financial institutions, and (c) lending portfolio
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
208
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investing in The RMK Fund may not invest in oil, gas or other
Commodities mineral leases, rights or royalty contracts or
commodities or commodity contracts. This restriction
does not prevent the Fund from purchasing securities of
companies which are not principally engaged in the
business of buying or selling such leases, rights or
contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
Investing in Real The RMK Fund may not invest in real estate. This
Estate restriction does not prevent the Fund from purchasing
securities of companies investing in real estate or of
companies which are not principally engaged in the
business of buying or selling such leases, rights or
contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
Diversification of With respect to securities comprising 75% of the value
Investments of its total assets, the RMK Fund will not purchase
securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and
securities of other investment companies) if, as a result,
more than 5% of the value of its total assets would be
invested in securities of that issuer, or the Fund would
own more than 10% of the outstanding voting
securities of that issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
Concentration of The RMK Fund may not purchase any security if, as a
Investments result, more than 25% of the Fund's total assets (taken
at current value) would be invested in any one industry.
This restriction does not apply to U.S. government
securities and bank obligations. For purposes of this
restriction, telephone, gas and electric public utilities are
each regarded as separate industries and finance
companies whose financing activities are related
primarily to the activities of their parent companies are
classified in the industry of their parents.
- ------------------------------------------------------------------------------------------------------------------------------------
Underwriting The RMK Fund may not act as underwriter, except to
the extent that, in connection with the disposition of
portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Cash Reserves Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investing in The Pioneer Fund may purchase or sell
Commodities commodities or contracts related to commodities
to the extent permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- ------------------------------------------------------------------------------------------------------------------------------------
Investing in Real The Pioneer Fund may not purchase or sell real
Estate estate except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- ------------------------------------------------------------------------------------------------------------------------------------
Diversification of No stated policy. However, the Pioneer Fund is
Investments currently classified as a diversified fund under the
1940 Act. This means that the Fund may not
purchase securities of any one issuer (other than
cash, cash items, securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities or any certificate of deposit
thereof, and securities of other investment
companies) if, as a result, with respect to 75% of
the value of its total assets, (a) more than 5% of
the value of the Fund's total assets would be
invested in securities of that issuer, or (b) the
Fund would hold more than 10% of the
outstanding voting securities of that issuer. The
1940 Act requires any change from diversified to
non-diversified status of a fund to be approved in
advance by fund shareholders.
- ------------------------------------------------------------------------------------------------------------------------------------
Concentration of Except as permitted by exemptive or other relief
Investments or permission from the SEC, SEC staff or other
authority of competent jurisdiction, the Pioneer
Fund may not make any investment if, as a result,
the Fund's investments will be concentrated in any
one industry, except the Fund may invest without
limitation in obligations issued by banks.
- ------------------------------------------------------------------------------------------------------------------------------------
Underwriting The Pioneer Fund may not engage in the business
of underwriting the securities of other issuers
except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC
staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of
competent jurisdiction.
- ------------------------------------------------------------------------------------------------------------------------------------
209
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market Fund Pioneer Cash Reserves Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Buying on The RMK Fund may not purchase securities on margin The Pioneer Fund may not purchase securities on
Margin (but it may obtain such short-term credits as may be margin.
necessary for the clearance of purchases and sales of
securities); or make short sales except where, by virtue
of ownership of other securities, it has the right to
obtain, without payment of further consideration,
securities equivalent in kind and amount to those sold,
and the Fund will not deposit or pledge more than 10%
of its total assets (taken at current value) as collateral
for such sales.
Except with respect to borrowing money, if a percentage
limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any
change in value or net assets will not result in a
violation of such restriction. For purposes of its policies
and limitations, the RMK Fund considers instruments
(such as certificates of deposit and demand and time
deposits) issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and
undivided profits in excess of $100,000,000 at the time
of investment to be cash items.
- ------------------------------------------------------------------------------------------------------------------------------------
210
BUYING, SELLING AND EXCHANGING SHARES OF THE FUNDS
The following is a comparison of how shareholders may buy, sell and
exchange shares of the RMK Funds and the Pioneer Funds and how each Fund
determines its net asset value.
- ------------------------------------------------------------------------------------------------------------------------------------
RMK Funds Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Buying shares You may purchase shares of an RMK Fund by You may buy Class A shares and Class C shares,
contacting a Morgan Keegan & Company, Inc. Financial as applicable, of a Pioneer Fund from any
Adviser, a Regions Morgan Keegan Trust Administrator, investment firm that has a sales agreement with
or Regions Morgan Keegan Trust. You may locate the PFD, the Fund's distributor. You can buy Class A
branch nearest you by visiting the Morgan Keegan & and Class C shares at the offering price. You can
Company, Inc. website. You may also purchase shares buy Class Y shares at net asset value per share.
through a broker-dealer, investment professional or PFD may reject any order until it has confirmed
financial institution which has been authorized to offer the order in writing and received payment. Each
shares by Morgan Keegan ("Authorized Dealers"). Pioneer Fund reserves the right to stop offering
any class of shares.
Once you have opened an account, you may
automatically purchase additional shares on a regular You may use securities you own to purchase
basis through the systematic investment program. shares of the Pioneer Fund provided that Pioneer,
in its sole discretion, determines that the
Initial sales charges may apply to your purchase. securities are consistent with the Pioneer Fund's
objective and policies and their acquisition is in
Your purchase order must be received by your Morgan the best interests of the Fund. If the Pioneer Fund
Keegan & Company, Inc. Financial Advisor, Regions accepts your securities, they will be valued for
Morgan Keegan Trust Administrator, or Authorized purposes of determining (a) the number of
Dealer by 11:30 a.m. (Central Time) for the Regions Pioneer Fund shares to be issued to you in the
Morgan Keegan Select Treasury Money Market Fund same way the Pioneer Fund will value the
and the Regions Morgan Keegan Select Money Market securities for purposes of determining its net
Fund or before the close of the New York Stock asset value, with respect to Class A shares and
Exchange ("NYSE") (normally 4:00 p.m. Eastern Time, Class C shares and (b) its net asset value.
3:00 p.m. Central Time) for all other RMK Funds to get
that day's closing share price. You will receive the next If you have an existing non-retirement account,
calculated closing share price if your investment you may purchase Class A shares and Class C
professional forwards the order to the RMK Fund on the shares of the Pioneer Fund by telephone or
same day and the Fund receives payment on the same online. Certain IRAs also may use the telephone
business day (in the case of the Regions Morgan purchase privilege.
Keegan Select Treasury Money Market Fund and the Initial sales charges may apply, and if you invest
Regions Morgan Keegan Select Money Market Fund) or in the Pioneer Fund through investment
the next business day (for the other RMK Funds). Each professionals or other financial intermediaries,
RMK Fund reserves the right to reject any purchase other conditions, fees, or charges may apply.
request.
If you place an order to purchase shares with the
Each RMK Fund maintains policies to deter short-term transfer agent or an authorized agent by the close
trading that may be disruptive to the efficient of regular trading on the NYSE (currently 4:00
management of the RMK Funds. These policies may p.m. Eastern Time), your transaction will be
limit your ability to purchase shares. completed at the share price determined as of the
close of trading on the NYSE that day. If your
order is placed with the transfer agent 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 authorized agent is
responsible for transmitting your order to the
Pioneer Fund in a timely manner.
- ------------------------------------------------------------------------------------------------------------------------------------
211
- ------------------------------------------------------------------------------------------------------------------------------------
RMK Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Minimum initial Your initial investment must be at least $1,000 for Class
investment A or Class C shares. The initial investment must be
$250 for an IRA or if you are an officer, director,
employee or retired employee of Regions or its
affiliates, or if you establish a $50 monthly minimum
addition to your account through the RMK Fund's
Systematic Investment Program. There is no minimum
initial investment for Class I shares. Additional
investments must be at least $50 for Class A, Class C
or Class I shares. Initial and subsequent investments in
an IRA established on behalf of a non-working spouse
of a shareholder who has an IRA invested in one of the
RMK Funds require a minimum amount of only $250. In
special circumstances, there minimums may be waived
or lowered at the RMK Fund's discretion.
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Shares of an RMK Fund are not subject to a maximum
purchase purchase amount.
amounts
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Each Pioneer Fund has policies and procedures
with respect to frequent purchases and
redemptions of Pioneer Fund shares by Pioneer
Fund investors, which may limit your ability to
purchase shares. Frequent trading into and out of
a Pioneer Fund can disrupt portfolio management
strategies, harm Pioneer Fund performance by
forcing the Pioneer Fund to hold excess cash or
to liquidate certain portfolio securities prematurely
and increase expenses for all investors.
- ------------------------------------------------------------------------------------------------------------------------------------
Minimum initial Your initial investment must be at least $1,000 for
investment Class A or Class C shares, and $5 million for
Class Y shares. The initial investment amount for
Class Y shares may be invested in one or more of
the Pioneer mutual funds that currently offer
Class Y shares. Additional investments must be at
least $100 for Class A shares and $500 for Class
C shares. There is no minimum additional
investment amount for Class Y 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 Pioneer Fund may waive the
initial or subsequent investment minimums.
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Purchases of fund shares are limited to $999,999
purchase for Class C shares. Class A shares and Class Y
amounts shares are not subject to a maximum purchase
amount. These limits are applied on a per
transaction basis.
- ------------------------------------------------------------------------------------------------------------------------------------
212
- ------------------------------------------------------------------------------------------------------------------------------------
RMK Funds Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Exchanging You may exchange shares of the RMK Fund into shares You may exchange your shares for shares of the
shares of the same class of any series of the RMK Trust same class of another Pioneer mutual fund. Your
without paying a sales charge or a contingent deferred exchange request must be for at least $1,000.
sales charge by calling or writing to Morgan Keegan, Each Pioneer Fund allows you to exchange your
the RMK Trust or an Authorized Dealer, as appropriate. shares at net asset value without charging you
Shares of any series of the RMK Trust may be acquired either an initial or contingent deferred shares
in exchange for shares of the same class of any other charge at the time of the exchange. Shares you
series of the RMK Trust, other than shares of Regions acquire as part of an exchange will continue to be
Morgan Keegan Select Treasury Money Market Fund or subject to any contingent deferred sales charge
Regions Morgan Keegan Select Money Market Fund on that applies to the shares you originally
which no sales charge has been paid, without paying a purchased. When you ultimately sell your shares,
sales charge or a contingent deferred sales charge in the date of your original purchase will determine
the same manner. The date of original purchase of your contingent deferred sales charge.
exchanged Class C shares will be used for purposes of
calculating the contingent deferred sales charge
imposed upon redemption of exchanged-for-shares. You
may exchange Class C shares of an RMK Fund with
Class A shares of Regions Morgan Keegan Select
Treasury Money Market Fund or Regions Morgan
Keegan Select Money Market Fund since there are no
Class C shares offered by these RMK Funds.
To exchange shares, you must:
o meet any minimum initial investment requirements;
and
o receive a prospectus for the RMK Fund into which
you wish to exchange.
To request an exchange, call or write to your investment
professional, as appropriate.
- ------------------------------------------------------------------------------------------------------------------------------------
213
- ------------------------------------------------------------------------------------------------------------------------------------
RMK Funds Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Selling shares You may redeem your shares through Morgan Keegan Subject to certain conditions, you may be able to
& Company, Inc., your Morgan Keegan & Company, Inc. redeem your shares by phone, mail, or fax or
Financial Advisor, your Authorized Dealer, or your local online.
Regions Morgan Keegan Trust Administrator. You
should note that redemptions will be made only on days If you place an order to sell shares of a Pioneer
when an RMK Fund computes its net asset value. When Fund with the transfer agent or an authorized
your redemption request is received in proper form, it is agent by the close of regular trading on the NYSE
processed at the next determined net asset value. (currently 4:00 p.m. Eastern Time), your
transaction will be completed at the share price
Subject to certain conditions, you may be able to determined as of the close of trading on the NYSE
redeem your shares by mail, phone, exchange, or that day. If your order is placed with the transfer
systematic withdrawal. agent after 4:00 p.m., or your order is not in
good order, your transaction will be completed at
Redemption requests for the RMK Funds must be the share price next determined after your order
received by 11:30 a.m. (Central Time) for the Regions is received in good order by the Fund. The
Morgan Keegan Select Treasury Money Market Fund authorized agent is responsible for transmitting
and the Regions Morgan Keegan Select Money Market your order to the Pioneer Fund in a timely
Fund or before the close of the NYSE (normally 4:00 manner.
p.m. Eastern Time, 3:00 p.m. Central Time) for all other
RMK Funds in order for shares to be redeemed at that If the shares you are selling are subject to a
day's closing share price. Requests received after these deferred sales charge, it will be deducted from the
times on any business day will be executed the sale proceeds.
following business day, at that day's closing share price.
In some circumstances, redemption requests
In some circumstances, redemption requests must be in must be in writing and bear signature guarantees.
writing and bear signature guarantees.
Additional conditions may also apply to
Sales charges may apply when redeeming Class A and redemptions involving excessive trading or
Class C shares. systematic withdrawal plans.
Additional conditions may also apply to redeeming With respect to your Class A shares and Class C
recently purchased shares, the availability of redemption shares, if you have an eligible non-retirement
proceeds, and in-kind redemptions. account, you may sell up to $100,000 per account
per day by telephone or online and you may sell
shares of the Pioneer Fund held in a retirement
plan account by telephone only if your account is
an eligible IRA (tax penalties may apply).
- ------------------------------------------------------------------------------------------------------------------------------------
214
- ------------------------------------------------------------------------------------------------------------------------------------
RMK Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value The net asset value for each class of an RMK Fund's Each Pioneer Fund's net asset value is the value
shares is computed by subtracting the liabilities from of its portfolio of securities plus any other assets
the total assets attributable to each class of shares and minus its operating expenses and other liabilities.
dividing the result by the number of shares outstanding. Each Pioneer Fund calculates a net asset value for
Each RMK Fund calculates its net asset value as of the each class of shares every day the NYSE is open
close of regular trading (approximately 4:00 p.m. when regular trading closes (normally 4:00 p.m.
Eastern Time, or any earlier NYSE closing time that day) Eastern time). Pioneer Treasury Reserves Fund
on each day the NYSE is open for trading. and Pioneer Cash Reserves Fund also calculate a
net asset value for each class of shares at 2:00
p.m., Eastern time, every day the NYSE is open.
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 call Class C shares, you
may pay a contingent deferred sales charge
depending on how long you have owned your
shares.
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
Indemnification
Regions has separately agreed with the RMK Trust that for a period of six
years, if indemnification from the assets of the RMK Funds or liability
insurance is not otherwise available to current and former Independent RMK
Trustees, Regions will indemnify and hold them harmless to the same extent as
such Trustees would have been indemnified under the RMK Trust's declaration of
trust and bylaws up to an aggregate amount of $10 million.
Section 15(f) Safe Harbor
MAM and Pioneer have agreed to use their commercially reasonable efforts
to assure compliance with the conditions of Section 15(f) of the 1940 Act.
Section 15(f) provides a non-exclusive safe harbor for an investment adviser or
any affiliated persons thereof to receive any amount or benefit in connection
with a sale of securities of, or any other interest in, such adviser which
results in an assignment of an investment advisory contract with an investment
company as long as two conditions are met. First, no "unfair burden" may be
imposed on the investment company as a result of the transaction, or any
express or implied terms, conditions or understandings applicable thereto. As
defined in the 1940 Act, the term "unfair burden" includes any arrangement
during the two-year period after the date on which such transaction occurs
whereby the investment adviser (or predecessor or successor adviser) or any
interested person of any such adviser receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services), or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter of the
investment company). The RMK Trustees were advised that MAM and Pioneer were
not aware of any circumstances relating to the Reorganizations that might
result in the imposition of such an "unfair burden" on any RMK Fund as a result
of the transaction between Pioneer and MAM. Second, during the three-year
period immediately following the transaction, at least 75% of an investment
company's board of directors must not be "interested persons" of the investment
adviser or the predecessor investment adviser within the meaning of the 1940
Act. The Pioneer Funds' Boards of Trustees will satisfy this condition at the
time of the Reorganizations.
Purchase of Certain Securities by Regions
Prior to the Reorganization of each of Regions Morgan Keegan Select Mid
Cap Value Fund, Regions Morgan Keegan Select Balanced Fund, Regions Morgan
Keegan Select Mid Cap Growth Fund, Regions Morgan Keegan Select Growth Fund,
Regions Morgan Keegan Select Fixed Income Fund, Regions Morgan Keegan Select
Limited Maturity Fixed Income Fund (together, the "Securities Lending Funds")
Regions or one of its affiliates will purchase from each of the Securities
Lending Funds any interests held by such Securities Lending Fund in (i) a
promissory note issued by Whistlejacket Capital Ltd. or certain of its
affiliates (as successor-in-interest to White Pine Finance, LLC), due March 12,
2008 (the "Whistlejacket Asset"), and (ii) floating rate debt securities of
Lehman Brothers Holdings Incorporated, maturing
215
October 14, 2008 and October 22, 2008, respectively (the "Lehman Asset" and,
together with the Whistlejacket Asset, the "Securities"), at such time as such
Securities are delivered to the Securities Lending Fund in connection with the
termination by the Securities Lending Fund of its securities lending
relationship with Bank of New York Mellon and its holdings in the BNY
Institutional Cash Reserves Fund. The Whistlejacket Asset will be purchased by
Regions or one of its affiliates at a price equal to 100% of the par value of
such Whistlejacket Asset, payable in cash. The Lehman Asset will be purchased
by Regions or one of its affiliates at a price equal to the greater of (x) 80%
of the par value of such Lehman Asset, and (y) the fair market value of such
Lehman Asset, in each instance, payable in cash. Notwithstanding anything to
the contrary herein, the foregoing obligation of Regions or one of its
affiliates to purchase the Securities will be conditioned upon the receipt from
the SEC of "no-action" or other appropriate relief under the 1940 Act that
would permit such purchase of the Securities, provided that, in the event that
such relief is not forthcoming, Regions will use its best efforts to make
alternative arrangements designed to provide equivalent value to each
Securities Lending Fund consistent with applicable laws and regulations.
Investment Adviser
Pioneer serves as the investment adviser to each Pioneer Fund. Pioneer
oversees each Pioneer Fund's operations and is responsible for the day-to-day
management of each Fund's portfolio. Pioneer is an indirect, wholly owned
subsidiary of UniCredit S.p.A., one of the largest banking groups in Italy.
Pioneer is part of the global asset management group providing investment
management and financial services to mutual funds, institutional and other
clients. As of December 31, 2008, assets under management were approximately
$206 billion worldwide, including over $50 billion in assets under management
by Pioneer. Pioneer's main office is at 60 State Street, Boston, Massachusetts
02109. Pioneer's U.S. mutual fund investment history includes creating one of
the first mutual funds in 1928.
The Board of Trustees of the Pioneer Funds is responsible for overseeing
the performance of each Pioneer Fund's investment adviser and sub-adviser, if
any, and determining whether to approve and renew each Pioneer Fund's
investment management agreement and any sub-advisory agreement. Each Pioneer
Fund entered into an amended and restated management agreement with Pioneer,
effective July 1, 2008, pursuant to which Pioneer continues to act as each
Fund's investment adviser.
As each Pioneer Fund's investment adviser, Pioneer provides each Fund with
investment research, advice and supervision and furnishes an investment program
for the Fund consistent with the Fund's investment objective and policies,
subject to the supervision of the Fund's Trustees. Pioneer determines what
portfolio securities will be purchased or sold, arranges for the placing of
orders for the purchase or sale of portfolio securities, selects brokers or
dealers to place those orders, maintains books and records with respect to the
Fund's securities transactions, and reports to the Trustees on the Fund's
investments and performance.
The Trustees' approval of and the terms, continuance and termination of
the amended and restated management agreement are governed by the 1940 Act and
the Investment Advisers Act of 1940, as applicable. Pursuant to the amended and
restated management agreement, Pioneer assumes no responsibility other than to
render the services called for under the amended and restated management
agreement, in good faith, and Pioneer will not be liable for any error of
judgment or mistake of law or for any loss arising out of any investment or for
any act or omission in the execution of securities or other transactions for
the Fund. Pioneer, however, is not protected against liability by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under the amended and restated management agreement. The amended and restated
management agreement requires Pioneer to furnish all necessary services,
facilities and personnel in connection with the performance of its services
under the amended and restated management agreement, and except as specifically
stated therein, Pioneer is not responsible for any of the Pioneer Funds'
ordinary and extraordinary expenses.
Pioneer has received an order from the SEC that permits Pioneer, subject
to the approval of the Pioneer Funds' Board of Trustees, to hire and terminate
a sub-adviser or to materially modify an existing sub-advisory contract for
each Pioneer Fund without shareholder approval. Pioneer retains the ultimate
responsibility to oversee and recommend the hiring, termination and replacement
of any sub-adviser. To the extent that the SEC adopts a rule that would
supersede the order, or would provide greater flexibility than the order,
Pioneer and the Pioneer Funds intend to rely on such rule to permit Pioneer,
subject to the approval of the Pioneer Funds' Board of Trustees and any other
applicable conditions of the rule, to hire and terminate a sub-adviser or to
materially modify an existing sub-advisory contract for each Pioneer Fund
without shareholder approval.
Distributor and Transfer Agent
PFD is each Pioneer Fund's distributor. Pioneer Investment Management
Shareholder Services, Inc. ("PIMSS") is each Pioneer Fund's transfer agent.
Each Pioneer Fund compensates PFD and the transfer agent for their services.
PFD and the transfer agent are affiliates of Pioneer.
216
Disclosure of Portfolio Holdings
Each Pioneer Fund's policies and procedures with respect to the disclosure
of its portfolio securities are described in the statement of additional
information and on Pioneer's website at www.pioneerinvestments.com.
Buying, Exchanging and Selling Shares of the Pioneer Funds
Net Asset Value. If a Reorganization is approved, the applicable Pioneer
Fund will issue to the corresponding RMK Fund the number of Pioneer Fund
shares, including fractional shares, of each class with an aggregate net asset
value equal to the net asset value of the RMK Fund attributable to the
corresponding class of the RMK Fund's shares. The net asset value per share of
each class of each Pioneer Fund shall be determined using the Pioneer Funds'
valuation procedures. The number of shares of the Pioneer Fund to be issued in
exchange for the RMK Fund's assets shall be determined, with respect to each
class, by dividing the RMK Fund's net assets with respect to that class by the
net asset value per share of the corresponding class of the Pioneer Fund. The
number of full and fractional shares of a Pioneer Fund to be received by each
corresponding RMK Fund shareholder in a Reorganization will be equal in
aggregate net asset value to the aggregate net asset value of the shares of the
RMK Fund held by such shareholder on the Closing Date.
Each Pioneer Fund's net asset value is the value of its portfolio of
securities plus any other assets minus its operating expenses and any other
liabilities. Each Pioneer Fund calculates a net asset value for each class of
shares every day the NYSE is open when regular trading closes (normally 4:00
p.m. Eastern time). Pioneer Treasury Reserves Fund and Pioneer Cash Reserves
Fund (the "Pioneer Money Market Funds") also calculate a net asset value for
each class of shares at 2:00 p.m. Eastern time every day the NYSE is open.
All Pioneer Funds that are not Pioneer Money Market Funds
Each Pioneer Fund, other than Pioneer Treasury Reserves Fund and Pioneer
Cash Reserves Fund (together, the "Pioneer Money Market Funds"), generally
values its portfolio securities using closing market prices or readily
available market quotations. When closing market prices or market quotations
are not available or are considered by Pioneer to be unreliable, a Pioneer Fund
uses a security's fair value. All methods of determining the value of a
security used by a Pioneer 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 of the Pioneer Funds. The use of fair value pricing by a Pioneer Fund
may cause the net asset value of its shares to differ from the net asset value
that would be calculated only using market prices. For market prices and
quotations, as well as for some fair value methods, the Pioneer Funds rely upon
securities prices provided by pricing services.
Each Pioneer Fund, other than the Pioneer Money Market Funds, 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 a
Pioneer 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 Pioneer Fund determines its net asset value. In those
circumstances when the Pioneer 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 Pioneer
Fund could change on a day investors 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. Each Pioneer Fund, other
than the Pioneer Money Market Funds, 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. Each Pioneer Fund, other than the Pioneer Money Market
Funds, values cash equivalent securities with remaining maturities of 60 days
or less at amortized cost. To the extent that a Pioneer Fund, other than the
Pioneer Money Market Funds, 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 Pioneer Funds explain the circumstances
under which the Funds will use fair value pricing and the effects of using fair
value pricing.
You buy or sell shares at the share price. When you buy Class A shares of
any Pioneer Fund, except any Pioneer Money Market Fund, 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.
217
Pioneer Money Market Funds
Each Pioneer Money Market Fund generally values its portfolio securities
using the amortized cost method. This valuation method assumes a steady rate of
amortization of any premium or discount from the date of purchase until the
maturity of each security.
You buy or sell shares at the share price. When you buy Class A shares of
any Pioneer Money Market Fund, you do not pay an initial sales charge.
Share price. Share price is the net asset value per share next calculated
after a transaction.
Distribution and Service Plans. Each Pioneer Fund has adopted a
distribution plan for its Class A shares in accordance with Rule 12b-1 under
the 1940 Act. Under each plan, a Pioneer Fund pays distribution and service
fees to PFD. Because these fees are an ongoing expense of a Pioneer 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
each Pioneer Fund -- directly, by the payment of sales commissions, if any; and
indirectly, as a result of the Pioneer Fund paying Rule 12b-1 fees.
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 a Pioneer 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 each Pioneer Fund's statement of additional
information. Your intermediary may charge you additional fees or commissions
other than those disclosed in this Proxy Statement/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 Pioneer Funds.
Opening Your Account. If your shares are held in your investment firm's
name, the options and services available to you may be different from those
described herein or in a Pioneer Fund's prospectus. Ask your investment
professional for more information. With respect to Class Y shares, if you are
an individual or other non-institutional investor, open your Class Y share
account by completing an
218
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 a Pioneer Fund through investment professionals or other
financial intermediaries, including wrap programs and fund supermarkets,
additional conditions may apply to your investment in a Pioneer Fund, and the
investment professional or intermediary may charge you a transaction-based or
other fee for its services. These conditions and fees are in addition to those
imposed by a Pioneer Fund and its affiliates. You should ask your investment
professional or financial intermediary about its services and any applicable
fees.
Account Options. Use your account application to select options and
privileges for your account. You can change your selections at any time by
sending a completed account options form to the transfer agent. You may be
required to obtain a signature guarantee to make certain changes to an existing
account.
Call or write to the transfer agent for account applications, account
options forms and other account information:
PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Telephone 1-800-225-6292
Telephone Transaction Privileges. If your account is registered in your
name, you can buy, exchange or sell shares of the Pioneer Funds by telephone.
If you do not want your account to have telephone transaction privileges, you
must indicate that choice on your account application or by writing to the
transfer agent.
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. Each Pioneer Fund may implement other confirmation
procedures from time to time. Different procedures may apply if you have a
non-U.S. account or if your account is registered in the name of an
institution, broker-dealer or other third party.
Online Transaction Privileges. If your account is registered in your name,
you may be able to buy, exchange or sell Pioneer Fund shares online. Your
investment firm may also be able to buy, exchange or sell your Pioneer 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. Each Pioneer Fund may implement other procedures
from time to time. Different procedures may apply if you have a non-U.S.
account or if your account is registered in the name of an institution,
broker-dealer or other third party. You may not be able to use the online
transaction privilege for certain types of accounts, including most retirement
accounts.
Share Price. If you place an order to purchase, exchange, or sell shares
with the transfer agent or a broker-dealer, your investment firm or plan
administrator by the close of regular trading on the NYSE (currently 4:00 p.m.
Eastern time) (except for orders with respect to the Pioneer Funds received by
2:00 p/m/ meeting the requirements referenced below), your transaction will be
completed at the share price determined as of the close of trading on the NYSE
on that day. If your order is placed with the transfer agent or a
broker-dealer, your investment firm or plan administrator 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
Pioneer Fund. Your investment firm or plan administrator is responsible for
transmitting your order to the Pioneer Fund in a timely manner.
On any day that the money markets in which a Pioneer Fund invests close
early, such as days in advance of holidays or in the event of an emergency,
such Fund reserves the right to advance the time when the Fund's share price is
determined (and by which transaction orders must be received) to the closing
time of the markets. You begin earning dividends on the first business day
after the Pioneer Fund is credited with same day funds for your purchase.
However, if your purchase order is received by the Pioneer Fund by 2:00 p.m.
with payment through same-day wire meeting the requirements referenced below,
you also will receive dividends declared that day. There are special
requirements if you wish to purchase Pioneer Fund shares by wire, have your
order executed at 2:00 p.m. and receive dividends for that day. You or your
investment firm must contact the Pioneer Fund's transfer agent, Pioneer
Investment Management Shareholder
219
Services, Inc. at 1-800-225-6292, to be pre-approved. Wire transfers normally
take two or more hours to complete and a fee may be charged by the sending
bank.
Good order means that:
o You have provided adequate instructions
o There are no outstanding claims against your account
o There are no transaction limitations on your account
o If you have any Fund share certificates, you submit them and they are
signed by each record owner exactly as the shares are registered
o Your request includes a signature guarantee if you:
o Are selling over $100,000 or exchanging over $500,000 worth of shares
o Changed your account registration or address within the last 30 days
o Instruct the transfer agent to mail the check to an address different
from the one on your account
o Want the check paid to someone other than the account's record
owner(s)
o Are transferring the sale proceeds to a Pioneer mutual fund account
with a different registration
Transaction Limitations. Your transactions are subject to certain
limitations, including the limitation on the purchase of the Pioneer Fund's
shares within 30 calendar days of a redemption. See "Excessive Trading" below.
Buying Pioneer Fund Shares. You may buy shares of a Pioneer Fund from any
investment firm that has a sales agreement with PFD. Participants in retirement
plans generally must contact the plan's administrator to purchase shares.
You can buy Class A shares and Class C shares of each Pioneer Fund at the
offering price. You can buy Class Y shares of each Pioneer Fund at net asset
value per share. PFD may reject any order until it has confirmed the order in
writing and received payment. Each Pioneer Fund reserves the right to stop
offering any class of shares.
You may use securities you own to purchase shares of a Pioneer Fund
provided that Pioneer, in its sole discretion, determines that the securities
are consistent with the Fund's investment objective and policies and their
acquisition is in the best interests of the Fund. If a Pioneer Fund accepts
your securities, they will be valued for purposes of determining the number of
Fund shares to be issued to you in the same way the Fund will value the
securities for purposes of determining its net asset value. For federal income
tax purposes, you may be taxed in the same manner as if you sold the securities
that you use to purchase Fund shares for cash in an amount equal to the value
of the Fund shares that you purchase. Your broker may also impose a fee in
connection with processing your purchase of Fund shares with securities.
Minimum Investment Amounts. Your initial investment for Class A shares and
Class C shares must be at least $1,000, and for Class Y shares must be at least
$5,000,000. The minimum investment amount with respect to Class Y shares may be
invested in one or more of the Pioneer mutual funds that currently offer Class
Y shares. Additional investments must be at least $100 for Class A shares and
$500 for Class C shares. There is no minimum additional investment amount for
Class Y shares. You may qualify for lower initial or subsequent investment
minimums if you are opening a retirement plan account, establishing an
automatic investment plan or placing your trade through your investment firm.
The minimum investment amount does not apply for purposes of the
Reorganization.
Maximum Purchase Amounts. Purchases of Pioneer Fund shares are limited to
$999,999 for Class C shares. These limits are applied on a per transactions
basis. Class A shares and Class Y shares are not subject to a maximum purchase
amount.
Exchanging Pioneer Fund Shares. You may exchange your shares in a Pioneer
Fund for shares of the same class of another Pioneer mutual fund. Your exchange
request must be for at least $1,000.
Each Pioneer Fund allows you to exchange your shares at net asset value
without charging you either an initial or contingent deferred sales charge at
the time of the exchange. An exchange generally is treated as a sale and a new
purchase of shares for federal income tax purposes. Shares you acquire as part
of an exchange and shares your acquire as a result of this Reorganization 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.
220
Before you request an exchange, consider each Pioneer Fund's investment
objective and policies as described in the relevant Pioneer Fund's
prospectus(es).
Selling Pioneer Fund Shares. Your shares will be sold at net asset value
per share next calculated after a Pioneer Fund or its authorized agent receives
your request in good order. If the shares you are selling are subject to a
deferred sales charge, it will be deducted from the sale proceeds. Each Pioneer
Fund generally will send your sale proceeds by check, bank wire or electronic
funds transfer. Normally you will be paid within seven days. If you are selling
shares from a non-retirement account or certain IRAs, you may use any of the
methods described below. If you are selling shares from a retirement account
other than an IRA, you must make your request in writing.
You may have to pay federal income taxes on a sale or an exchange or any
distributions received in cash or additional shares.
- ------------------------------------------------------------------------------------------------------------------------------------
Buying Shares Exchanging Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Through Your Investment Firm Normally, your investment firm will send your Normally, your investment firm will send your
purchase request to PFD and/or the Pioneer exchange request to the Pioneer Funds'
Funds' transfer agent. transfer agent.
CONSULT YOUR INVESTMENT PROFESSIONAL CONSULT YOUR INVESTMENT
FOR MORE INFORMATION. PROFESSIONAL FOR MORE INFORMATION
ABOUT EXCHANGING YOUR SHARES.
Your investment firm may receive a
commission from PFD for your purchase of
Pioneer Fund shares, and may receive
additional compensation from Pioneer, for your
purchase of Pioneer Fund shares.
- ------------------------------------------------------------------------------------------------------------------------------------
By Phone or Online You can use the telephone or online privilege if After you establish your eligible Pioneer Fund
you have an existing non-retirement account. account, you can exchange Pioneer Fund
Certain IRAs can use the telephone purchase shares by phone or online if:
privilege. If your account is eligible, you can
purchase additional Pioneer Fund shares by o You are exchanging into an existing account
phone or online if: or using the exchange to establish a new
account, provided the new account has a
o You established your bank account of record registration identical to the original account
at least 30 days ago
o The Pioneer Fund into which you are
o Your bank information has not changed for exchanging offers the same class of shares
at least 30 days
o You are not exchanging more than
o You are not purchasing more than $100,000 $500,000 worth of shares per account per
worth of shares per account per day day
o You can provide the proper account o You can provide the proper account
identification information identification information
o When you request a telephone or online
purchase, the transfer agent will
electronically debit the amount of the
purchase from your bank account of record.
The transfer agent will purchase Pioneer
Fund shares for the amount of the debit at
the offering price determined after the
transfer agent receives your 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.
- ------------------------------------------------------------------------------------------------------------------------------------
221
- ------------------------------------------------------------------------------------------------------------------------------------
Buying Shares Exchanging Shares
- ------------------------------------------------------------------------------------------------------------------------------------
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 Pioneer 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.
Name of Pioneer Fund
- ------------------------------------------------------------------------------------------------------------------------------------
222
- -----------------------------------------------------------------------------------------
Buying Shares
- -----------------------------------------------------------------------------------------
In Writing, By Mail or By Fax You can purchase Pioneer Fund shares for an
existing fund account by mailing a check to the
transfer agent. Make your check payable to the
Pioneer 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 Pioneer 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.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Exchanging Shares
- -----------------------------------------------------------------------------------------
In Writing, By Mail or By Fax You can exchange Pioneer Fund shares by
mailing or faxing a letter of instruction to the
transfer agent. You can exchange Pioneer
Fund shares directly through a Pioneer Fund
only if your account is registered in your
name. However, you may not fax an exchange
request for more than $500,000 ($5 million
with respect to Class Y shares). 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 ($5 million with
respect to Class Y shares)
o The name of the Pioneer Fund out of which
you are exchanging and the name of the
Pioneer Fund into which you are exchanging
o The class of shares you are exchanging
o The dollar amount or number of shares
your are exchanging
- -----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Selling Shares How to Contact Pioneer
- ------------------------------------------------------------------------------------------------------------------------------------
Normally, your investment firm will send your request to sell BY PHONE
shares to the Pioneer Funds' transfer agent.
For information or to request a telephone transaction between
CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE 8:00 a.m. and 7:00 p.m. (Eastern time) by speaking with a
INFORMATION. shareholder services representative call 1-800-225-6292
To request a transaction using FactFone(SM) call 1-800-225-4321
Each Pioneer Fund has authorized PFD to act as its agent in
the repurchase of Pioneer Fund shares from qualified Telecommunications Device for the Deaf (TDD) 1-800-225-1997
investment firms. Each Pioneer Fund reserves the right to
terminate this procedure at any time.
IF YOU HAVE AN ELIGIBLE NON-RETIREMENT ACCOUNT, YOU BY MAIL
MAY SELL UP TO $100,000 PER ACCOUNT PER DAY BY Send your written instructions to:
PHONE OR ONLINE. You may sell Pioneer Fund shares held in Pioneer Investment Management Shareholder Services, Inc.
a retirement plan account by phone only if your account is an P.O. Box 55014
eligible IRA (tax penalties may apply). You may not sell your Boston, Massachusetts 02205-5014
shares by phone or online if you have changed your address
(for checks) or your bank information (for wires and transfers) PIONEER WEBSITE
in the last 30 days. www.pioneerinvestments.com
You may receive your sale proceeds: BY FAX
Fax your exchange and sale requests to: 1-800-225-4240
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
- ------------------------------------------------------------------------------------------------------------------------------------
223
- ------------------------------------------------------------------------------------------------------------------------------------
Selling Shares How to Contact Pioneer
- ------------------------------------------------------------------------------------------------------------------------------------
You can sell some or all of your Pioneer Fund shares by
WRITING DIRECTLY TO A PIONEER FUND only if your account
is registered in your name. Include in your request your name,
your social security number, the Pioneer 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.
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Fund Shareholder Account Policies
Signature Guarantees and Other Requirements. You are required to obtain a
signature guarantee when you are:
o Requesting certain types of exchanges or sales of Pioneer Fund shares
o Redeeming shares for which you hold a share certificate
o Requesting certain types of changes for your existing account
You can obtain a signature guarantee from most broker-dealers, banks,
credit unions (if authorized understate law) and federal savings and loan
associations. You cannot obtain a signature guarantee from a notary public.
The Pioneer Funds generally will accept only medallion signature
guarantees. A medallion signature guarantee may be obtained from a domestic
bank or trust company, broker, dealer, clearing agency, savings association, or
other financial institution that is participating in a medallion program
recognized by the Securities Transfer Association. Signature guarantees from
financial institutions that are not participating in one of these programs are
not accepted as medallion signature guarantees. The Pioneer Funds may accept
other forms of guarantee from financial intermediaries in limited
circumstances.
Fiduciaries and corporations are required to submit additional documents
to sell Pioneer Fund shares.
Distribution Options. Each Pioneer Fund offers three distribution options.
Any Pioneer 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 Pioneer
Fund will automatically be invested in additional Pioneer 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
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 Pioneer Fund
may reinvest the amount in additional shares instead of sending a check.
Additional shares of the Pioneer Fund will be purchased at the then current net
asset value.
Directed Dividends. You can invest the dividends paid by one of your
Pioneer mutual fund accounts in a second Pioneer mutual fund account. The value
of your second account must be at least $1,000. You may direct the investment
of any amount of dividends. There are no fees or charges for directed
dividends. If you have a retirement plan account, you may only direct dividends
to accounts with identical registrations.
224
Excessive Trading. Frequent trading into and out of a Pioneer Fund can
disrupt portfolio management strategies, harm a Pioneer Fund's performance by
forcing a Pioneer 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 a Pioneer Fund's portfolio securities for purposes of
calculating its net asset value does not fully reflect the then current fair
market value of those holdings. Each Pioneer 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 a Pioneer 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.
Each Pioneer Fund's Board of Trustees has adopted policies and procedures
with respect to frequent purchases and redemptions of a Pioneer Fund's shares
by a Pioneer Fund's 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 a
Pioneer 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 a Pioneer 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 a Pioneer Fund may be adversely
affected. Frequently, a Pioneer Fund's 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 broker or other intermediary in
taking steps to limit this type of activity.
Each Pioneer Fund may reject a purchase or exchange order before its
acceptance or an order prior to issuance of shares. Each Pioneer 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
a Pioneer Fund believes are requested on behalf of market timers. Each Pioneer
Fund reserves the right to reject any purchase request by any investor or
financial institution if a Pioneer Fund believes that any combination of
trading activity in the account or related accounts is potentially disruptive
to such Pioneer 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 a
Pioneer Fund. Each Pioneer Fund and its shareholders do not incur any gain or
loss as a result of a rejected order. Each Pioneer Fund may impose further
restrictions on trading activities by market timers in the future. Each Pioneer
Fund's prospectus will be amended or supplemented to reflect any material
additional restrictions on trading activities intended to prevent excessive
trading.
To limit the negative effects of excessive trading on a Pioneer Fund, each
Pioneer Fund has adopted the following restriction on investor transactions. If
an investor redeems $5,000 or more (including redemptions that are a part of an
exchange transaction) from a Pioneer Fund, that investor shall be prevented (or
"blocked") from purchasing shares of that Pioneer Fund (including purchases
that are a part of an exchange transaction) for 30 calendar days after the
redemption. This policy does not apply to systematic withdrawal plan
transactions, transactions made through employer-sponsored retirement plans
described under Section 401(a), 403(b) or 457 of the Code or employee benefit
plans, scheduled (Section 72(t) of the Code election) or mandatory (required
minimum distribution) withdrawals from IRAs, rebalancing transactions made
through certain asset allocation or "wrap" programs, or to transactions by
other Pioneer Funds that invest in that Pioneer Fund. This policy does not
apply to purchase or redemption transactions of less than $5,000 or to the
Pioneer money market funds. Purchases pursuant to the reinstatement privilege
(for Class A shares) are subject to this policy.
We rely on financial intermediaries that maintain omnibus accounts to
apply to their customers either the Pioneer Funds' policy described above or
their own policies or restrictions designed to limit excessive trading of
Pioneer Fund shares. However, we do not impose this policy at the omnibus
account level.
Minimum Account Size. Each Pioneer Fund requires that you maintain a
minimum account value of $500. If you hold less than $500 in your account, each
Pioneer Fund reserves the right to notify you that it intends to sell your
shares and close your account. You will
225
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 a Pioneer
Fund by telephone or accessing www.pioneerinvestments.com during times of
market volatility or disruption in telephone or internet service. On NYSE
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 reach a Pioneer Fund by telephone, you should
communicate with the Pioneer Fund in writing.
Share Certificates. The Pioneer Funds do not offer share certificates.
Shares are electronically recorded. Any existing certificated shares can only
be sold by returning your certificate to the transfer agent, along with a
letter of instruction or a stock power (a separate written authority
transferring ownership) and a signature guarantee.
Other Policies. Each Pioneer Fund and PFD 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. Each Pioneer 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 SEC
Each Pioneer Fund reserves the right to:
o suspend transactions in shares when trading on the NYSE is closed or
restricted, when the SEC determines an emergency or other circumstances
exist that make it impracticable for the Pioneer Fund to sell or value
its portfolio securities
o redeem in kind by delivering to you portfolio securities owned by the
Pioneer 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 Pioneer 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
Dividends and Capital Gains. Each Pioneer Fund generally pays any
distributions of net short- and long-term capital gains in November, and
generally pays dividends from any net investment income in December. Each
Pioneer Fund may also pay dividends and capital gain distributions at other
times if necessary for the Fund to avoid U.S. federal income or excise tax. If
you invest in a Pioneer Fund close to the time that such Pioneer 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 a Pioneer
Fund's net capital gains (if any) are considered long-term capital gains and
may be taxable to you at reduced rates depending upon their source and other
factors. Distributions from a Pioneer Fund's net short-term capital gains are
taxable as ordinary income. Other dividends are taxable either as ordinary
income or, for taxable years beginning on or before December 31, 2010, if so
designated by a Pioneer Fund and certain other conditions, including holding
period requirements, are met by the Pioneer Fund and the shareholder, as
"qualified dividend income" taxable to individual shareholders at a maximum 15%
U.S. federal income tax rate.
"Qualified dividend income" generally is income derived from dividends
from U.S. corporations or certain foreign corporations that are either
incorporated in a U.S. possession or eligible for tax benefits under certain
U.S. income tax treaties. In addition, dividends that a Pioneer Fund receives
in respect of stock of certain foreign corporations may be "qualified dividend
income" if that stock is readily tradable on an established U.S. securities
market.
A portion of dividends received from a Pioneer Fund (but none of the
Fund's capital gain distributions) may qualify for the dividends-received
deduction for corporations.
If a Pioneer Fund declares a dividend in October, November or December,
payable to shareholders of record in such a month, but pays it in January of
the following year, you will be taxed on the dividend as if you received it in
the year in which it was declared.
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
226
tax basis for the shares that you sell or exchange. If you are neither a
citizen nor a resident of the United States, the Pioneer Fund will withhold
U.S. federal income tax at the rate of 30% (or any lower applicable treaty
rate) on certain taxable dividends and other payments (but not on distributions
of net capital gains).
You must provide your social security number or other taxpayer
identification number to the applicable Pioneer 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 other
distributions, sale proceeds and any other payments to you that are subject to
backup withholding. Backup withholding will not be applied to payments that
have been subject to the 30% withholding tax on shareholders who are neither
citizens nor residents of the United States.
You should ask your tax adviser about any federal, state, local and
foreign tax considerations relating to an investment in the Pioneer Funds. You
may also consult the applicable Pioneer Fund's statement of additional
information for a more detailed discussion of the U.S. federal income tax
considerations that may affect the Fund and its shareowners.
227
FINANCIAL HIGHLIGHTS
The following tables show the financial performance of each Pioneer Fund
for the past five fiscal years and, if applicable, for any recent semiannual
period (or the period during which each Pioneer Fund has been in operation, if
less than five years). Certain information reflects financial results for a
single Pioneer Fund share. The total returns in the tables represent the rate
that you would have earned or lost on an investment in Class A or Class Y
shares of the applicable Pioneer Fund (assuming reinvestment of all dividends
and distributions). No financial highlights are provided for Pioneer Mid Cap
Growth Fund II, Pioneer Growth Fund and Pioneer Intermediate Tax Free Income
Fund because each such Fund is newly-organized and has not yet offered shares.
For financial statement purposes, (i) with respect to Pioneer Mid Cap Growth
Fund II, Regions Morgan Keegan Select Mid Cap Growth Fund will be the
accounting survivor of the Reorganization, (ii) with respect to Pioneer Growth
Fund, Regions Morgan Keegan Select Growth Fund will be the accounting survivor
of the Reorganization, and (iii) with respect to Pioneer Intermediate Tax Free
Income Fund, Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund
will be the accounting survivor of the Reorganization. As the accounting
survivor, each such RMK Fund's operating history will be used for financial
reporting purposes after the consummation of each applicable Reorganization.
The information below, except for the financial highlights for the six
months ended December 31 and indicated below, has been audited by Ernst & Young
LLP, each Pioneer Fund's independent registered public accounting firm, whose
report is included in each Fund's annual report along with the Fund's financial
statements. Each annual report is available upon request. [It is expected that
(i) audited financial statements for Pioneer Fund and Pioneer Cash Reserves
Fund for the fiscal year ended December 31, 2008, and (ii) unaudited financial
statements for Pioneer Cullen Value Fund and Pioneer Bond Fund for the six
months ended December 31, 2008 will be available prior the Proxy
Statement/Prospectus being mailed to shareholders in March 2009. When
available, the financial highlights for these fiscal periods will be reflected
in the relevant financial highlights tables below.]
Pioneer Fund -- Class A shares
Six Months
Ended
6/30/08 Year Ended Year Ended
(unaudited) 12/31/07 12/31/06
Class A ------------- ------------ ------------
Net asset value, beginning of period $ 46.32 $ 48.10 $ 44.21
---------- ---------- ----------
Increase from investment operations:
Net investment income $ 0.20 $ 0.41 $ 0.43
Net realized and unrealized gain (loss) on investments (4.70) 1.79 6.72
---------- ---------- ----------
Net increase (decrease) from investment operations $ (4.50) $ 2.20 $ 7.15
Distributions to shareowners:
Net investment income (0.20) (0.41) (0.43)
Net realized gain -- (3.57) (2.83)
---------- ---------- ----------
Net increase (decrease) in net asset value $ (4.70) $ (1.78) $ 3.89
---------- ---------- ----------
Net asset value, end of period $ 41.62 $ 46.32 $ 48.10
========== ========== ==========
Total return* (9.73)% 4.71% 16.39%
Ratio of net expenses to average net assets+ 1.15%** 1.09% 1.11%
Ratio of net investment income to average net assets+ 0.92%** 0.81% 0.90%
Portfolio turnover rate 9%** 10% 9%
Net assets, end of period (in thousands) $5,428,948 $6,299,615 $6,681,712
Ratios with reductions for fees paid indirectly:
Net expenses 1.15%** 1.08% 1.10%
Net investment income 0.92%** 0.82% 0.91%
Year Ended Year Ended Year Ended
12/31/05 12/31/04 12/31/03
Class A ------------ ------------ ------------
Net asset value, beginning of period $ 42.06 $ 38.00 $ 30.76
---------- ---------- ----------
Increase from investment operations:
Net investment income $ 0.37 $ 0.35 $ 0.28
Net realized and unrealized gain (loss) on investments 2.31 4.05 7.24
---------- ---------- ----------
Net increase (decrease) from investment operations $ 2.68 $ 4.40 $ 7.52
Distributions to shareowners:
Net investment income (0.39) (0.34) (0.28)
Net realized gain (0.14) -- --
---------- ---------- ----------
Net increase (decrease) in net asset value $ 2.15 $ 4.06 $ 7.24
---------- ---------- ----------
Net asset value, end of period $ 44.21 $ 42.06 $ 38.00
========== ========== ==========
Total return* 6.40% 11.64% 24.58%
Ratio of net expenses to average net assets+ 1.08% 1.06% 1.09%
Ratio of net investment income to average net assets+ 0.88% 0.90% 0.86%
Portfolio turnover rate 13% 14% 6%
Net assets, end of period (in thousands) $5,648,986 $5,626,270 $5,370,888
Ratios with reductions for fees paid indirectly:
Net expenses 1.08% 1.06% 1.09%
Net investment income 0.88% 0.90% 0.86%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio with no reduction for fees paid indirectly.
228
Pioneer Fund -- Class C shares
Six Months
Ended
6/30/08 Year Ended Year Ended
(unaudited) 12/31/07 12/31/06
Class C ------------- ------------ ------------
Net asset value, beginning of period $ 44.55 $ 46.44 $ 42.78
--------- -------- --------
Increase from investment operations:
Net investment income $ 0.03 $ 0.02 $ 0.06
Net realized and unrealized gain (loss) on investments (4.53) 1.72 6.52
--------- -------- --------
Net increase (decrease) from investment operations $ (4.50) $ 1.74 $ 6.58
Distributions to shareowners:
Net investment income (0.04) (0.06) (0.09)
Net realized gain -- (3.57) (2.83)
--------- -------- --------
Net increase (decrease) in net asset value $ (4.54) $ (1.89) $ 3.66
--------- -------- --------
Net asset value, end of period $ 40.01 $ 44.55 $ 46.44
========= ======== ========
Total return* (10.11)% 3.88% 15.52%
Ratio of net expenses to average net assets+ 1.92%** 1.88% 1.89%
Ratio of net investment income to average net assets+ 0.15%** 0.02% 0.12%
Portfolio turnover rate 9%** 10% 9%
Net assets, end of period (in thousands) $ 249,225 $296,094 $309,868
Ratios with reduction for fees paid indirectly:
Net expenses 1.92%** 1.87% 1.88%
Net investment income 0.15%** 0.03% 0.13%
Year Ended Year Ended Year Ended
12/31/05 12/31/04 12/31/03
Class C ------------- ------------ ------------
Net asset value, beginning of period $ 40.73 $ 36.84 $ 29.84
--------- -------- ---------
Increase from investment operations:
Net investment income $ 0.04 $ 0.04 $ 0.02
Net realized and unrealized gain (loss) on investments 2.22 3.91 7.01
--------- -------- ---------
Net increase (decrease) from investment operations $ 2.26 $ 3.95 $ 7.03
Distributions to shareowners:
Net investment income (0.07) (0.06) (0.03)
Net realized gain (0.14) -- --
--------- -------- ---------
Net increase (decrease) in net asset value $ 2.05 $ 3.89 $ 7.00
--------- -------- ---------
Net asset value, end of period $ 42.78 $ 40.73 $ 36.84
========= ======== =========
Total return* 5.55% 10.74% 23.58%
Ratio of net expenses to average net assets+ 1.87% 1.84% 1.89%
Ratio of net investment income to average net assets+ 0.09% 0.11% 0.05%
Portfolio turnover rate 13% 14% 6%
Net assets, end of period (in thousands) $ 292,453 $313,420 $ 292,526
Ratios with reduction for fees paid indirectly:
Net expenses 1.87% 1.84% 1.89%
Net investment income 0.09% 0.11% 0.05%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio with no reduction for fees paid indirectly.
229
Pioneer Fund -- Class Y shares
Six Months
Ended
6/30/08 Year Ended Year Ended
(unaudited) 12/31/07 12/31/06
Class Y ------------- ------------ -----------
Net asset value, beginning of period $ 46.45 $ 48.23 $ 44.31
--------- -------- --------
Increase from investment operations:
Net investment income $ 0.29 $ 0.60 $ 0.60
Net realized and unrealized gain (loss) on investments (4.72) 1.80 6.77
--------- -------- --------
Net increase (decrease) from investment operations $ (4.43) $ 2.40 $ 7.37
Distributions to shareowners:
Net investment income (0.29) (0.61) (0.62)
Net realized gain -- (3.57) (2.83)
--------- -------- --------
Net increase (decrease) in net asset value $ (4.72) $ (1.78) $ 3.92
--------- -------- --------
Net asset value, end of period $ 41.73 $ 46.45 $ 48.23
========= ======== ========
Total return* (9.55)% 5.11% 16.88%
Ratio of net expenses to average net assets+ 0.72%** 0.70% 0.70%
Ratio of net investment income to average net assets+ 1.35%** 1.21% 1.31%
Portfolio turnover rate 9%** 10% 9%
Net assets, end of period (in thousands) $ 481,111 $487,357 $401,391
Ratios with reduction for fees paid indirectly:
Net expenses 0.72%** 0.70% 0.70%
Net investment income 1.35%** 1.21% 1.31%
Year Ended Year Ended Year Ended
12/31/05 12/31/04 12/31/03
Class Y ------------ ------------ -----------
Net asset value, beginning of period $ 42.16 $ 38.09 $ 30.82
--------- -------- --------
Increase from investment operations:
Net investment income $ 0.58 $ 0.52 $ 0.41
Net realized and unrealized gain (loss) on investments 2.28 4.06 7.28
--------- ------- --------
Net increase (decrease) from investment operations $ 2.86 $ 4.58 $ 7.69
Distributions to shareowners:
Net investment income (0.57) (0.51) (0.42)
Net realized gain (0.14) -- --
-------- -------- --------
Net increase (decrease) in net asset value $ 2.15 $ 4.07 $ 7.27
--------- -------- --------
Net asset value, end of period $ 44.31 $ 42.16 $ 38.09
========= ======== ========
Total return* 6.83% 12.15% 25.14%
Ratio of net expenses to average net assets+ 0.65% 0.61% 0.61%
Ratio of net investment income to average net assets+ 1.31% 1.34% 1.31%
Portfolio turnover rate 13% 14% 6%
Net assets, end of period (in thousands) $ 269,333 $155,647 $139,210
Ratios with reduction for fees paid indirectly:
Net expenses 0.65% 0.61% 0.61%
Net investment income 1.31% 1.34% 1.31%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at each end of each period.
** Annualized.
+ Ratio with no reduction for fees paid indirectly.
230
Pioneer Mid Cap Value Fund -- Class A shares
Year Year Year
Ended Ended Ended
10/31/08 10/31/07 10/31/06
Class A --------------- -------------- ----------
Net asset value, beginning of period $ 25.62 $ 25.33 $ 22.84
---------- ---------- ----------
Increase (decrease) from investment operations:
Net investment income $ 0.17 $ 0.11 $ 0.12
Net realized and unrealized gain (loss) on investments (8.99) 3.58 3.24
---------- ---------- ----------
Net increase (decrease) from investment operations $ (8.82) $ 3.69 $ 3.36
Distributions to shareowners:
Net investment income (0.10) (0.10) (0.02)
Net realized gain (1.66) (3.30) (0.85)
---------- ---------- ----------
Net increase (decrease) in net asset value $ (10.58) $ 0.29 $ 2.49
---------- ---------- ----------
Net asset value, end of period $ 15.04 $ 25.62 $ 25.33
========== ========== ==========
Total return* (36.70)% 16.47% 15.11%
Ratio of net expenses to average net assets+ 1.13% 1.03% 1.08%
Ratio of net investment income to average net assets+ 0.80% 0.48% 0.46%
Portfolio turnover rate 61% 54% 91%
Net assets, end of period (in thousands) $1,101,941 $2,048,721 $1,946,583
Ratios with reduction for fees paid indirectly:
Net expenses 1.13% 1.02% 1.07%
Net investment income 0.80% 0.49% 0.47%
Year Year
Ended Ended
10/31/05 10/31/04
Class A ------------ -----------
Net asset value, beginning of period $ 25.57 $ 22.25
---------- ----------
Increase (decrease) from investment operations:
Net investment income $ 0.04 $ 0.01
Net realized and unrealized gain (loss) on investments 2.86 3.83
---------- ----------
Net increase (decrease) from investment operations $ 2.90 $ 3.84
Distributions to shareowners:
Net investment income -- --
Net realized gain (5.63) (0.52)
---------- ----------
Net increase (decrease) in net asset value $ (2.73) $ 3.32
---------- ----------
Net asset value, end of period $ 22.84 $ 25.57
========== ==========
Total return* 11.90% 17.65%
Ratio of net expenses to average net assets+ 1.10% 1.21%
Ratio of net investment income to average net assets+ 0.16% 0.05%
Portfolio turnover rate 74% 59%
Net assets, end of period (in thousands) $1,957,797 $1,547,823
Ratios with reduction for fees paid indirectly:
Net expenses 1.10% 1.21%
Net investment income 0.16% 0.05%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at the end of each period. Total return
would be reduced if sales charges were taken into account.
+ Ratios with no reduction for fees paid indirectly.
231
Pioneer Mid Cap Value Fund -- Class C shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/08 10/31/07 10/31/06 10/31/05 10/31/04
Class C ---------- ---------- ---------- ----------- ----------
Net asset value, beginning of period $ 21.48 $ 21.84 $ 19.94 $ 23.15 $ 20.34
---------- ---------- --------- -------- --------
Increase (decrease) from investment operations:
Net investment loss $ 0.00(b) $ (0.08) $ (0.08) $ (0.11) $ (0.16)
Net realized and unrealized gain (loss) on investments (7.44) 3.02 2.83 2.53 3.46
---------- ---------- --------- -------- --------
Net increase (decrease) from investment operations $ (7.44) $ 2.94 $ 2.75 $ 2.42 $ 3.30
Distributions to shareowners:
Net realized gain (1.66) (3.30) (0.85) (5.63) (0.49)
---------- ---------- --------- -------- --------
Net increase (decrease) in net asset value $ (9.10) $ (0.36) $ 1.90 $ (3.21) $ 2.81
---------- ---------- --------- -------- --------
Net asset value, end of period $ 12.38 $ 21.48 $ 21.84 $ 19.94 $ 23.15
========== ========== ========= ======== ========
Total return* (37.23)% 15.46% 14.20% 10.95% 16.60%
Ratio of net expenses to average net assets+ 1.98% 1.87% 1.90% 1.95% 2.11%
Ratio of net investment loss to average net assets+ (0.05)% (0.36)% (0.36)% (0.68)% (0.88)%
Portfolio turnover rate 61% 54% 91% 74% 59%
Net assets, end of period (in thousands) $ 92,814 $ 187,566 $188,847 $183,357 $105,778
Ratios with reduction for fees paid indirectly:
Net expenses 1.97% 1.86% 1.89% 1.95% 2.11%
Net investment loss (0.04)% (0.35)% (0.35)% (0.68)% (0.88)%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at the end of each period. Total return
would be reduced if sales charges were taken into account.
+ Ratios with no reduction for fees paid indirectly.
(b) Amount rounds to less than $0.01 per share.
232
Pioneer Mid Cap Value Fund -- Class Y shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/08 10/31/07 10/31/06 10/31/05 10/31/04
Class Y ------------ ------------ ------------ ------------ -----------
Net asset value, beginning of period $ 26.73 $ 26.31 $ 23.68 $ 26.17 $ 22.73
-------- -------- -------- -------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.26 $ 0.19 $ 0.24 $ 0.06 $ 0.08
Net realized and unrealized gain (loss) on investments (9.39) 3.74 3.35 3.08 3.96
-------- -------- -------- -------- -------
Net increase (decrease) from investment operations $ (9.13) $ 3.93 $ 3.59 $ 3.14 $ 4.04
Distributions to shareowners:
Net investment income (0.18) (0.21) (0.11) -- --
Net realized gain (1.66) (3.30) (0.85) (5.63) (0.60)
-------- -------- -------- -------- -------
Net increase (decrease) in net asset value $ (10.97) $ 0.42 $ 2.63 $ (2.49) $ 3.44
-------- -------- -------- -------- -------
Net asset value, end of period $ 15.76 $ 26.73 $ 26.31 $ 23.68 $ 26.17
======== ======== ======== ======== =======
Total return* (36.41)% 16.84% 15.59% 12.61% 18.23%
Ratio of net expenses to average net assets+ 0.71% 0.68% 0.62% 0.67% 0.78%
Ratio of net investment income to average net assets+ 1.23% 0.82% 0.92% 0.62% 0.46%
Portfolio turnover rate 61% 54% 91% 74% 59%
Net assets, end of period (in thousands) $236,643 $354,485 $291,513 $278,780 $50,081
Ratios with reduction for fees paid indirectly:
Net expenses 0.71% 0.68% 0.61% 0.67% 0.78%
Net investment income 1.23% 0.82% 0.93% 0.62% 0.46%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
233
Pioneer Cullen Value Fund -- Class A shares
Year Ended Year Ended Year Ended
6/30/08 6/30/07 6/30/06
Class A --------------- -------------- ------------
Net asset value, beginning of period $ 21.21 $ 18.28 $ 16.19
--------- ---------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.24 $ 0.26 $ 0.14
Net realized and unrealized gain (loss) on investments ( 2.16) 2.86 2.23
--------- ---------- --------
Net increase (decrease) from investment operations $ (1.92) $ 3.12 $ 2.37
Distributions to shareowners:
Net investment income ( 0.27) (0.18) (0.06)
Net realized gain ( 0.05) (0.01) (0.22)
--------- ---------- --------
Net increase (decrease) in net asset value $ (2.24) $ 2.93 $ 2.09
--------- ---------- -------
Net asset value, end of period $ 18.97 $ 21.21 $ 18.28
========= ========== ========
Total return* ( 9.22)% 17.13% 14.73%
Ratio of net expenses to average net assets+ 1.09% 1.09% 1.15%
Ratio of net investment income to average net assets+ 1.28% 1.67% 1.57%
Portfolio turnover rate 13% 15% 21%
Net assets, end of period (in thousands) $2,224,629 $1,828,453 $809,593
Ratios with no reimbursement of fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.09% 1.09% 1.15%
Net investment income 1.28% 1.67% 1.57%
Ratios with reimbursement of fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 1.09% 1.08% 1.15%
Net investment income 1.29% 1.68% 1.57%
Year Ended Year Ended
6/30/05(a) 6/30/04
Class A ------------ -----------
Net asset value, beginning of period $ 13.96 $ 11.27
-------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.05 $ 0.02
Net realized and unrealized gain (loss) on investments 2.55 2.71
-------- -------
Net increase (decrease) from investment operations $ 2.60 $ 2.73
Distributions to shareowners:
Net investment income (0.03) (0.04)
Net realized gain (0.34) --
-------- -------
Net increase (decrease) in net asset value $ 2.23 $ 2.69
-------- -------
Net asset value, end of period $ 16.19 $ 13.96
======== =======
Total return* 18.81% 24.24%
Ratio of net expenses to average net assets+ 1.66% 1.92%
Ratio of net investment income to average net assets+ 0.62% 0.32%
Portfolio turnover rate 49% 70%
Net assets, end of period (in thousands) $ 98,690 $33,089
Ratios with no reimbursement of fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.64% 1.92%
Net investment income 0.64% 0.32%
Ratios with reimbursement of fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 1.66% 2.00%
Net investment income 0.62% 0.24%
(a) Effective December 28, 2004 Pioneer became the sub-advisor for the Fund and
subsequently became the advisor on February 28, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
234
Pioneer Cullen Value Fund -- Class C shares
Year Ended Year Ended Year Ended 2/28/05(a)
6/30/08 6/30/07 6/30/06 to 6/30/05
Class C ------------ ------------ ------------ --------------
Net asset value, beginning of period $ 20.95 $ 18.12 $ 16.15 $ 16.05
-------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.09 $ 0.11 $ 0.05 $ 0.01
Net realized and unrealized gain (loss) on investments (2.15) 2.82 2.17 0.09
-------- -------- -------- --------
Net increase (decrease) from investment operations $ (2.06) $ 2.93 $ 2.22 $ 0.10
Distributions to shareowners:
Net investment income (0.12) (0.09) (0.03) --
Net realized gain (0.05) (0.01) (0.22) --
-------- -------- -------- --------
Net increase (decrease) in net asset value $ (2.23) $ 2.83 $ 1.97 $ 0.10
-------- -------- -------- --------
Net asset value, end of period $ 18.72 $ 20.95 $ 18.12 $ 16.15
======== ======== ======== ========
Total return* (9.92)% 16.21% 13.81% 0.62%***
Ratio of net expenses to average net assets+ 1.85% 1.87% 1.94% 2.15%**
Ratio of net investment income to average net assets+ 0.51% 0.89% 0.83% 0.34%**
Portfolio turnover rate 13% 15% 21% 49%
Net assets, end of period (in thousands) $588,241 $568,385 $239,241 $ 15,560
Ratios with no waiver of fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 1.85% 1.87% 1.94% 2.27%**
Net investment income 0.51% 0.89% 0.83% 0.22%**
Ratios with waiver of fees and assumption of expenses by PIM
and reduction for fees paid indirectly:
Net expenses 1.84% 1.87% 1.94% 2.15%**
Net investment income 0.52% 0.89% 0.83% 0.34%**
(a) Class C shares were first publicly offered on February 28, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
*** Not annualized.
+ Ratios with no reduction for fees paid indirectly.
235
Pioneer Cullen Value Fund -- Class Y shares
Year Ended Year Ended Year Ended 2/28/05(a)
6/30/08 6/30/07 6/30/06 to 6/30/05
Class Y ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 21.30 $ 18.34 $ 16.20 $ 16.05
-------- -------- -------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.29 $ 0.28 $ 0.10 $ 0.03
Net realized and unrealized gain (loss) on investments (2.14) 2.91 2.33 0.12
-------- -------- -------- -------
Net increase (decrease) from investment operations $ (1.85) $ 3.19 $ 2.43 $ 0.15
Distributions to shareowners:
Net investment income (0.33) (0.22) (0.07) --
Net realized gain (0.05) (0.01) (0.22) --
-------- -------- -------- -------
Net increase (decrease) in net asset value $ (2.23) $ 2.96 $ 2.14 $ 0.15
-------- -------- -------- -------
Net asset value, end of period $ 19.07 $ 21.30 $ 18.34 $ 16.20
======== ======== ======== =======
Total return* (8.87)% 17.47% 15.12% 0.93%***
Ratio of net expenses to average net assets+ 0.75% 0.77% 0.83% 0.99%**
Ratio of net investment income to average net assets+ 1.62% 2.00% 1.91% 1.60%**
Portfolio turnover rate 13% 15% 21% 49%
Net assets, end of period (in thousands) $818,534 $599,166 $144,022 $ 5,082
Ratios with no waiver of fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 0.75% 0.77% 0.83% 0.99%**
Net investment income 1.62% 2.00% 1.91% 1.60%**
Ratios with waiver of fees and assumption of expenses by PIM
and reduction for fees paid indirectly:
Net expenses 0.75% 0.77% 0.83% 0.99%**
Net investment income 1.62% 2.00% 1.91% 1.60%**
(a) Class Y shares were first publicly offered on February 28, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
*** Not annualized.
+ Ratios with no reduction for fees paid indirectly.
236
Pioneer Classic Balanced Fund -- Class A shares
Year Ended Year Ended Year Ended
7/31/08 7/31/07 7/31/06 (b)
Class A ------------ ------------ -------------
Net asset value, beginning of period $ 10.80 $ 11.19 $ 13.05
-------- -------- --------
Increase from investment operations:
Net investment income $ 0.31 $ 0.37 $ 0.31
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.99) 0.73 0.51
-------- -------- --------
Net increase (decrease) from investment operations $ (0.68) $ 1.10 $ 0.82
Distributions to shareowners:
Net investment income (0.33) (0.38) (0.29)
Net realized gain (1.14) (1.11) (2.39)
-------- -------- --------
Total Distributions $ (1.47) $ (1.49) $ (2.68)
-------- -------- --------
Capital Contributions $ -- $ -- $ --
-------- -------- --------
Redemption Fee $ -- $ -- $ --
-------- -------- --------
Net increase (decrease) in net asset value $ (2.15) $ (0.39) $ (1.86)
-------- -------- --------
Net asset value, end of period $ 8.65 $ 10.80 $ 11.19
======== ======== ========
Total return* (7.52)% 10.42% 7.52%
Ratio of net expenses to average net assets+ 1.17% 1.16% 1.24%
Ratio of net investment income to average net assets+ 3.22% 3.29% 2.65%
Portfolio turnover rate 50% 64% 115%
Net assets, end of period (in thousands) $111,667 $163,391 $ 66,691
Ratios with no waiver of fees and assumption of expenses by
Advisor and no reduction for fees paid indirectly:
Net expenses 1.30% 1.25% 1.24%
Net investment income 3.09% 3.20% 2.65%
Ratios with waiver of fees and assumption of expenses by Advisor
and reduction for fees paid indirectly:
Net expenses 1.16% 1.16% 1.24%
Net investment income 3.23% 3.29% 2.65%
Year Ended Year Ended
7/31/05 7/31/04
Class A --------------- ---------------
Net asset value, beginning of period $ 12.10 $ 11.37
--------- ---------
Increase from investment operations:
Net investment income $ 0.22 $ 0.20
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 1.01 0.75
--------- ---------
Net increase (decrease) from investment operations $ 1.23 $ 0.95
Distributions to shareowners:
Net investment income (0.25) (0.22)
Net realized gain (0.03) --
--------- ---------
Total Distributions $ (0.28) $ (0.22)
--------- ---------
Capital Contributions $ 0.00(a) $ --
--------- ---------
Redemption Fee $ -- $ 0.00(a)
--------- ---------
Net increase (decrease) in net asset value $ 0.95 $ 0.73
--------- ---------
Net asset value, end of period $ 13.05 $ 12.10
========= =========
Total return* 10.33% 8.36%
Ratio of net expenses to average net assets+ 1.34% 1.32%
Ratio of net investment income to average net assets+ 1.77% 1.64%
Portfolio turnover rate 70% 19%
Net assets, end of period (in thousands) $ 107,147 $ 90,369
Ratios with no waiver of fees and assumption of expenses by
Advisor and no reduction for fees paid indirectly:
Net expenses 1.39% 1.41%
Net investment income 1.72% 1.55%
Ratios with waiver of fees and assumption of expenses by Advisor
and reduction for fees paid indirectly:
Net expenses 1.34% 1.32%
Net investment income 1.77% 1.64%
(a) Amount rounds to less than one cent per share.
(b) Pioneer became the Fund's advisor on September 23, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sale
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
237
Pioneer Classic Balanced Fund -- Class C shares
Year Year 9/23/05 (a)
Ended Ended to
7/31/08 7/31/07 7/31/06
Class C ----------- ----------- -------------
Net asset value, beginning of period $ 10.79 $ 11.19 $ 12.86
------- -------- --------
Increase from investment operations:
Net investment income $ 0.22 $ 0.29 $ 0.18
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.99) 0.72 0.73
------- -------- --------
Net increase (decrease) from investment operations $ (0.77) $ 1.01 $ 0.91
Distributions to shareowners:
Net investment income (0.25) (0.30) (0.19)
Net realized gain (1.14) (1.11) (2.39)
------- ------- --------
Net decrease in net asset value $ (2.16) $ (0.40) $ (1.67)
------- -------- --------
Net asset value, end of period $ 8.63 $ 10.79 $ 11.19
======= ======== ========
Total return* (8.40)% 9.54% 8.21%(b)
Ratio of net expenses to average net assets+ 2.07% 2.06% 2.00%**
Ratio of net investment income to average net assets+ 2.32% 2.41% 1.55%**
Portfolio turnover rate 50% 64% 115%
Net assets, end of period (in thousands) $ 9,071 $ 11,784 $ 426
Ratios with no waiver of fees and assumption of expenses by
Advisor and no reduction for fees paid indirectly:
Net expenses 2.10% 2.10% 2.00%**
Net investment income 2.29% 2.37% 1.55%**
Ratios with waiver of fees and assumption of expenses by
Advisor and reduction for fees paid indirectly:
Net expenses 2.06% 2.06% 2.00%**
Net investment income 2.32% 2.41% 1.55%**
(a) Class C shares were first publicly offered on September 23, 2005.
(b) Not annualized.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
238
Pioneer Classic Balanced Fund -- Class Y shares
Year Ended Year Ended
7/31/08 7/31/07
Class Y ------------ ------------
Net asset value, beginning of period $ 10.80 $ 11.20
------- --------
Increase decrease from investment operations:
Net investment income $ 0.36 $ 0.40
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (1.01) 0.74
------- --------
Net increase (decrease) from investment operations $ (0.65) $ 1.14
Distributions to shareowners:
Net investment income (0.36) (0.43)
Net realized gain (1.14) (1.11)
------- -------
Total distributions $ (1.50) $ (1.54)
------- --------
Capital Contributions $ -- $ --
------- --------
Redemption fee $ -- $ --
------- --------
Net increase (decrease) in net asset value $ (2.15) $ (0.40)
------- --------
Net asset value, end of period $ 8.65 $ 10.80
======= ========
Total return* (7.25)% 10.82%
Ratio of net expenses to average net assets+ 0.80% 0.80%
Ratio of net investment income to average net assets+ 3.57% 3.61%
Portfolio turnover rate 50% 64%
Net assets, end of period (in thousands) $19,655 $ 27,743
Ratios with no waiver of fees and assumption of expenses by
Advisor and no reduction for fees paid indirectly:
Net expenses 0.80% 0.80%
Net investment income 3.57% 3.61%
Ratios with waiver of fees and assumption of expenses by Advisor
and reduction for fees paid indirectly:
Net expenses 0.80% 0.80%
Net investment income 3.57% 3.61%
Year Ended Year Ended Year Ended
7/31/06 (b) 7/31/05 7/31/04
Class Y --------------- --------------- -----------
Net asset value, beginning of period $ 13.05 $ 12.11 $ 11.38
--------- --------- --------
Increase decrease from investment operations:
Net investment income $ 0.79 $ 0.24 $ 0.22
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.07 1.00 0.75
--------- --------- --------
Net increase (decrease) from investment operations $ 0.86 $ 1.24 $ 0.97
Distributions to shareowners:
Net investment income (0.32) (0.27) (0.24)
Net realized gain (2.39) (0.03) --
-------- --------- -------
Total distributions $ (2.71) $ (0.30) $ (0.24)
--------- --------- --------
Capital Contributions $ -- $ 0.00(a) $ --
--------- --------- --------
Redemption fee $ 0.00(a) $ -- $ --
--------- --------- --------
Net increase (decrease) in net asset value $ (1.85) $ 0.94 $ 0.73
--------- --------- --------
Net asset value, end of period $ 11.20 $ 13.05 $ 12.11
========= ========= ========
Total return* 7.89% 10.40% 8.52%
Ratio of net expenses to average net assets+ 0.92% 1.19% 1.17%
Ratio of net investment income to average net assets+ 2.99% 1.95% 1.80%
Portfolio turnover rate 115% 70% 19%
Net assets, end of period (in thousands) $ 30,072 $ 52,762 $ 59,080
Ratios with no waiver of fees and assumption of expenses by
Advisor and no reduction for fees paid indirectly:
Net expenses 0.92% 1.29% 1.31%
Net investment income 2.99% 1.85% 1.66%
Ratios with waiver of fees and assumption of expenses by Advisor
and reduction for fees paid indirectly:
Net expenses 0.92% 1.19% 1.17%
Net investment income 2.99% 1.95% 1.80%
(a) Amount rounds to less than one cent per share.
(b) Pioneer became the Fund's advisor on September 23, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
239
Pioneer Bond Fund -- Class A shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
6/30/08 6/30/07 6/30/06 6/30/05 6/30/04
CLASS A ------------ ------------ ------------- ------------ ------------
Net asset value, beginning of period $ 8.95 $ 8.89 $ 9.40 $ 9.18 $ 9.41
-------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.43 $ 0.40 $ 0.35 $ 0.40 $ 0.41
Net realized and unrealized gain (loss) on investments 0.16 0.07 (0.47) 0.29 (0.14)
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 0.59 $ 0.47 $ (0.12) $ 0.69 $ 0.27
Distributions to shareowners:
Net investment income (0.44) (0.41) (0.39) (0.47) (0.50)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 0.15 $ 0.06 $ (0.51) $ 0.22 $ (0.23)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.10 $ 8.95 $ 8.89 $ 9.40 $ 9.18
======== ======== ======== ======== ========
Total return* 6.64% 5.31% (1.25)% 7.64% 2.98%
Ratio of net expenses to average net assets+ 1.00% 1.00% 1.00% 1.05% 1.14%
Ratio of net investment income to average net assets+ 4.60% 4.48% 3.91% 4.27% 4.42%
Portfolio turnover rate 73% 31% 60% 49% 63%
Net assets, end of period (in thousands) $265,959 $284,592 $208,454 $174,055 $160,421
Ratios with no assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 1.04% 1.00% 1.11% 1.18% 1.14%
Net investment income 4.56% 4.48% 3.80% 4.14% 4.42%
Ratios with assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 1.00% 1.00% 1.00% 1.05% 1.14%
Net investment income 4.60% 4.48% 3.91% 4.27% 4.42%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratio with no reduction for fees paid indirectly.
240
Pioneer Bond Fund -- Class Y shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
6/30/08 6/30/07 6/30/06 6/30/05 6/30/04
CLASS Y ------------ ------------ ------------- ----------- ----------
Net asset value, beginning of period $ 8.88 $ 8.83 $ 9.33 $ 9.12 $ 9.35
-------- -------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.45 $ 0.44 $ 0.39 $ 0.44 $ 0.46
Net realized and unrealized gain (loss) on investments 0.16 0.06 (0.46) 0.28 (0.14)
-------- -------- -------- ------- -------
Net increase (decrease) from investment operations $ 0.61 $ 0.50 $ (0.07) $ 0.72 $ 0.32
Distributions to shareowners:
Net investment income (0.47) (0.45) (0.43) (0.51) (0.55)
-------- -------- -------- ------- -------
Net increase (decrease) in net asset value $ 0.14 $ 0.05 $ (0.50) $ 0.21 $ (0.23)
-------- -------- -------- ------- -------
Net asset value, end of period $ 9.02 $ 8.88 $ 8.83 $ 9.33 $ 9.12
======== ======== ======== ======= =======
Total return* 6.91% 5.65% (0.77)% 8.07% 3.48%
Ratio of net expenses to average net assets+ 0.59% 0.57% 0.58% 0.61% 0.58%
Ratio of net investment income to average net assets+ 5.02% 4.89% 4.20% 4.43% 5.05%
Portfolio turnover rate 73% 31% 60% 49% 63%
Net assets, end of period (in thousands) $710,219 $613,523 $521,480 $21,027 $13,617
Ratios with no assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 0.61% 0.57% 0.58% 0.61% 0.58%
Net investment income 5.00% 4.89% 4.20% 4.43% 5.05%
Ratios with assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 0.59% 0.57% 0.58% 0.61% 0.58%
Net investment income 5.02% 4.89% 4.20% 4.43% 5.05%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at each end of each period.
+ Ratio with no reduction for fees paid indirectly.
241
Pioneer Short Term Income Fund -- Class A shares
For the period
from 7/8/04
Year Year Year Year (Commencement
Ended Ended Ended Ended of Operations)
8/31/08 8/31/07 8/31/06 8/31/05 to 8/31/04
Class A ----------- ----------- ----------- ----------- ---------------
Net asset value, beginning of period $ 9.76 $ 9.75 $ 9.84 $ 10.02 $ 10.00
------- ------- ------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.45 $ 0.43 $ 0.29 $ 0.27 $ 0.03
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.24) 0.02 (0.06) (0.14) 0.03
------- ------- ------- -------- --------
Net increase from investment operations $ 0.21 $ 0.45 $ 0.23 $ 0.13 $ 0.06
Distributions to shareowners:
Net investment income (0.45) (0.44) (0.32) (0.31) (0.04)
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ (0.24) $ 0.01 $ (0.09) $ (0.18) $ 0.02
------- ------- ------- -------- --------
Net asset value, end of period $ 9.52 $ 9.76 $ 9.75 $ 9.84 $ 10.02
======= ======= ======= ======== ========
Total return* 2.18% 4.68% 2.38% 1.31% 0.59%(a)
Ratio of net expenses to average net assets+ 0.91% 0.91% 0.90% 0.90% 0.90%**
Ratio of net investment income to average net assets+ 4.60% 4.27% 3.05% 2.68% 1.64%**
Portfolio turnover rate 34% 78% 81% 71% 24%(a)
Net assets, end of period (in thousands) $12,499 $13,184 $21,701 $ 11,512 $ 1,478
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.00% 1.00% 0.99% 1.40% 9.40%* *
Net investment income (loss) 4.51% 4.18% 2.96% 2.18% (6.86)%**
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.90% 0.90% 0.90% 0.90% 0.90%* *
Net investment income 4.61% 4.28% 3.05% 2.68% 1.64%* *
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account. ** Annualized.
(a) Not annualized.
+ Ratio with no reduction for fees paid indirectly.
242
Pioneer Short Term Income Fund -- Class Y shares
For the period
from 7/8/04
Year Year Year Year (Commencement
Ended Ended Ended Ended of Operations)
8/31/08 8/31/07 8/31/06 8/31/05 to 8/31/04
Class Y ------------ ------------ ------------ ----------- ---------------
Net asset value, beginning of period $ 9.76 $ 9.76 $ 9.85 $ 10.01 $ 10.00
-------- -------- -------- -------- --------
Increase from investment operations:
Net investment income $ 0.48 $ 0.45 $ 0.32 $ 0.30 $ 0.04
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.24) 0.02 (0.06) (0.12) 0.02
-------- -------- -------- ------- --------
Net increase from investment operations $ 0.24 $ 0.47 $ 0.26 $ 0.18 $ 0.06
Distributions to shareowners:
Net investment income (0.49) (0.47) (0.35) (0.34) (0.05)
-------- -------- -------- ------- --------
Net increase (decrease) in net asset value $ (0.25) $ -- $ (0.09) $ (0.16) $ 0.01
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.51 $ 9.76 $ 9.76 $ 9.85 $ 10.01
======== ======== ======== ======== ========
Total return* 2.45% 4.96% 2.73% 1.86% 0.57%(a
Ratio of net expenses to average net assets+ 0.55% 0.53% 0.53% 0.58% 0.61%**
Ratio of net investment income to average net assets+ 4.98% 4.68% 3.37% 2.53% 1.94%**
Portfolio turnover rate 34% 78% 81% 71% 24%(a)
Net assets, end of period (in thousands) $130,475 $189,724 $148,514 $ 17,672 $ 530
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.55% 0.53% 0.53% 0.99% 10.54%**
Net investment income (loss) 4.98% 4.68% 3.37% 2.12% (7.99)%**
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.55% 0.53% 0.53% 0.58% 0.61%**
Net investment income 4.98% 4.68% 3.37% 2.53% 1.94%**
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
(a) Not annualized.
+ Ratio with no reduction for fees paid indirectly.
243
Pioneer Treasury Reserves Fund -- Class A shares
Year Year
Ended Ended
7/31/08 7/31/07
Class A ----------- -----------
Net asset value, beginning of period $ 1.00 $ 1.00
------- -------
Increase from investment operations:
Net investment income $ 0.03 $ 0.05
------- -------
Distributions to shareowners:
Net investment income $ (0.03) $ (0.05)
------- -------
Capital contributions $ -- $ --
------- -------
Net asset value, end of period $ 1.00 $ 1.00
======= =======
Total return* 2.55% 4.59%
Ratio of net expenses to average net assets+ 0.85% 0.68%
Ratio of net investment income to average net assets+ 2.37% 4.55%
Net assets, end of period (in thousands) $47,807 $26,293
Ratios with no waiver of management fees and assumption of
expenses by the advisor and no reduction for fees paid
indirectly:
Net expenses 0.85% 0.68%
Net investment income 2.37% 4.55%
Ratios with waiver of management fees and assumption of
expenses by the advisor and reduction for fees paid indirectly:
Net expenses 0.84% 0.68%
Net investment income 2.38% 4.55%
Year Year Year
Ended Ended Ended
7/31/06 (b) 7/31/05 7/31/04
Class A ------------- --------- -----------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
------- -------- ---------
Increase from investment operations:
Net investment income $ 0.03 $ 0.02 $ 0.00(a)
------- -------- ---------
Distributions to shareowners:
Net investment income $ (0.03) $ (0.02) $ (0.00)(a)
------- -------- ---------
Capital contributions $ -- $ 0.00(a) $ --
------- -------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
======= ======== =========
Total return* 3.36% 1.62% 0.25%
Ratio of net expenses to average net assets+ 0.90% 0.70% 0.77%
Ratio of net investment income to average net assets+ 3.36% 1.62% 0.26%
Net assets, end of period (in thousands) $31,687 $ 70,793 $ 7 2,929
Ratios with no waiver of management fees and assumption of
expenses by the advisor and no reduction for fees paid
indirectly:
Net expenses 0.92% 0.69% 1.02%
Net investment income 3.34% 1.63% 0.01%
Ratios with waiver of management fees and assumption of
expenses by the advisor and reduction for fees paid indirectly:
Net expenses 0.90% 0.70% 0.77%
Net investment income 3.36% 1.62% 0.26%
(a) Amount rounds to less than one cent per share.
(b) Pioneer became the Fund's advisor on September 23, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at the net asset value at the end of each period and no sale
charges. Total return would be reduced if the sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
244
Pioneer Treasury Reserves Fund -- Class Y shares
Year Year
Ended Ended
7/31/08 7/31/07
Class Y ----------- -----------
Net asset value, beginning of period $ 1.00 $ 1.00
------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.03 $ 0.05
------- -------
Distributions to shareowners:
Net investment income $ (0.03) $ (0.05)
------- -------
Capital contributions $ -- $ --
------- -------
Net asset value, end of period $ 1.00 $ 1.00
======= =======
Total return* 2.78% 4.76%
Ratio of net expenses to average net assets+ 0.60% 0.56%
Ratio of net investment income to average net assets+ 2.84% 4.66%
Net assets, end of period (in thousands) $37,353 $71,565
Ratios with no waiver of management fees and assumption of
expenses by the advisor and no reduction for fees paid
indirectly:
Net expenses 0.60% 0.56%
Net investment income 2.84% 4.66%
Ratios with waiver of management fees and assumption of
expenses by the advisor and reduction for fees paid indirectly:
Net expenses 0.60% 0.56%
Net investment income 2.84% 4.66%
Year Year Year
Ended Ended Ended
7/31/06 (b) 7/31/05 7/31/04
Class Y ------------- ------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.03 $ 0.02 $ 0.00(a)
------- -------- --------
Distributions to shareowners:
Net investment income $ (0.03) $ (0.02) $ (0.00)(a)
------- -------- --------
Capital contributions $ -- $ 0.00(a) $ --
------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
======= ======== ========
Total return* 3.56% 1.67% 0.33%
Ratio of net expenses to average net assets+ 0.69% 0.65% 0.69%
Ratio of net investment income to average net assets+ 3.59% 1.60% 0.35%
Net assets, end of period (in thousands) $69,387 $ 96,014 $134,182
Ratios with no waiver of management fees and assumption of
expenses by the advisor and no reduction for fees paid
indirectly:
Net expenses 0.72% 0.85% 0.92%
Net investment income 3.57% 1.40% 0.12%
Ratios with waiver of management fees and assumption of
expenses by the advisor and reduction for fees paid indirectly:
Net expenses 0.69% 0.65% 0.69%
Net investment income 3.59% 1.60% 0.35%
(a) Amount rounds to less than one cent per share.
(b) Pioneer became the Fund's advisor on September 23, 2005.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at the net asset value at the end of each period and no sale
charges. Total return would be reduced if the sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
245
Pioneer Cash Reserves Fund -- Class A shares
Six Months
Ended Year Year
6/30/08 Ended Ended
(unaudited) 12/31/07 12/31/06
Class A ------------- ---------- ----------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Increase from investment operations:
Net investment income $ 0.014 $ 0.046 $ 0.043
-------- -------- --------
Distributions to shareowners:
Net investment income $ (0.014) $ (0.046) $ (0.043)
-------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return* 1.39% 4.72% 4.38%
Ratio of net expenses to average net assets+ 0.72%** 0.71% 0.75%
Ratio of net investment loss to average net assets+ 2.83%** 4.61% 4.33%
Net assets, end of period (in thousands) $730,092 $739,517 $708,103
Ratios with no reductions for fees paid indirectly:
Net expenses 0.72%** 0.71% 0.75%
Net investment income 2.83%** 4.61% 4.33%
Ratios with reductions for fees paid indirectly:
Net expenses 0.71%** 0.71% 0.75%
Net investment income 2.84%** 4.61% 4.33%
Year Year Year
Ended Ended Ended
12/31/05 12/31/04 12/31/03
Class A ---------- ---------- ----------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- -------
Increase from investment operations:
Net investment income $ 0.023 $ 0.005 $ 0.003
-------- -------- -------
Distributions to shareowners:
Net investment income $ (0.023) $ (0.005) $ (0.003)
-------- -------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return* 2.37% 0.45% 0.26%
Ratio of net expenses to average net assets+ 0.83% 0.93% 1.00%
Ratio of net investment loss to average net assets+ 2.62% 0.45% 0.26%
Net assets, end of period (in thousands) $571,418 $192,860 $227,052
Ratios with no reductions for fees paid indirectly:
Net expenses 0.83% 0.93% 1.06%
Net investment income 2.62% 0.45% 0.20%
Ratios with reductions for fees paid indirectly:
Net expenses 0.83% 0.93% 0.99%
Net investment income 2.62% 0.45% 0.27%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
246
Pioneer Cash Reserves Fund -- Class Y shares
Six Months
Ended Year Year
6/30/08 Ended Ended 9/23/05 (a)
(unaudited) 12/31/07 12/31/06 to 12/31/05
Class Y ------------- ------------ ------------ -------------
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- ----------
Increase from investment operations:
Net investment income $ 0.015 $ 0.048 $ 0.046 $ 0.009
-------- -------- -------- ----------
Distributions to shareowners:
Net investment income $ (0.015) $ (0.049) $ (0.046) $ (0.009)
-------- -------- -------- ----------
Net asset value,
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ==========
Total return* 1.50% 4.96% 4.67% 2.44%(b)
Ratio of net expenses to average net assets+ 0.49% 0.47% 0.47% 0.44%**
Ratio of net investment income to average net assets+ 3.06% 4.85% 4.54% 3.46%**
Net assets, end of period (in thousands) $ 63,983 $ 83,209 $ 76,726 $ 116,039
Ratios with no reductions for fees paid indirectly:
Net expenses 0.49% 0.47% 0.47% 0.44%**
Net investment income 3.06% 4.85% 4.54% 3.45%**
Ratios with reduction for fees paid indirectly:
Net expenses 0.49% 0.47% 0.47% 0.44%**
Net investment income 3.06% 4.85% 4.54% 3.46%**
(a) Class Y shares were first publicly offered on September 23, 2005.
(b) Not annualized
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at each end of each period.
** Annualized.
+ Ratio with no reduction for fees paid indirectly.
247
INFORMATION CONCERNING THE MEETING
Solicitation of Proxies
In addition to the mailing of these proxy materials, proxies may be
solicited by telephone, by fax or in person by the RMK Trustees, officers and
employees of your RMK Fund; by personnel of your RMK Fund's transfer agent,
Pioneer, PIMSS, or by broker-dealer firms. [ ] has been retained to provide
proxy solicitation services to the RMK Funds at a cost of approximately $[ ].
Pioneer and MAM will each be responsible for 50% of such amount.
Revoking Proxies
Each RMK Fund shareholder signing and returning a proxy has the power to
revoke it at any time before it is exercised:
o By filing a written notice of revocation with the RMK Fund's transfer
agent, Morgan Keegan, 50 North Front Street, Memphis, Tennessee 38103,
o By returning a duly executed proxy with a later date before the time
of the meeting, or
o If a shareholder has executed a proxy but is present at the meeting
and wishes to vote in person, by notifying the secretary of the RMK
Fund (without complying with any formalities) at any time before it is
voted.
Being present at the meeting alone does not revoke a previously executed
and returned proxy.
Outstanding Shares
Only shareholders of record on [ ], 2009 (the "record date") are entitled
to notice of and to vote at the meeting. As of the record date, the following
shares of each RMK Fund were outstanding:
Fund Shares Outstanding (as of [ ], 2009)
- ---- ------------------------------------
Regions Morgan Keegan Select Mid Cap Growth Fund
Class A ....................................... [ ]
Class C ....................................... [ ]
Class I ....................................... [ ]
Regions Morgan Keegan Select Growth Fund
Class A ....................................... [ ]
Class C ....................................... [ ]
Class I ....................................... [ ]
Regions Morgan Keegan Select Core Equity Fund
Class A ....................................... [ ]
Class C ....................................... [ ]
Class I ....................................... [ ]
Regions Morgan Keegan Select Mid Cap Value Fund
Class A ....................................... [ ]
Class C ....................................... [ ]
Class I ....................................... [ ]
Regions Morgan Keegan Select Value Fund
Class A ....................................... [ ]
Class C ....................................... [ ]
Class I ....................................... [ ]
Regions Morgan Keegan Select Balanced Fund
Class A ....................................... [ ]
Class C ....................................... [ ]
Class I ....................................... [ ]
248
Fund Shares Outstanding (as of [ ], 2009)
- ---- ------------------------------------
Regions Morgan Keegan Select Fixed Income Fund
Class A ...................................................... [ ]
Class C ...................................................... [ ]
Class I ...................................................... [ ]
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund
Class A ...................................................... [ ]
Class C ...................................................... [ ]
Class I ...................................................... [ ]
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund
Class A ...................................................... [ ]
Class C ...................................................... [ ]
Class I ...................................................... [ ]
Regions Morgan Keegan Select Treasury Money Market Fund
Class A ...................................................... [ ]
Class I ...................................................... [ ]
Regions Morgan Keegan Select Money Market Fund
Class A ...................................................... [ ]
Class I ...................................................... [ ]
Other Business
Your RMK Board knows of no business to be presented for consideration at
the meeting other than Proposals 1 through 11. If other business is properly
brought before the meeting, proxies will be voted according to the best
judgment of the persons named as proxies.
Adjournments and Postponements
If, by the time scheduled for the meeting, a quorum of shareholders of an
RMK Fund is not present or if a quorum is present but sufficient votes "for" a
Proposal have not been received, the persons named as proxies may propose an
adjournment of the meeting to another date and time, and the meeting may be
held as adjourned within a reasonable time after the original meeting date
without further notice. Any such adjournment will require the affirmative vote
of a plurality of the votes cast in person or by proxy at the meeting. The
persons named as proxies will vote all proxies in favor of the adjournment that
voted in favor of the Proposal. They will vote against such adjournment those
proxies required to be voted against the Proposal. Abstentions and broker
non-votes will be disregarded in the vote for adjournment. If the meeting is
postponed, the RMK Funds will give notice of the postponed meeting to their
shareholders.
Telephone and Internet Voting
In addition to soliciting proxies by mail, by fax or in person, an RMK
Fund may also arrange to have votes recorded by telephone, the Internet or
other electronic means. The voting procedures used in connection with such
voting methods are designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been properly
recorded. In the case of telephone voting, shareholders would be called at the
phone number in the RMK Fund's account records and would be asked for their
Social Security number or other identifying information. The shareholders would
then be given an opportunity to authorize proxies to vote their shares at the
meeting in accordance with their instructions. In the case of automated
telephone and Internet voting, shareholders would be required to provide their
identifying information and will receive a confirmation of their instructions
by mail to ensure that each shareholder's instructions have been recorded
correctly.
Shareholders' Proposals
Your RMK Fund is not required, and does not intend, to hold meetings of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting for shareholders must submit the proposal in writing, so that
it is received by your RMK Fund at 50 North Front Street, Memphis, Tennessee
38103 within a reasonable time before the meeting. If the Reorganization with
respect to your RMK Fund is completed, your RMK Fund will not hold another
shareholder meeting.
249
Appraisal Rights
If the Reorganization of your RMK Fund is approved at the meeting,
shareholders of your RMK Fund will not have the right to dissent and obtain
payment of the fair value of their shares because the exercise of appraisal
rights is subject to the forward pricing requirements of Rule 22c-1 under the
1940 Act, which supersede state law. Shareholders of your RMK Fund, however,
have the right to redeem their Fund shares until the Closing Date of the
Reorganization.
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of each RMK Fund, as of [ ], 2009, the following persons
owned of record or beneficially 5% or more of the outstanding shares of the RMK
Fund.
Share Number of Percent
Fund Class Record Holder Shares of Class
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Mid Cap Growth Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Growth Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Core Equity Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Mid Cap Value Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Value Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Balanced Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Fixed Income Fund C
--------------------------------------------------
I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Limited Maturity C
--------------------------------------------------
Fixed Income Fund I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
--------------------------------------------------
Select Intermediate Tax C
--------------------------------------------------
Exempt Bond Fund I
- ------------------------------------------------------------------------------------
250
Share Number of Percent
Fund Class Record Holder Shares of Class
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
----------------------------------------------------
Select Treasury Money
Market Fund I
- ------------------------------------------------------------------------------------
Regions Morgan Keegan A
----------------------------------------------------
Select Money Market Fund I
- ------------------------------------------------------------------------------------
To the knowledge of each Pioneer Fund, as of [ ], 2009, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
the Pioneer Fund.
Share Number Percent
Fund Class Record Holder of Shares of Class
- ------------------------------------------------------------------------------------
Pioneer Fund A
----------------------------------------------------
C
----------------------------------------------------
Y
- ------------------------------------------------------------------------------------
Pioneer Mid Cap Value Fund A
----------------------------------------------------
C
----------------------------------------------------
Y
- ------------------------------------------------------------------------------------
Pioneer Cullen Value Fund A
----------------------------------------------------
C
----------------------------------------------------
Y
- ------------------------------------------------------------------------------------
Pioneer Classic Balanced A
----------------------------------------------------
Fund C
----------------------------------------------------
Y
- ------------------------------------------------------------------------------------
Pioneer Bond Fund A
----------------------------------------------------
Y
- ------------------------------------------------------------------------------------
Pioneer Short Term Income A
----------------------------------------------------
Fund Y
- ------------------------------------------------------------------------------------
Pioneer Treasury Reserves A
----------------------------------------------------
Fund Y
- ------------------------------------------------------------------------------------
Pioneer Cash Reserves Fund A
----------------------------------------------------
Y
- ------------------------------------------------------------------------------------
251
EXPERTS
RMK Funds
The financial statements and financial highlights of each RMK Fund for the
past five fiscal years and any semi-annual period, as applicable, are
incorporated by reference into this Proxy Statement/Prospectus. The financial
statements and financial highlights of each RMK Fund for its most recent fiscal
year end November 30, 2008 have been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, as set forth in their report
thereon incorporated by reference into this registration statement. Such
financial statements and financial highlights are incorporated by reference
herein in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
Pioneer Funds
The financial highlights and financial statements of each Pioneer Fund for
the past five fiscal years and any semi-annual period, as applicable, are
incorporated by reference into this Proxy Statement/Prospectus. The financial
highlights and financial statements of each Pioneer Fund for its most recent
fiscal year end have been audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their reports thereon incorporated by
reference into this registration statement. Such financial statements and
financial highlights are incorporated by reference herein in reliance upon such
reports given on the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
You can obtain more free information about each Fund from your investment
firm or
With respect to each RMK Fund:
by writing to: Morgan Keegan & Company, Inc.
50 North Front Street
Memphis, Tennessee 38103
by calling: 1-800-222-8866
With respect to each Pioneer Fund:
by writing to: Pioneer Investment Management Shareholder Services, Inc.
60 State Street
Boston, Massachusetts 02109
by calling: 1-800-225-6292
Each Fund's statement of additional information and shareholder reports are
available free of charge on the following websites:
With respect to each RMK Fund: www.morgankeegan.com
With respect to each Pioneer Fund: www.pioneerinvestments.com
Shareholder reports. Annual and semiannual reports to shareholders, and
quarterly reports filed with the SEC, provide information about each Fund's
investments. An annual report discusses market conditions and investment
strategies that significantly affected each Fund's performance during its last
fiscal year.
Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended and the 1940 Act and files reports, proxy
statements and other information with the SEC. These reports, proxy statements
and other information filed by the Funds and their predecessors can be
inspected and copied (for a duplication fee) at the public reference facilities
of the SEC at 100 F Street, N.E., Washington, D.C. Copies of these materials
can also be obtained by mail from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549, at
prescribed rates. In addition, copies of these documents may be viewed on-screen
or downloaded from the SEC's Internet site at http://www.sec.gov.
252
EXHIBIT A-1 -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION
-----------------------------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the [ ] day of February, 2009, by and between Pioneer [____________] Fund, a
Delaware statutory trust (the "Acquiring Trust"), on behalf of its series
Pioneer [___________] Fund (the "Acquiring Fund"), with its principal place of
business at 60 State Street, Boston, Massachusetts 02109, and Regions Morgan
Keegan Select Funds, a Massachusetts business trust (the "Acquired Trust"), on
behalf of its series Regions Morgan Keegan [_______________] Fund (the
"Acquired Fund"), with its principal place of business at Morgan Keegan Tower,
50 North Front Street, Memphis, Tennessee 38103. The Acquiring Fund and the
Acquired Fund are sometimes referred to collectively herein as the "Funds" and
individually as a "Fund."
The transfer of all of the assets of the Acquired Fund to the Acquiring
Fund in exchange solely for (A) the issuance of Class A, [Class C](1) and Class
Y shares of beneficial interest of the Acquiring Fund (collectively, the
"Acquiring Fund Shares" and each, an "Acquiring Fund Share") to the Acquired
Fund, and (B) the assumption by the Acquiring Fund of the liabilities of the
Acquired Fund as set forth on the Statement of Assets and Liabilities (as
defined below) and as included in the calculation of net asset value ("NAV") on
the closing date of the Reorganization (the "Closing Date") (collectively, the
"Assumed Liabilities"), and (2) the distribution by the Acquired Fund, on or
promptly after the Closing Date as provided herein, of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in liquidation and dissolution
of the Acquired Fund, all upon the terms and conditions hereinafter set forth
in this Agreement (collectively, the "Reorganization") are intended to
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). This Agreement is
intended to be and is adopted as a "plan of reorganization" within the meaning
of Treasury Regulations Section 1.368-2(g).
WHEREAS, the Acquiring Fund is a series of the Acquiring Trust, an
open-end management investment company registered pursuant to the Investment
Company Act of 1940, as amended (the "Investment Company Act").
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of the Acquired Trust and the Board of
Trustees of the Acquiring Trust have determined that the Reorganization is in
the best interests of the Acquired Fund shareholders and the Acquiring Fund
shareholders, respectively, and is not dilutive of the interests of those
shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND
TERMINATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund will
transfer all of its assets as set forth in Paragraph 1.2 hereof (the "Acquired
Assets") to the Acquiring Fund, free and clear of all liens and encumbrances
and subject to no restrictions on the full transfer thereof (other than those
arising under the Securities Act of 1933, as amended (the "Securities Act")),
and the Acquiring Fund agrees in exchange therefor: (i) to issue to the
Acquired Fund the number of Acquiring Fund Shares, including fractional
Acquiring Fund Shares, of each class with an aggregate NAV equal to the NAV of
the Acquired Fund attributable to the corresponding class of the Acquired
Fund's shares, as determined in the manner set forth in Paragraphs 2.1 and 2.2
hereof; and (ii) to assume the Assumed Liabilities. Such transactions shall
take place at the Closing (as defined in Paragraph 3.1 below). [For purposes of
this Agreement, the Class A shares of the Acquired Fund correspond to the Class
A shares of the Acquiring Fund, the Class C shares of the Acquired Fund
correspond to the Class C shares of the Acquiring Fund, and the Class I shares
of the Acquired Fund correspond to the Class Y shares of the Acquiring Fund and
the term "Acquiring Fund Shares" should be read to include each such class of
shares of the Acquiring Fund.] [For the RMK Select Intermediate Tax Exempt Bond
Fund Agreement: For purposes of this Agreement, the Class A shares of the
Acquired Fund correspond to the Class A shares of the Acquiring Fund, the Class
C shares of the Acquired Fund correspond to the Class A shares of the Acquiring
Fund, and the Class I shares of the Acquired Fund correspond to the Class Y
shares of the Acquiring Fund and the term "Acquiring Fund Shares" should be
read to include each such class of shares of the Acquiring Fund.]
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights and choses in action of the Acquired Fund or the
- ----------
(1) To be deleted for RMK Select Intermediate Tax Exempt Bond Fund Agreement.
A-1-1
Acquired Trust in respect of the Acquired Fund, all other intangible property
owned by the Acquired Fund, originals or copies of or access to all books and
records of the Acquired Fund, and all other assets of the Acquired Fund on the
Closing Date. The Acquiring Fund shall also be entitled to receive (or, to the
extent agreed upon between the Acquired Trust and the Acquiring Trust, be
provided access to) copies of or access to all records that the Acquired Trust
is required to maintain under the Investment Company Act, and the rules of the
Securities and Exchange Commission (the "Commission") promulgated thereunder,
or other applicable laws, to the extent such records pertain to the Acquired
Fund; provided, however, that the Acquiring Trust understands and agrees that
certain of the records of the Acquired Trust in respect of the Acquired Funds
contain confidential, non-public information relating to certain funds other
than the Acquired Funds (the "Unrelated Information"), and the Acquiring Trust
hereby undertakes and agrees, subject to applicable law, to keep such Unrelated
Information in the strictest confidence, unless otherwise required by law.
(b) The Acquired Fund has provided the Acquiring Fund with a list of
all of the Acquired Fund's securities and other assets as of the date of
execution of this Agreement, and the Acquiring Fund has provided the
Acquired Fund with a copy of the current investment policies and
restrictions and fair value procedures applicable to the Acquiring Fund.
The Acquired Fund reserves the right to sell any of such securities or
other assets before the Closing Date (except to the extent sales may be
limited by representations of the Acquired Fund made in connection with the
issuance of the tax opinion provided for in Paragraph 8.5 hereof).
(c) (i) The Acquired Trust will, at least thirty (30) business days
prior to the Closing Date, furnish the Acquiring Fund with a list of the
then-held securities of the Acquired Fund, and shall identify any
investments of the Acquired Fund being fair valued by the Acquired Fund
Administrator (as defined below) or being valued based on broker-dealer
quotes obtained by the Acquired Fund Administrator. At least twenty (20)
business days prior to the Closing Date, the Acquiring Trust, on behalf of
the Acquiring Fund, will advise the Acquired Trust of any such investments
of the Acquired Fund identified on such list which the Acquiring Fund
Adviser (as defined below) does not believe would be desirable for the
Acquiring Fund. Under such circumstances, to the extent practicable, the
Acquired Trust, on behalf of the Acquired Fund, if requested in writing by
the Acquiring Trust and to the extent permissible and consistent with the
Acquired Fund's investment objectives and policies, will dispose of such
investments prior to the Closing Date; provided that no such sales shall be
made or required until the Reorganization has been approved by the Acquired
Fund Shareholders (as defined below).
(ii) Notwithstanding the foregoing, nothing in this Paragraph 1.2(c)
shall require the Acquired Trust, on behalf of the Acquired Fund, to
dispose of portfolio securities or other assets if, in the reasonable
judgment of the Acquired Trust's Board of Trustees or Morgan Asset
Management, Inc. ("MAM"), such disposition could adversely affect the
status of the reorganization of the Acquired Fund as a "reorganization"
within the meaning of Section 368(a) of the Code.
1.3 The Acquired Fund will use its best efforts to discharge all of its
known liabilities and obligations that are or will become due prior to the
Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Trust shall liquidate the Acquired Fund
and distribute pro rata to the Acquired Fund's shareholders of record,
determined as of the close of regular trading on the New York Stock Exchange on
the Closing Date (the "Acquired Fund Shareholders"), the Acquiring Fund Shares
received by the Acquired Fund pursuant to Paragraph 1.1 hereof. Each Acquired
Fund Shareholder shall receive the number of full and fractional Acquiring Fund
Shares of the class corresponding to the class of shares of beneficial interest
in the Acquired Fund (the "Acquired Fund Shares") held by such Acquired Fund
Shareholder that have an aggregate NAV equal to the aggregate NAV of the
Acquired Fund Shares held of record by such Acquired Fund Shareholder on the
Closing Date. Such liquidation and distribution will be accomplished by the
Acquired Trust instructing the Acquiring Trust to transfer the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the Acquiring Fund
established and maintained by the Acquiring Fund's transfer agent in the names
of the Acquired Fund Shareholders and representing the respective pro rata
number of the Acquiring Fund Shares due the Acquired Fund Shareholders. The
Acquired Trust shall promptly provide the Acquiring Trust with evidence of such
liquidation and distribution. All issued and outstanding Acquired Fund Shares
will simultaneously be cancelled on the books of the Acquired Fund, and the
Acquired Fund will be terminated as soon as reasonably practicable after such
distribution, but in all events within six months after the Closing Date. The
Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
A-1-2
1.7 Any reporting responsibility of the Acquired Trust with respect to the
Acquired Fund, including, but not limited to, the responsibility for filing of
regulatory reports, Tax Returns (as defined in Paragraph 4.1(h)(L) hereof), or
other documents with the Commission, any state securities commissions, and any
federal, state or local tax authorities or any other relevant regulatory
authority, is and shall remain the responsibility of the Acquired Trust. The
Acquired Trust agrees to file such regulatory reports, Tax Returns, and other
documents on a timely basis, The Acquiring Trust shall fully cooperate with the
Acquired Trust to the extent necessary for such reporting responsibilities to
be discharged.
1.8 No sales load, contingent deferred sales charge, commission,
redemption fee or other transactional fee will be charged as a result of the
Reorganization. With respect to shares of the Acquired Fund, for purposes of
determining any contingent deferred sales charge applicable to corresponding
Acquiring Fund shares received as a result of the Reorganization, the same
sales charge and schedule that applied to such Acquired Fund shares prior to
the Reorganization will apply after the Reorganization and the holding period
will be calculated from the date such Acquired Fund shares were initially
issued by the Acquired Fund.
2. VALUATION
2.1 The NAV per share of each class of Acquiring Fund Shares and the NAV
per share of each class of the Acquired Fund shall, in each case, be determined
as of the close of regular trading on the New York Stock Exchange (generally,
4:00 p.m., Eastern time) on the Closing Date (the "Valuation Time"). The NAV of
each Acquiring Fund Share shall be computed by Pioneer Investment Management,
Inc. (the "Acquiring Fund Adviser") in the manner set forth in the Acquiring
Trust's Declaration of Trust, or By-Laws, and the Acquiring Fund's then-current
prospectus and statement of additional information. The NAV of the Acquired
Fund shall be computed by Morgan Keegan & Company, Inc. (the "Acquired Fund
Administrator") in the manner set forth in the Acquired Trust's Declaration of
Trust or By-Laws, and each Acquired Fund's then-current prospectus and
statement of additional information. The Acquiring Fund Adviser shall confirm
to the Acquiring Fund the NAV of the Acquired Fund.
2.2 The number of shares of each class of Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the Acquired
Assets and the assumption of the Assumed Liabilities shall be determined by the
Acquiring Fund Adviser by dividing the NAV of the Acquired Fund attributable to
each class of Acquired Fund shares, as determined in accordance with Paragraph
2.1 hereof, by the NAV of each Acquiring Fund Share of the corresponding class,
as determined in accordance with Paragraph 2.1 hereof.
2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring
Fund Adviser and the Acquired Fund Administrator, respectively, to deliver a
copy of its valuation report to the other party at the Closing. All
computations of value shall be made by the Acquiring Fund Adviser and the
Acquired Fund Administrator in accordance with its regular practice as pricing
agent for the Acquiring Fund and the Acquired Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be May 15, 2009, or such later date as the
parties may agree to in writing. All acts necessary to consummate the
Reorganization (the "Closing") shall be deemed to take place simultaneously as
of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The
Closing shall be held at the offices of Sullivan & Cromwell LLP, 125 Broad
Street, New York, New York 10004, or at such other place as the parties may
agree.
3.2 Portfolio securities that are held other than in book-entry form in
the name of Regions Bank (the "Acquired Fund Custodian") as record holder for
the Acquired Fund shall be presented by the Acquired Fund to Brown Brothers
Harriman & Co. (the "Acquiring Fund Custodian") for examination no later than
three business days preceding the Closing Date. The Acquired Trust, on behalf
of each Acquired Fund, shall instruct the Acquired Fund Custodian to deliver
any such portfolio securities that the Acquired Fund Custodian so holds at the
Valuation Time to the Acquiring Fund Custodian for the account of the Acquiring
Fund on the Closing Date, duly endorsed in proper form for transfer, in such
condition as to constitute good delivery thereof in accordance with the custom
of brokers, and accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price thereof. Portfolio
securities held of record by the Acquired Fund Custodian in book-entry form on
behalf of the Acquired Fund shall be delivered on the Closing Date by the
Acquired Fund Custodian through the Depository Trust Company to the Acquiring
Fund Custodian and by the Acquiring Fund Custodian recording the beneficial
ownership thereof by the Acquiring Fund on the Acquiring Fund Custodian's
records. Any cash balances maintained by the Acquired Fund Custodian shall be
delivered on the Closing Date by the Acquired Fund Custodian transmitting
immediately available funds by wire transfer to the Acquiring Fund Custodian
and the Acquiring Fund Custodian crediting such funds to the account of the
Acquiring Fund.
3.3 The Acquiring Fund Custodian shall deliver within one business day
after the Closing a certificate of an authorized officer stating that: (a) the
Acquired Assets have been delivered in proper form to the Acquiring Fund on the
Closing Date, and (b) all necessary transfer
A-1-3
taxes including all applicable federal and state stock transfer stamps, if any,
have been paid, or provision for payment has been made in conjunction with the
delivery of portfolio securities as part of the Acquired Assets.
3.4 If on the Closing Date (a) the New York Stock Exchange is closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere is disrupted so that accurate
appraisal of the NAV of the Acquiring Fund Shares or the Acquired Fund pursuant
to Paragraph 2.1 hereof is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.5 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status and certificates of the Acquired Fund
Shareholders and the number of outstanding Acquired Fund Shares owned by each
Acquired Fund Shareholder as of the Valuation Time, certified by the President
or a Secretary of the Acquired Trust and its Treasurer, Secretary or other
authorized officer (the "Shareholder List") as being an accurate record of the
information (a) provided by the Acquired Fund Shareholders, (b) provided by the
Acquired Fund Custodian, or (c) derived from the Acquired Trust's records by
such officers or one of the Acquired Trust's service providers. The Acquiring
Fund shall issue and deliver to the Acquired Fund a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date, or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts or other documents as such other
party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on a disclosure schedule previously provided by
the Acquired Trust to the Acquiring Trust, the Acquired Trust, on behalf of the
Acquired Fund, represents, warrants and covenants to the Acquiring Trust, on
behalf of the Acquiring Fund, which representations, warranties and covenants
will be true and correct on the date hereof and on the Closing Date as though
made on and as of the Closing Date, as follows:
(a) The Acquired Fund is a series of the Acquired Trust. The Acquired
Trust is a business trust validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has the power to own all of
its properties and assets and, subject to approval by the Acquired Fund's
shareholders, to perform its obligations under this Agreement. The Acquired
Fund is not required to qualify to do business in any jurisdiction in which
it is not so qualified or where failure to qualify would subject it to any
material liability or disability. The Acquired Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted;
(b) The Acquired Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The Acquired Trust is not in violation of, and the execution and
delivery of this Agreement and the performance of its obligations under this
Agreement on behalf of the Acquired Fund will not result in a violation of,
any provision of the Acquired Trust's Declaration of Trust or By-Laws or any
material agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquired Fund to which the Acquired Trust,
on behalf of the Acquired Fund, is a party or by which the Acquired Fund or
any of its assets are bound;
(d) Except as set forth on Schedule 4.1(d), no litigation or
administrative proceeding or investigation of or before any court or
governmental body is currently pending or to its knowledge threatened
against the Acquired Fund or any of the Acquired Fund's properties or assets
and except as set forth on Schedule 4.1(d), the Acquired Trust knows of no
facts which could reasonably be expected to form the basis for the
institution of such proceedings. Neither the Acquired Trust nor the Acquired
Fund is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially adversely
affects the Acquired Fund's business or its ability to consummate the
transactions contemplated herein or would be binding upon the Acquiring Fund
as the successor to the Acquired Fund;
(e) Neither the Acquired Trust, on behalf of the Acquired Fund, nor the
Acquired Fund has any material contracts or other commitments (other than
this Agreement, agreements for the purchase and sale of securities or other
permitted investments, and those contracts listed in Schedule 4.1(e)) which
will not be terminated at or prior to the Closing Date and no such
termination will result in liability to the Acquired Fund (or the Acquiring
Fund);
(f) The statement of assets and liabilities of the Acquired Fund, the
related statements of operations and changes in net assets, and the schedule
of investments, and the notes thereto, as of and for the fiscal year ended
November 30, 2008, have been audited by an independent registered public
accounting firm retained by the Acquired Fund, are in accordance with
generally accepted
A-1-4
accounting principles ("GAAP") consistently applied, and fairly reflect, in
all material respects, the financial condition of the Acquired Fund as of
such date and the results of its operations for the period then ended, and
the Acquired Fund had no known liabilities of a material amount as of the
date thereof, whether actual or contingent, other than those disclosed
therein. The Statement of Assets and Liabilities will be in accordance with
GAAP consistently applied and will fairly reflect, in all material respects,
the financial condition of the Acquired Fund as of such date and the results
of its operations for the period then ended. Except for the Assumed
Liabilities, the Acquired Fund will not have any known or contingent
liabilities on the Closing Date. No significant deficiency, material
weakness, fraud, significant change or other factor that could significantly
affect the internal controls of the Acquired Fund has been disclosed or is
required to be disclosed in the Acquired Fund's reports on Form N-CSR to
enable the chief executive officer and chief financial officer or other
officers of the Acquired Trust to make the certifications required by the
Sarbanes-Oxley Act, and no deficiency, weakness, fraud, change, event or
other factor exists with respect to the Acquired Fund that will be required
to be disclosed in the Acquiring Fund's Form N-CSR after the Closing Date;
(g) Since the most recent fiscal year end, except as specifically
disclosed in the Acquired Fund's prospectus, its statement of additional
information as in effect on the date of this Agreement, there has not been
any material adverse change in the Acquired Fund's financial condition,
assets, liabilities, business or prospects, or any incurrence by the
Acquired Fund of indebtedness, except for normal contractual obligations
incurred in the ordinary course of business or in connection with the
settlement of purchases and sales of portfolio securities. For the purposes
of this subparagraph (g) (but not for any other purpose of this Agreement),
a decline in NAV per Acquired Fund Share arising out of its normal
investment operations or a decline in market values of securities in the
Acquired Fund's portfolio or a decline in net assets of the Acquired Fund as
a result of redemptions shall not constitute a material adverse change;
(h) (A) The Acquired Fund is a separate series of the Acquired Trust
treated as a separate corporation from each other series of the Acquired
Trust under Section 851(g) of the Code. For each taxable year of its
existence, the Acquired Fund has had in effect an election to be a
regulated investment company under Subchapter M of the Code, has satisfied,
and, for the current taxable year, it expects to satisfy, all of the
requirements of Subchapter M of the Code for treatment as a regulated
investment company, and for each such taxable year, the Acquired Fund has
been eligible to compute its federal income tax under Section 852 of the
Code. The Acquired Fund will qualify as such as of the Closing Date and
will satisfy the diversification requirements of Section 851(b)(3) of the
Code without regard to the last sentence of Section 851(d) of the Code. The
Acquired Fund has not taken any action, caused any action to be taken,
failed to take any action, or caused any action to fail to be taken which
action or failure could cause the Acquired Fund to fail to qualify as a
regulated investment company under the Code. The Acquired Fund does not and
will not have any tax liability under Section 4982 of the Code for any
period ending on or before the Closing Date;
(B) Within the times and in the manner prescribed by law, the Acquired
Fund has properly filed on a timely basis all Tax Returns (as defined
below) that it was required to file, and all such Tax Returns were complete
and accurate in all material respects. The Acquired Fund has not been
informed by any jurisdiction that the jurisdiction believes that the
Acquired Fund was required to file any Tax Return that was not filed;
(C) The Acquired Fund has timely paid, in the manner prescribed by law,
all Taxes (as defined below), that were due and payable or that were
claimed to be due;
(D) The Acquired Fund has not waived or extended any applicable statute
of limitations relating to the assessment or collection of Taxes;
(E) The Acquired Fund has not been notified that any examinations of
the Tax Returns of the Acquired Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against the
Acquired Fund as a result of any audit by the Internal Revenue Service or
any state, local or foreign taxing authority, and, to its knowledge, no
such deficiency has been proposed or threatened;
(F) The Acquired Fund has no actual or potential liability for any Tax
obligation of any taxpayer other than itself. The Acquired Fund is not and
has never been a member of a group of corporations with which it has filed
(or been required to file) consolidated, combined or unitary Tax Returns.
The Acquired Fund is not a party to any Tax allocation, sharing, or
indemnification agreement;
(G) The unpaid Taxes of the Acquired Fund for tax periods through the
Closing Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Statement of
Assets and Liabilities, as defined in Paragraph 5.7 hereof, rather than in
any notes thereto. All Taxes that the Acquired Fund is or was required by
law to withhold or collect have been duly withheld or collected and, to
the extent required, have been timely paid to the proper governmental
agency;
A-1-5
(H) The Acquired Fund has delivered to the Acquiring Fund or made
available to the Acquiring Fund complete and accurate copies of all Tax
Returns of the Acquired Fund, together with all related examination
reports and statements of deficiency for all periods not closed under the
applicable statutes of limitations and complete and correct copies of all
private letter rulings, revenue agent reports, information document
requests, notices of proposed deficiencies, deficiency notices, protests,
petitions, closing agreements, settlement agreements, pending ruling
requests and any similar documents submitted by, received by or agreed to
by or on behalf of the Acquired Fund. The Acquired Fund has disclosed on
its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code;
(I) The Acquired Fund has not undergone, has not agreed to undergo, and
is not required to undergo (nor will it be required as a result of the
transactions contemplated in this Agreement to undergo) a change in its
method of accounting resulting in an adjustment to its taxable income
pursuant to Section 481 of the Code. The Acquired Fund will not be
required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) change in method of
accounting for a taxable period ending on or prior to the Closing Date;
(ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; (iii) installment sale or
open transaction disposition made on or prior to the Closing Date; or (iv)
prepaid amount received on or prior to the Closing Date;
(J) There are (and as of immediately following the Closing there will
be) no liens on the assets of the Acquired Fund relating to or
attributable to Taxes, except for Taxes not yet due and payable;
(K) The Tax bases of the assets of the Acquired Fund are accurately
reflected on the Acquired Fund's Tax books and records; and
(L) For purposes of this Agreement, "Taxes" or "Tax" shall mean all
taxes, charges, fees, duties, deficiencies, customs, levies or other
similar assessments or liabilities, including without limitation income,
gross receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, transfer, withholding, employment,
unemployment, insurance, social security, business license, business
organization, environmental, workers compensation, payroll, profits,
license, lease, service, service use, severance, stamp, occupation,
windfall profits, customs, duties, franchise and other taxes imposed by
the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or
any such government, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof; and "Tax Returns" shall
mean all reports, returns, declarations, statements or other information
required to be supplied to a governmental or regulatory authority or
agency, in connection with Taxes and any associated schedules,
attachments, work papers, or other information, including any attachments,
produced in connection with such items, as well as any information returns
required by any governmental or regulatory authority to be provided to any
other person in connection with Taxes;
(i) All issued and outstanding Acquired Fund Shares are, and on the
Closing Date will be, validly issued and outstanding, fully paid and
non-assessable by the Acquired Trust. All of the issued and outstanding
Acquired Fund Shares will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the Shareholder List delivered at
the Closing pursuant to Paragraph 3.5 hereof. The Acquired Fund does not
have outstanding any options, warrants or other rights to subscribe for or
purchase any Acquired Fund Shares, nor is there outstanding any security
convertible into any Acquired Fund Shares;
(j) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Assets, and full right, power and authority to sell,
assign, transfer and deliver the Acquired Assets to the Acquiring Fund, and,
upon delivery and payment for the Acquired Assets, the Acquiring Fund will
acquire good and marketable title thereto, free of any liens or other
encumbrances and subject to no restrictions on the full transfer thereof,
except such restrictions as might arise under the Securities Act and, as
previously disclosed to the Acquiring Fund, such restrictions generally
applicable to the Acquired Assets of the type being transferred in the
ordinary course;
(k) The Acquired Trust has the trust power and authority, on behalf of the
Acquired Fund, to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquired
Trust's Board of Trustees, and, subject to the approval of the Acquired
Fund's shareholders, assuming due authorization, execution and delivery by
the Acquiring Trust, on behalf of the Acquiring Fund, this Agreement will
constitute a valid and binding obligation of the Acquired Trust, on behalf
of the Acquired Fund, enforceable in accordance with its terms, subject as
to enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
A-1-6
(l) The information to be furnished in writing by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection
with the transactions contemplated hereby and any information necessary to
compute the total return of the Acquired Fund shall be accurate and complete
and shall comply in all material respects with federal securities and other
laws and regulations applicable thereto;
(m) The information included in the proxy statement (the "Proxy
Statement") forming part of the Acquiring Trust's Registration Statement on
Form N-14 filed in connection with this Agreement (the "Registration
Statement") that has been furnished in writing by the Acquired Fund to the
Acquiring Fund for inclusion in the Registration Statement, on the effective
date of that Registration Statement and on the Closing Date, will conform in
all material respects to the applicable requirements of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Investment Company Act and the rules and regulations of the Commission
promulgated thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(n) Upon the effectiveness of the Registration Statement, no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by the Acquired Fund of the transactions
contemplated by this Agreement;
(o) All of the issued and outstanding Acquired Fund Shares have been
offered for sale and sold in compliance in all material respects with all
applicable federal and state securities laws, except as may have been
previously disclosed in writing to the Acquiring Fund;
(p) The current prospectus and statement of additional information of the
Acquired Fund and each prospectus and statement of additional information of
the Acquired Fund used during the six-year period ending on the date of this
Agreement, and any amendments or supplements thereto, conform or conformed
at the time of their distribution to the public in all material respects to
the applicable requirements of the Securities Act and the Investment Company
Act and the rules and regulations of the Commission thereunder and do not or
did not as of their dates or the dates of their distribution to the public
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made,
not materially misleading;
(q) The Acquired Fund currently complies in all material respects with,
and for the six-year period ending on the date of this Agreement, has
complied in all material respects with, the requirements of, and the rules
and regulations under, the Investment Company Act, the Securities Act, the
Exchange Act, state "Blue Sky" laws and all other applicable federal and
state laws or regulations. The Acquired Fund currently complies in all
material respects with, and for the six-year period ending on the date of
this Agreement has complied in all material respects with, all investment
objectives, policies, guidelines and restrictions and any compliance
procedures established by the Acquired Trust with respect to the Acquired
Fund. All advertising and sales material used by the Acquired Fund complies
in all material respects with, and for the six-year period ending on the
date of this Agreement has complied in all material respects with, the
applicable requirements of the Securities Act, the Investment Company Act,
the rules and regulations of the Commission promulgated thereunder, and, to
the extent applicable, the Conduct Rules of the Financial Industry
Regulatory Authority ("FINRA") and any applicable state regulatory
authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission,
FINRA or any state securities authorities by the Acquired Fund during the
six-year period ending on the date of this Agreement have been duly filed
and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration
statements, prospectuses, reports, proxy materials and other filings under
the Securities Act, the Exchange Act and the Investment Company Act (i) are
or were in compliance in all material respects with the requirements of all
applicable statutes and the rules and regulations promulgated thereunder and
(ii) do not or did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they
were made, not false or misleading;
(r) Neither the Acquired Fund nor, to the knowledge of the Acquired Trust,
any "affiliated person" of the Acquired Fund has been convicted of any
felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquired Trust, has any affiliated
person of the Acquired Fund been the subject, or presently is the subject,
of any proceeding or investigation with respect to any disqualification that
would be a basis for denial, suspension or revocation of registration as an
investment adviser under Section 203(e) of the Investment Advisers Act of
1940, as amended (the "Investment Advisers Act"), or Rule 206(4)-4(b)
thereunder or of a broker-dealer under Section 15 of the Exchange Act, or
for disqualification as an investment adviser, employee, officer or director
of an investment company under Section 9 of the Investment Company Act;
(s) The tax representation certificate to be delivered by the Acquired
Trust on behalf of the Acquired Fund to the Acquiring Trust and Bingham
McCutchen LLP at the Closing pursuant to Paragraph 7.4 hereof (the "Acquired
Trust Tax Representation Certificate")
A-1-7
will not on the Closing Date contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading; and
(t) There are no certificates representing ownership of Acquired Fund
Shares currently outstanding.
4.2 Except as set forth on a disclosure schedule previously provided by
the Acquiring Trust to the Acquired Trust, the Acquiring Trust, on behalf of
the Acquiring Fund, represents, warrants and covenants to the Acquired Trust,
on behalf of the Acquired Fund, which representations, warranties and covenants
will be true and correct on the date hereof and on the Closing Date as though
made on and as of the Closing Date, as follows:
(a) The Acquiring Fund is a series of the Acquiring Trust. The Acquiring
Fund has not commenced operations and will not do so until the Closing. The
Acquiring Trust is a statutory trust duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Acquiring Trust
has the power to own all of its properties and assets and to perform its
obligations under this Agreement. The Acquiring Fund is not required to
qualify to do business in any jurisdiction in which it is not so qualified
or where failure to qualify would subject it to any material liability or
disability. The Acquiring Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Acquiring Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The Acquiring Trust's registration statement on Form N-1A with respect
to the Acquiring Fund that will be in effect on the Closing Date, and the
prospectus and statement of additional information of the Acquiring Fund
included therein, will conform in all material respects with the applicable
requirements of the Securities Act and the Investment Company Act and the
rules and regulations of the Commission thereunder, and did not as of the
effective date thereof and will not as of the Closing Date contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
(d) The Registration Statement, the Proxy Statement and statement of
additional information with respect to the Acquiring Fund, and any
amendments or supplements thereto in effect on or prior to the Closing Date
included in the Registration Statement (other than written information
furnished by the Acquired Fund for inclusion therein, as covered by the
Acquired Fund's warranty in Paragraph 4.1(m) hereof) will conform in all
material respects to the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations of the Commission
thereunder. Neither the Registration Statement nor the Proxy Statement
(other than written information furnished by the Acquired Fund for inclusion
therein, as covered by the Acquired Fund's warranty in Paragraph 4.1(m)
hereof) will contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(e) The Acquiring Trust is not in violation of, and the execution and
delivery of this Agreement and performance of its obligations under this
Agreement on behalf of the Acquiring Fund will not result in a violation of,
any provision of the Acquiring Trust's Declaration of Trust or By-Laws or
any material agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquiring Fund to which the Acquiring Trust
is a party or by which the Acquiring Fund or any of its assets is bound;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or threatened
against the Acquiring Fund or any of the Acquiring Fund's properties or
assets. The Acquiring Trust knows of no facts which could reasonably be
expected to form the basis for the institution of such proceedings. Neither
the Acquiring Trust nor the Acquiring Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially adversely affects the Acquiring Fund's business or its
ability to consummate the transactions contemplated herein;
(g) The Acquiring Fund has no actual or potential liability for any Tax
obligation of any taxpayer. The Acquiring Fund is not and has never been a
member of a group of corporations with which it has filed (or been required
to file) consolidated, combined or unitary Tax Returns. The Acquiring Fund
is not a party to any Tax allocation, sharing, or indemnification agreement;
(h) The authorized capital of the Acquiring Fund consists of an unlimited
number of shares of beneficial interest, no par value per share. As of the
Closing Date, the Acquiring Fund will be authorized to issue an unlimited
number of shares of beneficial interest, no par value per share. The
Acquiring Fund Shares to be issued and delivered to the Acquired Fund for
the account of the Acquired Fund Shareholders pursuant to the terms of this
Agreement will have been duly authorized on the Closing Date and, when so
issued and delivered, will be validly issued and outstanding, fully paid and
non-assessable. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares;
A-1-8
(i) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, validly issued and outstanding, fully paid and
non-assessable and have been offered for sale and sold in every state and
the District of Columbia in compliance in all material respects with all
applicable federal and state securities laws;
(j) The Acquiring Trust has the trust power and authority, on behalf of
the Acquiring Fund, to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquiring
Trust's Board of Trustees, and, assuming due authorization, execution and
delivery by the Acquired Trust, on behalf of the Acquired Fund, this
Agreement will constitute a valid and binding obligation of the Acquiring
Trust, on behalf of the Acquiring Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(k) The information to be furnished in writing by the Acquiring Fund or
the Acquiring Fund Adviser for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete in all material respects and shall comply in all material respects
with federal securities and other laws and regulations applicable thereto or
the requirements of any form for which its use is intended, and will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the information provided not misleading;
(l) No consent, approval, authorization or order of or filing with any
court or governmental authority is required for the execution of this
Agreement or the consummation of the transactions contemplated by the
Agreement by the Acquiring Fund, except for the registration of the
Acquiring Fund Shares under the Securities Act and the Investment Company
Act;
(m) Neither the Acquiring Fund nor, to the knowledge of the Acquiring
Trust, any "affiliated person" of the Acquiring Fund has been convicted of
any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Trust, has any
affiliated person of the Acquiring Fund been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation
of registration as an investment adviser under Section 203(e) of the
Investment Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer
under Section 15 of the Exchange Act, or for disqualification as an
investment adviser, employee, officer or director of an investment company
under Section 9 of the Investment Company Act;
(n) The Acquiring Fund is a newly-formed separate series of Acquiring
Trust treated as a separate corporation from each other series of the
Acquiring Trust under Section 851(a) of the Code. Prior to the Closing Date,
the Acquiring Fund will have no assets, liabilities or operations of any
kind; and
(o) The tax representation certificate to be delivered by the Acquiring
Trust on behalf of the Acquiring Fund to the Acquired Trust and Bingham
McCutchen LLP at the Closing pursuant to Paragraph 6.3 hereof (the
"Acquiring Trust Tax Representation Certificate") will not on the Closing
Date contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading.
5. COVENANTS
5.1 The Acquired Fund and the Acquiring Fund each will operate its
business in the ordinary course of business between the date hereof and the
Closing Date. It is understood that such ordinary course of business will
include the declaration and payment of customary dividends and other
distributions and any other dividends and other distributions necessary or
advisable (except to the extent dividends or other distributions that are not
customary may be limited by representations made in connection with the
issuance of the tax opinion described in Paragraph 8.5 hereof), in each case
payable either in cash or in additional shares.
5.2 The Acquired Trust will call a special meeting of the Acquired Fund's
shareholders to consider approval of this Agreement and act upon the matters
set forth in the Proxy Statement.
5.3 The Acquiring Fund will prepare the notice of meeting, form of proxy
and Proxy Statement (collectively, "Proxy Materials") to be used in connection
with such meeting, and will promptly prepare and file with the Commission the
Registration Statement. The Acquired Trust will provide the Acquiring Fund with
information reasonably requested for the preparation of the Registration
Statement in compliance with the Securities Act, the Exchange Act, and the
Investment Company Act.
5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
A-1-9
5.5 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requires concerning the beneficial
ownership of the Acquired Fund Shares.
5.6 Subject to the provisions of this Agreement, each Fund will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Fund shall furnish to the Acquiring Fund on the business
day immediately following the Closing Date a statement of assets and
liabilities of the Acquired Fund as of the Closing Date ("Statement of Assets
and Liabilities") setting forth the NAV (as computed pursuant to Paragraph 2.1
hereof) of the Acquired Fund as of the Valuation Time, which statement shall be
prepared in accordance with GAAP consistently applied and will fairly reflect,
in all material respects, the financial condition of the Acquired Fund as of
such date and shall be certified by the Acquired Trust's Treasurer or Assistant
Treasurer. As promptly as practicable, but in any case within 30 days after the
Closing Date, the Acquired Trust shall furnish to the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes, and
of any capital loss carryovers and other items that will be carried over to the
Acquiring Fund under the Code, which statement will be certified by the
Treasurer or Assistant Treasurer of the Acquired Trust.
5.8 Neither Fund shall take any action that is inconsistent with the
representations set forth herein or, with respect to the Acquired Fund, in the
Acquired Trust Tax Representation Certificate and, with respect to the
Acquiring Fund, the Acquiring Trust Tax Representation Certificate.
5.9 Unless otherwise required pursuant to a "determination" within the
meaning of Section 1313(a) of the Code, the parties hereto shall treat and
report the transactions contemplated hereby as a reorganization within the
meaning of Section 368(a) of the Code, and shall not take any position
inconsistent with such treatment.
5.10 From and after the date of this Agreement and through the time of the
Closing, each Fund shall use its reasonable best efforts to cause it to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken, which action
or failure to act could prevent it from qualifying as a regulated investment
company under the provisions of Subchapter M of the Code.
5.11 Each Fund shall prepare, or cause to be prepared, all of its Tax
Returns for taxable periods that end on or before the Closing Date and shall
timely file, or cause to be timely filed, all such Tax Returns. Each Fund shall
make any payments of Taxes required to be made by it with respect to any such
Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions provided
for herein shall be, at its election, subject to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
6.1 All representations and warranties by the Acquiring Trust on behalf of
the Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date;
6.2 The Acquiring Trust shall have delivered to the Acquired Trust on the
Closing Date a certificate of the Acquiring Trust on behalf of the Acquiring
Fund executed in its name by its President or Vice President and its Treasurer
or Assistant Treasurer, in form and substance reasonably satisfactory to the
Acquired Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Trust made in this Agreement on
behalf of the Acquiring Fund are true and correct in all material respects at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 6 has been met, and as to such other matters as the Acquired Trust
shall reasonably request;
6.3 The Acquiring Trust on behalf of the Acquiring Fund shall have
delivered to the Acquired Trust and Bingham McCutchen LLP an Acquiring Trust
Tax Representation Certificate, reasonably satisfactory to Bingham McCutchen
LLP, in a form mutually acceptable to the Acquiring Trust and the Acquired
Trust, concerning certain tax-related matters.
6.4 The Acquired Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Acquiring Trust,
on behalf of the Acquiring Fund, and related matters of Bingham McCutchen LLP,
dated as of the Closing Date, in a form reasonably satisfactory to the Acquired
Trust; and
A-1-10
6.5 With respect to the Acquiring Fund, the Board of Trustees of the
Acquiring Trust shall have determined that the Reorganization is in the best
interests of the Acquiring Fund and, based upon such determination, shall have
approved this Agreement and the transactions contemplated hereby.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be, at its election, subject to the performance by
the Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Fund in writing:
7.1 All representations and warranties of the Acquired Trust on behalf of
the Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date;
7.2 The Acquired Trust shall have delivered to the Acquiring Fund on the
business day immediately following the Closing Date the Statement of Assets and
Liabilities of the Acquired Fund pursuant to Paragraph 5.7 hereof, together
with a list of its portfolio securities showing the federal income tax bases
and holding periods of such securities, as of the Closing Date, certified by
the Acquired Trust's Treasurer or Assistant Treasurer;
7.3 The Acquired Trust shall have delivered to the Acquiring Trust on the
Closing Date a certificate of the Acquired Trust on behalf of the Acquired Fund
executed in its name by its President or Vice President and a Treasurer or
Assistant Treasurer, in form and substance reasonably satisfactory to the
Acquiring Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Trust made in this Agreement on
behalf of the Acquired Fund are true and correct in all material respects at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 7 has been met, and as to such other matters as the Acquiring Trust
shall reasonably request;
7.4 The Acquired Trust on behalf of the Acquired Fund shall have delivered
to the Acquiring Trust and Bingham McCutchen LLP an Acquired Trust Tax
Representation Certificate, reasonably satisfactory to Bingham McCutchen LLP,
in a form mutually acceptable to the Acquired Trust and the Acquiring Trust,
concerning certain tax-related matters;
7.5 The Acquiring Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Acquired Trust, on
behalf of the Acquired Fund, and related matters of K&L Gates LLP, dated as of
the Closing Date, in a form reasonably satisfactory to the Acquiring Trust;
7.6 With respect to the Acquired Fund, the Board of Trustees of the
Acquired Trust shall have determined that the Reorganization is in the best
interests of the Acquired Fund and, based upon such determination, shall have
approved this Agreement and the transactions contemplated hereby; and
7.7 MAM shall have purchased officers and directors liability insurance
coverage for each of the current and former independent trustees and officers
of the Acquired Trust for a period of six years after the Closing Date at least
at the same levels (i.e., the same coverage amounts and deductibles) and on
substantially the same terms as the Acquired Trust maintains for its officers
and trustees on the Closing Date.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before the
Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Acquired Fund's shareholders in
accordance with the provisions of the Acquired Trust's Declaration of Trust and
By-Laws, and certified copies of the resolutions evidencing such approval by
the Acquired Fund's shareholders shall have been delivered by the Acquired Fund
to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither
party hereto may waive the conditions set forth in this Paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation,
A-1-11
in all material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the assets or
properties of either party hereto, provided that either party may waive any
such conditions for itself;
8.4 The Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and, to the knowledge of the
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the Securities Act;
8.5 The parties shall have received an opinion of Bingham McCutchen LLP,
dated the Closing Date, reasonably satisfactory to the Acquired Trust and the
Acquiring Trust, substantially to the effect that, based upon certain facts,
assumptions and representations, and upon certifications contained in the
Acquiring Trust Tax Representation Certificate and the Acquired Trust Tax
Representation Certificate, for federal income tax purposes, (i) the
Reorganization will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and each of the Acquired Fund and the Acquiring Fund will
be a "party to a reorganization" within the meaning of Section 368(b) of the
Code; (ii) no gain or loss will be recognized by the Acquired Fund on the
transfer of the Acquired Assets to the Acquiring Fund solely in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Assumed Liabilities, or upon the distribution of the Acquiring Fund Shares to
the shareholders of the Acquired Fund, except for (A) gain or loss that may be
recognized on the transfer of "section 1256 contracts" as defined in Section
1256(b) of the Code or (B) gain that may be recognized on the transfer of stock
in a "passive foreign investment company" as defined in Section 1297(a) of the
Code; (iii) the tax basis in the hands of the Acquiring Fund of each Acquired
Asset will be the same as the tax basis of such Acquired Asset in the hands of
the Acquired Fund immediately prior to the transfer thereof, increased by the
amount of gain (or decreased by the amount of loss), if any, recognized by the
Acquired Fund on the transfer; (iv) the holding period of each Acquired Asset
in the hands of the Acquiring Fund, other than assets with respect to which
gain or loss is required to be recognized, will include in each instance the
period during which such Acquired Asset was held by the Acquired Fund; (v) no
gain or loss will be recognized by the Acquiring Fund upon its receipt of the
Acquired Assets solely in exchange for Acquiring Fund Shares and the assumption
of the Assumed Liabilities; (vi) no gain or loss will be recognized by the
Acquired Fund Shareholders upon the exchange of their Acquired Fund Shares for
Acquiring Fund Shares as part of the Reorganization; (vii) the aggregate tax
basis of the Acquiring Fund Shares that each Acquired Fund Shareholder receives
in the Reorganization will be the same as the aggregate tax basis of the
Acquired Fund Shares exchanged therefor; (viii) each Acquired Fund
Shareholder's holding period for the Acquiring Fund Shares received in the
Reorganization will include the period for which such shareholder held the
Acquired Fund Shares exchanged therefor, provided that the Acquired Fund
Shareholder held such Acquired Fund Shares as capital assets. Notwithstanding
anything in this Agreement to the contrary, neither Fund may waive the
condition set forth in this Paragraph 8.5[;] [; and]
[8.6 The parties shall have executed the Undertaking between the Acquiring
Trust, on behalf of the Acquiring Fund, and the Acquired Trust, on behalf of
the Acquired Fund; and]
For the RMK Select Mid Cap Growth Fund and RMK Select Growth Fund
Agreements: 8.7 At the time of the Reorganization, the Acquired Fund shall not
own the securities referenced in paragraph 5 of the Undertaking among Regions
Financial Corporation, MAM and Pioneer Investment Management, Inc.
9. BROKERAGE FEES
9.1 Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES; UNDERTAKING
10.1 The Acquiring Trust and the Acquired Trust each agrees that[, with
the exception of the Undertaking referenced in Paragraph 8.7,] neither party
has made any representation, warranty or covenant not set forth herein or
referred to in Paragraphs 4.1 or 4.2 or Section 5 hereof and that this
Agreement constitutes the entire agreement between the parties with respect to
the matters covered by this Agreement.
10.2 The covenants to be performed after the Closing by both the Acquiring
Trust and the Acquired Trust shall survive the Closing. The representations,
warranties and all other covenants contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith shall not survive
the consummation of the transactions contemplated hereunder and shall terminate
on the Closing.
10.3 The Acquiring Trust, on behalf of the Acquiring Fund, and the
Acquired Trust, on behalf of the Acquired Fund, acknowledge and accept the
Undertaking between Regions Financial Corporation, MAM and Pioneer Investment
Management, Inc. to and for the benefit of the Acquiring Fund and the Acquired
Fund in connection with the transactions contemplated by this Agreement.
A-1-12
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the Acquired Trust. In addition, either party may at its
option terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or prior
to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met;
(c) by resolution of the Acquiring Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board,
make proceeding with the Agreement not in the best interests of the
Acquiring Fund's shareholders;
(d) by resolution of the Acquired Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board,
make proceeding with the Agreement not in the best interests of the Acquired
Fund's shareholders; or
(e) if the transactions contemplated by this Agreement shall not have
occurred on or prior to December 31, 2009 or such other date as the parties
may mutually agree upon in writing.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Fund, the Acquiring Trust, the Acquired
Trust or the Acquired Fund, or the trustees or officers of the Acquired Trust,
or the Acquiring Trust, but, subject to Paragraph 9.2 hereof, each party shall
bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Acquired Trust and the Acquiring Trust; provided, however, that following the
meeting of the Acquired Fund's shareholders called by the Acquired Trust
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired Fund
Shareholders under this Agreement to their detriment without their further
approval; provided that nothing contained in this Paragraph 12 shall be
construed to prohibit the parties from amending this Agreement to change the
Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquired Trust, Morgan
Keegan Tower, 50 North Front Street, Memphis, Tennessee 38103, Attention:
Secretary, with copies to K&L Gates LLP, 1601 K Street, NW, Washington, DC,
20006-1600, Attention: Donald W. Smith, Esq., and to the Acquiring Trust, c/o
Pioneer Investment Management, Inc., 60 State Street, Boston, Massachusetts
02109, Attention: Dorothy E. Bourassa, Esq., with copies to Bingham McCutchen
LLP, One Federal Street, Boston, Massachusetts 02110, Attention: Roger P.
Joseph, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware, without giving effect to conflict
of laws principles (other than 6 Delaware Code [sec] 2708); provided that, in
the case of any conflict between those laws and the federal securities laws,
the latter shall govern.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the prior written consent of the other party hereto.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, or other entity, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
A-1-13
14.5 It is expressly agreed that the obligations of the Acquiring Trust
and the Acquired Trust shall not be binding upon any of their respective
trustees, shareholders, nominees, officers, agents or employees personally, but
bind only to the property of the Acquiring Fund or the Acquired Fund, as the
case may be, as provided in the Acquiring Trust's Declaration of Trust and the
Declaration of Trust of the Acquired Trust, respectively. The execution and
delivery of this Agreement have been authorized by the trustees of the
Acquiring Trust and of the Acquired Trust and this Agreement has been executed
by authorized officers of the Acquiring Trust and the Acquired Trust, acting as
such, and neither such authorization by such trustees nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to imposed any liability on any of them personally, but shall
bind only the property of the Acquiring Fund and the Acquired Fund, as the case
may be, as provided in the Acquiring Trust's Declaration of Trust and the
Declaration of Trust of the Acquired Trust, respectively.
[Signature page follows.]
* * * * *
A-1-14
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first set forth above by its President or Vice
President and attested by its Secretary or Assistant Secretary.
Attest: Regions Morgan Keegan Select
Funds, on behalf of its series
Regions Morgan Keegan [ ] Fund
By: ----------------------------------- By: ----------------------------------
Name: Name:
Title: [Assistant] Secretary Title: [Vice] President
Pioneer [ ]
Attest
Fund, on behalf of its series Pioneer
[ ] Fund
By: ----------------------------------- By: ----------------------------------
Name: Christopher J. Kelley Name:
Title: Assistant Secretary Title: [Vice] President
A-1-15
Schedule 4.1(d)
On or about June 4, 2007, the Acquired Fund (along with the other funds of
the Acquired Trust) was named as a party along with Morgan Keegan and Company
("Morgan Keegan") in an administrative complaint filed by the Illinois
Securities Department regarding portability issues regarding the proprietary
funds. Morgan Keegan and the State have reached an agreement to resolve claims
brought by the state regarding Morgan Keegan's sales practices regarding the
proprietary funds. The settlement agreement was signed by the Director of the
Illinois Securities Department on January 22, 2009. Morgan Keegan will make
certain payments to the State's Investor Education Fund and reimbursement for
investigative expenses. The Acquired Fund was dismissed on January 23, 2009,
and is not contributing in any way to the monetary resolution.
A-1-16
Schedule 4.1(e)
None.
A-1-17
EXHIBIT A-2 -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION
-----------------------------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the [ ] day of February, 2009, by and between Pioneer [________] Fund, a
Delaware statutory trust (the "Acquiring Trust"), on behalf of its series
Pioneer [________________] Fund (the "Acquiring Fund"), with its principal
place of business at 60 State Street, Boston, Massachusetts 02109, and Regions
Morgan Keegan Select Funds, a Massachusetts business trust (the "Acquired
Trust"), on behalf of its series Regions Morgan Keegan [_____________] Fund
(the "Acquired Fund"), with its principal place of business at Morgan Keegan
Tower, 50 North Front Street, Memphis, Tennessee 38103. The Acquiring Fund and
the Acquired Fund are sometimes referred to collectively herein as the "Funds"
and individually as a "Fund."
The transfer of all of the assets of the Acquired Fund to the Acquiring
Fund in exchange solely for (A) the issuance of Class A, [Class C](1) and
[Class Y](2) shares of beneficial interest of the Acquiring Fund (collectively,
the "Acquiring Fund Shares" and each, an "Acquiring Fund Share") to the
Acquired Fund, and (B) the assumption by the Acquiring Fund of the liabilities
of the Acquired Fund as set forth on the Statement of Assets and Liabilities
(as defined below) and as included in the calculation of net asset value
("NAV") on the closing date of the Reorganization (the "Closing Date")
(collectively, the "Assumed Liabilities"), and (2) the distribution by the
Acquired Fund, on or promptly after the Closing Date as provided herein, of the
Acquiring Fund Shares to the shareholders of the Acquired Fund in liquidation
and dissolution of the Acquired Fund, all upon the terms and conditions
hereinafter set forth in this Agreement (collectively, the "Reorganization")
are intended to constitute a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). This
Agreement is intended to be and is adopted as a "plan of reorganization" within
the meaning of Treasury Regulations Section 1.368-2(g).
WHEREAS, the Acquiring Fund is a series of the Acquiring Trust, an
open-end management investment company registered pursuant to the Investment
Company Act of 1940, as amended (the "Investment Company Act").
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of the Acquired Trust and the Board of
Trustees of the Acquiring Trust have determined that the Reorganization is in
the best interests of the Acquired Fund shareholders and the Acquiring Fund
shareholders, respectively, and is not dilutive of the interests of those
shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND
TERMINATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund will
transfer all of its assets as set forth in Paragraph 1.2 hereof (the "Acquired
Assets") to the Acquiring Fund, free and clear of all liens and encumbrances
and subject to no restrictions on the full transfer thereof (other than those
arising under the Securities Act of 1933, as amended (the "Securities Act")),
and the Acquiring Fund agrees in exchange therefor: (i) to issue to the
Acquired Fund the number of Acquiring Fund Shares, including fractional
Acquiring Fund Shares, of each class with an aggregate NAV equal to the NAV of
the Acquired Fund attributable to the corresponding class of the Acquired
Fund's shares, as determined in the manner set forth in Paragraphs 2.1 and 2.2
hereof; and (ii) to assume the Assumed Liabilities. Such transactions shall
take place at the Closing (as defined in Paragraph 3.1 below). [For purposes of
this Agreement, the Class A shares of the Acquired Fund correspond to the Class
A shares of the Acquiring Fund, the Class C shares of the Acquired Fund
correspond to the Class C shares of the Acquiring Fund, and the Class I shares
of the Acquired Fund correspond to the Class Y shares of the Acquiring Fund and
the term "Acquiring Fund Shares" should be read to include each such class of
shares of the Acquiring Fund.] For the RMK Select Fixed Income Fund and the RMK
Select Limited Maturity Fixed Income Fund Agreements: [For purposes of this
Agreement, the Class A shares of the Acquired Fund correspond to the Class A
shares of the Acquiring Fund, the Class C shares of the Acquired Fund
correspond to the Class A shares of the Acquiring Fund and the Class I shares
of the Acquired Fund correspond to the Class Y shares of the Acquiring Fund and
the term "Acquiring Fund Shares" should be read to include each such class of
shares of the Acquiring Fund.] For the RMK Select Treasury Money Market Fund
Agreement: [For purposes of this Agreement, the Class A shares of the Acquired
Fund correspond to the Class A shares of the Acquiring Fund and the term
"Acquiring Fund Shares" should be read to include such class of shares of the
Acquiring Fund.] For the RMK Select Money
- ----------
(1) To be deleted for RMK Select Fixed Income Fund and RMK Select Limited
Maturity Fixed Income Fund Agreements.
(2) To be deleted for RMK Select Treasury Money Market Fund Agreement.
A-2-1
Market Fund Agreement: [For purposes of this Agreement, the Class A shares of
the Acquired Fund correspond to the Class A shares of the Acquiring Fund and
the Class I shares of the Acquired Fund correspond to the Class Y shares of the
Acquiring Fund and the term "Acquiring Fund Shares" should be read to include
each such class of shares of the Acquiring Fund.]
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights and choses in action of the Acquired Fund or the Acquired Trust in
respect of the Acquired Fund, all other intangible property owned by the
Acquired Fund, originals or copies of or access to all books and records of the
Acquired Fund, and all other assets of the Acquired Fund on the Closing Date.
The Acquiring Fund shall also be entitled to receive (or, to the extent agreed
upon between the Acquired Trust and the Acquiring Trust, be provided access to)
copies of or access to all records that the Acquired Trust is required to
maintain under the Investment Company Act, and the rules of the Securities and
Exchange Commission (the "Commission") promulgated thereunder, or other
applicable laws, to the extent such records pertain to the Acquired Fund;
provided, however, that the Acquiring Trust understands and agrees that certain
of the records of the Acquired Trust in respect of the Acquired Funds contain
confidential, non-public information relating to certain funds other than the
Acquired Funds (the "Unrelated Information"), and the Acquiring Trust hereby
undertakes and agrees, subject to applicable law, to keep such Unrelated
Information in the strictest confidence, unless otherwise required by law.
(b) The Acquired Fund has provided the Acquiring Fund with a list of all
of the Acquired Fund's securities and other assets as of the date of
execution of this Agreement, and the Acquiring Fund has provided the
Acquired Fund with a copy of the current investment policies and
restrictions and fair value procedures applicable to the Acquiring Fund. The
Acquired Fund reserves the right to sell any of such securities or other
assets before the Closing Date (except to the extent sales may be limited by
representations of the Acquired Fund made in connection with the issuance of
the tax opinion provided for in Paragraph 8.5 hereof).
(c) (i) The Acquired Trust will, at least thirty (30) business days
prior to the Closing Date, furnish the Acquiring Fund with a list of the
then-held securities of the Acquired Fund, and shall identify any
investments of the Acquired Fund being fair valued by the Acquired Fund
Administrator (as defined below) or being valued based on broker-dealer
quotes obtained by the Acquired Fund Administrator. At least twenty (20)
business days prior to the Closing Date, the Acquiring Trust, on behalf of
the Acquiring Fund, will advise the Acquired Trust of any such investments
of the Acquired Fund identified on such list which the Acquiring Fund
Adviser (as defined below) does not believe would be desirable for the
Acquiring Fund. Under such circumstances, to the extent practicable, the
Acquired Trust, on behalf of the Acquired Fund, if requested in writing by
the Acquiring Trust and to the extent permissible and consistent with the
Acquired Fund's investment objectives and policies, will dispose of such
investments prior to the Closing Date; provided that no such sales shall be
made or required until the Reorganization has been approved by the Acquired
Fund Shareholders (as defined below).
(ii) Notwithstanding the foregoing, nothing in this Paragraph 1.2(c)
shall require the Acquired Trust, on behalf of the Acquired Fund, to
dispose of portfolio securities or other assets if, in the reasonable
judgment of the Acquired Trust's Board of Trustees or Morgan Asset
Management, Inc. ("MAM"), such disposition could adversely affect the
status of the reorganization of the Acquired Fund as a "reorganization"
within the meaning of Section 368(a) of the Code.
(d) On or as soon as practicable prior to the Closing Date, the Acquired
Fund will declare and pay to its shareholders of record one or more
dividends and/or other distributions so that it will have distributed
substantially all of its investment company taxable income as defined in the
Code (computed without regard to any deduction for dividends paid) and
realized net capital gain as defined in the Code (after deduction for any
available capital loss carryover), if any (in the case of the current
taxable year, calculated on the basis of the best information available to
the Acquired Fund at the time of those distributions), for all tax periods
ending on or before the Closing Date (and treating the current taxable year
as ending on the Closing Date) such that the Acquired Fund will have no tax
liability under Section 852 or Section 4982 (based on such information) for
the current and any prior tax periods.
1.3 The Acquired Fund will use its best efforts to discharge all of its
known liabilities and obligations that are or will become due prior to the
Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Trust shall liquidate the Acquired Fund
and distribute pro rata to the Acquired Fund's shareholders of record,
determined as of the close of regular trading on the New York Stock Exchange on
the Closing Date (the "Acquired Fund Shareholders"), the Acquiring Fund Shares
received by the Acquired Fund pursuant to Paragraph 1.1 hereof. Each Acquired
Fund Shareholder shall receive the number of full and fractional Acquiring Fund
Shares of the class corresponding to the class of shares of beneficial interest
in the Acquired Fund (the "Acquired Fund Shares") held by such Acquired Fund
Shareholder that have an aggregate NAV equal to the aggregate NAV of the
Acquired Fund Shares held of record by such Acquired Fund Shareholder on the
Closing Date. Such liquidation and distribution will be accomplished by the
Acquired Trust instructing the Acquiring Trust to transfer the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books
A-2-2
of the Acquiring Fund to open accounts on the share records of the Acquiring
Fund established and maintained by the Acquiring Fund's transfer agent in the
names of the Acquired Fund Shareholders and representing the respective pro
rata number of the Acquiring Fund Shares due the Acquired Fund Shareholders.
The Acquired Trust shall promptly provide the Acquiring Trust with evidence of
such liquidation and distribution. All issued and outstanding Acquired Fund
Shares will simultaneously be cancelled on the books of the Acquired Fund, and
the Acquired Fund will be terminated as soon as reasonably practicable after
such distribution, but in all events within six months after the Closing Date.
The Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.7 Any reporting responsibility of the Acquired Trust with respect to the
Acquired Fund, including, but not limited to, the responsibility for filing of
regulatory reports, Tax Returns (as defined in Paragraph 4.1(h)(L) hereof))
(including but not limited to Tax Returns for the taxable year ending on the
Closing Date), or other documents with the Commission, any state securities
commissions, and any federal, state or local tax authorities or any other
relevant regulatory authority, is and shall remain the responsibility of the
Acquired Trust. The Acquired Trust agrees to file such regulatory reports, Tax
Returns, and other documents on a timely basis, The Acquiring Trust shall fully
cooperate with the Acquired Trust to the extent necessary for such reporting
responsibilities to be discharged.
1.8 No sales load, contingent deferred sales charge, commission,
redemption fee or other transactional fee will be charged as a result of the
Reorganization. With respect to shares of the Acquired Fund, for purposes of
determining any contingent deferred sales charge applicable to corresponding
Acquiring Fund shares received as a result of the Reorganization, the same
sales charge and schedule that applied to such Acquired Fund shares prior to
the Reorganization will apply after the Reorganization and the holding period
will be calculated from the date such Acquired Fund shares were initially
issued by the Acquired Fund.
2. VALUATION
2.1 The NAV per share of each class of Acquiring Fund Shares and the NAV
per share of each class of the Acquired Fund shall, in each case, be determined
as of the close of regular trading on the New York Stock Exchange (generally,
4:00 p.m., Eastern time) on the Closing Date (the "Valuation Time"). The NAV of
each Acquiring Fund Share shall be computed by Pioneer Investment Management,
Inc. (the "Acquiring Fund Adviser") in the manner set forth in the Acquiring
Trust's Declaration of Trust, or By-Laws, and the Acquiring Fund's then-current
prospectus and statement of additional information. The NAV of the Acquired
Fund shall be computed by Morgan Keegan & Company, Inc. (the "Acquired Fund
Administrator") in the manner set forth in the Acquired Trust's Declaration of
Trust or By-Laws, and each Acquired Fund's then-current prospectus and
statement of additional information. The Acquiring Fund Adviser shall confirm
to the Acquiring Fund the NAV of the Acquired Fund.
2.2 The number of shares of each class of Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the Acquired
Assets and the assumption of the Assumed Liabilities shall be determined by the
Acquiring Fund Adviser by dividing the NAV of the Acquired Fund attributable to
each class of Acquired Fund shares, as determined in accordance with Paragraph
2.1 hereof, by the NAV of each Acquiring Fund Share of the corresponding class,
as determined in accordance with Paragraph 2.1 hereof.
2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring
Fund Adviser and the Acquired Fund Administrator, respectively, to deliver a
copy of its valuation report to the other party at the Closing. All
computations of value shall be made by the Acquiring Fund Adviser and the
Acquired Fund Administrator in accordance with its regular practice as pricing
agent for the Acquiring Fund and the Acquired Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be May 15, 2009, or such later date as the
parties may agree to in writing. All acts necessary to consummate the
Reorganization (the "Closing") shall be deemed to take place simultaneously as
of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The
Closing shall be held at the offices of Sullivan & Cromwell LLP, 125 Broad
Street, New York, New York 10004, or at such other place as the parties may
agree.
3.2 Portfolio securities that are held other than in book-entry form in
the name of Regions Bank (the "Acquired Fund Custodian") as record holder for
the Acquired Fund shall be presented by the Acquired Fund to Brown Brothers
Harriman & Co. (the "Acquiring Fund Custodian") for examination no later than
three business days preceding the Closing Date. The Acquired Trust, on behalf
of each Acquired
A-2-3
Fund, shall instruct the Acquired Fund Custodian to deliver any such portfolio
securities that the Acquired Fund Custodian so holds at the Valuation Time to
the Acquiring Fund Custodian for the account of the Acquiring Fund on the
Closing Date, duly endorsed in proper form for transfer, in such condition as
to constitute good delivery thereof in accordance with the custom of brokers,
and accompanied by all necessary federal and state stock transfer stamps or a
check for the appropriate purchase price thereof. Portfolio securities held of
record by the Acquired Fund Custodian in book-entry form on behalf of the
Acquired Fund shall be delivered on the Closing Date by the Acquired Fund
Custodian through the Depository Trust Company to the Acquiring Fund Custodian
and by the Acquiring Fund Custodian recording the beneficial ownership thereof
by the Acquiring Fund on the Acquiring Fund Custodian's records. Any cash
balances maintained by the Acquired Fund Custodian shall be delivered on the
Closing Date by the Acquired Fund Custodian transmitting immediately available
funds by wire transfer to the Acquiring Fund Custodian and the Acquiring Fund
Custodian crediting such funds to the account of the Acquiring Fund.
3.3 The Acquiring Fund Custodian shall deliver within one business day
after the Closing a certificate of an authorized officer stating that: (a) the
Acquired Assets have been delivered in proper form to the Acquiring Fund on the
Closing Date, and (b) all necessary transfer taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or provision
for payment has been made in conjunction with the delivery of portfolio
securities as part of the Acquired Assets.
3.4 If on the Closing Date (a) the New York Stock Exchange is closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere is disrupted so that accurate
appraisal of the NAV of the Acquiring Fund Shares or the Acquired Fund pursuant
to Paragraph 2.1 hereof is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.5 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status and certificates of the Acquired Fund
Shareholders and the number of outstanding Acquired Fund Shares owned by each
Acquired Fund Shareholder as of the Valuation Time, certified by the President
or a Secretary of the Acquired Trust and its Treasurer, Secretary or other
authorized officer (the "Shareholder List") as being an accurate record of the
information (a) provided by the Acquired Fund Shareholders, (b) provided by the
Acquired Fund Custodian, or (c) derived from the Acquired Trust's records by
such officers or one of the Acquired Trust's service providers. The Acquiring
Fund shall issue and deliver to the Acquired Fund a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date, or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts or other documents as such other
party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on a disclosure schedule previously provided by
the Acquired Trust to the Acquiring Trust, the Acquired Trust, on behalf of the
Acquired Fund, represents, warrants and covenants to the Acquiring Trust, on
behalf of the Acquiring Fund, which representations, warranties and covenants
will be true and correct on the date hereof and on the Closing Date as though
made on and as of the Closing Date, as follows:
(a) The Acquired Fund is a series of the Acquired Trust. The Acquired
Trust is a business trust validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has the power to own all of
its properties and assets and, subject to approval by the Acquired Fund's
shareholders, to perform its obligations under this Agreement. The Acquired
Fund is not required to qualify to do business in any jurisdiction in which
it is not so qualified or where failure to qualify would subject it to any
material liability or disability. The Acquired Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted;
(b) The Acquired Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The Acquired Trust is not in violation of, and the execution and
delivery of this Agreement and the performance of its obligations under this
Agreement on behalf of the Acquired Fund will not result in a violation of,
any provision of the Acquired Trust's Declaration of Trust or By-Laws or any
material agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquired Fund to which the Acquired Trust,
on behalf of the Acquired Fund, is a party or by which the Acquired Fund or
any of its assets are bound;
(d) Except as set forth on Schedule 4.1(d), no litigation or
administrative proceeding or investigation of or before any court or
governmental body is currently pending or to its knowledge threatened
against the Acquired Fund or any of the Acquired Fund's
A-2-4
properties or assets, and except as set forth on Schedule 4.1(d), the
Acquired Trust knows of no facts which could reasonably be expected to form
the basis for the institution of such proceedings. Neither the Acquired
Trust nor the Acquired Fund is a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body which
materially adversely affects the Acquired Fund's business or its ability to
consummate the transactions contemplated herein or would be binding upon the
Acquiring Fund as the successor to the Acquired Fund;
(e) Neither the Acquired Trust, on behalf of the Acquired Fund, nor the
Acquired Fund has any material contracts or other commitments (other than
this Agreement, agreements for the purchase and sale of securities or other
permitted investments, and those contracts listed in Schedule 4.1(e)) which
will not be terminated at or prior to the Closing Date and no such
termination will result in liability to the Acquired Fund (or the Acquiring
Fund);
(f) The statement of assets and liabilities of the Acquired Fund, the
related statements of operations and changes in net assets, and the schedule
of investments, and the notes thereto, as of and for the fiscal year ended
November 30, 2008, have been audited by an independent registered public
accounting firm retained by the Acquired Fund, are in accordance with
generally accepted accounting principles ("GAAP") consistently applied, and
fairly reflect, in all material respects, the financial condition of the
Acquired Fund as of such date and the results of its operations for the
period then ended, and the Acquired Fund had no known liabilities of a
material amount as of the date thereof, whether actual or contingent, other
than those disclosed therein. The Statement of Assets and Liabilities will
be in accordance with GAAP consistently applied and will fairly reflect, in
all material respects, the financial condition of the Acquired Fund as of
such date and the results of its operations for the period then ended.
Except for the Assumed Liabilities, the Acquired Fund will not have any
known or contingent liabilities on the Closing Date. No significant
deficiency, material weakness, fraud, significant change or other factor
that could significantly affect the internal controls of the Acquired Fund
has been disclosed or is required to be disclosed in the Acquired Fund's
reports on Form N-CSR to enable the chief executive officer and chief
financial officer or other officers of the Acquired Trust to make the
certifications required by the Sarbanes-Oxley Act, and no deficiency,
weakness, fraud, change, event or other factor exists with respect to the
Acquired Fund that will be required to be disclosed in the Acquiring Fund's
Form N-CSR after the Closing Date;
(g) Since the most recent fiscal year end, except as specifically
disclosed in the Acquired Fund's prospectus, its statement of additional
information as in effect on the date of this Agreement, there has not been
any material adverse change in the Acquired Fund's financial condition,
assets, liabilities, business or prospects, or any incurrence by the
Acquired Fund of indebtedness, except for normal contractual obligations
incurred in the ordinary course of business or in connection with the
settlement of purchases and sales of portfolio securities. For the purposes
of this subparagraph (g) (but not for any other purpose of this Agreement),
a decline in NAV per Acquired Fund Share arising out of its normal
investment operations or a decline in market values of securities in the
Acquired Fund's portfolio or a decline in net assets of the Acquired Fund as
a result of redemptions shall not constitute a material adverse change;
(h) (A) The Acquired Fund is a separate series of the Acquired Trust
treated as a separate corporation from each other series of the Acquired
Trust under Section 851(g) of the Code. For each taxable year of its
existence, including the taxable year ending on the Closing Date, the
Acquired Fund has had in effect an election to be a regulated investment
company under Subchapter M of the Code, has satisfied or will satisfy all
of the requirements of Subchapter M of the Code for treatment as a
regulated investment company, and has been or will be eligible to compute
its federal income tax under Section 852 of the Code. The Acquired Fund
will qualify as such as of the Closing Date and will satisfy the
diversification requirements of Section 851(b)(3) of the Code without
regard to the last sentence of Section 851(d) of the Code. The Acquired
Fund has not taken any action, caused any action to be taken, failed to
take any action, or caused any action to fail to be taken which action or
failure could cause the Acquired Fund to fail to qualify as a regulated
investment company under the Code. The Acquired Fund does not and will not
have any tax liability under Section 4982 of the Code for any period ending
on or before the Closing Date;
(B) Within the times and in the manner prescribed by law, the Acquired
Fund has properly filed on a timely basis all Tax Returns (as defined
below) that it was required to file, and all such Tax Returns were
complete and accurate in all material respects. The Acquired Fund has not
been informed by any jurisdiction that the jurisdiction believes that the
Acquired Fund was required to file any Tax Return that was not filed;
(C) The Acquired Fund has timely paid, in the manner prescribed by law,
all Taxes (as defined below), that were due and payable or that were
claimed to be due;
(D) The Acquired Fund has not waived or extended any applicable statute
of limitations relating to the assessment or collection of Taxes;
A-2-5
(E) The Acquired Fund has not been notified that any examinations of
the Tax Returns of the Acquired Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against the
Acquired Fund as a result of any audit by the Internal Revenue Service or
any state, local or foreign taxing authority, and, to its knowledge, no
such deficiency has been proposed or threatened;
(F) The Acquired Fund has no actual or potential liability for any Tax
obligation of any taxpayer other than itself. The Acquired Fund is not and
has never been a member of a group of corporations with which it has filed
(or been required to file) consolidated, combined or unitary Tax Returns.
The Acquired Fund is not a party to any Tax allocation, sharing, or
indemnification agreement;
(G) The unpaid Taxes of the Acquired Fund for tax periods through the
Closing Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Statement of
Assets and Liabilities, as defined in Paragraph 5.7 hereof, rather than in
any notes thereto. All Taxes that the Acquired Fund is or was required by
law to withhold or collect have been duly withheld or collected and, to
the extent required, have been timely paid to the proper governmental
agency;
(H) The Acquired Fund has delivered to the Acquiring Fund or made
available to the Acquiring Fund complete and accurate copies of all Tax
Returns of the Acquired Fund, together with all related examination
reports and statements of deficiency for all periods not closed under the
applicable statutes of limitations and complete and correct copies of all
private letter rulings, revenue agent reports, information document
requests, notices of proposed deficiencies, deficiency notices, protests,
petitions, closing agreements, settlement agreements, pending ruling
requests and any similar documents submitted by, received by or agreed to
by or on behalf of the Acquired Fund. The Acquired Fund has disclosed on
its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code;
(I) The Acquired Fund has not undergone, has not agreed to undergo, and
is not required to undergo (nor will it be required as a result of the
transactions contemplated in this Agreement to undergo) a change in its
method of accounting resulting in an adjustment to its taxable income
pursuant to Section 481 of the Code. The Acquired Fund will not be
required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) change in method of
accounting for a taxable period ending on or prior to the Closing Date;
(ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; (iii) installment sale or
open transaction disposition made on or prior to the Closing Date; or (iv)
prepaid amount received on or prior to the Closing Date;
(J) There are (and as of immediately following the Closing there will
be) no liens on the assets of the Acquired Fund relating to or
attributable to Taxes, except for Taxes not yet due and payable;
(K) The Tax bases of the assets of the Acquired Fund are accurately
reflected on the Acquired Fund's Tax books and records; and
(L) For purposes of this Agreement, "Taxes" or "Tax" shall mean all
taxes, charges, fees, duties, deficiencies, customs, levies or other
similar assessments or liabilities, including without limitation income,
gross receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, transfer, withholding, employment,
unemployment, insurance, social security, business license, business
organization, environmental, workers compensation, payroll, profits,
license, lease, service, service use, severance, stamp, occupation,
windfall profits, customs, duties, franchise and other taxes imposed by
the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or
any such government, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof; and "Tax Returns" shall
mean all reports, returns, declarations, statements or other information
required to be supplied to a governmental or regulatory authority or
agency, in connection with Taxes and any associated schedules,
attachments, work papers, or other information, including any attachments,
produced in connection with such items, as well as any information returns
required by any governmental or regulatory authority to be provided to any
other person in connection with Taxes;
(i) All issued and outstanding Acquired Fund Shares are, and on the
Closing Date will be, validly issued and outstanding, fully paid and
non-assessable by the Acquired Trust. All of the issued and outstanding
Acquired Fund Shares will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the Shareholder List delivered at
the Closing pursuant to Paragraph 3.5 hereof. The Acquired Fund does not
have outstanding any options, warrants or other rights to subscribe for or
purchase any Acquired Fund Shares, nor is there outstanding any security
convertible into any Acquired Fund Shares;
A-2-6
(j) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Assets, and full right, power and authority to sell,
assign, transfer and deliver the Acquired Assets to the Acquiring Fund, and,
upon delivery and payment for the Acquired Assets, the Acquiring Fund will
acquire good and marketable title thereto, free of any liens or other
encumbrances and subject to no restrictions on the full transfer thereof,
except such restrictions as might arise under the Securities Act and, as
previously disclosed to the Acquiring Fund, such restrictions generally
applicable to the Acquired Assets of the type being transferred in the
ordinary course;
(k) The Acquired Trust has the trust power and authority, on behalf of the
Acquired Fund, to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquired
Trust's Board of Trustees, and, subject to the approval of the Acquired
Fund's shareholders, assuming due authorization, execution and delivery by
the Acquiring Trust, on behalf of the Acquiring Fund, this Agreement will
constitute a valid and binding obligation of the Acquired Trust, on behalf
of the Acquired Fund, enforceable in accordance with its terms, subject as
to enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(l) The information to be furnished in writing by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection
with the transactions contemplated hereby and any information necessary to
compute the total return of the Acquired Fund shall be accurate and complete
and shall comply in all material respects with federal securities and other
laws and regulations applicable thereto;
(m) The information included in the proxy statement (the "Proxy
Statement") forming part of the Acquiring Trust's Registration Statement on
Form N-14 filed in connection with this Agreement (the "Registration
Statement") that has been furnished in writing by the Acquired Fund to the
Acquiring Fund for inclusion in the Registration Statement, on the effective
date of that Registration Statement and on the Closing Date, will conform in
all material respects to the applicable requirements of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Investment Company Act and the rules and regulations of the Commission
promulgated thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(n) Upon the effectiveness of the Registration Statement, no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by the Acquired Fund of the transactions
contemplated by this Agreement;
(o) All of the issued and outstanding Acquired Fund Shares have been
offered for sale and sold in compliance in all material respects with all
applicable federal and state securities laws, except as may have been
previously disclosed in writing to the Acquiring Fund;
(p) The current prospectus and statement of additional information of the
Acquired Fund and each prospectus and statement of additional information of
the Acquired Fund used during the six-year period ending on the date of this
Agreement, and any amendments or supplements thereto, conform or conformed
at the time of their distribution to the public in all material respects to
the applicable requirements of the Securities Act and the Investment Company
Act and the rules and regulations of the Commission thereunder and do not or
did not as of their dates or the dates of their distribution to the public
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made,
not materially misleading;
(q) The Acquired Fund currently complies in all material respects with,
and for the six-year period ending on the date of this Agreement, has
complied in all material respects with, the requirements of, and the rules
and regulations under, the Investment Company Act, the Securities Act, the
Exchange Act, state "Blue Sky" laws and all other applicable federal and
state laws or regulations. The Acquired Fund currently complies in all
material respects with, and for the six-year period ending on the date of
this Agreement has complied in all material respects with, all investment
objectives, policies, guidelines and restrictions and any compliance
procedures established by the Acquired Trust with respect to the Acquired
Fund. All advertising and sales material used by the Acquired Fund complies
in all material respects with, and for the six-year period ending on the
date of this Agreement has complied in all material respects with, the
applicable requirements of the Securities Act, the Investment Company Act,
the rules and regulations of the Commission promulgated thereunder, and, to
the extent applicable, the Conduct Rules of the Financial Industry
Regulatory Authority ("FINRA") and any applicable state regulatory
authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission,
FINRA or any state securities authorities by the Acquired Fund during the
six-year period ending on the date of this Agreement have been duly filed
and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration
statements, prospectuses, reports, proxy materials and other filings under
the Securities Act, the Exchange Act and the Investment Company Act (i) are
or were in compliance in all material respects
A-2-7
with the requirements of all applicable statutes and the rules and
regulations promulgated thereunder and (ii) do not or did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not false or
misleading;
(r) Neither the Acquired Fund nor, to the knowledge of the Acquired Trust,
any "affiliated person" of the Acquired Fund has been convicted of any
felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquired Trust, has any affiliated
person of the Acquired Fund been the subject, or presently is the subject,
of any proceeding or investigation with respect to any disqualification that
would be a basis for denial, suspension or revocation of registration as an
investment adviser under Section 203(e) of the Investment Advisers Act of
1940, as amended (the "Investment Advisers Act"), or Rule 206(4)-4(b)
thereunder or of a broker-dealer under Section 15 of the Exchange Act, or
for disqualification as an investment adviser, employee, officer or director
of an investment company under Section 9 of the Investment Company Act;
(s) The tax representation certificate to be delivered by the Acquired
Trust on behalf of the Acquired Fund to the Acquiring Trust and Bingham
McCutchen LLP at the Closing pursuant to Paragraph 7.4 hereof (the "Acquired
Trust Tax Representation Certificate") will not on the Closing Date contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading; and
(t) There are no certificates representing ownership of Acquired Fund
Shares currently outstanding.
4.2 Except as set forth on a disclosure schedule previously provided by
the Acquiring Trust to the Acquired Trust, the Acquiring Trust, on behalf of
the Acquiring Fund, represents, warrants and covenants to the Acquired Trust,
on behalf of the Acquired Fund, which representations, warranties and covenants
will be true and correct on the date hereof and on the Closing Date as though
made on and as of the Closing Date, as follows:
(a) The Acquiring Fund is a series of the Acquiring Trust. The Acquiring
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Acquiring Trust has
the power to own all of its properties and assets and to perform its
obligations under this Agreement. The Acquiring Fund is not required to
qualify to do business in any jurisdiction in which it is not so qualified
or where failure to qualify would subject it to any material liability or
disability. The Acquiring Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Acquiring Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The current prospectus and statement of additional information of the
Acquiring Fund and each prospectus and statement of additional information
of the Acquiring Fund used during the three-year period ending on the date
of this Agreement, and any amendment or supplement to any of the foregoing,
conform or conformed at the time of their distribution to the public in all
material respects to the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations of the Commission
promulgated thereunder and do not or did not at the time of their
distribution to the public contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not materially misleading;
(d) The Acquiring Trust's registration statement on Form N-1A with respect
to the Acquiring Fund that will be in effect on the Closing Date, and the
prospectus and statement of additional information of the Acquiring Fund
included therein, will conform in all material respects with the applicable
requirements of the Securities Act and the Investment Company Act and the
rules and regulations of the Commission thereunder, and did not as of the
effective date thereof and will not as of the Closing Date contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
(e) The Registration Statement, the Proxy Statement and statement of
additional information with respect to the Acquiring Fund, and any
amendments or supplements thereto in effect on or prior to the Closing Date
included in the Registration Statement (other than written information
furnished by the Acquired Fund for inclusion therein, as covered by the
Acquired Fund's warranty in Paragraph 4.1(m) hereof) will conform in all
material respects to the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations of the Commission
thereunder. Neither the Registration Statement nor the Proxy Statement
(other than written information furnished by the Acquired Fund for inclusion
therein, as covered by the Acquired Fund's warranty in Paragraph 4.1(m)
hereof) will contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
A-2-8
(f) The Acquiring Trust is not in violation of, and the execution and
delivery of this Agreement and performance of its obligations under this
Agreement on behalf of the Acquiring Fund will not result in a violation of,
any provision of the Acquiring Trust's Declaration of Trust or By-Laws or
any material agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquiring Fund to which the Acquiring Trust
is a party or by which the Acquiring Fund or any of its assets is bound;
(g) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or threatened
against the Acquiring Fund or any of the Acquiring Fund's properties or
assets. The Acquiring Trust knows of no facts which could reasonably be
expected to form the basis for the institution of such proceedings. Neither
the Acquiring Trust nor the Acquiring Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially adversely affects the Acquiring Fund's business or its
ability to consummate the transactions contemplated herein;
(h) The statement of assets and liabilities of the Acquiring Fund, the
related statements of operations and changes in net assets, and the schedule
of investments, and the notes thereto, as of and for the fiscal year ended
[_____], have been audited by Ernst & Young LLP, an independent registered
public accounting firm. Those annual financial statements and, if applicable
the unaudited statement of assets and liabilities of the Acquiring Fund, the
related statements of operations and changes in net assets, and the schedule
of investments for any subsequent semi-annual period following the most
newly completed fiscal year, were prepared in accordance with GAAP
consistently applied and fairly reflect, in all material respects, the
financial condition of the Acquiring Fund as of such dates and the results
of its operations for the periods then ended, and the Acquiring Fund had no
known liabilities of a material amount as of the dates thereof, whether
actual or contingent, other than those disclosed therein;
(i) Since the most recent fiscal year end, except as specifically
disclosed in the Acquiring Fund's prospectus or its statement of additional
information as in effect on the date of this Agreement, [or its semi-annual
report for the period ended [__________], 2008], there has been no material
adverse change in the Acquiring Fund's financial condition, assets,
liabilities, business or prospects, or incurrence by the Acquiring Fund of
indebtedness, except for normal contractual obligations incurred in the
ordinary course of business or in connection with the settlement of
purchases and sales of portfolio securities. Solely for the purposes of this
Paragraph 4.2(i), a decline in NAV per Acquiring Fund Share arising out of
the Acquiring Fund's normal investment operations or a decline in market
values of securities in the Acquiring Fund's portfolio or a decline in net
assets of the Acquiring Fund as a result of redemptions shall not constitute
a material adverse change;
(j) (A) The Acquiring Fund is a separate series of the Acquiring Trust
treated as a separate corporation from each other series of the
Acquiring Trust under Section 851(g) of the Code. For each taxable year
of its existence, including the taxable year that includes the Closing
Date, the Acquiring Fund had in effect an election to be a regulated
investment company under Subchapter M of the Code, has satisfied or
will satisfy all of the requirements of Subchapter M of the Code for
treatment as a regulated investment company, and has been or will be
eligible to compute its federal income tax under Section 852 of the
Code. The Acquiring Fund will qualify as such as of the Closing Date
and will satisfy the diversification requirements of Section 851(b)(3)
of the Code without regard to the last sentence of Section 851(d) of
the Code. The Acquiring Fund has not taken any action, caused any
action to be taken, failed to take any action, or caused any action to
fail to be taken which action or failure could cause the Acquiring Fund
to fail to qualify as a regulated investment company under the Code.
The Acquiring Fund does not and will not have any tax liability under
Section 4982 of the Code for any period ending on or before the Closing
Date;
(B) Within the times and in the manner prescribed by law, the Acquiring
Fund has properly filed on a timely basis all Tax Returns that it was
required to file, and all such Tax Returns were complete and accurate in
all material respects. The Acquiring Fund has not been informed by any
jurisdiction that the jurisdiction believes that the Acquiring Fund was
required to file any Tax Return that was not filed;
(C) The Acquiring Fund has timely paid, in the manner prescribed by
law, all Taxes that were due and payable or that were claimed to be due;
(D) The Acquiring Fund has not waived or extended any applicable
statute of limitations relating to the assessment or collection of Taxes;
(E) The Acquiring Fund has not been notified that any examinations of
the Tax Returns of the Acquiring Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against the
Acquiring Fund as a result of any audit by the Internal Revenue Service or
any state, local or foreign taxing authority, and, to its knowledge, no
such deficiency has been proposed or threatened;
(F) The Acquiring Fund has no actual or potential liability for any Tax
obligation of any taxpayer other than itself. The Acquiring Fund is not
and has never been a member of a group of corporations with which it has
filed (or been required to file)
A-2-9
consolidated, combined or unitary Tax Returns. The Acquiring Fund is not a
party to any Tax allocation, sharing, or indemnification agreement;
(G) The unpaid Taxes of the Acquiring Fund for tax periods through the
Closing Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth in the financial
statements referred to in Paragraph 4.2(h) hereof. All Taxes that the
Acquiring Fund is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been timely
paid to the proper governmental agency; and
(H) The Acquiring Fund has disclosed on its federal income Tax Returns
all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of
the Code;
(k) The authorized capital of the Acquiring Fund consists of an unlimited
number of shares of beneficial interest, no par value per share. As of the
Closing Date, the Acquiring Fund will be authorized to issue an unlimited
number of shares of beneficial interest, no par value per share. The
Acquiring Fund Shares to be issued and delivered to the Acquired Fund for
the account of the Acquired Fund Shareholders pursuant to the terms of this
Agreement will have been duly authorized on the Closing Date and, when so
issued and delivered, will be validly issued and outstanding, fully paid and
non-assessable. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, validly issued and outstanding, fully paid and
non-assessable and have been offered for sale and sold in every state and
the District of Columbia in compliance in all material respects with all
applicable federal and state securities laws;
(m) The Acquiring Trust has the trust power and authority, on behalf of
the Acquiring Fund, to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquiring
Trust's Board of Trustees, and, assuming due authorization, execution and
delivery by the Acquired Trust, on behalf of the Acquired Fund, this
Agreement will constitute a valid and binding obligation of the Acquiring
Trust, on behalf of the Acquiring Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) The information to be furnished in writing by the Acquiring Fund or
the Acquiring Fund Adviser for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete in all material respects and shall comply in all material respects
with federal securities and other laws and regulations applicable thereto or
the requirements of any form for which its use is intended, and will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the information provided not misleading;
(o) No consent, approval, authorization or order of or filing with any
court or governmental authority is required for the execution of this
Agreement or the consummation of the transactions contemplated by the
Agreement by the Acquiring Fund, except for the registration of the
Acquiring Fund Shares under the Securities Act and the Investment Company
Act;
(p) The Acquiring Fund currently complies in all material respects with,
and for the three-year period ending on the date of this Agreement has
complied in all material respects with, the requirements of, and the rules
and regulations under, the Investment Company Act, the Securities Act, the
Exchange Act, state "Blue Sky" laws and all other applicable federal and
state laws or regulations. The Acquiring Fund currently complies in all
material respects with, and for the three-year period ending on the date of
this Agreement has complied in all material respects with, all investment
objectives, policies, guidelines and restrictions and any compliance
procedures established by the Acquiring Trust with respect to the Acquiring
Fund. All advertising and sales material currently used by the Acquiring
Fund complies in all material respects with, and for the three-year period
ending on the date of this Agreement has complied in all material respects
with, the applicable requirements of the Securities Act, the Investment
Company Act, the rules and regulations of the Commission promulgated
thereunder, and, to the extent applicable, the Conduct Rules of FINRA and
any applicable state regulatory authority. All registration statements,
prospectuses, reports, proxy materials or other filings required to be made
or filed with the Commission, FINRA or any state securities authorities by
the Acquiring Fund during the three-year period ending on the date of this
Agreement have been duly filed and have been approved or declared effective,
if such approval or declaration of effectiveness is required by law. Such
registration statements, prospectuses, reports, proxy materials and other
filings under the Securities Act, the Exchange Act and the Investment
Company Act (i) are or were in compliance in all material respects with the
requirements of all applicable statutes and the rules and regulations
promulgated thereunder and (ii) do not or did not contain any
A-2-10
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not false or
misleading;
(q) Neither the Acquiring Fund nor, to the knowledge of the Acquiring
Trust, any "affiliated person" of the Acquiring Fund has been convicted of
any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Trust, has any
affiliated person of the Acquiring Fund been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation
of registration as an investment adviser under Section 203(e) of the
Investment Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer
under Section 15 of the Exchange Act, or for disqualification as an
investment adviser, employee, officer or director of an investment company
under Section 9 of the Investment Company Act; and
(r) The tax representation certificate to be delivered by the Acquiring
Trust on behalf of the Acquiring Fund to the Acquired Trust and Bingham
McCutchen LLP at the Closing pursuant to Paragraph 6.3 hereof (the
"Acquiring Trust Tax Representation Certificate") will not on the Closing
Date contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading.
5. COVENANTS
5.1 The Acquired Fund and the Acquiring Fund each will operate its
business in the ordinary course of business between the date hereof and the
Closing Date. It is understood that such ordinary course of business will
include the declaration and payment of customary dividends and other
distributions and any other dividends and other distributions necessary or
advisable (except to the extent dividends or other distributions that are not
customary may be limited by representations made in connection with the
issuance of the tax opinion described in Paragraph 8.5 hereof), in each case
payable either in cash or in additional shares.
5.2 The Acquired Trust will call a special meeting of the Acquired Fund's
shareholders to consider approval of this Agreement and act upon the matters
set forth in the Proxy Statement.
5.3 The Acquiring Fund will prepare the notice of meeting, form of proxy
and Proxy Statement (collectively, "Proxy Materials") to be used in connection
with such meeting, and will promptly prepare and file with the Commission the
Registration Statement. The Acquired Trust will provide the Acquiring Fund with
information reasonably requested for the preparation of the Registration
Statement in compliance with the Securities Act, the Exchange Act, and the
Investment Company Act.
5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.5 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requires concerning the beneficial
ownership of the Acquired Fund Shares.
5.6 Subject to the provisions of this Agreement, each Fund will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Fund shall furnish to the Acquiring Fund on the business
day immediately following the Closing Date a statement of assets and
liabilities of the Acquired Fund as of the Closing Date ("Statement of Assets
and Liabilities") setting forth the NAV (as computed pursuant to Paragraph 2.1
hereof) of the Acquired Fund as of the Valuation Time, which statement shall be
prepared in accordance with GAAP consistently applied and will fairly reflect,
in all material respects, the financial condition of the Acquired Fund as of
such date and shall be certified by the Acquired Trust's Treasurer or Assistant
Treasurer. As promptly as practicable, but in any case within 30 days after the
Closing Date, the Acquired Trust shall furnish to the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes, and
of any capital loss carryovers and other items that will be carried over to the
Acquiring Fund under the Code, which statement will be certified by the
Treasurer or Assistant Treasurer of the Acquired Trust.
5.8 Neither Fund shall take any action that is inconsistent with the
representations set forth herein or, with respect to the Acquired Fund, in the
Acquired Trust Tax Representation Certificate and, with respect to the
Acquiring Fund, the Acquiring Trust Tax Representation Certificate.
5.9 Unless otherwise required pursuant to a "determination" within the
meaning of Section 1313(a) of the Code, the parties hereto shall treat and
report the transactions contemplated hereby as a reorganization within the
meaning of Section 368(a) of the Code, and shall not take any position
inconsistent with such treatment.
A-2-11
5.10 From and after the date of this Agreement and through the time of the
Closing, each Fund shall use its reasonable best efforts to cause it to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken, which action
or failure to act could prevent it from qualifying as a regulated investment
company under the provisions of Subchapter M of the Code.
5.11 Each Fund shall prepare, or cause to be prepared, all of its Tax
Returns for taxable periods that end on or before the Closing Date and shall
timely file, or cause to be timely filed, all such Tax Returns. Each Fund shall
make any payments of Taxes required to be made by it with respect to any such
Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions provided
for herein shall be, at its election, subject to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
6.1 All representations and warranties by the Acquiring Trust on behalf of
the Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date;
6.2 The Acquiring Trust shall have delivered to the Acquired Trust on the
Closing Date a certificate of the Acquiring Trust on behalf of the Acquiring
Fund executed in its name by its President or Vice President and its Treasurer
or Assistant Treasurer, in form and substance reasonably satisfactory to the
Acquired Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Trust made in this Agreement on
behalf of the Acquiring Fund are true and correct in all material respects at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 6 has been met, and as to such other matters as the Acquired Trust
shall reasonably request;
6.3 The Acquiring Trust on behalf of the Acquiring Fund shall have
delivered to the Acquired Trust and Bingham McCutchen LLP an Acquiring Trust
Tax Representation Certificate, reasonably satisfactory to Bingham McCutchen
LLP, in a form mutually acceptable to the Acquiring Trust and the Acquired
Trust, concerning certain tax-related matters;
6.4 The Acquired Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Acquiring Trust,
on behalf of the Acquiring Fund, and related matters of Bingham McCutchen LLP,
dated as of the Closing Date, in a form reasonably satisfactory to the Acquired
Trust; and
6.5 With respect to the Acquiring Fund, the Board of Trustees of the
Acquiring Trust shall have determined that the Reorganization is in the best
interests of the Acquiring Fund and, based upon such determination, shall have
approved this Agreement and the transactions contemplated hereby.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be, at its election, subject to the performance by
the Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Fund in writing:
7.1 All representations and warranties of the Acquired Trust on behalf of
the Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date;
7.2 The Acquired Trust shall have delivered to the Acquiring Fund on the
business day immediately following the Closing Date the Statement of Assets and
Liabilities of the Acquired Fund pursuant to Paragraph 5.7 hereof, together
with a list of its portfolio securities showing the federal income tax bases
and holding periods of such securities, as of the Closing Date, certified by
the Acquired Trust's Treasurer or Assistant Treasurer;
7.3 The Acquired Trust shall have delivered to the Acquiring Trust on the
Closing Date a certificate of the Acquired Trust on behalf of the Acquired Fund
executed in its name by its President or Vice President and a Treasurer or
Assistant Treasurer, in form and substance reasonably satisfactory to the
Acquiring Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Trust made in this Agreement on
behalf of the Acquired Fund are true and correct in all material respects at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 7 has been met, and as to such other matters as the Acquiring Trust
shall reasonably request;
A-2-12
7.4 The Acquired Trust on behalf of the Acquired Fund shall have delivered
to the Acquiring Trust and Bingham McCutchen LLP an Acquired Trust Tax
Representation Certificate, reasonably satisfactory to Bingham McCutchen LLP,
in a form mutually acceptable to the Acquired Trust and the Acquiring Trust,
concerning certain tax-related matters;
7.5 The Acquiring Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Acquired Trust, on
behalf of the Acquired Fund, and related matters of K&L Gates LLP, dated as of
the Closing Date, in a form reasonably satisfactory to the Acquiring Trust;
7.6 With respect to the Acquired Fund, the Board of Trustees of the
Acquired Trust shall have determined that the Reorganization is in the best
interests of the Acquired Fund and, based upon such determination, shall have
approved this Agreement and the transactions contemplated hereby; and
7.7 MAM shall have purchased officers and directors liability insurance
coverage for each of the current and former independent trustees and officers
of the Acquired Trust for a period of six years after the Closing Date at least
at the same levels (i.e., the same coverage amounts and deductibles) and on
substantially the same terms as the Acquired Trust maintains for its officers
and trustees on the Closing Date.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before the
Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Acquired Fund's shareholders in
accordance with the provisions of the Acquired Trust's Declaration of Trust and
By-Laws, and certified copies of the resolutions evidencing such approval by
the Acquired Fund's shareholders shall have been delivered by the Acquired Fund
to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither
party hereto may waive the conditions set forth in this Paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
either party hereto, provided that either party may waive any such conditions
for itself;
8.4 The Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and, to the knowledge of the
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the Securities Act;
8.5 The parties shall have received an opinion of Bingham McCutchen LLP,
dated the Closing Date, reasonably satisfactory to the Acquired Trust and the
Acquiring Trust, substantially to the effect that, based upon certain facts,
assumptions and representations, and upon certifications contained in the
Acquiring Trust Tax Representation Certificate and the Acquired Trust Tax
Representation Certificate, for federal income tax purposes, (i) the
Reorganization will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and each of the Acquired Fund and the Acquiring Fund will
be a "party to a reorganization" within the meaning of Section 368(b) of the
Code; (ii) no gain or loss will be recognized by the Acquired Fund on the
transfer of the Acquired Assets to the Acquiring Fund solely in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Assumed Liabilities, or upon the distribution of the Acquiring Fund Shares to
the shareholders of the Acquired Fund, except for (A) gain or loss that may be
recognized on the transfer of "section 1256 contracts" as defined in Section
1256(b) of the Code, (B) gain that may be recognized on the transfer of stock
in a "passive foreign investment company" as defined in Section 1297(a) of the
Code, or (C) any other gain that may be required to be recognized as a result
of the closing of the Acquired Fund's taxable year; (iii) the tax basis in the
hands of the Acquiring Fund of each Acquired Asset will be the same as the tax
basis of such Acquired Asset in the hands of the Acquired Fund immediately
prior to the transfer thereof, increased by the amount of gain (or decreased by
the amount of loss), if any, recognized by the Acquired Fund on the transfer;
(iv) the holding period of each Acquired Asset in the hands of the Acquiring
Fund, other than assets with respect to which gain or loss is required to be
recognized, will include in each instance the period during which such Acquired
Asset was held by the Acquired Fund; (v) no gain or loss will be recognized by
the Acquiring Fund upon its receipt of the Acquired Assets solely in exchange
for Acquiring Fund Shares and the assumption of the Assumed Liabilities; (vi)
no gain or loss will be recognized by the Acquired Fund Shareholders upon the
exchange of their Acquired
A-2-13
Fund Shares for Acquiring Fund Shares as part of the Reorganization; (vii) the
aggregate tax basis of the Acquiring Fund Shares that each Acquired Fund
Shareholder receives in the Reorganization will be the same as the aggregate tax
basis of the Acquired Fund Shares exchanged therefor; (viii) each Acquired Fund
Shareholder's holding period for the Acquiring Fund Shares received in the
Reorganization will include the period for which such shareholder held the
Acquired Fund Shares exchanged therefor, provided that the Acquired Fund
Shareholder held such Acquired Fund Shares as capital assets. Notwithstanding
anything in this Agreement to the contrary, neither Fund may waive the condition
set forth in this Paragraph 8.5; [and]
8.6 The Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for dividends paid
under Section 561 of the Code, all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code determined without regard to Section
852(b)(2)(D) of the Code) for its taxable year ending on the Closing Date, all
of the excess of (i) its interest income excludable from gross income under
Section 103(a) of the Code over (ii) its deductions disallowed under Sections
265 and 171(a)(2) of the Code for its taxable year ending on the Closing Date,
and all of its net capital gain (as such term is used in Sections 852(b)(3)(A)
and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date[.] [;]
[For the RMK Select Mid Cap Value Fund, RMK Select Balanced Fund, RMK
Select Fixed Income Fund and RMK Select Limited Maturity Fixed Income Fund
Agreements: 8.7 The parties shall have executed the Undertaking between the
Acquiring Trust, on behalf of the Acquiring Fund, and the Acquired Trust, on
behalf of the Acquired Fund;] and
8.8 At the time of the Reorganization, the Acquired Fund shall not own the
securities referenced in paragraph 5 of the Undertaking among Regions Financial
Corporation, MAM and Pioneer Investment Management, Inc.
9. BROKERAGE FEES
9.1 Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES; UNDERTAKING
10.1 The Acquiring Trust and the Acquired Trust each agrees that[, with the
exception of the Undertaking referenced in Paragraph 8.7,] neither party has
made any representation, warranty or covenant not set forth herein or referred
to in Paragraphs 4.1 or 4.2 or Section 5 hereof and that this Agreement
constitutes the entire agreement between the parties with respect to the matters
covered by this Agreement.
10.2 The covenants to be performed after the Closing by both the Acquiring
Trust and the Acquired Trust shall survive the Closing. The representations,
warranties and all other covenants contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith shall not survive
the consummation of the transactions contemplated hereunder and shall terminate
on the Closing.
10.3 The Acquiring Trust, on behalf of the Acquiring Fund, and the Acquired
Trust, on behalf of the Acquired Fund, acknowledge and accept the Undertaking
between Regions Financial Corporation, MAM and Pioneer Investment Management,
Inc. to and for the benefit of the Acquiring Fund and the Acquired Fund in
connection with the transactions contemplated by this Agreement.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the Acquired Trust. In addition, either party may at its
option terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or
prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met;
(c) by resolution of the Acquiring Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board,
make proceeding with the Agreement not in the best interests of the
Acquiring Fund's shareholders;
(d) by resolution of the Acquired Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board,
make proceeding with the Agreement not in the best interests of the
Acquired Fund's shareholders; or
(e) if the transactions contemplated by this Agreement shall not have
occurred on or prior to December 31, 2009 or such other date as the parties
may mutually agree upon in writing.
A-2-14
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Fund, the Acquiring Trust, the Acquired
Trust or the Acquired Fund, or the trustees or officers of the Acquired Trust,
or the Acquiring Trust, but, subject to Paragraph 9.2 hereof, each party shall
bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Acquired Trust and the Acquiring Trust; provided, however, that following the
meeting of the Acquired Fund's shareholders called by the Acquired Trust
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired Fund Shareholders
under this Agreement to their detriment without their further approval; provided
that nothing contained in this Paragraph 12 shall be construed to prohibit the
parties from amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquired Trust, Morgan
Keegan Tower, 50 North Front Street, Memphis, Tennessee 38103, Attention:
Secretary, with copies to K&L Gates LLP, 1601 K Street, NW, Washington, DC,
20006-1600, Attention: Donald W. Smith, Esq., and to the Acquiring Trust, c/o
Pioneer Investment Management, Inc., 60 State Street, Boston, Massachusetts
02109, Attention: Dorothy E. Bourassa, Esq., with copies to Bingham McCutchen
LLP, One Federal Street, Boston, Massachusetts 02110, Attention: Roger P.
Joseph, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware, without giving effect to conflict of
laws principles (other than 6 Delaware Code [sec] 2708); provided that, in the
case of any conflict between those laws and the federal securities laws, the
latter shall govern.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the prior written consent of the other party hereto.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, or other entity, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Acquiring Trust and
the Acquired Trust shall not be binding upon any of their respective trustees,
shareholders, nominees, officers, agents or employees personally, but bind only
to the property of the Acquiring Fund or the Acquired Fund, as the case may be,
as provided in the Acquiring Trust's Declaration of Trust and the Declaration of
Trust of the Acquired Trust, respectively. The execution and delivery of this
Agreement have been authorized by the trustees of the Acquiring Trust and of the
Acquired Trust and this Agreement has been executed by authorized officers of
the Acquiring Trust and the Acquired Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to imposed any
liability on any of them personally, but shall bind only the property of the
Acquiring Fund and the Acquired Fund, as the case may be, as provided in the
Acquiring Trust's Declaration of Trust and the Declaration of Trust of the
Acquired Trust, respectively.
[Signature page follows.]
* * * * * *
A-2-15
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first set forth above by its President or Vice
President and attested by its Secretary or Assistant Secretary.
Attest: Regions Morgan Keegan Select
Funds, on behalf of its series
Regions Morgan Keegan [_________] Fund
By: ------------------------------- By: -------------------------------
Name: Name:
Title: [Assistant] Secretary Title: [Vice] President
Attest: Pioneer [_________] Fund,
on behalf of its series Pioneer
[_________] Fund
By: ------------------------------- By: -------------------------------
Name: Christopher J. Kelley Name:
Name:Title: Assistant Secretary Title: [Vice] President
A-2-16
Schedule 4.1(d)
On or about June 4, 2007, the Acquired Fund (along with the other funds of
the Acquired Trust) was named as a party along with Morgan Keegan and Company
("Morgan Keegan") in an administrative complaint filed by the Illinois
Securities Department regarding portability issues regarding the proprietary
funds. Morgan Keegan and the State have reached an agreement to resolve claims
brought by the state regarding Morgan Keegan's sales practices regarding the
proprietary funds. The settlement agreement was signed by the Director of the
Illinois Securities Department on January 22, 2009. Morgan Keegan will make
certain payments to the State's Investor Education Fund and reimbursement for
investigative expenses. The Acquired Fund was dismissed on January 23, 2009, and
is not contributing in any way to the monetary resolution.
[For Regions Morgan Keegan Select Money Market Fund and Regions Morgan
Keegan Select Treasury Money Market Fund -- In October of 2008, the Securities
and Exchange Commission conducted a limited-scope exam of money market fund
pricing and valuation for the month of September 2008 for the Acquired Fund.
There has been no subsequent communication from the Securities and Exchange
Commission pertaining to this review.]
A-2-17
Schedule 4.1(e)
None.
A-2-18
EXHIBIT B -- PORTFOLIO MANAGEMENT DISCUSSION OF EACH FUND'S PERFORMANCE
REGIONS MORGAN KEEGAN SELECT MID CAP GROWTH FUND
What started out as a modest gain during the first half of the Fund's fiscal
year turned into an absolute rout in the second half of the fiscal year ended
November 30, 2008. In our years of investment management experience, we have
never seen stocks cascade down in price as they have over the last few months.
The last few months will certainly be remembered well into the future.
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select Mid
Cap Growth Fund's Class A Shares had a total return of -41.79%, based on net
asset value. The Russell Mid Cap Growth Index(1), the Fund's benchmark, had a
total return of -46.15% and the Lipper Mid Cap Growth Index(2) showed an average
return of -45.29% during the same period. While the numbers were certainly not
what we had envisioned at the beginning of the year, the Fund was able to
outperform its index and peer group.
In what started as a long row of dominos falling over, the year began with poor
performance from high-yield/structured debt funds, then on to bank stocks
collapsing, a frozen financial system, and now potential major industrial
problems (e.g., GM, Ford and Chrysler). We all are looking for what's next, but
perhaps all the dominos (or enough of them) have fallen over. The stock market
has certainly declined enough to discount any (or most) unforeseen events.
While there were no sectors that provided positive returns, the Energy,
Industrial and Consumer Discretionary sectors declined less than the market.
Information Technology, Materials, and Financials were the weaker performing
sectors. Individual stocks that added to performance were: Dollar Tree Stores,
+47%; Southwestern Energy, +38%; Church & Dwight, +6%; and Ross Stores, +1%.
While we try to avoid large price declines in stocks we hold, it was almost
impossible to avoid large percentage losses in the Fund due to the overall
decline of the market. The weaker performing holdings in the Fund were: Sirius
XM Radio, -95%; Boyd Gaming, -88%; Health Net, -81%; CB Richard Ellis -81%; and
Coventry Health, -78%.
There are any number of variables that could happen to the economy, but positive
actions by the Federal Reserve and Treasury Department should lessen the
economic pain and lead to eventual recovery of the economy. Unfortunately, there
are no guarantees as it's been over seventy years since the economy has suffered
such financial shocks as we have over the last year.
/s/ Charles A. Murray /s/ David P. McGrath
Charles A. Murray, CFA David P. McGrath, CFA
Senior Portfolio Manager Senior Portfolio Manager
Morgan Asset Management, Inc. Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-1
REGIONS MORGAN KEEGAN SELECT GROWTH FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select Growth
Fund's Class A Shares had a total return of -35.65%, based on net asset value.
During the same period, the Standard & Poor's 500 Index(1), the Fund's
benchmark, had a total return of -38.09% and the Lipper Large Cap Growth
Index(2) had a total return of -42.88%. The miserable performance of the equity
markets reflected a convergence of declining housing prices, an institutional
credit crisis, skyrocketing unemployment, plunging consumer confidence (and
spending), and massive government intervention. While we are not pleased with
the Fund's performance, we did avoid many major disasters in the financial
sector. Also, we were underweighted in the "high expectations" stocks with high
valuations that performed poorly during the year.
Only three stocks held in the Fund showed a positive return. They were Southwest
Energy (+38%), Wal-Mart (+19%) and Genentech (+0.4%). The list of stocks that
showed poor performance for the year is extensive, but some of the worst include
Coventry Health (-78%), NYSE Euronext (-72%) and Research in Motion (-63%).
The last few months left no place for investors to hide. Only three economic
sectors in the Standard & Poor's 500 Index showed a better performance than -38%
for the twelve months ended November 30, 2008. They were Consumer Staples
(-13%), Energy (-26%) and Health Care (-27%). We continue to hold a slight
overweight in the Energy and Material sectors as compared to the Fund's
benchmark index.
/s/ Charles A. Murray /s/ David P. McGrath
Charles A. Murray, CFA David P. McGrath, CFA
Senior Portfolio Manager Senior Portfolio Manager
Morgan Asset Management, Inc. Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-2
REGIONS MORGAN KEEGAN SELECT CORE EQUITY FUND
In the past year, we have witnessed events not seen since and reminiscent of the
1930s: the dramatic slowing economic growth; the freeze-up of the financial
system; and the decline in the stock market. However, unlike the 1930s, the
significant fiscal and monetary responses, although slow in coming, are
unprecedented.
The stresses in the financial markets and the economy are evidenced in the
negative reaction of stocks such as the decline seen in the Fund's benchmark,
the Standard & Poor's 500 Index(1), which fell 38.09 percent for the twelve
months ended November 30, 2008. Regions Morgan Keegan Select Core Equity Fund's
Class A Shares performed in line with the Fund's benchmark with a decline of
39.36 percent, based on net asset value (1.26 percent underperformance). The
Lipper Large-Cap Core Funds Index(2) fell 38.52 percent during the same period.
All sectors in the benchmark index produced negative returns. For the Fund, the
best performing sector was the Financial sector because of selection. Energy was
the poorest performing sector for the Fund because of underweight and selection.
Much of the outperformance resulted from not owning such stocks as Lehman
Brothers, Merrill Lynch, Fannie Mae, Freddie Mac and Washington Mutual. In the
Energy sector, holdings of Smith International, National Oilwell Varco and Bank
of America negatively affected performance. In the Healthcare sector, holdings
of Gilead Sciences, Express Scripts, and Medco Health were additive to
performance.
It is with trepidation that we look to 2009. Uncertainty exists concerning the
recovery of the domestic economy, and fears abound that the global economy will
continue to slow. Increased unemployment and a cautious consumer are strong
headwinds for any improvement in economic growth here in the U.S.; and, as the
U.S. slows, so does the rest of the world.
As things now stand, serious damage has been done to home prices, bond prices,
and stock prices. Cash and U.S. Treasury securities seem to be the safe havens
of choice. As of this writing, 90-day Treasury bills yield zero percent. The
ten-year Treasury yields slightly more than two percent.
As a result of the dismal outlook and price depreciation, attractive valuations
unseen for over fifty years have appeared in the stock market. For example, the
dividend yield on the Standard & Poor's 500 Index is now 3.30 percent. Compared
to the Treasury yields cited previously, the yield is quite attractive and we
have not seen such a spread since the 1950s.
Although the outlook for earnings is dismal, even at reduced levels, the
earnings yield on stocks is significantly higher than aforementioned Treasury
yields. Thus, at some point normal relative valuations could return. Money would
move out of the safety of Treasury securities, and into other bonds and stocks.
Cash on the sidelines has grown significantly. When money comes out of Treasury
bills and cash, stocks have the potential to dramatically outperform other asset
classes.
In the meantime, building or adding to a portfolio of quality stocks presents an
attractive, forward-looking strategy. The Fund provides a portfolio of domestic
stocks that should participate in the ultimate stock market recovery.
/s/ Walter A. Hellwig /s/ John B. Russell
Walter A. Hellwig John B. Russell, CFA
Senior Portfolio Manager Assistant Portfolio Manager
Morgan Asset Management, Inc. Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-3
REGIONS MORGAN KEEGAN SELECT MID CAP VALUE FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select Mid
Cap Value Fund's Class A Shares had a total return of -37.35%, based on net
asset value. This compares to the Russell Midcap Value Index(1) total return of
- -41.95% during the same period. Fund performance was impacted by underperforming
stocks within the Energy, Consumer Discretionary, and Healthcare sectors, as
well as high volatility and severely negative returns across the board in the
U.S. and global stock markets. The financial meltdown which intensified in the
second half of 2008 has created unprecedented failures and mergers of major U.S.
financial institutions and a level of U.S. government, regulatory, and Federal
Reserve involvement not seen since the 1930's. A protracted recovery and
continued market volatility are more likely than not for the foreseeable future
as the world economy recalibrates to slower consumer and industrial activity,
changes in credit availability, and the ongoing U.S. housing malaise.
From a sector perspective, the Fund's holdings in the Materials, Industrials,
and Information Technology sectors were some of the key positive contributors to
overall performance relative to the benchmark. With respect to specific stocks,
the Fund benefited from strong contributions by Compass Minerals International,
Inc., Flowserve Corp., Peoples United Financial, and Pactiv Corporation. Fund
holdings that most adversely impacted performance were found primarily in the
Energy and Consumer Discretionary sectors. With respect to specific stocks, Fund
performance was adversely impacted by Affiliated Managers Group, Exterran
Holdings Inc., Hanesbrands Inc., and Corinthian Colleges, Inc.
With respect to the outlook for 2009, we believe that the challenges of the
ongoing global financial crisis will likely impact the markets for some time. On
a positive note, stock market valuations have generally become much more
attractive than they have been for a long time. However, the restoration of
integrity and confidence in the capital markets is an essential ingredient for
improved market returns. The massive and unprecedented coordinated activities of
Federal Reserve and the U.S. Treasury in October and November of 2008 appear to
be having some positive impact on credit markets; however, credit spreads
remained wide and unstable at year end 2008. On one hand, the credit market for
residential mortgages has shown some signs of stabilizing, but many investors
have shifted their focus to the consumer credit and commercial mortgage sectors
of the market. The recession started in December 2007, and is expected to
continue well into 2009. As a result, we feel that it may take an extended
period of time, likely measured in months or quarters, before full confidence
and strong economic growth reappear. There will likely continue to be market
volatility as many investors continue to reassess the credit crisis and the
depressed economy.
Nevertheless, we concur with Warren Buffett's widely publicized quote from
October 2008-"if you wait for the robins, the spring will be over." In our view,
U.S. stocks, including mid-cap stocks, are generally trading at attractive
levels for long-term investment, though the timing of the recovery is
unpredictable. Based on a traditional rule of thumb, market-recovery medicine
(in the form of interest rate cuts and fiscal stimulus) takes 9-12 months to
begin to take hold with the stock market serving as a leading indicator of the
recovery. This suggests an economic recovery by late 2009 and a stock market
recovery in advance of that. Perhaps the timetable for a classic recovery may be
challenged by the severity and nature of market concerns, but we believe that
this historical perspective will ultimately serve investors well.
Despite the painful losses that so many investors have experienced this year, we
believe that a focus on high quality business franchises and valuations will
provide attractive opportunities amongst the rubble for long-term investors. In
general, the Fund's portfolio companies possess strong business and attractive
cash flow characteristics, and in our opinion, are likely to weather the impact
of a recessionary economy and volatile markets well. Also, we are looking at
more potential new investment opportunities with similar characteristics being
presented these days than in many years. As such, we are cautiously optimistic
about the potential for better markets and returns in 2009 and beyond.
/s/ Eric T. McKissack
Eric T. McKissack, CFA
Chief Investment Officer
Channing Capital Management, LLC
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Channing Capital Management, LLC. disclaims any responsibility to update
such views. The Fund is subject to market risk, which is the possibility that
the market values of securities owned by the Fund will decline and, therefore,
the value of the Fund's shares may be less than what you paid for them.
Accordingly, you can lose money investing in the Fund.
(Unaudited)
B-4
REGIONS MORGAN KEEGAN SELECT VALUE FUND
In the past year, we have witnessed events not seen since and reminiscent of the
1930s: the dramatic slowing economic growth; the freeze-up of the financial
system; and the decline in the stock market. However, unlike the 1930s, the
significant fiscal and monetary responses, although slow in coming, are
unprecedented.
The stresses in the financial markets and the economy are evidenced in the
negative reaction of stocks such as the decline seen in the Fund's benchmark,
the Standard & Poor's 500 Citigroup Value Index(1), which fell 40.75 percent for
the twelve months ended November 30, 2008. Regions Morgan Keegan Select Value
Fund's Class A Shares performed in line with the Fund's benchmark with a decline
of 39.17 percent, based on net asset value (1.58 percent outperformance).
All sectors in the benchmark index produced negative returns. For the Fund, the
best performing sector was the Financial sector because of an underweight,
particularly early in the year. The Utility sector was the poorest performing
sector for the Fund because of an underweight position.
Much of the outperformance resulted from not owning such stocks as Lehman
Brothers, Merrill Lynch, Fannie Mae, Freddie Mac and Washington Mutual. The
holdings of McDonalds, General Mills, and Monsanto were additive to performance.
In the Utility sector, holdings of Entergy, Exelon, and First Energy negatively
affected performance.
It is with trepidation that we look to 2009. Uncertainty exists concerning the
recovery of the domestic economy, and fears abound that the global economy will
continue to slow. Increased unemployment and a cautious consumer are strong
headwinds for any improvement in economic growth here in the U.S.; and, as the
U.S. slows, so does the rest of the world.
As things now stand, serious damage has been done to home prices, bond prices,
and stock prices. Cash and U.S. Treasury securities seem to be the safe havens
of choice. As of this writing, 90-day Treasury bills yield zero percent. The
ten-year Treasury yields slightly more than two percent.
As a result of the dismal outlook and price depreciation, attractive valuations
unseen for over fifty years have appeared in the stock market. For example, the
dividend yield on the Standard & Poor's 500 Index is now 3.30 percent. Compared
to the Treasury yields cited previously, the yield is quite attractive and we
have not seen such a spread since the 1950s.
Although the outlook for earnings is dismal, even at reduced levels, the
earnings yield on stocks is significantly higher than aforementioned Treasury
yields. Thus, at some point normal relative valuations could return. Money would
move out of the safety of Treasury securities, and into other bonds and stocks.
Cash on the sidelines has grown significantly. When money comes out of Treasury
bills and cash, stocks have the potential to dramatically outperform other asset
classes.
In the meantime, building or adding to a portfolio of quality stocks presents an
attractive, forward-looking strategy. The Fund provides a portfolio of domestic
stocks that should participate in the ultimate stock market recovery.
/s/ Walter A. Hellwig
Walter A. Hellwig
Senior Portfolio Manager
Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-5
REGIONS MORGAN KEEGAN SELECT BALANCED FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select
Balanced Fund's Class A Shares had a total return of -20.78%, based on net asset
value. The Standard & Poor's 500 Index(1) and the Barclays Capital (formerly,
Lehman Brothers) Government/Credit Total Index(2) had total returns of -38.09%
and 1.32%, respectively, during the same period. A market-index return comprised
of 60% Standard & Poor's 500 Index and 40% Merrill Lynch 1-10 Year
Government/Corporate A Rated and Above Index(3) was -22.32%. The peer group, as
represented by the Lipper Balanced Index( 4), showed a return of -28.91%. While
we were not pleased with the absolute return of the Fund, the relative
outperformance as compared to the blended index (141 basis points) and the peer
group (813 basis points) helps ease some of the pain.
What began as a modest return at midyear turned into a financial horror movie by
year-end. Concerns of bank failures, a frozen credit market, weak consumer
spending and plunging consumer confidence led to a market decline for the ages,
or the worst stock market return since 1931. What strikes this 35-year
investment veteran is how many financial and economic comparisons to the 1930's
were made over the last few months.
The Fund performed well relative to the indices and our peer group probably due
to two reasons: the Fund had no major exposure to any poorly performing assets,
and we did not rebalance the Fund from bonds to stocks as the market declined.
The Fund was underweighted in Financials during the year, and the bond portion
of the Fund held no bonds of the bankrupt financial institutions. An
over-weighted position in U.S. Treasury securities helped as the rush to quality
assets pushed their prices higher offsetting some of the stock declines.
As mentioned above, we did not rebalance the Fund during the second half of the
year. Rebalancing is the process of selling the outperforming asset class and
reinvesting in the underperforming asset class. This kept the Fund from always
buying into stocks as they were steadily declining.
/s/ Charles A. Murray
Charles A. Murray, CFA
Senior Portfolio Manager
Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-6
REGIONS MORGAN KEEGAN SELECT FIXED INCOME FUND
The sluggish economic growth that characterized the first half of the Fund's
fiscal year gave way to a full blown recession as 2008 drew to a close.
Declining home prices, delinquencies and foreclosures forced banks to tighten
credit standards and slow lending. Faced with declining home prices, falling
equity prices, rising unemployment and slowing global growth, consumer
confidence dropped sharply. The result has been a decline in consumer spending
that has spread to businesses as they cut jobs and reduce capital spending
plans. On almost all fronts, incoming data suggest the recession will be deeper
and longer than many thought a few months ago. After growing over 3.0% during
the first half of the year, GDP declined 0.5% in the third quarter with a
sharper decline expected in the last quarter.
After a modest total return of 0.25% during the first half of the year, the
Regions Morgan Keegan Select Fixed Income Fund's Class A Shares total return was
- -5.66% for the six months ended November 30, 2008. The result was a total return
for the year of -5.42%. This compares with the Fund's benchmark return of 3.04%
for the Merrill Lynch U.S. Corporate/Government/Mortgage Index(1). The
underperformance of the Fund relative to the index was the result two factors.
First, investor flight to quality has favored U.S. Treasury securities, a sector
which we have underweighted. Second, the Fund retains a small position in
non-agency mortgage securities. Despite the still solid credit characteristics
of these mortgage bonds, most are rated AAA, prices have been adversely affected
by a decline in mortgage market fundamentals and insufficient market liquidity.
Looking into the coming year, we expect the economic environment to remain
challenging as the housing market seeks to stabilize and rising unemployment
further dampens consumer demand. While this recession looks to be deeper and
perhaps longer than other post-war downturns, we feel the economy will rebound
in the second half of 2009. The Administration, Congress, and the Federal
Reserve have been very aggressive with a combination of monetary and fiscal
policy stimulus. While some of this stimulus has already been felt, much has yet
to work its way through the economy. Additional policy actions by the Federal
Reserve and the Obama Administration to stoke the economic engine are expected
over the next several months. We believe the Fund is currently positioned to
benefit in the coming year. The Fund remains underweight in the Treasury sector.
The Fund is overweight high quality corporate and U.S. agency mortgages, the
areas we expect to lead performance in 2009.
/s/ Scott M. Flurry /s/ William C. Rice
Scott M. Flurry, CFA William C. Rice, CFA
Senior Portfolio Manager Senior Portfolio Manager
Morgan Asset Management, Inc. Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-7
REGIONS MORGAN KEEGAN SELECT LIMITED MATURITY FIXED INCOME FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select
Limited Maturity Fixed Income Fund's Class A Shares had a total return of
- -7.01%, based on net asset value. During the same period, the Merrill Lynch 1-3
Year Government/Corporate A Rated and Above Index(1) had a total return of
4.30%.
The market events and the deteriorating economic data throughout 2008 created
turmoil in the financial markets. As a result, investor confidence fell to
extremely low levels. Investors continued to choose U.S. Treasury securities
over other sectors in the fixed income market. Thus, U.S. Treasuries
outperformed other sectors, such as non-agency mortgages and corporate bonds.
Credit characteristics of many investment grade securities became secondary, as
prices suffered from a decline in overall market fundamentals and little market
liquidity.
We expect that economic conditions will struggle to improve over the next year,
as the credit markets seek liquidity and rising unemployment weakens consumer
demand. The fiscal and monetary policies that have been passed should serve as a
stimulus to the economy as these policies are implemented. Going forward, we
believe the Fund is properly structured heading into the coming year, as it is
underweight the Treasury sector and has a duration short to that of its
benchmark. Furthermore, the Fund is overweight the Corporate sector and has a
AAA average quality rating.
/s/ Scott M. Flurry /s/ George R. McCurdy IV
Scott M. Flurry, CFA George R. McCurdy IV, CFA
Senior Portfolio Manager Portfolio Manager
Morgan Asset Management, Inc. Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-8
REGIONS MORGAN KEEGAN SELECT INTERMEDIATE TAX EXEMPT BOND FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select
Intermediate Tax Exempt Bond Fund's Class A Shares had a total return of 2.40%,
based on net asset value. The Merrill Lynch 3-7 Year Municipal Index, the Fund's
benchmark, had a total return of 4.51% during the same period.
At the beginning of the fiscal year, yields on investment grade tax-exempt bonds
were at multi-year lows, and the Fund was positioned defensively with a
relatively short maturity structure and relatively high credit quality profile.
Soon after the start of 2008 severe disruptions began to occur in the municipal
market, mainly as a result of the fallout from mortgage market problems. Bond
insurers were downgraded by the credit rating agencies because of the insurers'
exposure to subprime mortgage-backed securities. The municipal market had long
relied on AAA-rated insurance to facilitate valuation of diverse credits. The
very functioning of short-term tax-exempt credit markets depended on having
AAA-rated insurance available. While the Fund did not hold any securities whose
underlying credit quality was in question, the market dysfunction affected
security valuation and trading across most market sectors. As the yield curve
steepened in the first half of the fiscal year, with shorter term securities
increasing in value and longer term ones declining, the Fund benefited from
holding shorter bonds.
In the second half of the fiscal year the volatility of tax-exempt yields
increased as economic and financial market problems increased. Liquidity in the
tax-exempt market was very poor during this period. Despite the volatility the
net change in municipal yields was a small increase from about 7 years to 30
years and little change in the shorter maturities. The Fund had a small positive
return for the period as interest earned exceeded the slight decline in market
value.
The Fund is once again defensively positioned for a difficult market. Both
maturity structure and duration are shorter than those of the benchmark.
/s/ Dorothy E. Thomas
Dorothy E. Thomas, CFA
Senior Portfolio Manager
Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-9
REGIONS MORGAN KEEGAN SELECT TREASURY MONEY MARKET FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select
Treasury Money Market Fund's Class A Shares had a total return 1.35%, based on
net asset value. During this time period, the Federal Reserve Board cut the
Federal Funds Rate from 4.50% to 1.00%, as economic growth concerns overshadowed
inflationary risks.
The market events this year have been nothing short of astonishing, and as a
result, investor confidence remains extremely low. Demand for liquid, government
guaranteed securities has driven U.S. Treasury yields to historically low
levels. The three-month U.S. Treasury bill began the fiscal year at 3.14%, yet
ended at 0.04%, which is a decline of 310 basis points, or 3.10%.
The Fund maintains a 60-day or less weighted average life in order to qualify
for its AAA rating from Standard & Poor's. A positively sloped yield curve and a
decline in interest rates mean longer dated securities have yielded a higher
return than shorter-dated securities. Therefore, the Fund purchased longer-dated
U.S. Treasury securities when possible.
Our current strategy is to take advantage of any short-term fluctuations in
interest rates, as well as exploiting any yield disparities between U.S.
Treasury Bills and money market eligible U.S. Treasury Notes. Due to the
slightly positive slope of the yield curve, the low interest rate environment,
and the Federal Reserve Board's monetary outlook, we will maintain a weighted
average life of the Fund near 50 days as liquidity considerations and trading
conditions permit.
/s/ George R. McCurdy IV
George R. McCurdy IV, CFA
Portfolio Manager
Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-10
REGIONS MORGAN KEEGAN SELECT MONEY MARKET FUND
For the fiscal year ended November 30, 2008, Regions Morgan Keegan Select Money
Market Fund's Class A Shares had a total return of 2.26%, based on net asset
value. During this time period, the Federal Reserve Board cut the Federal Funds
Rate from 4.50% to 1.00%, as economic growth concerns overshadowed inflationary
risks.
Unprecedented market events, such as the failure of some major financial
institutions and U.S. government intervention, along with deteriorating economic
conditions have caused investors to seek principal preservation over investment
returns. This flight to quality has driven U.S. Treasury yields to historically
low levels. The three-month U.S. Treasury bill began the fiscal year at 3.14%,
yet ended at 0.04%, which is a decline of 310 basis points, or 3.10%.
Investor preference to government guaranteed securities shifted funds from
corporations, which limited their ability to raise capital at reasonable rates.
This disruption in the credit markets resulted in a decline in outstanding
commercial paper. Our focus on quality and a shrinking commercial paper market
caused the Fund's sector allocation to shift heavily to money market eligible
U.S. government securities. We will continue managing the Fund to take advantage
of any short-term market fluctuations without exposing it to any unnecessary
risks.
/s/ George R. McCurdy IV
George R. McCurdy IV, CFA
Portfolio Manager
Morgan Asset Management, Inc.
Market forecasts provided in this report may not necessarily come to pass. There
is no assurance that the Fund will achieve its investment objectives. These
views are subject to change at any time based upon market or other conditions,
and Morgan Asset Management, Inc. disclaims any responsibility to update such
views. The Fund is subject to market risk, which is the possibility that the
market values of securities owned by the Fund will decline and, therefore, the
value of the Fund's shares may be less than what you paid for them. Accordingly,
you can lose money investing in the Fund.
(Unaudited)
B-11
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER FUND 12/31/07
In the following interview, John Carey, portfolio manager of the Pioneer Fund,
discusses the factors that influenced performance during the 12-month period
ended December 31, 2007.
Q: The last few months of the year were fraught with concerns about sub-prime
mortgages and the weakening U. S. dollar. How did the Fund navigate its way
through those storms and end the year?
A: Pioneer Fund showed a total return at net asset value of 4.71% on the Class
A shares for the year ended December 31, 2007. By comparison, the Fund's
benchmark, the Standard & Poor's 500 (the S&P 500), an unmanaged index of
the general stock market, rose by 5.49% over the same period, and the
average return of the 835 funds in the Lipper Analytical Services large-cap
core category was 5.73%.
Our underperformance for the year was due to a shortfall in the second
half, which saw a return of -3.07% at net asset value for Pioneer Fund
Class A shares, compared with returns of -1.28% for the S&P 500 and -1.13%
for the average large-cap core fund in the Lipper universe. The second half
was a rocky period for the markets after the positive first half. The main
reason for the turnaround in market performance appeared to be the credit
crisis that intensified over the summer months and was precipitated by a
fall in house prices. As news emerged about the exposures of many financial
institutions to "sub-prime" mortgage debt and the complicated financial
instruments based on mortgages, investors became concerned, and many stocks
fell sharply.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
As we write, the turmoil that started in the U. S. housing and financial
sectors has spread into other areas of our economy and also to other
countries. As investors lose confidence in the kinds of "structured
finance" products and "securitized loan" packages that facilitated so much
of the growth in credit availability over the past few years, they may
adopt very different strategies in the years ahead, with uncertain
consequences for the economy. Some commentators even suggest that we are
just at the beginning of what could be a protracted period of difficulty
for the financial markets. Nonetheless, we believe that our patient,
research-driven approach continues to make sense with respect to the
long-term outlook. We also think that there may be some potentially quite
compelling investment opportunities over the coming months as anxious
investors sell many shares quite indiscriminately.
Q: Please discuss performance in the second half in more detail, specifically
which holdings had the greatest positive and negative effects on
performance relative to the benchmark S&P 500 Index.
A: Investors responded to the market turmoil in the second half of the year in
a variety of ways. Some investors gravitated toward "growth" stocks -- that
is, companies perceived to have better-than-average chances of achieving
higher earnings in the future. Other investors, alarmed by the possibility
of inflation, bought gold-mining and other natural-resources stocks. Still
others took refuge in consumer-staples and utilities stocks. The cross
currents during the widespread portfolio re-positioning created challenging
conditions for many of our investments.
Overall, the Fund underperformed the S&P 500 by somewhat less than 2% in
the six months ended December 31. Contributing to the underperformance were
the Fund's underweight in the top-performing energy sector, its overweight
and our weak stock selection in the poorly-performing consumer
discretionary sector, and our lack of investment in several of the leading
performers in the consumer-staples and information-technology sectors.
McGraw-Hill, its Standard & Poor's business hit hard by the slowdown in
issuance of new debt requiring its ratings, was the principal culprit in
consumer discretionary. In addition, our not owning the exemplary
performers Procter & Gamble in consumer staples and Apple and Google in
information technology also held the Fund's returns back relative to the
index.
On the positive side, we were correctly quite underweight in the dismal
financials sector, and we had some very strong individual stock performers
in the industrials and materials sectors: Deere in industrials, and Rio
Tinto in materials. The former benefited from increased demand for farm
equipment in the robust agricultural industry, and the latter was the
recipient of a take-over bid from one of its big competitors in mining, BHP
Billiton.
B-12
Q: What changes did you make to the portfolio in the last six months of the
period?
A: The Fund initiated seven positions and eliminated eleven during the last
six months of the period. Recognizing the difficulty of issues facing some
of our companies, we used the opportunities presented by overall
stock-market weakness to "upgrade" the portfolio. In other instances, we
took profits as some stocks approached the target prices we had set for
them. New purchases included several new names in the mining industry:
Freeport McMoRan Copper & Gold, Teck Cominco, and Xstrata. While the focus
of Freeport is revealed in its name, Teck Cominco and Xstrata are both
quite diversified in the metals they produce. All three have, we believe,
good long-term opportunities to expand their production and profits.
Canadian National Railway is also a commodities "play": it transports
forest products, grain, coal, and fertilizers in its modern fleet of
locomotives and railcars. Despite its name, Coach is not a railcar, but
rather a designer, producer, and marketer of fine-quality, premium-priced
leather goods. The Fund took advantage of a depressed stock price to pick
up shares of that very successful company. Finally, we added shares of
Corning, the manufacturer of fiberoptic cable and liquid-crystal display
glass; and we received shares of Banco Bilbao Vizcaya Argentaria, or BBVA,
in exchange for our shares of Compass Bancshares as a result of a merger
between the two companies.
On the other side of the ledger, the Fund not only lost Compass Bancshares
to a merger, but we also sold ALLTEL and Biomet in acquisition deals. In
the cases of all of the other liquidations -- Pioneer Natural Resources (no
relation to Pioneer Investments!), Novartis, First Horizon National,
Washington Mutual, Bank of America, Federated Investors, Merrill-Lynch, and
State Street -- we either felt the share prices reflected reasonably full
value or we thought your money could be better invested elsewhere.
Q: With all the uneasiness in the markets since the middle of summer, what is
your outlook for large-cap core stocks in the year ahead?
A: It seems appropriate to be cautious at the moment, in light of the state of
our economy and the diminished earnings prospects for numerous companies.
Whereas few economists were predicting recession as recently as a few
months ago, some now are; and whereas a so-called "soft landing" was the
most common prediction a year ago, more prevalent today is concern over a
rather sharper kind of drop. As always, we shall do our best to protect the
portfolio against the worst ravages of the market by staying diversified
across industries and focusing on companies we think have good balance
sheets and prospects for earnings growth. Our commitment for the portfolio
is always to be substantially fully invested, since we never know when the
market might resume an upward trajectory, but we aim to moderate risk by
doing our own research and developing what we believe is a good
understanding of the companies whose securities we purchase.
February 13, 2008, is Pioneer Fund's 80th birthday. It has been quite an
exciting life so far! Through everything the managers of the Fund have
always endeavored to remember that our first duty is to you, the
shareholders of the Fund, who have entrusted your hard-earned money to our
care. We hope in the years ahead to continue to enjoy, and merit, your
support.
Thank you as ever for your faithful support.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These opinions should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
B-13
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER MID CAP VALUE FUND 10/31/08
A spreading credit crisis undermined the health of the overall U.S. economy and
caused a sharp downturn in the equity market during the 12 months ended October
31, 2008. Widening problems in the financials sector especially affected the
mid-cap value market, which includes the stocks of many financial corporations.
In the following discussion, Rod Wright, portfolio manager of the Pioneer Mid
Cap Value Fund, provides an update on the Fund and the factors that influenced
its performance during the 12-month period.
Q: How did the Fund perform during the 12 months ended October 31, 2008?
A: Pioneer Mid Cap Value Fund Class A shares had a total return of -36.70% at
net asset value for the fiscal year ended October 31. During the same 12
months, the Fund's benchmark, the Russell Midcap Value Index (the Russell
Index), returned -38.83%, while the broad-market Standard & Poor's 500
Index (the S&P 500) returned -36.08%. Over the same 12-month period, the
average return of the 362 mutual funds in Lipper Analytical Service's Mid
Cap Value category was -39.25%.
Q: What were the principal factors affecting the Fund's performance during the
12-month period?
A: The investment environment for equities was very difficult, as problems
that began in the credit markets spread and affected the general economy.
Economic activity contracted in the third quarter of 2008 -- the final
quarter of the Fund's fiscal year. Consumers, who had helped propel the
economy's expansion, abruptly curtailed their spending, leading to sharp
cutbacks in expectations for retailers and other consumer-sensitive
corporations. Because they had the most exposure to the credit markets and
the greatest vulnerability to swings in the capital markets, financial
stocks performed particularly poorly, as investors tried to avoid any
securities that carried credit risk. This particularly affected the
benchmark Russell Mid Cap Value Index, in which financial companies have a
31% weight. By comparison, just 5.7% of the Russell Midcap Growth Index is
in financial stocks.
We were disappointed with the Fund's negative results during the period,
despite the Fund's outperformance of the Russell Midcap Value Index and its
Lipper peer group. In general, we positioned the Fund defensively, which
helped overall returns relative to the Russell Index during a tumultuous
period in the market. Our long-term discipline for the Fund focuses on
individual stock selection rather than sector positioning, and the Fund's
weightings of any individual sector or industry tend to be the result of
stock-selection decisions rather than deliberate allocations. As a result
of our stock selections, the Fund's underweighted position in the
financials sector supported performance on a relative basis. Selections in
telecommunication services and consumer staples also helped, as did
investments in the consumer discretionary, industrials and health care
groups. However, the Fund's underweight position in the energy sector,
combined with poor results among the energy corporations in which we did
invest, detracted from relative results. Investments in materials and, to a
lesser extent, information technology also hurt performance. The Fund's
positioning in the utilities sector did not appreciably impact on overall
results.
Q: What individual investments most influenced the Fund's performance during
the 12 months ended October 31, 2008?
A: The largest single positive contributor to performance was the Fund's
investment in insurance company UNUM, which reaped the benefit from a prior
restructuring program that strengthened its balance sheet, improved its
operations, and resulted in credit rating upgrades by two major ratings
services -- a rarity for a financial company in the current environment.
Another financials holding that was able to withstand the worst effects of
the credit crisis and contribute to the Fund's performance was PNC
Financial Services, a regional banking and financial services company. In
addition, three Fund holdings were the subject of takeover proposals within
their industries, helping lift their stock valuations. Barr
Pharmaceuticals, a specialty pharmaceutical company, received an
acquisition offer from Teva Pharmaceuticals; Anheuser-Busch was the
recipient of a buyout proposal from Belgian brewer Inbev; and Wm. Wrigley &
Co. was acquired by Mars. Other holdings that supported the Fund's results
included: cosmetics company Estee Lauder; health care services provider
Omnicare; industrial supplier W.W. Grainger; and supermarket chain Kroger.
The Fund also avoided some of the Russell Mid Cap Value Index's worst
performers during the period, such as insurer XL Capital, which also helped
relative performance.
On the negative side, the biggest single detractor from the Fund's
performance was First Marblehead, a financials firm specializing in
securitizing student loans. We sold our position in the company, whose
ability to package student loans into securities for investors was severely
affected by the disruptions in the credit markets.
In addition to the adverse impact of the Fund's underweight position in the
energy sector, some of its energy investments did not perform well.
Independent oil refiner Tesoro was hurt when the price of crude oil
increased much more rapidly than prices for refined products, such as
gasoline and heating oil. We sold that investment and also liquidated the
Fund's holding in another disappointing
B-14
energy-related company, KBR, Inc. We were concerned about the
sustainability of the revenue growth for KBR, which is involved in defense
department contract services, as well as energy services. In the materials
group, investments in Freeport-McMoRan Copper & Gold and fertilizer
corporation Mosaic both fell in value when demand for commodities softened
amid concerns about the global economy. Harman International, which
produces electronics equipment for the automotive industry, and Infineon
Technology, a semiconductor corporation, were two other investments that
held back the Fund's performance.
Q: What is your investment outlook?
A: We remain cautious and have sought to position the Fund defensively, as we
think the full effects of the financial crisis have yet to be felt. We
think the problems in the economy are significant and are likely to persist
because a significant amount of bad debt still needs to be worked through.
However, despite the travails of the past year, we think the market
downdraft has created some good opportunities in the share prices of
higher-quality companies whose stocks have declined dramatically in the
wake of the massive sell-off. We intend to take advantage of attractive
prices for sound companies with solid balance sheets and healthy
businesses, which we think have the potential to hold up well even if the
market slump continues.
Please refer to the Schedule of Investments on pages 16-24 for a full listing of
Fund securities.
Investments in mid-sized companies may offer the potential for higher returns,
but are also subject to greater short-term price fluctuations than larger, more
established companies. Investing in foreign and/or emerging markets securities
involves risks relating to interest rates, currency exchange rates, economic,
and political conditions. At times, the Fund's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These opinions should not be relied upon for any other purposes.
B-15
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER CULLEN VALUE FUND 6/30/08
Equity markets, despite some brief rallies, tumbled during the 12-months ended
June 30, 2008, as weakness in the financials sector and housing market raised
concerns about the strength of the domestic economy. In the following interview,
James P. Cullen discusses the factors that influenced the performance of Pioneer
Cullen Value Fund during the 12 months. Mr. Cullen, President of Schafer Cullen
Capital Management, oversees the team responsible for the daily management of
the Fund.
Q: How did the Fund perform during the 12 months ended June 30, 2008?
A: Pioneer Cullen Value Fund Class A shares produced a total return of -9.22%
for the fiscal year ended June 30, 2008, while the Standard & Poor's 500
Index (the S&P 500) returned -13.11% and the Russell 1000 Value Index (the
Russell Index) returned -18.78% over the same 12-month period. In addition,
the average return of the 551 funds in the Lipper Large-Cap Value category
was -17.04% over the 12-month period ended June 30, 2008.
Q: What was your principal strategy during the 12 months ended June 30, and
how did it affect performance?
A: Most equity prices showed sharp declines for the period in a slump that
began in the financials sector over concerns about problems in housing and
subprime-mortgage debt. We believe the economy has been able to stay out of
recession (which is defined as two consecutive quarters of negative growth
in gross domestic product) primarily because of the good results from
corporations heavily involved in international commerce. In the last
quarter, for example, almost 25% of the total profits of S&P 500 companies
came from international business operations.
We maintained a relatively conservative portfolio for the Fund throughout
the 12 months, and this positioning helped in a very volatile market. For
example, we went heavy on consumer staples stocks, where stock selection
helped support the Fund's results, despite some profit taking by investors
in the final six months of the annual reporting period. In general, we
maintained our longer-term investment discipline, keeping the portfolio
well diversified by industry and focusing on stocks with relatively low
price-to-earnings ratios and excellent long-term earnings prospects. We
take a five-year outlook when we invest the Fund in a company, and we
expect to hold the position for an extended period of time, barring any
unforeseen deterioration in company fundamentals.
We established two major new positions for the Fund during the period, both
in the health care sector: Johnson & Johnson and Eli Lilly. Pharmaceuticals
stocks have been out of favor recently, both because of worries about
pending expirations of profitable patents and because of concerns about
pressure on Congress to limit Medicare reimbursements. Although the
industry has underperformed, we believe the two corporations have the
potential to do well, especially in a down market, because their earnings
are driven by demand for medical necessities rather than for discretionary
items. Johnson & Johnson, a more diversified health care products company
that is less dependent on results from its pharmaceuticals operation,
benefits from a well known brand name in markets throughout the world,
giving it a distinctive advantage as global demand for health care products
continues to grow. Eli Lilly has a new chief executive, who we believe has
a realistic view of the political pressures calling for containment of
health care costs. Moreover, the company has a distinctive advantage
because of its relatively full pipeline of potential new drug products in
development. We also were attracted by Eli Lilly's generous dividend yield
and the fact that the company is small enough to make it an attractive
acquisition target by other, larger companies.
We went light on financials holdings in the Fund, but maintained a solid
position in JPMorgan Chase, which we believe to be the best-managed and
financially strongest of the major financial institutions. We also have
maintained somewhat smaller positions for the Fund in Merrill Lynch and
Morgan Stanley because of their international exposure, and because each
company appears small enough to be a potential takeover target. In general,
though, we believed it was difficult to evaluate the underlying value in
many financials companies, and so we de-emphasized the group during the
12-month period, having sold the Fund's earlier positions in regional banks
such as Wachovia, Wells Fargo and Regions Financial. The Fund took
advantage of a pretty strong climate for the energy sector during the
12-month period, and benefited from good performance produced by several
energy-related holdings, including the Brazilian oil company Petrobras, a
relatively new position.
Q: What is your investment outlook?
A: While the deceleration in U.S. economic growth is unmistakable, we think
most U.S. corporations have stronger financial balance sheets than seen in
earlier slumps, with many companies able to withstand weakness in the
domestic economy because of their international businesses. American
corporations have become very good at competing in world markets, which
gives them new sources of profits and greater resilience in the face of
problems in the United States.
B-16
We believe it is important to keep a longer-term horizon and not make the
mistake of reacting to the daily headlines. We have examined historical
trends over the past 40 years -- during which there were six recessions --
to see what happened after significant slumps in the equity market. We have
found that investors who purchased at the worst possible times (shortly
before the start of the slumps) typically have captured double-digit
returns over the subsequent five years, if they remained disciplined and
were careful about the prices they paid for stocks.
We intend to remain disciplined, and we continue to believe that keeping a
five-year horizon and investing in fundamentally solid companies whose
stock valuations are cheap will enable the Fund to do well over the longer
term, despite any short-term market problems.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
B-17
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER CLASSIC BALANCED FUND 7/31/08
Problems in the credit markets and growing evidence of slowing economic growth
affected both the domestic fixed-income and equity markets during the 12 months
ended July 31, 2008. The fiscal year witnessed many major financial institutions
announce significant losses from their debt-related investments, while rising
oil and commodity prices contributed to inflationary pressures. In this
environment, both the bond and stock markets were volatile, with investors
moving away from risk. In the following interview, Walter Hunnewell, who manages
the equity portfolio of the Pioneer Classic Balanced Fund, and Richard
Schlanger, who is responsible for the Fund's fixed-income portfolio, discuss the
factors that affected the Fund's performance over the 12 months.
Q: How did the Fund perform during the 12 month-period ended July 31, 2008?
A: Pioneer Classic Balanced Fund Class A shares had a total return of -7.52%
at net asset value for the 12 months ended July 31, 2008. During the same
period, the Fund's benchmarks, the Standard and Poor's 500 Index (S&P 500)
and the Lehman Brothers Government/ Credit Bond Index (the Lehman Index),
returned -11.09% and 6.18%, respectively, while the average return of the
453 funds in Lipper's Mixed-Asset, Target Allocation Moderate category was
-5.45%.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What were your principal strategies during the 12 months ended July 31,
2008?
A: As we looked at where the most reasonable asset values could be found, we
made several adjustments in our asset allocations. At the start of the
fiscal year, we had 57% of assets invested in equities and 43% in
fixed-income securities. Those allocations changed over the period as
conditions evolved, and by the end of the fiscal year, we had increased our
equity exposure to about 63% of assets, with the remaining 37% in bonds.
The principal shift in our allocation occurred after the U.S. Federal
Reserve Board (the Fed) was forced to facilitate the rescue of investment
bank Bear Stearns, which triggered a widespread flight in the bond market
toward Treasuries and away from securities bearing credit-risk. As a result
of this flight to quality, we believed Treasuries had become overvalued,
especially in view of rising inflationary pressures, and so we reduced our
investments in bonds and increased the Fund's positions in stocks.
In the Fund's fixed-income portfolio, we held about half of fixed-income
assets in pass-through securities at the end of the fiscal year,
predominately the mortgage-backed securities of Fannie Mae and Freddie Mac,
the two major government-related mortgage institutions. (The Fund did not
own any unsecured securities of either institution.) About 40% of assets
were invested in corporate securities, with the largest exposures in bonds
of companies we considered to be in financially strong positions. We raised
our investments in high-yield bonds from 4% of fixed-income assets to about
7%, as we saw increased value. Over the 12-month period, as Treasuries
increased in value, we took profits and reduced our allocation to
Treasuries and Treasury Inflation Protected Securities (TIPS) from 13.8% of
fixed-income assets to 2.8%. As yields declined, we reduced the duration of
the fixed-income portion of the portfolio (duration being the bond
portfolio's sensitivity to changes in interest rates). At the end of the
fiscal year, the portfolio's effective duration was 4.16 years, down from
4.41 years 12 months earlier.
While the fiscal year did see some short-term rallies in equity prices, the
general trend was down, with the Standard & Poor's 500 Index (the S&P 500)
declining by more than 11% over the 12 months. The primary factors pulling
down stock prices were concerns about the impact that deteriorating credit
conditions would have on the economy and future corporate earnings. In this
environment, the Fund's largest overweighted positions relative to the S&P
500 were in the health care and materials sectors, while the most
significant underweights were in energy and financials stocks. Over the 12
months, we made the largest increases in the Fund's sector weightings to
information technology and consumer staples. We believed that health care
stocks had fallen to very low values and represented a more defensive
opportunity in a slowing economy, while we thought long-term economic
trends favored continued strong pricing trends in materials, especially in
metals and mining. In contrast, despite strong oil and natural gas price
trends over the 12 months, we believed these trends were less likely to be
sustained over the longer term. We generally avoided financials stocks
because of their exposure to credit problems.
B-18
Q: What types of investments most influenced Fund performance over the
12-month period?
A: In the equity portfolio, our emphasis on materials companies and/or
de-emphasis of financials companies helped performance significantly, as
did stock selection in materials. Our de-emphasis of energy corporations
and our overweighted position in health care tended to detract from
results, as did stock selections in industrials and health care companies.
The leading individual stock contributor to performance was the Fund's
investment in Diamond Offshore Drilling, one of two major deepwater
drilling specialists in the energy industry. The firm benefited from
increased drilling investment as oil prices rose sharply. Nokia, the
Finland-based telecommunications equipment manufacturer and a long-time
Fund holding, also helped results, despite slumping somewhat late in the
fiscal year. Other equity investments that helped included our positions in
Altria, the global tobacco company, and investment bank Lazard. The single
greatest stock detractor from performance was our position in Washington
Mutual, which was heavily involved in home mortgages. Its stock price
plummeted in the wake of the slump in the domestic housing market. We sold
the position in Washington Mutual, as well as the Fund's position in
another disappointing performer, Idearc, the publisher of Yellow Pages
phone directories. Investors were concerned about Idearc's debt and the
sustainability of the stock's dividend yield. Rockwell Automation, an
industrials corporation, continued to grow, but nevertheless underperformed
amid concerns that its growth primarily was in low-margin operations. We
reduced the Fund's position. Two pharmaceutical companies that disappointed
were Schering-Plough and Merck, both of which were hurt by questions about
the efficacy of Vytorin, an anti-cholesterol drug in which they both have
an interest. We retained the Fund's investment in Schering-Plough because
of the company's pipeline of potential new products, but we liquidated the
position in Merck. We also sold the Fund's investment in Brandywine Realty
Trust, a real estate investment trust that had disappointing results.
In the Fund's fixed-income portfolio, investments in Treasuries helped
substantially during a period that saw investors flock to the
highest-quality securities in a time of growing doubts about credit
quality. As the Fund's Treasury positions rose in price, we took profits
and reduced the weighting. The Fund's investments in mortgage-backed
securities lagged the performance of Treasuries. While we thought there was
good fundamental value in mortgage-backed securities, they nevertheless
underperformed because of concerns about the residential real estate
markets. Mortgages still outpaced corporate bonds, however, which performed
very poorly as investors grew increasingly averse to credit risk.
Q: What is your investment outlook?
A: We believe the economy clearly has entered a decelerating period but has
avoided a deep slump, mainly because of the strength in exporting
industries. We anticipate continuing economic weakness in the near term and
we believe the Fed is likely to leave short-term interest rates unchanged
for the balance of 2008, although short-term and long-term market rates may
begin to drift higher in 2009.
In the fixed-income market, our analysis indicates that mortgage-backed
securities are priced very cheaply relative to other asset classes and so
represent an attractive opportunity. As a consequence, we intend to retain
the Fund's emphasis on mortgages in the near future. In our opinion, one of
the reasons mortgages have underperformed is because of the retreat by
foreign investors, who we believe may return to the market as conditions
stabilize.
We don't anticipate that conditions in the stock market will get
significantly worse, although we expect that financial institutions still
will be disclosing further losses from their investments. A key factor
affecting the economy, and therefore corporate profitability, will be the
housing market. Outside of the financials sector, corporate profits have
continued to grow, even when you exclude the energy sector. One factor
favoring the equity market is that American corporations generally are in
stronger financial positions, with less debt, than they have been in
earlier downturns. In this environment, we intend to emphasize investments
for the Fund in companies with the ability to grow, even in an economic
slowdown. This will include companies in the health care and consumer
staples sectors, as well as selected consumer discretionary names. We
expect to continue to avoid financials stocks for the foreseeable future,
although we intend to be alert for attractive opportunities that may be
presented.
Important Note: On September 7, 2008, the Federal Housing Finance Agency
("FHFA") of the U.S. Government announced that it had been appointed by its
Director to be the conservator of the Federal National Mortgage Association
(Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac).
According to the FHFA, the conservatorship is designed to preserve and
conserve each enterprise's assets and property and to put each enterprise
in a sound and solvent condition. During the conservatorship, each
enterprise's operation is expected to continue without interruption. At
present, there is no exact time frame as to when this conservatorship may
end.
Please refer to the Schedule of Investments on pages 17-34 for a full
listing of Fund securities.
B-19
When interest rates rise, the prices of fixed-income securities in the Fund will
generally fall. Conversely, when interest rates fall, the prices of fixed-income
securities in the Fund will generally rise. Investments in the Fund are subject
to possible loss due to the financial failure of underlying securities and their
inability to meet their debt obligations. Prepayment risk is the chance that
mortgage-backed bonds will be paid off early if falling interest rates prompt
homeowners to refinance their mortgages. Forced to reinvest the unanticipated
proceeds at lower interest rates, the Fund would experience a decline in income
and lose the opportunity for additional price appreciation associated with
falling interest rates. The Portfolio invests in REIT securities, the value of
which can fall for a variety of reasons, such as declines in rental income,
fluctuating interest rates, poor property management, environmental liabilities,
uninsured damage, increased competition, or changes in real estate tax laws.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio may invest in mortgage-backed securities, which during times of
fluctuating interest rates may increase or decrease more than other fixed-income
securities. Mortgage-Backed securities are also subject to pre-payments. At
times, the Fund's investments may represent industries or industry sectors that
are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
B-20
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER BOND FUND 6/30/08
Problems originating with subprime mortgages created concerns throughout the
credit markets during the 12 months ending June 30, 2008. As investors worried
about credit risks in the face of weakening economic growth, higher-quality
securities turned in the best performance. In the following interview, Kenneth
J. Taubes discusses the factors that influenced the performance of Pioneer Bond
Fund during the 12-month period. Mr. Taubes is Head of U.S. Portfolio Management
at Pioneer Investments and the leader of the team managing the Pioneer Bond
Fund.
Q: How did the Fund perform during the 12 months ending June 30, 2008?
A: The Fund's Class A shares returned 6.64%, at net asset value, during the
period, trailing its market benchmark but significantly outperforming
competitive mutual funds. The Lehman Aggregate Bond Index returned 7.12%
for the 12 months, while the average return of the 170 mutual funds in the
Lipper Corporate Debt, A-Rated, category was 3.06% for the period. On June
30, 2008, the 30-day SEC yield of Class A shares was 4.75%.
Q: What was the investment environment like during the 12 months?
A: The fixed-income markets, as well as the equity market, started
experiencing problems early in the Fund's fiscal year as difficulties with
subprime mortgages began to appear, raising doubts about credit risks in
general. Signs of deceleration in the general economy, in part brought on
by a slump in housing and deteriorating conditions in the mortgage market,
raised further fears that the economy might be heading into a significant
downturn. In response, the U.S. Federal Reserve Board began acting
aggressively, cutting the influential Fed funds target rate from 5.25% to
2.00% over the period while also adopting other policies intended to inject
additional liquidity into the financial system and restore stability to the
capital markets.
Over the 12 months, investors sought out higher quality securities and
tried to minimize exposure to credit risk. In general, the higher the
credit quality of a security, the better it performed. U.S. Treasury
securities turned in the best performance in fixed-income markets. U.S.
agency mortgage-backed securities also performed positively, while lagging
Treasuries. Lower-rated, higher-yielding corporate bonds and asset-backed
securities slumped, losing value. For the 12 months, the five-year Treasury
produced a return of more than 11% while high-yield bonds, as gauged by the
Merrill Lynch High Yield Master II Index, declined 2.11%.
Q: What were your principal strategies in this environment, and how did they
affect performance?
A: The Fund invested to maintain a relatively high-quality positioning while
protecting its yield. For most of the period, the Fund emphasized U.S.
agency mortgage-backed securities because of their superior yields when
compared to Treasuries, while underweighting corporate bonds relative to
the indexes. In particular, the Fund underweighted investments in financial
industry corporate bonds, as many major financial institutions had high
vulnerability to the crisis in subprime mortgages. The Fund had virtually
no investments in subprime-related securities and only minimal exposure to
commercial mortgage-backed securities, which also underperformed. At the
end of the fiscal year, the average credit quality of Fund holdings was A+.
Supporting performance was the Fund's relatively underweighted position in
corporate bonds, especially the low exposure to finance industry bonds.
However, the de-emphasis on Treasuries in favor of U.S. agency mortgages
held back results on a total return basis, even while it helped produce
more yield. Treasuries performed better because of their price gains. The
Fund's investments in lower-quality corporates and in commercial mortgage-
backed securities, even while relatively low, also proved to be drags on
performance. Among individual bond holdings, investments in securities of
Sallie Mae, the student-loan institution, and in bonds of Valent
Pharmaceuticals, a company focusing on drugs to fight infectious diseases,
both added to results. However, positions in bonds of Ambac and MBIA, two
bond insurance companies, both detracted from the Fund's results because
each of the companies had exposure to subprime mortgages.
During a time when interest rates declined, the Fund's somewhat longer-
duration positioning tended to help results. At the end of the fiscal year,
the average maturity of Fund holdings was 7.04 years, and the effective
duration of the Fund's portfolio was 4.37 years. The average duration of
the Fund's portfolio was shortened to reflect sharp declines in rates and
diminished prospects for further rate declines.
Near the close of the fiscal year, the Fund began to add to investments in
corporate bonds to take advantage of selective opportunities in securities
that we believed were priced very cheaply. The Fund also retained an
emphasis in agency mortgages because we thought their prices were
inexpensive. We reduced further the Fund's investments in Treasuries, which
we thought had become relatively
B-21
expensive after outperforming for an extended period of time. Yields of
Treasuries were lower than recent rates of inflation. At the end of the
fiscal year, on June 30, 2008, 56.5% of Fund assets were invested in
pass-through securities, virtually all in agency mortgages, while 19.9% of
assets were invested in industrial bonds. Treasuries accounted for less
than 4% of assets.
In the final month of the period, Fannie Mae and Freddie Mac, the two
largest mortgage institutions in the United States, came under pressure
from the continuing fallout over subprime mortgages. The Fund had no
investments in direct obligations of either Fannie Mae or Freddie Mac, but
did have positions in guaranteed mortgage pools of the two institutions.
More importantly, the Fund was significantly underweighted in unsecured
agency debt, relative to the Lehman Aggregate Index. The Fund did not own
any preferred or common equity in either Fannie Mae or Freddie Mac.
Q: What is your investment outlook?
A: While economic growth has weakened and inflationary pressures have
risen, we do not believe the economic outlook is as dire as some observers
have indicated. Despite all its problems, the economy still grew at a 1%
rate, as measured by gross domestic product, in the first quarter of the
year, and growth is likely to be positive for the second quarter as well.
While the housing and automotive industries clearly are at recession
levels, other parts of the economy are holding up well. Investments in
energy production and exploration are up, consumer spending has proven to
be resilient, and export activities are helping to support overall economic
growth.
The interest-rate cuts of the Federal Reserve Board, which took place
gradually over the past 10 months, should begin to be felt in the economy,
providing stimulus to growth and an eventual return to more normal market
conditions.
When interest rates rise, the prices of fixed-income securities in the Fund will
generally fall. Conversely, when interest rates fall, the prices of fixed-income
securities in the Fund will generally rise. Investments in the Fund are subject
to possible loss due to the financial failure of issuers of underlying
securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages. Forced
to reinvest the unanticipated proceeds at lower interest rates, the Fund would
experience a decline in income and lose the opportunity for additional price
appreciation associated with falling interest rates. Investments in high-yield
or lower-rated securities are subject to greater-than-average risk. The
securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie
Mac) are neither guaranteed nor issued by the U.S. Government. The portfolio may
invest in mortgage-backed securities, which during times of fluctuating interest
rates may increase or decrease more than other fixed-income securities.
Mortgage-backed securities are also subject to pre-payments. At times, the
Fund's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These opinions should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
B-22
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER SHORT TERM INCOME FUND 8/31/08
In the following interview, portfolio managers Richard Schlanger and Charles
Melchreit discuss the factors that influenced Pioneer Short Term Income Fund's
performance for the 12-month period ended August 31, 2008.
Q: Can you describe the market environment for fixed-income investors over the
fiscal year ending August 31, 2008?
A: Over the 12 months ending August 31, 2008, we saw continued fallout from
the subprime mortgage crisis, characterized at times by a "flight to
quality" that boosted Treasury market performance at the expense of
credit-sensitive sectors. The extent of the subprime issue first began to
emerge in July and August of 2007, when it became apparent that, due to
rising borrower defaults, subprime lenders would be unable to meet their
obligations to the Wall Street firms that had repackaged the mortgages for
investors. A credit crunch and liquidity crisis ensued. In November of
2007, subprime-related losses at a number of leading financial firms drove
credit spreads wider as the perception of counterparty risk among market
participants became heightened. Many of the institutions had issued very
short-term commercial paper to finance lower quality or longer maturity
holdings in so-called "special investment vehicles" (SIVs) and were unable
to roll over their debt in the prevailing credit crunch. While the US
Federal Reserve embarked on a rate-cutting campaign, those participants
were forced to seek liquidity by borrowing at market rates that failed to
follow the Fed funds rate down, or by selling corporate holdings and other
credit-sensitive positions held in SIVs. The flooding of the market with
credits that trade at yields above Treasuries caused performance of all
credit sectors to lag that of Treasuries by wide margins.
In March, leading investment bank Bear Stearns fell victim to the lack of
liquidity, leading the Fed to orchestrate the firm's takeover by JP Morgan
and take unprecedented, aggressive actions to provide funding and stability
for the markets as a whole. That proved to be something of a turning point
in the short term, as market participants regained an appetite for risk in
the second quarter of 2008. However, market sentiment would deteriorate
again based on the extraordinary spike in oil prices, rising inflation
numbers and a faltering economy. As the period drew to a close, prices for
oil and other commodities began to ease and the dollar began to strengthen,
providing some relief to the outlook.
During the 12 months under review, the Federal Reserve lowered the Fed
funds rate seven times by a total of more than three percentage points,
leaving the benchmark rate at 2.00%. While interest rate movements were
volatile for the full 12 months of the period, Treasury yields fell and the
yield curve steepened sharply as declines on the short end of the curve
were dramatic. To illustrate, the two-year Treasury yield fell by two
percentage points, from 4.13% to 2.36%, while the 10-year fell nearly one
percentage point, from 4.53% to 3.83%. Since fixed-income security prices
move in the opposite direction of yields, the declines resulted in strong
Treasury market performance.
Q: How did the Fund perform in this environment?
A: The Fund's total return from August 31, 2007 through August 31, 2008, was a
positive 2.18%, versus 5.85% for the unmanaged benchmark index, the Lehman
Brothers One- to Three-Year Government/Credit Index. The Fund's SEC yield
as of August 31, 2008, was 4.33%. The total return and SEC yield numbers
are for Class A shares and do not include the impact of any sales charge
paid.
Q: Can you review the Fund's principal strategies during the period ended
August 31, 2008?
A: We have continued to focus holdings on the two-to-three year maturity
range. The strategy worked well for the Fund over the period, as
fixed-income returns were strongest on the short-to-intermediate end of the
yield curve.
Average quality of the Fund's portfolio remains a high "AA-." U.S. Treasury
and agency issues totaled 6.5% at period end, down from 13.2% 12 months
earlier. The change reflects our view that Treasuries, even when viewed as
a safe haven, have not been valued attractively versus credit-sensitive
sectors given negative real, or after-inflation, returns. In addition, we
were focused on income generation in making purchases for the Fund, given a
Fed that appeared to be on hold for the foreseeable future with respect to
any increases in rates. The relatively light representation of Treasuries
was the principal reason for the Fund's underperformance versus the
benchmark, as Treasuries benefited from the flight to quality that
prevailed during much of the period.
The Fund sold Treasury issues in favor of an increased weighting in a
variety of mortgage-related securities with higher yields. At the end of
the period, mortgage-related securities accounted for 73% of Fund assets.
Within the mortgage sector, the Fund has significant exposure to
pass-through securities backed by residential and commercial mortgages.
Given the ongoing concerns with respect to the housing market, the holdings
were predominantly focused on agency collateral, specifically Ginnie Mae,
Fannie Mae and Freddie Mac. In selecting mortgage holdings, we have
emphasized higher coupons and structured agency product, and that
B-23
contributed positively to the Fund's performance during the period. Despite
negative headlines, Fannie Mae and Freddie Mac mortgage-backed issues
performed nearly as well as Ginnie Maes for the full period. The Fund did
not own any subprime mortgages during the period.
The Fund's corporate holdings were 19% of assets at the end of August, up
slightly from 18% six months earlier. During the period we began to
purchase newly issued corporate debt securities to take advantage of the
higher yields it offered versus issues traded in the secondary market. By
the end of the period, high quality newly issued corporate debt generally
offered between three-quarters of a percentage point and one and one-half
percentage point of additional yield versus Treasuries of comparable
maturity. Purchases among corporate bonds have been weighted toward bank
and finance names that have been trading at attractive valuations and which
we expect to benefit from Fed actions to provide liquidity. High-yield
corporate bonds were 4% of the Fund's portfolio at period-end. During the
period, we added exposure of approximately 2% to floating rate securities
backed by bank loans, on the basis of their attractive yields and low
interest rate sensitivity. The Fund's corporate exposure and, in
particular, our holdings in the financial sector underperformed as a whole
for the period versus less credit-sensitive areas of the market.
Q: What is your assessment of the current climate for fixed income investing?
A: Over the latter part of the fiscal year we began to position the Fund
somewhat more aggressively with respect to overall portfolio duration and
corresponding sensitivity to changes in interest rates. (Duration is a
measure of a bond's price sensitivity to changes in interest rates.)
Duration at the end of the August was at 1.95 years, up from 1.61 at the
midpoint of the fiscal period and slightly higher than the 1.87-year
duration 12 months ago. This reflects our view that the Fed is unlikely to
raise interest rates in the near future, based on several factors. The U.S.
employment numbers have been weaker than expected, with eight consecutive
months of job losses and August unemployment reaching 6.1%. In addition,
housing and related sectors continue to weigh on the U.S. economy. Until
recently, it appeared that the Fed was faced with the dilemma of both a
weakening economy and rising inflation. However, with the price of oil and
other commodities beginning to ease, the dollar beginning to strengthen and
overseas economies continuing to falter, we believe the inflation outlook
is such that the Fed will not soon feel compelled to raise rates. In
addition, a steep yield curve is helpful to struggling banks and financial
firms, giving the Fed further incentive not to raise short-term rates.
In all environments, we follow a disciplined investment process based on
identifying relative value among fixed-income sectors and carefully
evaluating the risk/reward profile of credit-sensitive issues. We will
continue to take advantage of ongoing market volatility to add securities
with attractive yields to the Fund. As always, we will work to provide a
high level of current income while reducing the impact of interest rate
changes on the Fund's share price. We believe our focus on quality and
relative share price stability continues to make the Fund an attractive
option for investors seeking to maintain fixed-income exposure in an
uncertain environment.
Please refer to the Schedule of Investments on pages 16-32 for a full listing of
Fund securities.
When interest rates rise, the prices of fixed-income securities in the Fund will
generally fall. Conversely, when interest rates fall, the prices of fixed-income
securities in the Fund will generally rise. Investments in the Fund are subject
to possible loss due to the financial failure of underlying securities and their
inability to meet their debt obligations. These risks may increase share price
volatility. Prepayment risk is the chance that mortgage-backed bonds will be
paid off early if falling interest rates prompt homeowners to refinance their
mortgages. Forced to reinvest the unanticipated proceeds at lower interest
rates, the Fund would experience a decline in income and lose the opportunity
for additional price appreciation associated with falling interest rates. The
securities issued by U.S. government sponsored entities (i.e. FNMA, Freddie Mac)
are neither guaranteed nor issued by the U.S. government. The portfolio may
invest in mortgage-backed securities, which during times of fluctuating interest
rates may increase or decrease more than other fixed-income securities.
Mortgage-backed securities are also subject to pre-payments. Investing in
foreign and/or emerging markets securities involves risks relating to interest
rates, currency exchange rates, economic, and political conditions. At times,
the Fund's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Past performance is not a guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes.
B-24
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER TREASURY RESERVES FUND 7/31/08
Continued weakness in the U.S. housing market and substantial volatility in the
financial markets contributed to a memorable 2008 fiscal year for Pioneer
Treasury Reserves Fund. In the following interview, portfolio manager Seth Roman
discusses how his cautious, conservative style of management helped to preserve
the Fund's credit integrity amidst great market turmoil while maintaining
liquidity to meet investors' needs. Mr. Roman is a member of Pioneer's Fixed
Income Group, which is responsible for the daily management of the Fund.
Pioneer Treasury Reserves Fund invests in the highest-quality money market
instruments available -- such as those issued by the U.S. Treasury or any agency
of the U.S. government, including the Federal National Mortgage Association
(FNMA) and the Federal Home Loan Bank (FHLB). During the period, the majority of
the Fund's assets were invested in U.S. Treasury securities, with the balance in
agency securities.
Q: How did the Fund perform during the 12-month period ended July 31, 2008?
A: The Fund performed well in a challenging environment. For the fiscal year
ended July 31, 2008, the Fund's Class A shares had a total return of 2.55%.
In comparison, the average return for the 82 funds in Lipper's U.S.
Treasury Money Market Funds category was 2.41%, while the Fund's benchmark,
the Merrill-Lynch 90-day T-bill Index, returned 2.64% for the same period.
The Fund's net asset value remained stable at $1.00 a share throughout this
turbulent period.
With the Federal Reserve Board (the Fed) reducing short-term interest rates
to promote economic growth and infuse liquidity into the financial system,
yields on money market securities declined throughout the fiscal year.
Consequently, the seven-day effective compound yield for Class A shares
fell from 4.30% at the start of the reporting period on August 1, 2007, to
1.35% on July 31, 2008.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What were some of the concerns weighing on the financial markets during the
reporting period?
A: Given the Fund's commitment to superior credit quality, it didn't have any
direct exposure to the subprime market. However, the severity of the
subprime crisis caused investors to reevaluate risk across all types of
investments. Prices fell and yields rose on all but the highest-quality
fixed-income securities, as investors demanded more yield on riskier bonds
amid increased concerns that the economy might weaken. The uncertainty
triggered a sharp and sudden reevaluation of credit risk and a flight to
quality across all types of investment securities. Well-publicized
difficulties at several major investment banks, hedge fund managers and
among the insurers of repackaged loans added to investors' uncertainty --
as did angst about slower growth, inflation, and a weak U.S. dollar.
At the heart of the uncertainty were worries about the developing credit
crunch, in which lenders and investors cut off the capital that businesses
need to grow and consumers need to buy homes. The Fed was proactive,
starting as early as August 2007, to infuse liquidity in the financial
system by reducing its discount rate, the rate at which banks can borrow
from the central bank. This was the first of several cuts, which culminated
in the discount rate falling from 6.25% to 2.25% by the end of the
reporting period.
In addition, the Fed initiated a series of cuts in the Federal funds rate
starting in September 2007. This benchmark rate is the interest rate banks
charge each other for overnight loans to maintain reserve levels. By the
close of the fiscal year period, the Federal funds rate decreased from
5.25% to 2.00%. Both actions had a positive impact on the markets by
increasing liquidity and reassuring investors that the Fed was willing to
do its part to fend off a recession.
Q: What were your principal investment strategies for the Fund during the
period?
A: We were primarily concerned about safety and liquidity to protect
shareowners' principal while providing immediate access to their money. We
invested in only the highest-quality securities and avoided the types of
complex financial investments that carry credit risks.
At the beginning of the reporting period, with the Fed still leaning toward
raising short-term interest rates to fight inflationary pressures, the Fund
was focused on shorter-maturity U.S. Treasury and agency securities. We
believed this strategy helped to keep the portfolio flexible enough to
capture higher yields when opportunities presented themselves. However, by
early fall, we anticipated correctly that the Fed would change course and
lower interest rates to stem the effects of the housing and mortgage market
crisis and to foster
B-25
growth. As a result, we increased the Fund's exposure to longer-maturity
Treasury securities to lock in the higher fixed-rate yields for a longer
period of time.
In the final months of the reporting period, we focused the Fund's
investments on short-term repurchase agreements, which offered a better
risk/return profile for the Fund. As a result of these strategies, the
portfolio's average days to maturity rose from 15 days on July 31, 2007, to
42 days midway through the year on January 31, and subsequently settled at
17 days by July 31, 2008.
The Fund has maintained some exposure to agency securities of Fannie Mae
and Freddie Mac, both of which experienced highly publicized difficulties
during the fiscal year, with the Federal government stepping in with a
bailout plan after the end of the period. Despite the news on both
entities, the Fund's performance was not affected.
Q: What is your investment outlook?
A: We do not think that it is likely that interest rates will rise soon,
despite recent changes in emphasis of the Fed, which appears to have
changed its focus to pay more attention to restraining inflationary
pressures. However, while energy and food prices have risen significantly,
we have not seen upward pressure on wages, which can have a major impact on
overall inflation. As a consequence, we do not think that the Fed will
raise short-term interest rates in the near future. In such an environment,
we may extend the Fund's duration (its sensitivity to interest rates)
somewhat to gain yield, but we'll proceed with caution, as we remain
primarily concerned with maintaining the Fund's high quality and liquidity.
Important Note: On September 7, 2008, the Federal Housing Finance Agency
("FHFA") of the U.S. Government announced that it had been appointed by its
Director to be the conservator of the Federal National Mortgage Association
(Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). According
to the FHFA, the conservatorship is designed to preserve and conserve each
enterprise's assets and property and to put each enterprise in a sound and
solvent condition. During the conservatorship, each enterprise's operation is
expected to continue without interruption. At present, there is no exact time
frame as to when this conservatorship may end.
Please refer to the Schedule of Investments on pages 13-14 for a full listing of
Fund securities.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. Fund shares are
not federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency.
When interest rates rise, the prices of fixed income securities in the Fund will
generally fall. Conversely, when interest rates fall, the prices of fixed income
securities in the Fund will generally rise.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
B-26
SUBJECT TO COMPLETION, DATED [ ], 2009
PIONEER MID CAP GROWTH FUND II (a series of PIONEER SERIES TRUST I)
PIONEER GROWTH FUND (a series of PIONEER SERIES TRUST I)
PIONEER FUND
PIONEER MID CAP VALUE FUND
PIONEER CULLEN VALUE FUND (a series of PIONEER SERIES TRUST III)
PIONEER CLASSIC BALANCED FUND (a series of PIONEER SERIES TRUST IV)
PIONEER BOND FUND
PIONEER SHORT TERM INCOME FUND
PIONEER INTERMEDIATE TAX FREE INCOME FUND (a series of PIONEER SERIES TRUST I)
PIONEER TREASURY RESERVES FUND (a series of PIONEER SERIES TRUST IV)
PIONEER CASH RESERVES FUND (a series of PIONEER MONEY MARKET TRUST)
(each, a "Pioneer Fund" and together, the "Pioneer Funds")
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
STATEMENT OF ADDITIONAL INFORMATION
[ ], 2009
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the combined Proxy Statement and Prospectus dated
[ ], 2009 (the "Proxy Statement/Prospectus"), which relates to the Class A,
Class C and Class Y shares, as applicable, of each Pioneer Fund to be issued in
exchange for shares of the corresponding Regions Morgan Keegan Select Fund as
shown below (each, an "RMK Fund" and together, the "RMK Funds"), each of which
is a series of Regions Morgan Keegan Select Funds. Please retain this Statement
of Additional Information for further reference.
To obtain a copy of the Proxy Statement/Prospectus, free of charge, please
write to the Pioneer Funds at the address set forth above or call the Pioneer
Funds at the number set forth above.
RMK Funds: Pioneer Funds:
- ---------- --------------
Regions Morgan Keegan Select Mid Cap Growth Fund Pioneer Mid Cap Growth Fund II*
Class A Class A
Class C Class C
Class I Class Y
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund*
Class A Class A
Class C Class C
Class I Class Y
Regions Morgan Keegan Select Core Equity Fund Pioneer Fund
Class A Class A
Class C Class C
Class I Class Y
Regions Morgan Keegan Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
Class A Class A
Class C Class C
Class I Class Y
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
Class A Class A
Class C Class C
Class I Class Y
Regions Morgan Keegan Select Balanced Fund Pioneer Classic Balanced Fund
Class A Class A
Class C Class C
Class I Class Y
RMK Funds: Pioneer Funds:
- ---------- --------------
Regions Morgan Keegan Select Fixed Income Fund Pioneer Bond Fund
Class A Class A
Class C Class A
Class I Class Y
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund Pioneer Short Term Income Fund
Class A Class A
Class C Class A
Class I Class Y
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund*
Class A Class A
Class C Class A
Class I Class Y
Regions Morgan Keegan Select Treasury Money Market Fund Pioneer Treasury Reserves Fund
Class A Class A
Class I Class Y
Regions Morgan Keegan Select Money Market Fund Pioneer Cash Reserves Fund
Class A Class A
Class I Class Y
* This is a newly-organized Pioneer fund that will commence operations upon
consummation of the proposed Reorganization.
2
TABLE OF CONTENTS
Page
----
INTRODUCTION .............................................................................. 4
DOCUMENTS INCORPORATED BY REFERENCE ....................................................... 4
PRO FORMA COMBINED FINANCIAL STATEMENTS ................................................... 5
ADDITIONAL INFORMATION ABOUT PIONEER MID CAP GROWTH FUND II, PIONEER GROWTH FUND AND
PIONEER
INTERMEDIATE TAX FREE INCOME FUND ....................................................... 66
FUND HISTORY ............................................................................ 66
INVESTMENT STRATEGIES AND RISKS ......................................................... 66
MANAGEMENT OF THE FUND .................................................................. 88
INVESTMENT ADVISOR AND ADMINISTRATOR .................................................... 95
PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS ............................................ 98
SHAREHOLDER SERVICING/TRANSFER AGENT .................................................... 99
CUSTODIAN ............................................................................... 99
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ........................................... 99
PORTFOLIO MANAGEMENT .................................................................... 100
PORTFOLIO TRANSACTIONS .................................................................. 103
DESCRIPTION OF SHARES ................................................................... 104
SALES CHARGES ........................................................................... 106
REDEEMING SHARES ........................................................................ 110
TELEPHONE AND ONLINE TRANSACTIONS ....................................................... 111
PRICING OF SHARES ....................................................................... 112
TAX STATUS .............................................................................. 113
FINANCIAL STATEMENTS .................................................................... 119
ANNUAL FEE, EXPENSE AND OTHER INFORMATION ............................................... 119
APPENDIX A - DESCRIPTION OF SHORT-TERM DEBT, CORPORATE BOND AND PREFERRED STOCK RATINGS ... A-1
APPENDIX B - PROXY VOTING POLICIES AND PROCEDURES OF PIONEER INVESTMENT MANAGEMENT, INC. .. B-1
3
INTRODUCTION
This Statement of Additional Information is intended to supplement the
Proxy Statement/Prospectus relating specifically to (i) the proposed transfer
of all of the assets of each RMK Fund to, and the assumption of the stated
liabilities of each RMK Fund by, the corresponding Pioneer Fund in exchange for
shares of the Pioneer Fund as shown in the table above, and (ii) the
solicitation by the RMK Funds' Board of Trustees of proxies to be used at a
special meeting of the shareholders of the RMK Funds to be held on [ ],
2009. Please retain this Statement of Additional Information for further
reference.
DOCUMENTS INCORPORATED BY REFERENCE
This Statement of Additional Information consists of these cover pages,
the accompanying pro forma financial statements, additional information
regarding Pioneer Mid Cap Growth Fund II, Pioneer Growth Fund and Pioneer
Intermediate Tax Free Income Fund and the following documents, each of which
was filed electronically with the Securities and Exchange Commission (the
"SEC") and is incorporated by reference herein.
1. Pioneer Fund's Statement of Additional Information, dated May 1, 2008
(File Nos. 2-25980; 811-01466), as filed with the SEC on April 25, 2008
(Accession No. 0000078713-08-000011) is incorporated herein by reference.
2. Pioneer Fund's Annual Report for the fiscal year ended December 31, 2007
(File No. 811-01466), as filed with the SEC on February 28, 2008
(Accession No. 0000276776-08-000018) is incorporated herein by reference.
3. Pioneer Fund's Semi-Annual Report for the fiscal period ended June 30,
2008 (File No. 811-01466), as filed with the SEC on August 26, 2008
(Accession No. 0000078713-08-000072) is incorporated herein by reference.
4. Pioneer Fund's Annual Report for the fiscal year ended December 31, 2008
(File No. 811-01466), as filed with the SEC on [ ], 2009 (Accession
No. [ ]) is incorporated herein by reference. [To be filed by
amendment.]
5. Pioneer Mid Cap Value Fund's Statement of Additional Information, dated
March 1, 2008 (File No. 33-34801), as filed with the SEC on February 28,
2008 (Accession No. 0000863334-08-000015) is incorporated herein by
reference.
6. Pioneer Mid Cap Value Fund's Annual Report for the fiscal year ended
October 31, 2008 (File No. 811-06106), as filed with the SEC on
December 30, 2008 (Accession No. 0000078713-08-000105) is incorporated
herein by reference.
7. Pioneer Cullen Value Fund's Statement of Additional Information, dated
November 1, 2008 (File Nos. 333-120144; 811-21664), as filed with the SEC
on October 27, 2008 (Accession No. 0001306349-08-000008) is incorporated
herein by reference.
8. Pioneer Cullen Value Fund's Annual Report for the fiscal year ended
June 30, 2008 (File No. 811-21664), as filed with the SEC on August 26,
2008 (Accession No. 0000078713-08-000078) is incorporated herein by
reference.
9. Pioneer Cullen Value Fund's Semi-Annual Report for the fiscal period
ended December 31, 2008 (File No. 811-21664), as filed with the SEC on
[ ], 2009 (Accession No. [ ]) is incorporated herein by reference.
[To be filed by amendment.]
10. Pioneer Classic Balanced Fund's Statement of Additional Information,
dated December 1, 2008 (File Nos. 333-126384; 811-21781), as filed with
the SEC on November 26, 2008 (Accession No. 0001331854-08-000012) is
incorporated herein by reference.
11. Pioneer Classic Balanced Fund's Annual Report for the fiscal year ended
July 31, 2008 (File No. 811-21781), as filed with the SEC on September 29,
2008 (Accession No. 0000078713-08-000091) is incorporated herein by
reference.
12. Pioneer Bond Fund's Statement of Additional Information, dated November 1,
2008 (File Nos. 2-62436; 811-02864), as filed with the SEC on October 27,
2008 (Accession No. 0000276776-08-000052) is incorporated herein by
reference.
13. Pioneer Bond Fund's Annual Report for the fiscal year ended June 30,
2008 (File No. 811-02864), as filed with the SEC on August 26, 2008
(Accession No. 0000078713-08-000070) is incorporated herein by reference.
14. Pioneer Bond Fund's Semi-Annual Report for the fiscal period ended
December 31, 2008 (File No. 811-02864), as filed with the SEC on [ ],
2009 (Accession No. [ ]) is incorporated herein by reference. [To be
filed by amendment.]
15. Pioneer Short Term Income Fund's Statement of Additional Information,
dated December 31, 2008 (File Nos. 333-114423; 811-21558), as filed with
the SEC on December 23, 2008 (Accession No. 0001286364-08-000008) is
incorporated herein by reference.
4
16. Pioneer Short Term Income Fund's Annual Report for the fiscal year ended
August 31, 2008 (File No. 811-21558), as filed with the SEC on October 29,
2008 (Accession No. 0000276776-08-000055) is incorporated herein by
reference.
17. Pioneer Treasury Reserves Fund's Statement of Additional Information,
dated December 1, 2008 (File Nos. 333-126384; 811-21781), as filed with
the SEC on November 26, 2008 (Accession No. 0001331854-08-000015) is
incorporated herein by reference.
18. Pioneer Treasury Reserves Fund's Annual Report for the fiscal year ended
July 31, 2008 (File No. 811-21871), as filed with the SEC on September 29,
2008 (Accession No. 0000078713-08-000091) is incorporated herein by
reference.
19. Pioneer Cash Reserves Fund's Statement of Additional Information, dated
May 1, 2008 (File Nos. 33-13179; 811-05099), as filed with the SEC on
April 25, 2008 (Accession No. 0000812195-08-000006) is incorporated herein
by reference.
20. Pioneer Cash Reserves Fund's Annual Report for the fiscal year ended
December 31, 2007 (File No. 811-05099), as filed with the SEC on
February 28, 2008 (Accession No. 0000276776-08-000017) is incorporated
herein by reference.
21. Pioneer Cash Reserves Fund's Semi-Annual Report for the fiscal period
ended June 30, 2008 (File No. 811-05099), as filed with the SEC on
August 26, 2008 (Accession No. 0000078713-08-000071) is incorporated
herein by reference.
22. Pioneer Cash Reserves Fund's Annual Report for the fiscal year ended
December 31, 2008 (File No. 811-05099), as filed with the SEC on [ ],
2009 (Accession No. [ ]) is incorporated herein by reference. [To be
filed by amendment.]
23. Regions Morgan Keegan Select Funds' Combined Statement of Additional
Information, dated April 1, 2008 (File Nos. 33-44737; 811-06511), as filed
with the SEC on March 31, 2008 (Accession No. 0000898432-08-000317) is
incorporated herein by reference.
24. Regions Morgan Keegan Select Funds' Annual Report for the fiscal year
ended November 30, 2008 (File No. 811-06511), as filed with the SEC on
February 5, 2009 (Accession No. 0001193125-09-020033) is incorporated
herein by reference.
PRO FORMA FINANCIAL STATEMENTS
Shown below are the financial statements for each Pioneer Fund and the
corresponding RMK Fund and pro forma financial statements for each combined
Pioneer Fund, provided that: (i) no pro forma financial statements have been
prepared and included relating to the reorganizations of Pioneer Fund, Pioneer
Mid Cap Value Fund, Pioneer Cullen Value Fund and Pioneer Short Term Income
Fund because the net asset value of the RMK Fund does not exceed 10% of the net
asset value of the corresponding Pioneer Fund as of January [ ], 2009; and (ii)
no pro forma financial statements have been prepared and included relating to
the reorganization of Regions Morgan Keegan Mid Cap Growth Fund and Pioneer Mid
Cap Growth Fund II, Regions Morgan Keegan Select Growth Fund and Pioneer Growth
Fund or Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund and
Pioneer Intermediate Tax Free Income Fund because each of Pioneer Mid Cap
Growth Fund II, Pioneer Growth Fund and Pioneer Intermediate Tax Free Income
Fund is a newly-organized fund and does not have any assets or liabilities as
of the date hereof.
The pro forma financial statements are unaudited.
See Notes to Pro Forma Combined Financial Statements.
5
Pro Forma Schedule of Investments for Regions Morgan Keegan Select Balanced
Fund and Pioneer Classic Balanced Fund(a)
As of 07/31/08
(unaudited)
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
-- 55,440 55,440
-- 24,730 24,730
-- 31,194 31,194
42,000 -- 42,000
40,000 -- 40,000
30,000 -- 30,000
30,000 30,000
40,000 -- 40,000
30,000 31,884 61,884
40,000 -- 40,000
20,000 -- 20,000
10,000 -- 10,000
30,000 -- 30,000
20,000 -- 20,000
20,000 -- 20,000
24,000 -- 24,000
10,000 10,000
50,000 36,087 86,087
-- 10,744 10,744
-- 23,506 23,506
-- 45,760 45,760
-- 6,190 6,190
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- --------------
CONVERTIBLE PREFERRED STOCK 0.7%
Commercial Services & Supplies 0.7%
Office Services & Supplies 0.7%
Avery Dennison Corp., 7.875%, 11/15/10 $ -- $ 2,474,287 $ 2,474,287
------------ ----------- ------------
TOTAL CONVERTIBLE PREFERRED STOCK $ -- $ 2,474,287 $ 2,474,287
------------ ----------- ------------
COMMON STOCKS 59.7%
Energy 10.1%
Integrated Oil & Gas 0.5%
Royal Dutch Shell Plc (A.D.R.) $ -- $ 1,750,637 $ 1,750,637
------------ ----------- ------------
Oil & Gas Drilling 1.1%
Diamond Offshore Drilling, Inc. $ -- $ 3,721,444 $ 3,721,444
------------ ----------- ------------
Oil & Gas Exploration & Production 4.6%
Devon Energy Corp. $ 3,985,380 $ -- $ 3,985,380
Exxon Mobil Corp. 3,217,200 -- 3,217,200
Occidental Petroleum Corp. 2,364,900 -- 2,364,900
Southwestern Energy Corp. 1,089,300 -- 1,089,300
Sunoco, Inc. 1,624,400 -- 1,624,400
XTO Energy, Inc. 1,416,900 1,505,881 2,922,781
------------ ----------- ------------
$ 13,698,080 $ 1,505,881 $ 15,203,961
------------ ----------- ------------
Oil & Gas Equipment & Services 2.8%
Halliburton Co. $ 1,792,800 $ -- $ 1,792,800
National Oilwell Varco, Inc. 1,572,600 -- 1,572,600
Oceaneering International, Inc. 606,400 -- 606,400
Schlumberger Ltd. 3,048,000 -- 3,048,000
Smith International, Inc. 1,487,600 -- 1,487,600
Weatherford International Ltd. 754,600 -- 754,600
------------ ----------- ------------
$ 9,262,000 $ -- $ 9,262,000
------------ ----------- ------------
Coal 0.6%
Arch Coal, Inc. $ 1,351,440 $ -- $ 1,351,440
Peabody Energy Corp. 676,500 -- 676,500
------------ ----------- ------------
$ 2,027,940 $ -- $ 2,027,940
------------ ----------- ------------
Oil & Gas Storage & Transportation 0.5%
EL Paso Corp. $ 896,500 $ 647,040 $ 1,543,540
------------ ----------- ------------
Total Energy $ 25,884,520 $ 7,625,002 $ 33,509,522
------------ ----------- ------------
Materials 5.2%
Aluminum 0.1%
Alcoa, Inc. $ -- $ 362,610 $ 362,610
------------ ----------- ------------
Diversified Chemical 0.3%
E.I. du Pont de Nemours and Co. $ -- $ 1,029,798 $ 1,029,798
------------ ----------- ------------
Diversified Metals & Mining 1.3%
Freeport-McMoRan Copper & Gold, Inc. (Class B) $ -- $ 4,427,280 $ 4,427,280
------------ ----------- ------------
Fertilizers & Agricultural Chemicals 0.4%
Potash Corp. Saskatchewan, Inc. $ -- $ 1,264,431 $ 1,264,431
------------ ----------- ------------
6
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
36,000 -- 36,000
100,000 -- 100,000
70,000 -- 70,000
-- 29,453 29,453
24,000 48,626 72,626
-- 86,690 86,690
-- 30,409 30,409
-- 9,543 9,543
40,000 -- 40,000
28,000 -- 28,000
30,000 -- 30,000
6,000 -- 6,000
30,000 -- 30,000
50,000 -- 50,000
8,000 -- 8,000
-- 38,346 38,346
2,000 -- 2,000
-- 39,419 39,419
18,000 -- 18,000
32,000 -- 32,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
- - ------------ -------------- -------------- ----------------
Mining 2.9%
Agnico-Eagle Mines Ltd. $ 1,967,400 $ -- $ 1,967,400
Barrick Gold Corp. 4,235,000 -- 4,235,000
Newmont Mining Corp. 3,357,200 -- 3,357,200
------------ ------------ -------------
$ 9,559,600 $ -- $ 9,559,600
------------ ------------ -------------
Paper Packaging 0.2%
Packaging Corp of America $ -- $ 751,641 $ 751,641
------------ ------------ -------------
Total Materials $ 9,559,600 $ 7,835,760 $ 17,395,360
------------ ------------ -------------
Capital Goods 6.0%
Aerospace & Defense 1.4%
United Technologies Corp. $ 1,535,520 $ 3,111,091 $ 4,646,611
------------ ------------ -------------
Electrical Component & Equipment 1.7%
Emerson Electric Co. $ -- $ 4,221,803 $ 4,221,803
Rockwell International Corp. -- 1,353,505 1,353,505
------------ ------------ -------------
$ -- $ 5,575,308 $ 5,575,308
------------ ------------ -------------
Industrial Conglomerates 0.2%
3M Co. $ -- $ 671,732 $ 671,732
------------ ------------ -------------
Construction & Engineering 0.8%
Fluor Corp. $ 325,400 $ -- $ 325,400
Jacobs Engineering Group Inc. 2,165,520 -- 2,165,520
------------ ------------ -------------
$ 2,490,920 $ -- $ 2,490,920
------------ ------------ -------------
Industrial Machinery 1.4%
Caterpillar, Inc. $ 2,085,600 $ -- $ 2,085,600
Precision Castparts Corp. 560,580 -- 560,580
Deere & Co. 2,104,800 -- 2,104,800
------------ ------------ -------------
$ 4,750,980 $ -- $ 4,750,980
------------ ------------ -------------
Industrial Conglomerates 0.5%
General Electric Co. $ 1,414,500 $ -- $ 1,414,500
Textron Inc. 347,760 -- 347,760
------------ ------------ -------------
$ 1,762,260 $ -- $ 1,762,260
------------ ------------ -------------
Total Capital Goods $ 10,539,680 $ 9,358,131 $ 19,897,811
------------ ------------ --------------
Commercial Services & Supplies 0.5%
Commercial Printing 0.3%
R.R. Donnelly & Sons Co. $ -- $ 1,023,838 $ 1,023,838
------------ ------------ --------------
Data Processing Services 0.1%
MasterCard Inc. $ 488,300 $ -- $ 488,300
------------ ------------ --------------
Total Commercial Services & Supplies $ 488,300 $ 1,023,838 $ 1,512,138
------------ ------------ --------------
Transportation 1.4%
Airlines 0.1%
Delta Air Lines, Inc. $ -- $ 297,219 $ 297,219
------------ ------------ --------------
Railroads 1.4%
Burlington Northern Santa Fe Corp. $ 1,874,340 $ -- $ 1,874,340
Union Pacific Corp. 2,638,080 -- 2,638,080
------------ ------------ --------------
$ 4,512,420 $ -- $ 4,512,420
------------ ------------ --------------
Total Transportation $ 4,512,420 $ 297,219 $ 4,809,639
------------ ------------ --------------
7
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
-- 19,376 19,376
-- 10,801 10,801
-- 64,284 64,284
20,000 -- 20,000
20,000 -- 20,000
30,000 -- 30,000
30,000 -- 30,000
-- 169,759 169,759
-- 38,095 38,095
-- 9,786 9,786
-- 37,719 37,719
-- 16,310 16,310
10,000 -- 10,000
-- 56,595 56,595
-- 49,288 49,288
40,000 -- 40,000
-- 50,410 50,410
40,000 84,860 124,860
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- --------------
Automobiles & Components 0.2%
Auto Parts & Equipment 0.2%
Johnson Controls, Inc. $ -- $ 584,380 $ 584,380
------------ ------------ ------------
Total Automobiles & Components $ -- $ 584,380 $ 584,380
------------ ------------ ------------
Consumer Durables & Apparel 0.2%
Household Appliances 0.2%
Snap-On, Inc. $ -- $ 607,988 $ 607,988
------------ ------------ ------------
Total Consumer Durables & Apparel $ -- $ 607,988 $ 607,988
------------ ------------ ------------
Consumer Services 2.1%
Restaurants 1.2%
McDonald's Corp. $ -- $ 3,843,540 $ 3,843,540
------------ ------------ ------------
General Merchandise Stores 1.0%
Lowe's Companies, Inc. $ 406,400 $ -- $ 406,400
Starbucks Corp. 293,800 -- 293,800
The Home Depot, Inc. 714,900 -- 714,900
Wal-Mart Stores, Inc. 1,758,600 -- 1,758,600
------------ ------------ ------------
$ 3,173,700 $ -- $ 3,173,700
------------ ------------ ------------
Total Consumer Services $ 3,173,700 $ 3,843,540 $ 7,017,240
------------ ------------ ------------
Media 1.3%
Movies & Entertainment 1.2%
Regal Entertainment Group $ -- $ 2,826,487 $ 2,826,487
Viacom, Inc. (Class B) -- 1,063,993 1,063,993
------------ ------------ ------------
$ -- $ 3,890,480 $ 3,890,480
------------ ------------ ------------
Publishing 0.1%
McGraw-Hill Co., Inc. $ -- $ 397,997 $ 397,997
------------ ------------ ------------
Total Media $ -- $ 4,288,477 $ 4,288,477
------------ ------------ ------------
Retailing 0.7%
Department Stores 0.5%
J.C. Penney Co., Inc. $ -- $ 1,162,877 $ 1,162,877
Nordstrom, Inc. -- 468,749 468,749
------------ ------------ ------------
$ -- $ 1,631,626 $ 1,631,626
------------ ------------ ------------
Apparel 0.2%
Nike, Inc. $ 586,800 $ -- $ 586,800
------------ ------------ ------------
Total Retailing $ 586,800 $ 1,631,626 $ 2,218,426
------------ ------------ ------------
Food & Drug Retailing 1.1%
Drug Retail 1.1%
CVS Corp. $ -- $ 2,065,718 $ 2,065,718
Walgreen Co. -- 1,692,550 1,692,550
------------ ------------ ------------
$ -- $ 3,758,268 $ 3,758,268
------------ ------------ ------------
Total Food & Drug Retailing $ -- $ 3,758,268 $ 3,758,268
------------ ------------ ------------
Food, Beverage & Tobacco 4.0%
Tobacco 3.2%
Altria Group, Inc. $ 814,000 $ -- $ 814,000
Lorillard, Inc. -- 3,383,015 3,383,015
Phillip Morris International 2,066,000 4,383,019 6,449,019
------------ ------------ ------------
$ 2,880,000 $ 7,766,034 $ 10,646,034
------------ ------------ ------------
8
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
14,000 -- 14,000
20,000 -- 20,000
28,000 30,322 58,322
-- 34,525 34,525
-- 37,216 37,216
10,000 -- 10,000
6,000 -- 6,000
16,000 -- 16,000
24,000 -- 24,000
34,000 54,199 88,199
-- 129,764 129,764
16,000 61,611 77,611
24,000 -- 24,000
20,000 -- 20,000
10,000 10,000
32,000 -- 32,000
-- 100,640 100,640
-- 99,113 99,113
20,000 101,707 121,707
-- 7,465 7,465
5,000 20,167 25,167
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- ----------------
Agricultural Products 0.4%
Bunge Ltd. $ 1,384,880 $ -- $ 1,384,880
------------ ------------ -------------
Soft Drinks 0.4%
PepsiCo, Inc, $ 1,331,200 $ -- $ 1,331,200
------------ ------------ -------------
Total Food, Beverage & Tobacco $ 5,596,080 $ 7,766,034 $ 13,362,114
------------ ------------ -------------
Household & Personal Products 1.6%
Household Products 1.1%
Procter & Gamble Co. $ 1,833,440 $ 1,985,485 $ 3,818,925
------------ ------------ -------------
Personal Products 0.5%
Estee Lauder Co. $ -- $ 1,522,553 $ 1,522,553
------------ ------------ -------------
Total Household & Personal Products $ 1,833,440 $ 3,508,038 $ 5,341,478
------------ ------------ -------------
Health Care Equipment & Services 1.9%
Health Care Distributors & Services 0.8%
McKesson Corp. $ -- $ 2,083,724 $ 2,083,724
UnitedHealth Group Inc. 280,800 -- 280,800
WellPoint, Inc. 314,700 -- 314,700
------------ ------------ -------------
$ 595,500 $ 2,083,724 $ 2,679,224
------------ ------------ -------------
Biotechnology 1.1%
Celgene Corp. $ 1,207,840 $ -- $ 1,207,840
Genentech, Inc. 2,286,000 -- 2,286,000
------------ ------------ -------------
$ 3,493,840 $ -- $ 3,493,840
------------ ------------ -------------
Total Health Care Equipment & Services $ 4,089,340 $ 2,083,724 $ 6,173,064
------------ ------------ -------------
Pharmaceuticals & Biotechnology 7.0%
Pharmaceuticals 7.0%
Abbott Laboratories $ 1,915,560 $ 3,053,572 $ 4,969,132
Bristol-Myers Squibb Co. -- 2,740,616 2,740,616
Eli Lilly & Co. 753,760 2,902,494 3,656,254
Johnson & Johnson Co. 1,643,280 -- 1,643,280
Medtronic, Inc. 1,056,600 -- 1,056,600
Genzyme, Inc. 766,500 -- 766,500
Gilead Sciences, Inc. 1,727,360 -- 1,727,360
Schering-Plough Corp. -- 2,121,491 2,121,491
Teva Pharmaceutical Industries, Ltd. -- 4,444,227 4,444,227
------------ ------------ -------------
$ 7,863,060 $ 15,262,400 $ 23,125,460
------------ ------------ -------------
Total Pharmaceuticals & Biotechnology $ 7,863,060 $ 15,262,400 $ 23,125,460
------------ ------------ -------------
Banks 1.1%
Diversified Banks 1.1%
U.S. Bancorp $ 612,200 $ 3,113,251 $ 3,725,451
------------ ------------ -------------
Total Banks $ 612,200 $ 3,113,251 $ 3,725,451
------------ ------------ -------------
Diversified Financials 2.8%
Asset Management & Custody Banks 0.5%
Franklin Resources, Inc. $ -- $ 751,054 $ 751,054
The Bank of New York Mellon., Corp. 177,500 715,929 893,429
------------ ------------ -------------
$ 177,500 $ 1,466,983 $ 1,644,483
------------ ------------ -------------
9
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
-- 75,562 75,562
-- 19,797 19,797
2,000 525 2,525
32,000 -- 32,000
20,000 -- 20,000
7,000 -- 7,000
-- 2,679 2,679
10,000 11,221 21,221
20,000 -- 20,000
-- 35,894 35,894
90,000 96,519 186,519
-- 183,597 183,597
5,000 150,751 155,751
5,000 -- 5,000
30,000 -- 30,000
34,000 47,361 81,361
30,000 -- 30,000
12,000 -- 12,000
80,000 -- 80,000
10,000 -- 10,000
25,000 130,502 155,502
50,000 -- 50,000
20,000 -- 20,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- ----------------
Investment Banking & Brokerage 1.2%
Lazard, Ltd. $ -- $ 3,083,685 $ 3,083,685
Morgan Stanley -- 781,586 781,586
------------ ------------ ------------
$ -- $ 3,865,271 $ 3,865,271
------------ ------------ ------------
Specialized Finance 1.1%
CME Group, Inc. $ 720,260 $ 189,068 $ 909,328
Citigroup, Inc. 598,080 -- 598,080.00
American Express Co. 742,400 -- 742,400
The Goldman Sachs Group, Inc. 1,288,280 -- 1,288,280
Nymex Holdings, Inc. -- 219,624 219,624
------------ ------------ ------------
$ 3,349,020 $ 408,692 $ 3,757,712
------------ ------------ ------------
Total Diversified Financials $ 3,526,520 $ 5,740,946 $ 9,267,466
------------ ------------ ------------
Insurance 0.5%
Life & Health Insurance 0.5%
Aflac, Inc. $ 556,100 $ 624,000 $ 1,180,100
American International Group, Inc. 521,000 -- 521,000
------------ ------------ ------------
Total Insurance $ 1,077,100 $ 624,000 $ 1,701,100
------------ ------------ ------------
Software & Services 0.3%
Application Software 0.3%
Citrix Systems, Inc. $ -- $ 956,216 $ 956,216
------------ ------------ ------------
Total Software & Services $ -- $ 956,216 $ 956,216
------------ ------------ ------------
Technology Hardware & Equipment 7.4%
Communications Equipment 3.6%
Cisco Systems, Inc. $ 1,979,100 $ 2,122,453 $ 4,101,553
Corning, Inc. -- 3,673,776 3,673,776
Nokia Corp. (A.D.R.) 136,600 4,118,517 4,255,117
------------ ------------ ------------
$ 2,115,700 $ 9,914,746 $ 12,030,446
------------ ------------ ------------
Computer Hardware 3.2%
Apple Computer, Inc. $ 794,750 $ -- $ 794,750
Dell Inc. 737,100 -- 737,100
Hewlett-Packard Co. 1,523,200 2,121,773 3,644,973
IBM Corp. 3,839,400 -- 3,839,400
Research In Motion Ltd. 1,473,840 -- 1,473,840
------------ ------------ ------------
$ 8,368,290 $ 2,121,773 $ 10,490,063
------------ ------------ ------------
Systems Software 0.6%
Oracle Corp. $ 1,722,400 $ -- $ 1,722,400
Microsoft Corp. 257,200 -- 257,200
------------ ------------ ------------
$ 1,979,600 $ -- $ 1,979,600
------------ ------------ ------------
Total Technology Hardware & Equipment $ 12,463,590 $ 12,036,519 $ 24,500,109
------------ ------------ ------------
Semiconductors 1.4%
Intel Corp. $ 554,750 $ 2,895,839 $ 3,450,589
Applied Materials, Inc. 866,000 -- 866,000
Texas Instruments Inc. 487,600 -- 487,600
------------ ------------ ------------
Total Semiconductors $ 1,908,350 $ 2,895,839 $ 4,804,189
------------ ------------ ------------
10
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- -------------- -------------- -------------- ----------
-- 81,805 81,805
30,000 -- 30,000
20,000 32,160 52,160
-- 189,268 189,268
5,000 -- 5,000
-- 12,175 12,175
Principal Principal Principal
Amount Amount Amount
($) ($) ($)
------------ ------------ ------------
-- 200,000 200,000 5.78
-- 8,676 8,676
-- 200,000 200,000
-- 325,000 325,000 2.56
-- 245,608 245,608
-- 60,000 60,000 2.90
-- 169,457 169,457
-- 295,627 295,627
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- ----------------
Telecommunication Services 2.7%
Integrated Telecommunication Services 2.0%
Frontier Communications Corp. $ -- $ 945,666 $ 945,666
Qualcomm, Inc. 1,660,200 -- 1,660,200
Verizon Communications, Inc. 680,800 1,094,726 1,775,526
Windstream Corp. -- 2,256,075 2,256,075
------------ ------------ -------------
$ 2,341,000 $ 4,296,467 $ 6,637,467
------------ ------------ -------------
Internet 0.7%
Google, Inc. $ 2,368,750 $ -- $ 2,368,750
------------ ------------ -------------
Total Telecommunication Services $ 4,709,750 $ 4,296,467 $ 9,006,217
------------ ------------ -------------
Utilities 0.2%
Gas Utilities 0.2%
Questar Corp. $ -- $ 643,813 $ 643,813
------------ ------------ -------------
Total Utilities $ -- $ 643,813 $ 643,813
------------ ------------ -------------
TOTAL COMMON STOCKS $ 98,424,450 $ 99,781,476 $ 198,205,926
------------ ------------ -------------
ASSET BACKED SECURITIES 0.5%
Energy 0.1%
Oil & Gas Equipment & Services 0.1%
Sevan Marine ASA, Floating Rate Note, 5/14/13 $ -- $ 182,000 $ 182,000
------------ ------------ -------------
Total Energy $ -- $ 182,000 $ 182,000
------------ ------------ -------------
Transportation 0.0%
Airlines 0.0%
Continental Airlines, 6.648%, 9/15/17 $ -- $ 7,895 $ 7,895
------------ ------------ -------------
Total Transportation $ -- $ 7,895 $ 7,895
------------ ------------ -------------
Food & Drug Retailing 0.0%
Food Retail 0.0%
Dominos Pizza Master Issuer LLC, 7.629%,
4/25/37 $ -- $ 145,000 $ 145,000
------------ ------------ -------------
Total Food & Drug Retailing $ -- $ 145,000 $ 145,000
------------ ------------ -------------
Banks 0.1%
Thrifts & Mortgage Finance 0.1%
Carrington Mortgage, Floating Rate Note, 10/25/36 $ -- $ 297,739 $ 297,739
Local Insight Media Finance, LLC, 5.88%, 10/23/37 -- 195,944 195,944
------------ ------------ -------------
$ -- $ 493,683 $ 493,683
------------ ------------ -------------
Total Banks $ -- $ 493,683 $ 493,683
------------ ------------ -------------
Diversified Financials 0.2%
Diversified Financial Services 0.2%
Asset Backed Securities Corp., Floating Rate Note,
4/25/35 $ -- $ 52,563 $ 52,563
PF Export Receivable Master Trust, 6.436%, 6/1/15 -- 167,949 167,949
Power Receivables Finance, 6.29%, 1/1/12 -- 302,627 302,627
$ -- $ 523,139 $ 523,139
------------ ------------ -------------
Total Diversified Financials $ -- $ 523,139 $ 523,139
------------ ------------ -------------
11
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
-- 224,466 224,466
-- 123,400 123,400
-- 350,000 350,000
-- 512,299 512,299
-- 543,277 543,277 5.21
-- 140,000 140,000
-- 411,751 411,751
-- 74,526 74,526
-- 70,858 70,858
-- 418,964 418,964
-- 173,400 173,400
-- 381,638 381,638
-- 200,528 200,528
-- 362,026 362,026
500,000 -- 500,000
-- 160,000 160,000
-- 25,000 25,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- -------------- --------------
Utilities 0.1%
Electric Utilities 0.1%
FPL Energy America Wind LLC, 6.639%, 6/20/23 $ -- $ 230,933 $ 230,933
FPL Energy Wind Funding, 6.876%, 6/27/17 -- 124,017 124,017
------------ ------------ ------------
$ -- $ 354,950 $ 354,950
------------ ------------ ------------
Total Utilities $ -- $ 354,950 $ 354,950
------------ ------------ ------------
TOTAL ASSET BACKED SECURITIES $ -- $ 1,706,667 $ 1,706,667
------------ ------------ ------------
COLLATERALIZED MORTGAGE OBLIGATIONS 1.1%
Materials 0.1%
Forest Products 0.1%
T SRA R 2006-1 F, 7.5296%, 10/15/36 $ -- $ 267,969 $ 267,969
------------ ------------ ------------
Total Materials $ -- $ 267,969 $ 267,969
------------ ------------ ------------
Banks 0.3%
Thrifts & Mortgage Finance 0.3%
ABN Amro Mortgage Corp., 4.75%, 5/25/18 $ -- $ 503,214 $ 503,214
SARM 2004-12 7A1, Floating Rate Note, 2/25/34 -- 507,177 507,177
------------ ------------ ------------
$ -- $ 1,010,391 $ 1,010,391
------------ ------------ ------------
Total Banks $ -- $ 1,010,391 $ 1,010,391
------------ ------------ ------------
Diversified Financials 0.0%
Diversified Financial Services 0.0%
Global Signal, 7.036%, 2/15/36 $ -- $ 129,647 $ 129,647
------------ ------------ ------------
Total Diversified Financials $ -- $ 129,647 $ 129,647
------------ ------------ ------------
Government 0.6%
Government 0.6%
Fannie Mae, 5.45%, 12/25/20 $ -- $ 418,041 $ 418,041
Federal Home Loan Bank, 5.0%, 1/15/16 -- 75,318 75,318
Federal Home Loan Bank, 6.0%, 4/15/32 -- 73,305 73,305
Federal Home Loan Mortgage Corp., 5.5%,
12/15/20 -- 424,999 424,999
Federal Home Loan Mortgage Corp., 5.875%,
5/15/16 -- 177,139 177,139
Federal Home Loan Mortgage Corp., 6.0%,
12/15/21 -- 390,695 390,695
Freddie Mac, 5.5%, 6/15/32 -- 203,861 203,861
Freddie Mac, 6.1%, 9/15/18 -- 369,977 369,977
------------ ------------ ------------
$ -- $ 2,133,335 $ 2,133,335
------------ ------------ ------------
Total Government $ -- $ 2,133,335 $ 2,133,335
------------ ------------ ------------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS $ -- $ 3,541,342 $ 3,541,342
------------ ------------ ------------
CORPORATE BONDS 13.9%
Energy 0.7%
Integrated Oil & Gas 0.2%
ConocoPhillips, 4.750%, 10/15/2012 $ 506,224 $ -- $ 506,224
Occidental Petroleum, 6.75%, 1/15/12 -- 172,351 172,351
Petro-Canada, 4.0%, 7/15/13 -- 23,547 23,547
------------ ------------ ------------
$ 506,224 $ 195,898 $ 702,122
------------ ------------ ------------
12
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ---------- ------------ ----------
-- 200,000 200,000
-- 175,000 175,000
-- 65,000 65,000
-- 92,610 92,610
-- 45,000 45,000
-- 90,000 90,000
-- 125,000 125,000
-- 320,000 320,000
-- 400,000 400,000 7.00
-- 150,000 150,000
-- 300,000 300,000
-- 425,000 425,000
-- 30,000 30,000
-- 230,000 230,000
-- 70,000 70,000
-- 25,000 25,000
-- 80,000 80,000
1,000,000 -- 1,000,000
-- 157,505 157,505
-- 145,000 145,000
-- 120,000 120,000
-- 250,000 250,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- ---------------
Oil & Gas Equipment & Services 0.1%
Weatherford International, Inc., 6.625%, 11/15/11 $ -- $ 208,964 $ 208,964
----------- ------------ ------------
Oil & Gas Exploration & Production 0.1%
Canadian National Resources, 5.9%, 2/1/18 $ -- $ 173,236 $ 173,236
Pemex Project Funding Master, 9.125%, 10/13/10 -- 70,135 70,135
Ras Laffan Liquefied Natural Gas, 3.437%, 9/15/09 -- 92,794 92,794
Southern Star Central Corp., 6.75%, 3/1/16 -- 42,300 42,300
----------- ------------ ------------
$ -- $ 378,465 $ 378,465
----------- ------------ ------------
Oil & Gas Refining & Marketing 0.0%
Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ -- $ 83,920 $ 83,920
----------- ------------ ------------
Oil & Gas Storage & Transportation 0.2%
Buckeye Partners, LP 6.05%, 1/15/18 $ -- $ 121,670 $ 121,670
NGPL Pipeco LLC, 6.514%, 12/15/12 -- 322,871 322,871
Teppco Partners LP, Floating Rate Note, 6/1/67 -- 345,699 345,699
----------- ------------ ------------
$ -- $ 790,240 $ 790,240
----------- ------------ ------------
Total Energy $ 506,224 $ 1,657,487 $ 2,163,711
----------- ------------ ------------
Materials 0.3%
Aluminum 0.0%
Novelis, Inc., 7.25%, 2/15/15 $ -- $ 138,750 $ 138,750
----------- ------------ ------------
Commodity Chemicals 0.1%
Nova Chemicals, Ltd., 6.5%, 1/15/12 $ -- $ 273,000 $ 273,000
----------- ------------ ------------
Diversified Metals & Mining 0.1%
Inco, Ltd., 7.2%, 9/15/32 $ -- $ 410,374 $ 410,374
----------- ------------ ------------
Fertilizers & Agricultural Chemicals 0.0%
Potash Corp., Saskatchewan, 4.875%, 3/1/13 $ -- $ 30,246 $ 30,246
----------- ------------ ------------
Steel 0.1%
Arcelormittal, 6.125%, 6/1/18 $ -- $ 220,870 $ 220,870
Commercial Metals Co., 7.35%, 8/15/18 -- 70,342 70,342
----------- ------------ ------------
$ -- $ 291,212 $ 291,212
----------- ------------ ------------
Total Materials $ -- $ 1,143,582 $ 1,143,582
----------- ------------ ------------
Capital Goods 0.8%
Aerospace & Defense 0.3%
Boeing Co., 5.125%, 2/15/13 $ -- $ 25,337 $ 25,337
Honeywell International, 7.5%, 3/1/10 -- 84,593 84,593
United Technologies Corp., 4.375%, 5/1/2010 1,020,277 -- 1,020,277
----------- ------------ ------------
$ 1,020,277 $ 109,930 $ 1,130,207
----------- ------------ ------------
Electrical Component & Equipment 0.0%
Orcal Geothermal, 6.21%, 12/30/20 $ -- $ 161,078 $ 161,078
----------- ------------ ------------
Industrial Conglomerates 0.2%
General Electric Capital Corp., 6.125%, 2/22/11 $ -- $ 151,356 $ 151,356
General Electric Capital Corp., 6.75%, 3/15/32 -- 120,412 120,412
General Electric Capital Corp., 5.625%, 9/15/17 -- 243,390 243,390
----------- ------------ ------------
$ -- $ 515,158 $ 515,158
----------- ------------ ------------
13
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ---------- ------------ ----------
-- 495,000 495,000
-- 300,000 300,000
-- 250,000 250,000
-- 500,000 500,000
-- 460,000 460,000
-- 80,000 80,000
-- 500,000 500,000
-- 345,000 345,000
-- 700,000 700,000
-- 125,000 125,000
-- 80,000 80,000
-- 400,000 400,000
-- 500,000 500,000
-- 512,000 512,000
-- 500,000 500,000
-- 435,000 435,000
1,000,000 -- 1,000,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- ---------------
Trading Companies & Distributors 0.2%
GATX Corp., 5.5%, 2/15/12 $ -- $ 493,685 $ 493,685
Glencore Funding LLC, 6.0%, 4/15/14 -- 287,138 287,138
------------ ------------ ------------
$ -- $ 780,823 $ 780,823
------------ ------------ ------------
Total Capital Goods $ 1,020,277 $ 1,566,989 $ 2,587,266
Commercial Services & Supplies 0.1%
Office Services & Supplies 0.1%
Pitney Bowes, Inc., 5.6%, 3/15/18 $ -- $ 243,111 $ 243,111
------------ ------------ ------------
Total Commercial Services & Supplies $ -- $ 243,111 $ 243,111
Transportation 0.1%
Airlines 0.1%
Southwest Airlines Co $ -- $ 451,522 $ 451,522
Total Transportation $ -- $ 451,522 $ 451,522
Automobiles & Components 0.2%
Auto Parts & Equipment 0.1%
TRW Automotive, Inc., 7.25%, 3/15/17 $ -- $ 395,600 $ 395,600
Automobile Manufacturers 0.1%
Ford Motor Co., 7.25%, 10/1/08 $ -- $ 78,800 $ 78,800
General Motors, 7.2%, 1/15/11 -- 336,250 336,250
$ -- $ 415,050 $ 415,050
Total Automobiles & Components $ -- $ 810,650 $ 810,650
Consumer Durables & Apparel 0.1%
Household Appliances 0.1%
Whirlpool Corp. 5.5%, 3/1/13 $ -- $ 334,561 $ 334,561
Total Consumer Durables & Apparel $ -- $ 334,561 $ 334,561
Consumer Services 0.2%
Restaurants 0.2%
McDonalds Corp., 5.75%, 3/1/12 $ -- $ 728,466 $ 728,466
Total Consumer Services $ -- $ 728,466 $ 728,466
Media 0.5%
Broadcasting & Cable TV 0.2%
British Sky Broadcasting, 6.1%, 2/15/18 $ -- $ 121,650 $ 121,650
Comcast Corp., 5.3%, 1/15/14 -- 77,346 77,346
Cox Communications, 7.125%, 10/1/12 -- 418,232 418,232
$ -- $ 617,228 $ 617,228
Media 0.2%
Comcast Cable Corp., 6.75%, 1/30/11 $ -- $ 517,228 $ 517,228
Publishing 0.2%
News America, Inc., 7.3%, 4/30/28 $ -- $ 520,377 $ 520,377
Total Media $
$ -- 1,654,833 $ 1,654,833
Retailing 0.6%
General Merchandise Stores 0.2%
Target Corp., 5.875%, 3/1/12 $ -- $ 517,429 $ 517,429
Specialty Stores 0.4%
Tanger Factory Outlet Centers, Inc., 6.15%,
11/15/15 $ -- $ 405,262 $ 405,262
The Home Depot, Inc., 5.200%, 3/1/2011 991,095 -- 991,095
------------ ------------- ------------
$ 991,095 $ 405,262 $ 1,396,357
------------ ------------- ------------
Total Retailing $ 991,095 $ 922,691 $ 1,913,786
------------ ------------- ------------
14
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ---------- ------------ ----------
-- 250,000 250,000
-- 35,000 35,000
1,000,000 -- 1,000,000
-- 35,000 35,000
-- 350,000 350,000
1,000,000 -- 1,000,000
-- 250,000 250,000
-- 450,000 450,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
-- 250,000 250,000
-- 120,000 120,000
-- 400,000 400,000
1,000,000 -- 1,000,000
-- 705,000 705,000
-- 500,000 500,000
-- 50,000 50,000
-- 450,000 450,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- --------------
Food, Beverage & Tobacco 0.5%
Agricultural Products 0.1%
Cargill, Inc. 5.2%, 1/22/13 $ -- $ 247,353 $ 247,353
------------ ------------ ------------
Brewers 0.0%
Miller Brewing Co., 5.5%, 8/15/13 $ -- $ 35,056 $ 35,056
------------ ------------ ------------
Food Distributors 0.3%
Kraft Foods, Inc., 4.125%, 11/12/2009 $ 996,495 $ -- $ 996,495
------------ ------------ ------------
Soft Drinks 0.1%
Bottling Group LLC, 5.0%, 11/15/13 $ -- $ 35,341 $ 35,341
PepsiCo 4.65%, 2/15/13 -- 355,415 355,415
------------ ------------ ------------
$ -- $ 390,756 $ 390,756
------------ ------------ ------------
Total Food, Beverage & Tobacco $ 996,495 $ 673,165 $ 1,669,660
------------ ------------ ------------
Household & Personal Products 0.3%
Household Products 0.3%
The Procter & Gamble Co., 6.875% 9/15/2009 $ 1,039,733 $ -- $ 1,039,733
------------ ------------ ------------
Total Household & Personal Products $ 1,039,733 $ -- $ 1,039,733
------------ ------------ ------------
Health Care Equipment & Services 0.1%
Managed Health Care 0.1%
United Health Group, 4.875%, 2/15/13 $ -- $ 242,156 $ 242,156
------------ ------------ ------------
Total Health Care Equipment & Services $ -- $ 242,156 $ 242,156
------------ ------------ ------------
Pharmaceuticals & Biotechnology 0.8%
Biotechnology 0.1%
Biogen IDEC, 6.0%, 3/1/13 $ -- $ 446,968 $ 446,968
------------ ------------ ------------
Pharmaceuticals 0.6%
Abbott Laboratories, Note, 3.500%, 2/17/2009 $ 1,001,207 $ -- $ 1,001,207
Johnson & Johnson, 5.150% 8/15/2012 1,045,406 -- 1,045,406
------------ ------------ ------------
$ 2,046,613 $ -- $ 2,046,613
------------ ------------ ------------
Total Pharmaceuticals & Biotechnology $ 2,046,613 $ 446,968 $ 2,493,581
------------ ------------ ------------
Banks 1.0%
Diversified Banks 0.5%
Kazkommerts International BV, 8.0%, 11/3/15 $ -- $ 191,250 $ 191,250
Korea Development Bank, 5.3%, 1/17/13 -- 118,721 118,721
TNK-BP Finance SA, 7.5%, 3/13/13 -- 387,000 387,000
Wells Fargo & Co., 5.125%, 9/1/2012 993,429 -- 993,429
------------ ------------ ------------
$ 993,429 $ 696,971 $ 1,690,400
------------ ------------ ------------
Regional Banks 0.4%
Barclays Plc, 6.05%, 12/4/17 $ -- $ 679,308 $ 679,308
Branch Banking & Trust Co., 4.875%, 1/15/13 -- 467,849 467,849
Keycorp, 6.5%, 5/14/13 -- 41,765 41,765
------------ ------------ ------------
$ -- $ 1,188,922 $ 1,188,922
------------ ------------ ------------
Thrifts & Mortgage Finance 0.1%
Sovereign Bancorp, 8.75%, 5/30/18 $ -- $ 392,155 $ 392,155
------------ ------------ ------------
Total Banks $ 993,429 $ 2,278,048 $ 3,271,477
------------ ------------ ------------
15
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ---------- ------------ ----------
-- 90,000 90,000
-- 200,000 200,000
-- 250,000 250,000
-- 265,000 265,000 4.00
500,000 -- 500,000
-- 200,000 200,000
1,000,000 -- 1,000,000
-- 300,000 300,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
500,000 -- 500,000
1,000,000 -- 1,000,000
-- 235,000 235,000
-- 250,000 250,000
-- 500,000 500,000 2.95
-- 247,899 247,899
1,000,000 -- 1,000,000
-- 100,000 100,000
-- 275,000 275,000
-- 100,000 100,000
-- 375,000 375,000
-- 100,000 100,000
-- 200,000 200,000
-- 480,000 480,000 7.00
-- 200,000 200,000
500,000 -- 500,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- --------------
Diversified Financials 3.4%
Asset Management & Custody Banks 0.1%
Eaton Vance Corp., 6.5%, 10/2/17 $ -- $ 90,521 $ 90,521
Mellon Funding Corp., 5.5%, 11/15/18 -- 182,492 182,492
------------ ------------ ------------
$ -- $ 273,013 $ 273,013
------------ ------------ ------------
Consumer Finance 0.1%
American Express Bank FSB, 5.5%, 4/16/13 $ -- $ 242,085 $ 242,085
SLM Corp., Floating Rate Note, 7/25/14 -- 183,059 183,059
------------ ------------ ------------
$ -- $ 425,144 $ 425,144
------------ ------------ ------------
Investment Banking & Brokerage 0.5%
Goldman Sachs Group, Inc., 4.500%, 6/15/2010 $ 500,958 $ -- $ 500,958
Merrill Lynch & Co. 5.45%, 2/5/13 -- 185,528 185,528
Morgan Stanley, 5.050% 1/21/2011 987,425 -- 987,425
------------ ------------ ------------
$ 1,488,383 $ 185,528 $ 1,673,911
------------ ------------ ------------
Diversified Financial Services 2.1%
Brascan Corp., 5.75%, 3/1/10 $ -- $ 295,883 $ 295,883
Caterpillar Financial Services, 3.700%, 8/15/2008 1,000,231 -- 1,000,231
Caterpillar Financial Services, 4.500% 6/15/2009 1,008,799 -- 1,008,799
Citigroup Inc, 4.625%, 8/3/2010 991,633 -- 991,633
General Electric Co., 4.875%, 10/21/2010 1,021,730 -- 1,021,730
General Electric Co., 5.500%, 11/15/2011 1,003,280 -- 1,003,280
IBM Intl Group, 5.050%, 10/22/2012 511,764 -- 511,764
John Deere Capital Corp., 4.875%, 3/16/2009 1,010,498 -- 1,010,498
WEA Finance LLC, 7.125%, 4/15/18 -- 238,995 238,995
------------ ------------ ------------
$ 6,547,935 $ 534,878 $ 7,082,813
------------ ------------ ------------
Specialized Finance 0.6%
CIT Group Inc., 7.625%, 11/30/12 $ -- $ 212,321 $ 212,321
Citigroup Inc., Floating Rate Note, 1/30/09 -- 478,258 478,258
Coso Geothermal Power, 7.0%, 7/15/26 -- 241,392 241,392
International Lease Finance, 5.450%, 3/24/2011 923,651 -- 923,651
Private Export Funding, 4.55%, 5/15/15 -- 100,182 100,182
------------ ------------ ------------
$ 923,651 $ 1,032,153 $ 1,955,804
------------ ------------ ------------
Total Diversified Financials $ 8,959,969 $ 2,450,716 $ 11,410,685
------------ ------------ ------------
Insurance 0.9%
Life & Health Insurance 0.1%
Prudential Financial, 5.15%, 1/15/13 $ -- $ 268,422 $ 268,422
------------ ------------ ------------
Multi-Line Insurance 0.5%
AFC Capital Trust I, 8.207%, 2/3/27 $ -- $ 82,490 $ 82,490
American General Finance, 6.9%, 12/15/17 -- 300,817 300,817
Hanover Insurance Group, 7.625%, 10/15/25 -- 85,696 85,696
International Lease, 6.375%, 3/25/13 -- 177,520 177,520
Liberty Mutual Group, 7.0%, 3/15/37 -- 390,091 390,091
Loew Corp., 5.25%, 3/15/16 -- 189,468 189,468
MetLife Inc, 5.375% 12/15/2012 493,150 -- 493,150
------------ ------------ ------------
$ 493,150 $ 1,226,082 $ 1,719,232
------------ ------------ ------------
16
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ---------- ------------ ----------
-- 125,000 125,000
-- 280,000 280,000
-- 60,000 60,000 14.00
-- 500,000 500,000
-- 100,000 100,000
-- 400,000 400,000
-- 700,000 700,000
-- 250,000 250,000
-- 500,000 500,000
500,000 -- 500,000
-- 185,000 185,000
500,000 -- 500,000
500,000 -- 500,000
1,000,000 -- 1,000,000
-- 500,000 500,000
1,000,000 -- 1,000,000
-- 250,000 250,000
-- 300,000 300,000
-- 225,000 225,000
1,000,000 -- 1,000,000
500,000 -- 500,000
1,000,000 -- 1,000,000
-- 225,000 225,000
-- 200,000 200,000
-- 125,000 125,000
-- 250,000 250,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- -----------------
Property & Casualty Insurance 0.3%
Berkshire Hathway, Inc., 5.0%, 8/15/13 $ -- $ 124,825 $ 124,825
Kingsway America, Inc., 7.5%, 2/1/14 -- 234,500 234,500
MBIA, Inc., Floating Rate Note, 1/15/33 -- 33,000 33,000
Ohio Casualty Corp., 7.3%, 6/15/14 -- 503,658 503,658
------------ ------------ --------------
$ -- $ 895,983 $ 895,983
------------ ------------ --------------
Reinsurance 0.0%
Platinum Underwriters HD, 7.5%, 6/1/17 $ -- $ 93,980 $ 93,980
------------ ------------ --------------
Total Insurance $ 493,150 $ 2,484,467 $ 2,977,617
------------ ------------ --------------
Real Estate 0.4%
Real Estate Investment Trusts 0.4%
Colonial Reality LP, 6.15%, 4/15/13 $ -- $ 371,881 $ 371,881
Health Care REIT, Inc., 6.2%, 6/1/16 -- 642,926 642,926
Trustreet Properties, Inc., 7.5%, 4/1/15 -- 267,460 267,460
------------ ------------ --------------
$ -- $ 1,282,267 $ 1,282,267
------------ ------------ --------------
Total Real Estate $ -- $ 1,282,267 $ 1,282,267
------------ ------------ --------------
Software & Services 0.3%
Data Processing & Outsourced Services 0.1%
First Data Corp., 9.875%, 9/24/15 $ -- $ 442,500 $ 442,500
------------ ------------ --------------
Systems Software 0.2%
Oracle Corp., 5.000% 1/15/2011 $ 510,791 $ -- $ 510,791
------------ ------------ --------------
Total Software & Services $ 510,791 $ 442,500 $ 953,291
------------ ------------ --------------
Semiconductors 0.1%
Semiconductor Equipment 0.1%
Klac Instruments Corp., 6.9%, 5/1/18 $ -- $ 180,756 $ 180,756
------------ ------------ --------------
Total Semiconductors $ -- $ 180,756 $ 180,756
------------ ------------ --------------
Telecommunication Services 1.2%
Integrated Telecommunication Services 1.2%
AT&T Inc, 5.100% 9/15/2014 $ 490,190 $ -- $ 490,190
AT&T Inc, 5.300% 11/15/2010 512,999 -- 512,999
AT&T Inc, 5.875%, 8/15/2012 1,029,968 -- 1,029,968
Intelsat Sub Holdings, 8.5%, 1/15/13 -- 495,000 495,000
New York Telephone Co, 6.125% 1/15/2010 1,022,870 -- 1,022,870
Telecom Italia Capital, 4.875%, 10/1/10 -- 248,146 248,146
Telecom Italia Capital, 5.25%, 11/15/13 -- 283,145 283,145
------------ ------------ --------------
$ 3,056,027 $ 1,026,291 $ 4,082,318
------------ ------------ --------------
Total Telecommunication Services $ 3,056,027 $ 1,026,291 $ 4,082,318
------------ ------------ --------------
Utilities 1.4%
Electric Utilities 1.0%
Commonwealth Edison, 6.15%, 9/15/17 $ -- $ 224,501 $ 224,501
Cons Edison NY, 3.850%, 6/15/2013 948,670 -- 948,670.00
Detroit Edison Co., 6.125%, 10/1/2010 517,621 -- 517,621.00
Duke Energy, 4.200%, 10/1/2008 1,001,020 -- 1,001,020.00
Entergy Gulf States, 5.7%, 6/1/15 -- 215,551 215,551
Israel Electric Corp., Ltd., 7.25%, 1/15/19 -- 198,102 198,102
Nevada Power Co., 6.5%, 8/1/18 -- 126,563 126,563
West Penn Power Co., 5.95%, 12/15/17 -- 247,666 247,666
------------ ------------ --------------
$ 2,467,311 $ 1,012,383 $ 3,479,694
------------ ------------ --------------
17
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ------------ ------------ ----------
-- 250,000 250,000
-- 300,000 300,000
-- 410,000 410,000
-- 100,000 100,000
-- 100,000 100,000
-- 250,000 250,000
500,000 -- 500,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
2,000,000 -- 2,000,000
-- 589,504 589,504
-- 1,092,920 1,092,920
-- 2,387,623 2,387,623
-- 1,099,017 1,099,017
-- 356,751 356,751
-- 168,583 168,583
-- 422,502 422,502 5.05
1,500,000 -- 1,500,000
1,000,000 -- 1,000,000
-- 941,544 941,544
-- 93,770 93,770
-- 630,994 630,994
1,000,000 2,535,403 3,535,403
-- 8,565,465 8,565,465
1,000,000 -- 1,000,000
-- 4,372,534 4,372,534
-- 541,168 541,168
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- ----------------
Gas Utilities 0.1%
Questar Pipeline Co., 5.83%, 2/1/18 $ -- $ 249,088 $ 249,088
------------ ------------ -------------
Multi-Utilities 0.2%
NSG Holdings LLC, 7.75%, 12/15/25 $ -- $ 294,000 $ 294,000
NY State Gas and Electric, 6.15%, 12/15/17 -- 406,203 406,203
Public Service of New Mexico, 7.95%, 5/15/18 -- 101,460 101,460
------------ ------------ -------------
$ -- $ 801,663 $ 801,663
------------ ------------ -------------
Total Utilities $ 2,467,311 $ 2,063,134 $ 4,530,445
------------ ------------ -------------
TOTAL CORPORATE BONDS $ 23,081,114 $ 23,084,360 $ 46,165,474
------------ ------------ -------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS 18.8%
Government 18.8%
Fannie Mae, 5.24%, 8/7/18 $ -- $ 101,429 $ 101,429
Federal Farm Credit Bank 4.875%, 1/17/17 -- 255,427 255,427
Federal Home Loan Bank 3.625%, 5/29/13 490,923 -- 490,923
Federal Home Loan Bank 6.210%, 6/2/09 1,027,165 -- 1,027,165
Federal Home Loan Bank 4.375%, 10/22/10 1,022,926 -- 1,022,926
Federal Home Loan Bank 4.750%, 1/19/16 1,019,860 -- 1,019,860
Federal Home Loan Bank 5.450%, 9/2/11 2,004,356 -- 2,004,356
Federal Home Loan Mortgage Corp., 4.5%, 12/1/20 -- 569,493 569,493
Federal Home Loan Mortgage Corp., 5.0%,
4/1/34-11/1/34 -- 1,043,067 1,043,067
Federal Home Loan Mortgage Corp., 5.5%,
10/1/16-12/1/35 -- 2,367,142 2,367,142
Federal Home Loan Mortgage Corp.., 6.0%,
1/1/33-5/1/36 -- 1,109,952 1,109,952
Federal Home Loan Mortgage Corp., 6.5%,
5/1/09-11/1/33 -- 369,166 369,166
Federal Home Loan Mortgage Corp., 7.0%, 10/1/46 -- 173,961 173,961
Federal Home Loan Mortgage Corp., Floating Rate
Note, 11/1/35 -- 427,945 427,945
Federal National Mortgage Association, 4.25%,
8/15/10 1,530,978 -- 1,530,978
Federal National Mortgage Association, 4.625%,
10/15/13 1,026,146 -- 1,026,146
Federal National Mortgage Association, 4.5%,
11/1/20-4/1/38 -- 885,327 885,327
Federal National Mortgage Association, 4.78%,
12/1/12 -- 93,595 93,595
Federal National Mortgage Association, 4.905%,
12/1/36 -- 636,720 636,720
Federal National Mortgage Association, 5.0%,
10/15/11-6/1/34 1,040,960 2,489,882 3,530,842
Federal National Mortgage Association, 5.5%,
8/1/14-12/1/37 -- 8,505,421 8,505,421
Federal National Mortgage Association, 5.625%,
8/22/11 1,001,543 -- 1,001,543
Federal National Mortgage Association, 6.0%,
1/1/29-12/1/37 -- 4,402,773 4,402,773
Federal National Mortgage Association, 6.5%,
12/1/21-10/1/32 -- 561,321 561,321
18
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------ ------------ ------------ ----------
-- 659,579 659,579
-- 38,990 38,990
-- 233,081 233,081
4,706,292 -- 4,706,292
-- 1,086,576 1,086,576
-- 1,007,313 1,007,313
-- 1,338,123 1,338,123
-- 8,662 8,662
-- 15,313 15,313
-- 2,188 2,188
-- 14,307 14,307
-- 256,325 256,325
-- 292,166 292,166
-- 396,968 396,968
-- 200,000 200,000
-- 80,000 80,000
-- 320,000 320,000
-- 100,000 100,000
-- 100,000 100,000
1,000,000 -- 1,000,000
1,000,000 -- 1,000,000
2,000,000 -- 2,000,000
6,000,000 -- 6,000,000
4,000,000 -- 4,000,000
2,000,000 -- 2,000,000
-- 110,000 110,000
-- 345,000 345,000
12,000 -- 12,000
160,000 -- 160,000
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- ----------------
Government (continued)
Federal National Mortgage Association, 7.0%,
10/1/19-1/1/36 $ -- $ 692,935 $ 692,935
Federal National Mortgage Association, 8.0%,
4/1/20-5/1/31 -- 42,237 42,237
Government National Mortgage Association, 4.5%,
1/15/35-4/15/35 -- 216,158 216,158
Government National Mortgage Association, 5.0 %,
2/15/18-8/15/19 4,704,235 -- 4,704,235
Government National Mortgage Association, 5.5%,
8/15/19-12/15/34 -- 1,086,118 1,086,118
Government National Mortgage Association, 6.0%,
8/15/13-9/15/34 -- 1,023,295 1,023,295
Government National Mortgage Association, 6.5%,
10/15/28-5/15/33 -- 1,385,804 1,385,804
Government National Mortgage Association, 7.0%,
4/15/28-8/15/28 -- 9,258 9,258
Government National Mortgage Association, 7.5%,
9/20/29-1/15/30 -- 16,412 16,412
Government National Mortgage Association,
7.75%, 11/15/29 -- 2,375 2,375
Government National Mortgage Association, 8.0%,
2/15/30 -- 15,647 15,647
Government National Mortgage Association II,
5.5%, 2/20/34 -- 253,905 253,905
Government National Mortgage Association II,
6.0%, 10/20/33 -- 296,451 296,451
Government National Mortgage Association II,
6.49%, 8/20/36 -- 408,752 408,752
U.S. Treasury Inflation Protected Security, 0.0%,
11/15/15 -- 151,250 151,250
U.S. Treasury Bonds, 3.875%, 5/15/18 -- 79,312 79,312
U.S. Treasury Bonds, 5.25%, 11/15/28 -- 344,250 344,250
U.S. Treasury Bonds, 7.125%, 2/15/23 -- 127,523 127,523
U.S. Treasury Notes, 4.25%, 11/15/14 -- 104,742 104,742
U.S. Treasury Notes, 3.5%, 12/15/09 1,016,562 -- 1,016,562
U.S. Treasury Notes, 4.375%, 8/15/2012 1,050,625 -- 1,050,625
U.S. Treasury Notes, 4.750%, 5/15/2014 2,148,124 -- 2,148,124
U.S. Treasury Notes, 4.500%, 11/30/11-2/15/16 6,335,157 -- 6,335,157
U.S. Treasury Notes, 4.875%, 8/15/2016 4,300,312 -- 4,300,312
U.S. Treasury Notes, 4.625%, 2/15/2017 2,107,656 -- 2,107,656
U.S. Treasury Notes, 5.375%, 2/15/31 -- 120,871 120,871
U.S. Treasury Notes, 5.5%, 8/15/28 -- 382,088 382,088
------------ ------------ -------------
$ 31,827,528 $ 30,752,004 $ 62,579,532
------------ ------------ -------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS $ 31,827,528 $ 30,752,004 $ 62,579,532
------------ ------------ -------------
EXCHANGE TRADED FUNDS 1.1%
iShares MSCI EAFE Index $ 796,680 $ -- $ 796,680
iShares Silver Trust 2,804,800 -- 2,804,800
------------ ------------ -------------
TOTAL EXCHANGE TRADED FUNDS $ 3,601,480 $ -- $ 3,601,480
------------ ------------ -------------
19
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ---------- ---------- ---------- ----------
-- 230,332 230,332
-- 172,404 172,404
-- 344,809 344,809
-- 172,404 172,404
-- 62,077 62,077
-- 172,547 172,547
998,893 -- 998,893
-- 172,352 172,352
-- 86,202 86,202
-- 62,013 62,013
-- 86,166 86,166
-- 310,328 310,328
-- 258,607 258,607
-- 103,443 103,443
-- 144,820 144,820
-- 54,704 54,704
-- 68,962 68,962
-- 127,809 127,809
-- 310,328 310,328
-- 14,815 14,815
-- 315,845 315,845
-- 86,202 86,202
-- 117,235 117,235
-- 172,404 172,404
-- 19,929 19,929
-- 16,528 16,528
-- 27,582 27,582
-- 172,406 172,406
-- 103,443 103,443
-- 103,497 103,497
-- 19,989 19,989
34,408 34,408
-- 310,328 310,328
-- 217,230 217,230
-- 103,443 103,443
-- 34,425 34,425
-- 53,108 53,108
-- 68,912 68,912
-- 171,274 171,274
-- 171,673 171,673
-- 338,602 338,602
-- 137,804 137,804
-- 309,666 309,666
-- 42,584 42,584
-- 274,558 274,558
-- 68,503 68,503
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
% of Balanced Balanced Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- ---------------
TEMPORARY CASH INVESTMENTS 19.8%
Securities Lending Collateral 16.1%
Certificates of Deposit: 1.7%
American Express, 2.72%, 8/8/08 $ -- $ 230,332 $ 230,332
Bank of America, 2.88%, 8/11/08 -- 172,404 172,404
CBA, 3.02%, 7/16/09 -- 344,809 344,809
Citibank, 2.85%, 7/29/08 -- 172,404 172,404
Banco Santander NY, 2.80%, 10/7/08 -- 62,077 62,077
Banco Santander NY, 3.09%, 12/22/08 -- 172,547 172,547
Bank of Ireland, 2.46%, 2/12/09 998,893 -- 998,893
Bank of Nova Scotia, 3.18%, 5/05/09 -- 172,352 172,352
Bank of Scotland NY, 2.72%, 8/15/08 -- 86,202 86,202
Bank of Scotland NY, 2.89%, 11/4/08 -- 62,013 62,013
Bank of Scotland NY, 3.03%, 9/26/08 -- 86,166 86,166
Barclays Bank, 3.18%, 5/27/09 -- 310,328 310,328
Bank Bovespa NY, 2.705%, 8/8/08 -- 258,607 258,607
Calyon NY, 2.85%, 8/25/08 -- 103,443 103,443
Calyon NY, 2.64%, 9/29/08 -- 144,820 144,820
Calyon NY, 2.69%, 01/16/09 -- 54,704 54,704
Deutsche Bank Financial, 2.72%, 8/4/08 -- 68,962 68,962
Dexia Bank NY, 3.37%, 09/29/08 -- 127,809 127,809
DNB NOR Bank ASA NY, 2.90%, 6/8/09 -- 310,328 310,328
Fortis, 3.11%, 09/30/08 -- 14,815 14,815
Intesa SanPaolo S.p.A., 2.72%, 5/22/09 -- 315,845 315,845
Lloyds Bank, 2.61%, 8/18/08 -- 86,202 86,202
Natixis, 2.83%, 8/4/08 -- 117,235 117,235
NORDEA NY, 2.81%, 8/29/08 -- 172,404 172,404
NORDEA NY, 2.72%, 4/9/09 -- 19,929 19,929
NORDEA NY, 2.73%, 12/01/08 -- 16,528 16,528
Rabobank Nederland NY, 2.37%, 8/29/08 -- 27,582 27,582
Royal Bank of Canada NY, 2.6%, 9/5/08 -- 172,406 172,406
Bank of Scotland NY, 2.7%, 8/1/08 -- 103,443 103,443
Bank of Scotland NY, 2.96%, 11/3/08 -- 103,497 103,497
Skandinavian Enskilda Bank NY, 3.18%, 09/22/08 -- 19,989 19,989
Skandinavian Enskilda Bank NY, 3.06% 02/13/09 -- 34,408 34,408
Svenska Bank NY, 2.70%, 7/08/09 -- 310,328 310,328
Toronto Dominion Bank NY, 2.77%, 9/5/08 -- 217,230 217,230
Toronto Dominion Bank NY, 2.75%, 11/5/08 -- 103,443 103,443
Wachovia, 3.62%,10/28/08 -- 34,425 34,425
------------ ------------ ------------
$ 998,893 $ 4,810,020 $ 5,808,913
------------ ------------ ------------
Commercial Paper: 0.9%
Bank of America, 2.70%, 8/26/08 $ -- $ 53,108 $ 53,108
Bank of America, 2.60%, 8/11/08 -- 68,912 68,912
Citigroup, 2.83%, 10/24/08 -- 171,274 171,274
HSBC Securities, Inc., 2.88%, 9/29/08 -- 171,673 171,673
Honda Finance Corp., 2.92%, 7/14/09 -- 338,602 338,602
ING Funding, 2.70%, 8/13/08 -- 137,804 137,804
Macquarie bank, 2.75%, 8/29/08 -- 309,666 309,666
PARFIN, 3.18%, 8/1/08 -- 42,584 42,584
Rabobank, 2.68%, 10/3/08 -- 274,558 274,558
Royal Bank of Scotland, 2.66%, 10/21/08 -- 68,503 68,503
20
Regions
Morgan Pioneer
Keegan Pioneer Classic
Select Classic Balanced
Balanced Balanced Fund
Fund Fund Combined Floating
Shares Shares Shares Rate (b)
- ------------- ------------ ------------- ----------
-- 68,939 68,939
-- 137,713 137,713
-- 68,912 68,912
-- 32,810 32,810
-- 155,135 155,135
-- 172,349 172,349
-- 63,761 63,761
-- 172,404 172,404
-- 310,328 310,328
-- 293,088 293,088
-- 517,213 517,213
-- 517,213 517,213
40,080,513 -- 40,080,513
-- 517,213 517,213
-- 8,117 8,117
-- 577,193 577,193
-- 2,413,663 2,413,663
-- 68,068 68,068
6,201,892 -- 6,201,892
6,201,892 -- 6,201,892
Regions
Morgan
Keegan Pioneer
Select Classic
% of Balanced Balanced
Pro Forma Fund Fund
Combined Market Market
Net Assets Value Value
------------ ----------------- ------------------
Commercial Paper (continued):
Societe Generale, 3.18%, 8/5/08 $ -- $ 68,939
Societe Generale, 3.18%, 8/22/08 -- 137,713
SVSS NY, 3.18%, 8/11/08 -- 68,912
Bank Bovespa NY, 2.79%, 3/12/09 -- 32,810
General Electric Capital Corp., 2.77%, 1/5/09 -- 155,135
General Electric Capital Corp., 2.82%, 3/16/09 -- 172,349
IBM, 3.18%, 2/13/09 -- 63,761
IBM, 3.18%, 6/26/09 -- 172,404
Met Life Global Funding, 3.16%, 6/12/09 -- 310,328
WestPac, 3.18%, 6/1/09 -- 293,088
------------- --------------
$ -- $ 3,112,123
------------- --------------
Mutual Funds: 12.5%
AIM Short Term Investment Trust, 2.47% $ -- $ 517,213
BlackRock Liquidity Money Market Fund, 3.18% -- 517,213
Bank of New York Institutional Cash Reserves Fund 40,080,513 --
Dreyfus Preferred Money Market Fund, 3.18% -- 517,213
------------- --------------
$ 40,080,513 $ 1,551,640
------------- --------------
Tri-party Repurchase Agreements: 0.9%
Barclays Capital Markets, 2.15% 8/1/08 $ -- $ 8,117
Deutsche Bank, 2.18% 8/1/08 -- 577,193
Lehman Brothers, 2.13% 8/1/08 -- 2,413,663
------------- --------------
$ -- $ 2,998,973
------------- --------------
Other: 0.0%
ABS CFAT 2008-A A1, 3.005%, 4/27/09 $ -- $ 68,068
------------- --------------
$ 41,079,406 $ 12,540,825
------------- --------------
Mutual Funds 3.7%
Fidelity Institutional Money Market Fund $ 6,201,892 $ --
Lehman Brothers Prime Money Market Fund 6,201,892 --
------------- --------------
$ 12,403,784 $ --
------------- --------------
TOTAL TEMPORARY CASH INVESTMENTS $ 53,483,190 $ 12,540,825
------------- --------------
TOTAL INVESTMENT IN SECURITIES 115.7% $ 210,417,762 $ 173,880,961
------------- --------------
OTHER ASSETS AND LIABILITIES (15.7)% $ (40,348,636) $ (11,834,808)
------------- --------------
TOTAL NET ASSETS 100.0% $ 170,069,126 $ 162,046,153
------------- --------------
TOTAL INVESTMENTS AT COST $ 181,651,154 $ 177,817,628
------------- --------------
(A.D.R.) American Depositary Receipt
(a) No adjustments are shown to the unaudited pro
forma combined schedule of investments due to
the fact that upon consummation of the merger no
securities would need to be sold in order for
Pioneer Classic Balanced Fund to comply with its
prospectus restrictions. The foregoing sentence
shall not restrict in any way the ability of the
investment adviser of the funds from buying or
selling securities in the normal course of such
fund's business and operations.
(b) Debt obligation originally issued at one coupon
which converts to a higher coupon at a specified
date. The rate shown is the rate at period end.
Regions Pioneer
Morgan Classic
Keegan Balanced
Select Fund
Balanced Combined
Fund Market
Shares Value
- ------------- ------------------
-- $ 68,939
-- 137,713
-- 68,912
-- 32,810
-- 155,135
-- 172,349
-- 63,761
-- 172,404
-- 310,328
-- 293,088
--------------
$ 3,112,123
--------------
-- $ 517,213
-- 517,213
40,080,513 40,080,513
-- 517,213
--------------
$ 41,632,153
--------------
-- $ 8,117
-- 577,193
-- 2,413,663
--------------
$ 2,998,973
--------------
-- $ 68,068
--------------
$ 53,620,231
--------------
6,201,892 $ 6,201,892
6,201,892 6,201,892
--------------
$ 12,403,784
--------------
$ 66,024,015
--------------
$ 384,298,723
--------------
$ (52,183,444)
--------------
$ 332,115,279
--------------
$ 359,468,782
--------------
21
Pro Forma Combined Statement of Assets & Liabilities for Regions Morgan Keegan
Select Balanced Fund and Pioneer Classic Balanced Fund(a)
As of 07/31/08
(unaudited)
Regions Morgan Pioneer
Keegan Select Classic
Balanced Balanced
Fund Fund
---------------- ---------------
ASSETS:
Investment in securities, at value (Cost $181,651,154 and
$177,817,628, respectively) $ 210,417,762 $ 173,880,961
Cash -- 162,778
Foreign currencies, at value (cost $0 and $12,825, respectively) -- 13,637
Receivables -
Investment securities sold -- 363,295
Fund shares sold -- 13,549
Dividends, interest and foreign taxes withheld 884,079 792,841
Due from Pioneer Investment Management, Inc. -- 26,719
Other -- 7,946
------------- -------------
Total assets $ 211,301,841 $ 175,261,726
------------- -------------
LIABILITIES:
Payables -
Investment securities purchased $ -- $ 326,234
Fund shares repurchased -- 203,103
Dividends -- 8,335
Upon return of securities loaned 41,079,406 12,540,825
Due to affiliates 142,402 60,497
Accrued expenses 10,907 76,579
------------- -------------
Total liabilities $ 41,232,715 $ 13,215,573
------------- -------------
NET ASSETS:
Paid-in capital $ 140,243,331 $ 176,281,659
Undistributed net investment income 437,951 201,870
Accumulated net realized gain (loss) on investments and foreign
currency transactions 621,236 (10,501,521)
Net unrealized gain (loss) on investments 28,766,608 (3,936,667)
Net unrealized gain on options and other assets and liabilities
denominated in foreign currencies -- 812
------------- -------------
Total net assets $ 170,069,126 $ 162,046,153
------------- -------------
NET ASSETS BY CLASS:
Class A $ 34,860,782 $ 111,667,460
============= =============
Class B $ -- $ 21,652,120
============= =============
Class C $ 3,758,718 $ 9,071,283
============= =============
Class I $ 131,449,626 $ --
============= =============
Class Y $ -- $ 19,655,290
============= =============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 2,251,121 12,908,309
============= =============
Class B -- 2,515,167
============= =============
Class C 242,543 1,050,596
============= =============
Class I 8,476,209 --
============= =============
Class Y -- 2,271,050
============= =============
NET ASSET VALUE PER SHARE:
Class A $ 15.49 $ 8.65
============= =============
Class B $ -- $ 8.61
============= =============
Class C $ 15.50 $ 8.63
============= =============
Class I $ 15.51 $ --
============= =============
Class Y $ -- $ 8.65
============= =============
MAXIMUM OFFERING PRICE:
Class A $ 16.39 $ 9.06
============= =============
Pioneer Pioneer
Independence Independence
Fund Fund
Pro Forma Pro Forma
Adjustments Combined
----------------------- ---------------
ASSETS:
Investment in securities, at value (Cost $181,651,154 and
$177,817,628, respectively) $384,298,723
Cash 162,778
Foreign currencies, at value (cost $0 and $12,825, respectively) 13,637
Receivables -
Investment securities sold 363,295
Fund shares sold 13,549
Dividends, interest and foreign taxes withheld 1,676,920
Due from Pioneer Investment Management, Inc. 26,719
Other 7,946
------------
Total assets $386,563,567
------------
LIABILITIES:
Payables -
Investment securities purchased $ 326,234
Fund shares repurchased 203,103
Dividends 8,335
Upon return of securities loaned 53,620,231
Due to affiliates 202,899
Accrued expenses 87,486
------------
Total liabilities 54,448,288
------------
NET ASSETS:
Paid-in capital $316,524,990
Undistributed net investment income 639,821
Accumulated net realized gain (loss) on investments and foreign
currency transactions (9,880,285)
Net unrealized gain (loss) on investments 24,829,941
Net unrealized gain on options and other assets and liabilities
denominated in foreign currencies 812
------------
Total net assets $332,115,279
------------
NET ASSETS BY CLASS:
Class A $146,528,242
============
Class B $ 21,652,120
============
Class C $ 12,830,001
============
Class I (131,449,626)(a) $ --
============ ============
Class Y 131,449,626(a) $151,104,916
============ ============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 1,779,027(a) 16,938,457
============ ============
Class B 2,515,167
============ ============
Class C 192,997(a) 1,486,136
============ ============
Class I (8,476,209)(a) --
============ ============
Class Y 15,196,449(a) 17,467,499
============ ============
NET ASSET VALUE PER SHARE:
Class A $ 8.65
============
Class B $ 8.61
============
Class C $ 8.63
============
Class I $ --
============
Class Y $ 8.65
============
MAXIMUM OFFERING PRICE:
Class A $ 9.06
============
(a) Class A, C and I shares of Regions Morgan Keegan Select Balanced Fund are
exchanged for Class A, C and Y shares of Pioneer Classic Balanced Fund,
respectively.
See accompanying notes to pro forma financial statements.
22
Pro Forma Statement of Operations
For the Year Ended July 31, 2008
(unaudited)
Regions Morgan
Keegan Select Pioneer
Balanced Classic Balanced
Fund Fund
---------------- ------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $6,095 and
$39,420, respectively) $ 1,922,199 $ 4,449,427
Interest 2,390,933 4,508,447
Income on securities loaned, net 160,761 47,790
------------ -------------
Total investment income $ 4,473,893 $ 9,005,664
------------ -------------
EXPENSES:
Management fees $ 1,308,260 $ 1,335,339
Transfer agent fees 85,181
Class A -- 375,947
Class B -- 89,322
Class C -- 33,535
Class Y -- 886
Shareholder service fees - Class A Shares 306,280 --
Shareholder service fees - Class C Shares 11,340 --
Distribution fees
Class A -- 359,413
Class B -- 265,894
Class C 34,018 109,919
Administrative fees 156,992 46,223
Custodian fees 37,389 29,038
Registration fees 20,223 61,418
Professional fees -- 66,421
Accounting fees 52,331 --
Legal fees 13,444 --
Audit fees 29,751 --
Printing expense 10,170 59,331
Fees and expenses of nonaffiliated trustees 4,398 3,812
Insurance premiums 9,426 --
Miscellaneous 8,873 23,639
------------ -------------
Total expenses $ 2,088,076 $ 2,860,137
Less management fees waived and expenses assumed by
Pioneer Investment Management, Inc. -- (211,060)
Less fees paid indirectly -- (14,495)
------------ -------------
Net expenses $ 2,088,076 $ 2,634,582
------------ -------------
Net investment income $ 2,385,817 $ 6,371,082
------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 8,195,249 $ (8,183,370)
Written options closed/expired 935,935 --
------------ -------------
$ 9,131,184 $ (8,183,370)
------------ -------------
Change in net unrealized gain or loss from:
Investments $ (5,794,143) $ (12,705,418)
Forward foreign currency contracts and other assets and
liabilities in foreign currencies -- 812
------------ -------------
$ (5,794,143) $ (12,704,606)
------------ -------------
Net gain (loss) on investments, options and foreign
currency transactions $ 3,337,041 $ (20,887,976)
------------ -------------
Net increase in net assets resulting from operations $ 5,722,858 $ (14,516,894)
============ =============
Pioneer Pioneer
Classic Balanced Classic Balanced
Fund Fund
Pro Forma Pro Forma
Adjustments Combined
-------------------- -----------------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $6,095 and
$39,420, respectively) $ 6,371,626
Interest 6,899,380
Income on securities loaned, net 208,551
-------------
Total investment income $ 13,479,557
-------------
EXPENSES:
Management fees $ (175,607)(b) $ 2,467,992
Transfer agent fees (85,181)(b) --
Class A 222,547(b) 598,494
Class B 89,322
Class C 10,805(b) 44,340
Class Y 41,211(b) 42,097
Shareholder service fees - Class A Shares (306,280)(b) --
Shareholder service fees - Class C Shares (11,340)(b) --
Distribution fees
Class A 305,786(b) 665,199
Class B 265,894
Class C 11,292(b) 155,229
Administrative fees (117,785)(b) 85,430
Custodian fees (17,677)(a) 48,750
Registration fees 14,978(c) 96,619
Professional fees 32,854(c) 99,275
Accounting fees (52,331)(a) --
Legal fees (13,444)(a) --
Audit fees (29,751)(a) --
Printing expense 20,337(a) 89,838
Fees and expenses of nonaffiliated trustees (878)(a) 7,332
Insurance premiums (9,426)(a) --
Miscellaneous 3,795(c) 36,307
----------- -------------
Total expenses (156,095) $ 4,792,118
Less management fees waived and expenses assumed by
Pioneer Investment Management, Inc. (35,607)(b) (246,667)
Less fees paid indirectly (14,495)
----------- -------------
Net expenses $ (191,702) $ 4,530,956
----------- -------------
Net investment income $ 191,702 $ 8,948,601
----------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 11,879
Written options closed/expired 935,935
-------------
$ 947,814
-------------
Change in net unrealized gain or loss from:
Investments $ (18,499,561)
Forward foreign currency contracts and other assets and
liabilities in foreign currencies 812
-------------
$ (18,498,749)
-------------
Net gain (loss) on investments, options and foreign
currency transactions $ (17,550,935)
----------- -------------
Net increase in net assets resulting from operations $ 191,702 $ (8,602,334)
=========== =============
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Expenses and expense limitations conformed to Pioneer Classic Balanced
Fund's contracts with affiliated parties.
(c) Reflects increase in expenses due to an increase in the combined average
net assets.
See accompanying notes to pro forma financial statements.
23
Pro Forma Notes to Combined Financial Statements for Regions Morgan Keegan
Select Balanced Fund and Pioneer Classic Balanced Fund
As of 07/31/08
(unaudited)
1. Description of the Fund
Pioneer Classic Balanced Fund (the "Fund"), is one of four portfolios
comprising Pioneer Series Trust IV, a Delaware statutory trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified, open-end management investment company. The Fund is the successor
to the AmSouth Balanced Fund. The Fund's investment objective is to seek
capital growth and current income through a diversified portfolio of equity
securities and bonds.
The Fund offers four classes of shares: Class A, Class B, Class C and
Class Y shares. Class C shares were first publicly offered on September 23,
2005. On December 10, 2006, as planned, Investor Class shares converted to
Class A shares. Each class of shares represents an interest in the same
portfolio of investments of the Fund and has equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distribution fees and have exclusive voting
rights with respect to the distribution plans that have been adopted by Class
A, Class B and Class C shareowners, respectively. There is no distribution plan
for Class Y shares.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related
notes, are presented to show the effect of the proposed merger of Regions
Morgan Keegan Select Balanced Fund (the "RMK Fund") with and into the Fund (the
"Merger"), as if such merger had taken place as of August 1, 2007.
Under the terms of an Agreement and Plan of Merger between these two
funds, the combination of the Fund and the RMK Fund will be treated as a
tax-free business combination and, accordingly, will be accounted for by a
method of accounting for tax-free mergers of investment companies. The Merger
will be accomplished by an acquisition of the net assets of the RMK Fund in
exchange for shares of the Fund at their net asset values. The accompanying
schedules of investments, statements of assets and liabilities and the related
statements of operations of the Fund and the RMK Fund have been combined as of
and for the most recent twelve months ended July 31, 2008. Following the
Merger, the Fund will be the accounting survivor. All related merger costs will
be borne by Pioneer Investment Management Inc. ("Pioneer"), the investment
adviser of the Fund, and Morgan Asset Management, Inc. ("MAM"), the investment
adviser to the RMK Fund.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of the Fund and the RMK Fund included
in their respective annual reports to shareowners dated July 31 and November
30, 2008, respectively. Adjustments have been made to expenses for Pioneer
affiliate contractual rates and duplicate services that would not have been
incurred if the Merger took place on August 1, 2007.
3. Security Valuation
Security transactions are recorded as of trade date. The net asset value
of the Fund is computed once daily, on each day the New York Stock Exchange
(the "NYSE") is open, as of the close of regular trading on the NYSE. In
computing the net asset value, debt securities are valued at prices supplied by
independent pricing services, which consider such factors as Treasury spreads,
yields, maturities and ratings. Valuations may be supplemented by dealers and
other sources, as required. Equity securities are valued at the last sale price
on the principal exchange where they are traded. Securities that have not
traded on the date of valuation, or securities for which sale prices are not
generally reported, are valued at the mean between the last bid and asked
prices. Securities for which market quotations are not readily available are
valued at their fair values as determined by, or under the direction of, the
Board of Trustees. Trading in foreign securities is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. The Fund may also use the fair value of a security
including a non-U.S. security when the closing market price on the principal
exchange where the security is traded no longer reflects the value of the
security. At July 31, 2008, there were no securities fair valued. Temporary
cash investments are valued at cost which approximates market value.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities where the ex dividend date may have passed
are recorded as soon as the Fund becomes aware of the ex-dividend data in the
exercise of reasonable diligence. Interest income is recorded on the accrual
basis. All discounts/premiums on debt securities are accreted/amortized into
interest income for financial reporting purposes.
24
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of
the Fund that would have been issued at July 31, 2008 in connection with the
proposed Merger. The number of shares assumed to be issued is equal to the net
assets of Regions Morgan Keegan Select Balanced Fund as of July 31, 2008,
divided by the net asset value of the Fund's shares as of July 31, 2008. The
pro forma number of shares outstanding, by class, for the combined Fund
consists of the following at July 31, 2008:
Shares of Additional Shares
The Fund Assumed Issued Total Outstanding Shares
Class of Shares Pre-Combination In Merger Post-Combination
Class A 12,908,309 4,030,148 16,938,457
Class B 2,515,167 -- 2,515,167
Class C 1,050,596 435,540 1,486,136
Class Y 2,271,050 15,196,449 17,467,499
5. Management Agreement
Pioneer, a wholly owned indirect subsidiary of UniCredit S.p.A., manages
the Fund's portfolio. Management fees are calculated daily at the annual rate
of 0.65% of the Fund's average daily net assets up to $1 billion; 0.60% of the
next $4 billion and 0.55% of the excess over $5 billion. The management fee was
equivalent to 0.65% of the average daily net assets for the period.
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce Fund expenses to 1.16%, 2.06% and 2.06% of the
average daily net assets attributable to Class A, Class B and Class C shares,
respectively. Class Y shares do not have an expense limitation. These expense
limitations are in effect through December 1, 2009 for Class A shares and
through December 1, 2008 for Class B and Class C shares. There can be no
assurance that Pioneer will extend the expense limitations beyond such time.
6. Federal Income Taxes
Each of the Fund and the RMK Fund has elected to be taxed as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). After the acquisition, it will continue to be the Fund's policy to
comply with the requirements of the Code applicable to regulated investment
companies and to distribute all of its taxable income and net realized capital
gains, if any, to its shareowners. Therefore, no federal income tax provision
is required.
The identified cost of investments for these funds is substantially the
same for both financial and federal income tax purposes. The cost of
investments will remain unchanged for the combined Fund.
25
Pro Forma Schedule of Investments for Regions Morgan Keegan Select Fixed Income
Fund and Pioneer Bond Fund(a)
As of 12/31/08
(unaudited)
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
-- 2,300,000 2,300,000
-- 2,570,000 2,570,000
-- 2,100,000 2,100,000
-- 2,800,000 2,800,000
-- 4,880 4,880
-- 153,800 153,800
-- 347,245 347,245
-- 4,535,000 4,535,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
CONVERTIBLE CORPORATE BONDS 0.79%
Consumer Services 0.20%
Casinos & Gaming 0.20%
Scientific Games Corp., 0.75%, 12/1/24 $ -- $ 1,992,375 $ 1,992,375
------------ ------------ --------------
Total Consumer Services $ -- $ 1,992,375 $ 1,992,375
------------ ------------ --------------
Health Care Equipment & Services 0.15%
Health Care Services 0.15%
Omnicare Inc., 3.25%, 12/15/35 $ -- $ 1,442,413 $ 1,442,413
------------ ------------ --------------
Total Health Care Equipment & Services $ -- $ 1,442,413 $ 1,442,413
------------ ------------ --------------
Banks 0.19%
Regional Banks 0.19%
National City Corp., 4.0%, 2/1/11 $ -- $ 1,871,625 $ 1,871,625
------------ ------------ --------------
Total Banks $ -- $ 1,871,625 $ 1,871,625
------------ ------------ --------------
Telecommunication Services 0.24%
Integrated Telecommunication Services 0.24%
Qwest Communications International, 3.5%,
11/15/25 $ -- $ 2,355,500 $ 2,355,500
------------ ------------ --------------
Total Telecommunication Services $ -- $ 2,355,500 $ 2,355,500
------------ ------------ --------------
TOTAL CONVERTIBLE CORPORATE BONDS $ -- $ 7,661,913 $ 7,661,913
------------ ------------ --------------
PREFERRED STOCKS 0.52%
Diversified Financials 0.33%
Diversified Financial Services 0.33%
Bank of America Corp., 7.25%, 12/31/49 $ -- $ 3,172,000 $ 3,172,000
------------ ------------ --------------
Total Diversified Financials $ -- $ 3,172,000 $ 3,172,000
------------ ------------ --------------
Insurance 0.19%
Life & Health Insurance 0.19%
Delphi Financial Group, 7.376%, 5/15/37 $ -- $ 1,853,290 $ 1,853,290
------------ ------------ --------------
Total Insurance $ -- $ 1,853,290 $ 1,853,290
------------ ------------ --------------
TOTAL PREFERRED STOCKS $ -- $ 5,025,290 $ 5,025,290
------------ ------------ --------------
ASSET BACKED SECURITIES 3.23%
Materials 0.03%
Steel 0.03%
CXHE 2006-A AV2, 3.358%, 6/25/36 $ -- $ 332,551 $ 332,551
------------ ------------ --------------
Total Materials $ -- $ 332,551 $ 332,551
------------ ------------ --------------
Consumer Services 0.30%
Restaurants--0.3 % 0.30%
Dunkin Brands Master Finance LLC, 8.28%,
6/20/31 $ -- $ 2,923,805 $ 2,923,805
------------ ------------ --------------
Total Consumer Services $ -- $ 2,923,805 $ 2,923,805
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
26
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
5,325,000 5,325,000
2,150,000 2,150,000 0.57
1,684,495 1,684,495 0.62
1,875,000 1,875,000 0.98
667,038 667,038
3,395,000 3,395,000 0.89
1,175,000 1,175,000 0.93
2,203,090 2,203,090
586,240 586,240
5,183,519 5,183,519
1,620,192 1,620,192 0.52
1,570,501 1,570,501 0.72
1,069,101 1,069,101 0.59
1,500,000 1,500,000 0.91
420,000 420,000 0.91
212,264 212,264 1.01
822,771 822,771 0.54
927,250 927,250 0.73
1,217,527 1,217,527 0.90
1,725,000 1,725,000 0.63
900,000 900,000 3.67
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Food & Drug Retailing 0.22%
Food Retail 0.22%
Dominos Pizza Master Issuer LLC, 7.629%,
4/25/37 $ -- $ 2,130,000 $ 2,130,000
------------ ------------ --------------
Total Food & Drug Retailing $ -- $ 2,130,000 $ 2,130,000
------------ ------------ --------------
Banks 1.92%
Thrifts & Mortgage Finance 1.92%
Carrington Mortgage, Floating Rate Note, 10/25/36 $ -- $ 1,824,303 $ 1,824,303
CMLTI 2006-WFH2 A2A, Floating Rate Note,
8/25/36 -- 1,253,752 1,253,752
Countrywide Asset Backed Certificates, Floating
Rate Note, 11/25/35 -- 1,617,285 1,617,285
Countrywide Asset-Backed, 5.069%, 2/25/36 -- 614,070 614,070
Countrywide Asset-Backed Certificates, Floating
Rate Note, 8/25/35 -- 3,100,976 3,100,976
Countrywide Asset-Backed Certificates, Floating
Rate Note, 10/25/35 -- 965,654 965,654
FBR Securitization T, 2.76188%, 9/25/35 -- 1,873,129 1,873,129
Lehman XS Trust., 3.3485%, 5/25/46 -- 577,649 577,649
Local Insight Media Finance LLC, 5.88%, 10/23/37 -- 3,881,970 3,881,970
Morgan Stanley Ixis Real Estate, Floating Rate
Note, 11/25/36 -- 1,535,915 1,535,915
SASC 2007-BC4 A3, Floating Rate Note, 11/25/37 -- 1,402,614 1,402,614
------------ ------------ --------------
$ -- $ 18,647,317 $ 18,647,317
------------ ------------ --------------
Total Banks $ -- $ 18,647,317 $ 18,647,317
------------ ------------ --------------
Diversified Financials 0.75%
Consumer Finance 0.22%
Nomura Home Equity Trust, Floating Rate Note,
3/25/36 $ -- $ 1,015,516 $ 1,015,516
RASC 2005-KS7 M1, Floating Rate Note, 8/25/35 -- 1,161,461 1,161,461
------------ ------------ --------------
$ -- $ 2,176,977 $ 2,176,977
------------ ------------ --------------
Diversified Financial Services 0.05%
Asset Backed Securities Corp., Floating Rate Note,
4/25/35 $ -- $ 348,179 $ 348,179
First Franklin Mortgage Loan Asset Backed
Certificates, Floating Rate Note, 9/24/34 -- 174,491 174,491
------------ ------------ --------------
$ -- $ 522,670 $ 522,670
------------ ------------ --------------
Investment Banking & Brokerage 0.40%
GSAMP Trust, Floating Rate Note, 1/25/37 $ -- $ 749,682 $ 749,682
GSAMP Trust, Floating Rate Note, 11/25/35 -- 853,433 853,433
GSAMP Trust, Floating Rate Note, 3/25/35 -- 1,119,864 1,119,864
MLMI 2006-AR1 A2C, Floating Rate Note, 3/25/37 -- 1,168,548 1,168,548
------------ ------------ --------------
$ -- $ 3,891,527 $ 3,891,527
------------ ------------ --------------
Specialized Finance 0.08%
SLMA 2004-10 A6B, Floating Rate Note, 4/27/26 $ -- $ 747,000 $ 747,000
------------ ------------ --------------
Total Diversified Financials $ -- $ 7,338,174 $ 7,338,174
------------ ------------ --------------
TOTAL ASSET BACKED SECURITIES $ -- $ 31,371,847 $ 31,371,847
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
27
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------- ------------- ----------
120,154,349 120,154,349
1,871,149 1,871,149
1,440,000 1,440,000
4,370,029 4,370,029
3,955,416 3,955,416
3,375,000 3,375,000
2,900,000 2,900,000
1,266,317 1,266,317 0.87
10,135,000 10,135,000
2,600,000 2,600,000
4,045,295 4,045,295
1,750,000 1,750,000
1,750,000 1,750,000
10,000,000 10,000,000
1,097,989 1,097,989
8,510,000 8,510,000 5.70
2,890,000 2,890,000 5.74
2,010,000 2,010,000
1,435,000 1,435,000
4,470,000 4,470,000
3,787,250 3,787,250
1,977,233 1,977,233
2,921,516 2,921,516 0.70
1,450,000 1,450,000
3,380,786 3,380,786
2,821,761 2,821,761
717,986 717,986
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
COLLATERALIZED MORTGAGE OBLIGATIONS 9.68%
Materials 0.12%
Steel 0.12%
MSDWC 2000-1345 X, 0.7259%, 9/3/15 $ -- $ 1,182,835 $ 1,182,835
------------ ------------ --------------
Total Materials $ -- $ 1,182,835 $ 1,182,835
------------ ------------ --------------
Banks 6.48%
Diversified Banks 0.11%
RALI 2005-QA10 A41, 5.7412%, 9/25/35 $ -- $ 1,034,287 $ 1,034,287
Thrifts & Mortgage Finance 6.37%
Bank of America Commercial Mortgage, Inc.,
4.877%, 7/10/42 $ -- $ 1,204,751 $ 1,204,751
Chase Mortgage Finance Corp., 5.5%, 5/25/37 -- 3,520,125 3,520,125
Countrywide Alternative Loan Trust, 6.0%, 6/25/35 -- 2,489,440 2,489,440
GMAC Commercial Mortgage Securities, Inc.,
4.864%, 12/10/41 -- 2,788,893 2,788,893
GS Mortgage Securities Corp., II, 7.12%, 11/18/29 -- 2,774,808 2,774,808
IMPAC CMB Trust, Floating Rate Note, 11/25/35 -- 627,333 627,333
JP Morgan Chase Commercial Mortgage Security
Corp., 6.065392%, 4/15/45 -- 8,085,265 8,085,265
JP Morgan Mortgage Trust, 4.5%, 8/25/19 -- 2,128,820 2,128,820
JP Morgan Mortgage Trust, 6.0%, 8/25/34 -- 3,557,332 3,557,332
JPMCC 2002-C3 B, 5.146%, 7/12/35 -- 1,570,207 1,570,207
JPMCC 2004-PNC1 A3, 5.299%, 6/12/41 -- 1,581,631 1,581,631
LB-UBS Commercial Mortgage, 5.372%, 9/15/39 -- 7,845,059 7,845,059
MASTR Asset Securitization Trust, 5.5% , 11/25/33 -- 962,769 962,769
SASC 2007 BHC1 A1, Floating Rate Note, 12/18/49 -- 2,830,171 2,830,171
SASC 2007 BHC1 A2, Floating Rate Note, 12/18/49 -- 958,989 958,989
SBA CMBS Trust, 6.709%, 11/15/36 -- 1,366,800 1,366,800
T SRA R 2006-1 B, 5.7467%, 10/15/36 -- 875,126 875,126
TSTAR 2006-1A A, 5.668%, 10/15/36 -- 3,589,445 3,589,445
Wachovia Bank Commercial Mortgage Trust,
4.803%, 10/15/41 -- 3,040,079 3,040,079
WAMU Mortgage Pass-Through Certificates, 4.5%,
8/25/18 -- 1,559,291 1,559,291
WAMU Mortgage Pass-Through Certificates,
Floating Rate Note, 4/25/45 -- 1,379,204 1,379,204
WBCMT 2003-C9 B, 5.109%, 12/15/35 -- 1,262,822 1,262,822
Wells Fargo Mortgage Backed Securities 5.0%,
11/25/20 -- 3,199,068 3,199,068
Wells Fargo Mortgage Backed Securities, 5.0%,
3/25/21 -- 2,049,304 2,049,304
Wells Fargo Mortgage Backed Securities, 5.25,
12/25/33 -- 742,978 742,978
------------ ------------ --------------
$ -- $ 61,989,710 $ 61,989,710
------------ ------------ --------------
Total Banks $ -- $ 63,023,997 $ 63,023,997
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
28
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
2,127,761 2,127,761
812,986 812,986
692,097 692,097
1,270,000 1,270,000
331,175 331,175 0.87
1,656,181 1,656,181 0.82
2,808,450 2,808,450
3,494,856 3,494,856
4,898,824 4,898,824
1,405,622 1,405,622
426,588 426,588
919,750 919,750 0.57
2,444,768 2,444,768
500,000 500,000
202,444 202,444
1,000,000 1,000,000
4,168,284 4,168,284
575,000 575,000
4,318,725 4,318,725
722,923 722,923
741,304 741,304
700,421 700,421
5,626 5,626
7,751 7,751
448,762 448,762
3,824,108 3,824,108
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Diversified Financials 2.05%
Diversified Financial Services 2.05%
CMSI 2006-1 3A1, 5.0%, 2/25/36 $ -- $ 1,612,040 $ 1,612,040
DSLA 2004-AR3 2A2A, 1.84375%, 7/19/44 509,019 -- 509,019
First Horizon Mortgage Pass- Through Trust, 5.0%,
3/25/18 -- 675,660 675,660
Global Signal, 7.036%, 2/15/36 -- 834,885 834,885
Impac Securities Assets Corp., Floating Rate Note,
11/25/34 -- 164,344 164,344
Impac Securities Assets Corp., Floating Rate Note,
5/25/36 -- 1,175,694 1,175,694
J.P. Morgan Alternative Loan Trust, 6.0%, 3/25/36 -- 2,059,179 2,059,179
MARM 2005-1 9A1, 5.1939%, 1/25/35 2,340,491 -- 2,340,491
Master Alternative Loans Trust, 6.0%, 7/25/34 -- 3,818,021 3,818,021
Morgan Stanley Capital I, 5.25%, 12/25/17 -- 1,376,675 1,376,675
Morgan Stanley Capital I, 7.0%, 7/25/33 -- 402,992 402,992
Residential Accredit Loans, Inc., Floating Rate
Note, 9/25/46 -- 726,051 726,051
Residential Funding Mtg Sec I, 5.5%, 11/25/35 -- 2,062,797 2,062,797
RFMSI 2004-S9 1A24, 4.6%, 1/15/14 403,511 -- 403,511
Salomon Brothers Mortgage Securities, 8.0%,
9/25/30 -- 152,529 152,529
SARM 2006-3 3A2, 5.75%, 4/25/36 162,869 -- 162,869
Structured 2005-1 5A, 5.16%, 2/25/35 1,065,830 -- 1,065,830
Tower 2004-2A F, 6.376%, 12/15/14 -- 434,700 434,700
------------ ------------ --------------
$ 4,481,720 $ 15,495,567 $ 19,977,287
------------ ------------ --------------
Total Diversified Financials $ 4,481,720 $ 15,495,567 $ 19,977,287
------------ ------------ --------------
Real Estate 0.43%
Mortgage Real Estate Investment Trust 0.43%
CS First Boston Mortgage Security, 3.5%, 7/25/18 $ -- $ 3,791,275 $ 3,791,275
CS First Boston Mortgage Security, 7.0%, 5/25/32 -- 409,923 409,923
------------ ------------ --------------
$ -- $ 4,201,198 $ 4,201,198
------------ ------------ --------------
Total Real Estate $ -- $ 4,201,198 $ 4,201,198
------------ ------------ --------------
Government 0.59%
Fannie Mae, 5.69%, 1/25/32 $ -- $ 755,877 $ 755,877
Federal Home Loan Bank, 6.0%, 4/15/32 -- 718,246 718,246
Federal National Mortgage Association, 10.3%,
4/25/19 -- 5,922 5,922
Federal National Mortgage Association, 10.3%,
4/25/19 -- 9,098 9,098
Freddie Mac, 5.0%, 8/15/35 -- 453,399 453,399
Freddie Mac, 6.1%, 9/15/18 -- 3,823,132 3,823,132
------------ ------------ --------------
$ -- $ 5,765,674 $ 5,765,674
------------ ------------ --------------
Total Government $ -- $ 5,765,674 $ 5,765,674
------------ ------------ --------------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS $ 4,481,720 $ 89,669,271 $ 94,150,991
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
29
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
990,000 990,000
45,000 45,000
1,600,000 1,600,000
1,275,000 1,275,000
1,000,000 1,000,000 0.00
2,180,000 2,180,000
2,181,573 2,181,573
1,605,000 1,605,000
2,475,000 2,475,000
435,000 435,000
1,535,000 1,535,000
1,150,000 1,150,000
3,250,000 3,250,000
2,915,000 2,915,000
2,700,000 2,700,000
3,885,000 3,885,000
1,895,000 1,895,000 7.20
2,290,000 2,290,000
2,000,000 2,000,000
2,260,000 2,260,000
2,965,000 2,965,000 5.88
4,510,000 4,510,000
45,000 45,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
CORPORATE BONDS 33.84%
Energy 2.56%
Integrated Oil & Gas 0.09%
Marathon Oil Corp. 5.9%, 3/15/18 $ -- $ 826,813 $ 826,813
Petro-Canada, 4.0%, 7/15/13 -- 38,588 38,588
------------ ------------ --------------
$ -- $ 865,401 $ 865,401
------------ ------------ --------------
Oil & Gas Drilling 0.25%
Transocean Sedco, 1.5%, 12/15/37 $ -- $ 1,296,000 $ 1,296,000
Transocean Sedco, 1.625%, 12/15/37 -- 1,110,844 1,110,844
------------ ------------ --------------
$ -- $ 2,406,844 $ 2,406,844
------------ ------------ --------------
Oil & Gas Equipment & Services 0.05%
Sevan Marine ASA, Floating Rate Note, 5/14/13 $ -- $ 500,900 $ 500,900
------------ ------------ --------------
Oil & Gas Exploration & Production 0.48%
Canadian National Resources, 5.9%, 2/1/18 $ -- $ 1,883,479 $ 1,883,479
Gazprom International SA, 7.201%, 2/1/20 -- 1,592,549 1,592,549
Ras Laffan LNG 3, 5.832%, 9/30/16 -- 1,194,842 1,194,842
------------ ------------ --------------
$ -- $ 4,670,870 $ 4,670,870
------------ ------------ --------------
Oil & Gas Refining & Marketing 0.22%
Spectra Energy Capital, 6.2%, 4/15/18 $ -- $ 2,147,681 $ 2,147,681
------------ ------------ --------------
Oil & Gas Storage & Transportation 1.47%
Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ -- $ 351,741 $ 351,741
Buckeye Partners LP, 6.05%, 1/15/18 -- 1,286,729 1,286,729
Holly Energy Partners LP, 6.25%, 3/1/15 -- 770,500 770,500
Kinder Morgan Energy 5.95%, 2/15/18 -- 2,773,761 2,773,761
NGPL Pipeco LLC, 6.514%, 12/15/12 -- 2,766,390 2,766,390
Plains All America Pipeline, 6.125%, 1/15/17 -- 2,147,016 2,147,016
Questar Pipeline Co., 5.83%, 2/1/18 -- 3,591,286 3,591,286
Southern Union Co., 7.2%, 11/1/66 -- 653,775 653,775
------------ ------------ --------------
$ -- $ 14,341,198 $ 14,341,198
------------ ------------ --------------
Total Energy $ -- $ 24,932,894 $ 24,932,894
------------ ------------ --------------
Materials 1.37%
Aluminum 0.14%
Novelis, Inc., 7.25%, 2/15/15 $ -- $ 1,328,200 $ 1,328,200
------------ ------------ --------------
Commodity Chemicals 0.09%
Nova Chemicals, Ltd., 6.5%, 1/15/12 $ -- $ 830,000 $ 830,000
------------ ------------ --------------
Construction Materials 0.12%
C8 Capital SPV, Ltd., 6.64%, 12/31/49 $ -- $ 1,145,820 $ 1,145,820
------------ ------------ --------------
Diversified Metals & Mining 0.20%
Freeport-McMoran Copper & Gold, Floating Rate
Note, 4/1/15 $ -- $ 1,956,900 $ 1,956,900
------------ ------------ --------------
Fertilizers & Agricultural Chemicals 0.45%
Agrium, Inc., 6.75%, 1/15/19 $ -- $ 4,317,188 $ 4,317,188
Potash Corp. Saskatchewan, 4.875%, 3/1/13 -- 42,611 42,611
------------ ------------ --------------
$ -- $ 4,359,799 $ 4,359,799
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
30
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
3,900,000 3,900,000
1,230,000 1,230,000
40,000 40,000
2,225,000 2,225,000 6.72
2,665,000 2,665,000
2,670,000 2,670,000
1,400,000 1,400,000
5,660,000 5,660,000
3,100,000 3,100,000
3,110,000 3,110,000
1,158,244 1,158,244
2,140,000 2,140,000
3,400,000 3,400,000
5,125,000 5,125,000
3,255,000 3,255,000
4,235,000 4,235,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Steel 0.38%
ArcelorMittal 6.125%, 6/1/18 $ -- $ 2,670,556 $ 2,670,556
Commercial Metals Co., 7.35%, 8/15/18 -- 984,868 984,868
------------ ------------ --------------
$ -- $ 3,655,424 $ 3,655,424
------------ ------------ --------------
Total Materials $ -- $ 13,276,143 $ 13,276,143
------------ ------------ --------------
Capital Goods 1.32%
Aerospace & Defense 0.00%
Boeing Co., 5.125%, 2/15/13 $ -- $ 39,961 $ 39,961
------------ ------------ --------------
Building Products 0.11%
C10 Capital SPV Ltd, Floating Rate Note, 12/31/49 $ -- $ 1,058,722 $ 1,058,722
------------ ------------ --------------
Electrical Component & Equipment 0.43%
Anixter International Corp., 5.95%, 3/1/15 $ -- $ 2,132,000 $ 2,132,000
Belden CDT, Inc., 7.0%, 3/15/17 -- 2,002,500 2,002,500
------------ ------------ --------------
$ -- $ 4,134,500 $ 4,134,500
------------ ------------ --------------
Diversified Machinery 0.14%
Ingersoll-Rand Global Holding Co., Ltd., 6.875%,
8/15/18 $ 1,338,847 $ -- $ 1,338,847
------------ ------------ --------------
Trading Companies & Distributors 0.65%
GATX Financial Corp., 6.0%, 2/15/18 $ -- $ 5,031,814 $ 5,031,814
Glencore Funding LLC, 6.0%, 4/15/14 -- 1,254,874 1,254,874
------------ ------------ --------------
$ -- $ 6,286,688 $ 6,286,688
------------ ------------ --------------
Total Capital Goods $ 1,338,847 $ 11,519,871 $ 12,858,718
------------ ------------ --------------
Commercial Services & Supplies 0.32%
Office Services & Supplies 0.32%
Pitney Bowes, Inc., 5.6%, 3/15/18 $ -- $ 3,083,316 $ 3,083,316
------------ ------------ --------------
Total Commercial Services & Supplies $ -- $ 3,083,316 $ 3,083,316
------------ ------------ --------------
Transportation 1.12%
Airlines 0.12%
Southwest Airlines Co., 7.67%, 1/2/14 $ -- $ 1,128,593 $ 1,128,593
------------ ------------ --------------
Railroads 1.01%
Burlington Sante Fe Corp., 5.75%, 3/15/08 $ -- $ 2,062,919 $ 2,062,919
Kansas City Southern Mexico, 7.625%, 12/1/13 -- 2,788,000 2,788,000
Union Pacific Corp., 5.7%, 8/15/18 -- 4,934,017 4,934,017
------------ ------------ --------------
$ -- $ 9,784,936 $ 9,784,936
------------ ------------ --------------
Total Transportation 1.12% $ -- $ 10,913,529 $ 10,913,529
Automobiles & Components 0.10%
Auto Parts & Equipment 0.10%
Lear Corp., 8.75%, 12/1/16 $ -- $ 943,950 $ 943,950
------------ ------------ --------------
Total Automobiles & Components $ -- $ 943,950 $ 943,950
------------ ------------ --------------
Consumer Durables & Apparel 0.34%
Household Appliances 0.34%
Whirlpool Corp., 5.5%, 3/1/13 $ -- $ 3,350,656 $ 3,350,656
------------ ------------ --------------
Total Consumer Durables & Apparel $ -- $ 3,350,656 $ 3,350,656
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
31
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
1,780,000 1,780,000
2,470,000 2,470,000
3,095,000 3,095,000
2,620,000 2,620,000
4,250,000 4,250,000
1,000,000 1,000,000
1,600,000 1,600,000
135,000 135,000
425,000 425,000
25,000 25,000
2,000,000 2,000,000
2,000,000 2,000,000
3,545,000 3,545,000
3,500,000 3,500,000
1,500,000 1,500,000
1,200,000 1,200,000
55,000 55,000
2,765,000 2,765,000
55,000 55,000
1,000,000 1,000,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Consumer Services 0.60%
Casinos & Gaming 0.01%
Station Casinos, Inc., 6.625%, 3/15/18 $ -- $ 102,350 $ 102,350
------------ ------------ --------------
Education Services 0.59%
President & Fellows of Harvard, 3.7%, 4/1/13 $ -- $ 2,436,532 $ 2,436,532
President & Fellows of Harvard, 6.3%, 10/1/37 -- 3,341,826 3,341,826
------------ ------------ --------------
$ -- $ 5,778,358 $ 5,778,358
------------ ------------ --------------
Total Consumer Services $ -- $ 5,880,708 $ 5,880,708
------------ ------------ --------------
Media 0.93%
Broadcasting 0.73%
Grupo Telivisa SA, 6.0%, 5/15/18 $ -- $ 2,203,158 $ 2,203,158
Intelsat Sub, 8.5%, 1/15/13 -- 3,931,250 3,931,250
Walt Disney Co., 4.5%, 12/15/13 1,006,597 -- 1,006,597
------------ ------------ --------------
$ 1,006,597 $ 6,134,408 $ 7,141,005
------------ ------------ --------------
Cable & Satellite 0.20%
British Sky Broadcasting, 6.1%, 2/15/18 $ -- $ 1,313,758 $ 1,313,758
Comcast Corp., 5.3%, 1/15/14 -- 126,243 126,243
Time Warner Cable, Inc., 8.75, 2/14/19 -- 462,117 462,117
------------ ------------ --------------
$ -- $ 1,902,118 $ 1,902,118
------------ ------------ --------------
Total Media $ 1,006,597 $ 8,036,526 $ 9,043,123
------------ ------------ --------------
Retailing 0.72%
Department Stores 0.41%
Nordstrom, Inc., 5.625%, 1/15/09 $ -- $ 25,017 $ 25,017
Target Corp., 5.375%, 5/1/17 1,819,378 -- 1,819,378
Wal-Mart Stores, Inc., 5.875%, 4/5/27 2,108,574 -- 2,108,574
------------ ------------ --------------
$ 3,927,952 $ 25,017 $ 3,952,969
------------ ------------ --------------
Specialty Stores 0.31%
Sally Holdings, 9.25%, 11/15/14 $ -- $ 3,048,700 $ 3,048,700
------------ ------------ --------------
Total Retailing $ 3,927,952 $ 3,073,717 $ 7,001,669
------------ ------------ --------------
Food, Beverage & Tobacco 1.12%
Agricultural Products 0.33%
Cargill Inc., 5.2%, 1/22/13 $ -- $ 3,206,333 $ 3,206,333
------------ ------------ --------------
Food 0.26%
Kellogg Co., 5.125%, 12/3/12 $ 1,249,578 $ -- $ 1,249,578
McDonald's Corp., 5.35%, 3/1/18 1,246,542 -- 1,246,542
------------ ------------ --------------
$ 2,496,120 $ -- $ 2,496,120
------------ ------------ --------------
Brewers 0.01%
Miller Brewing Co., 5.5%, 8/15/13 $ -- $ 51,281 $ 51,281
------------ ------------ --------------
Distillers & Vintners 0.27%
Constellation Brands, Inc., 8.375%, 12/15/14 $ -- $ 2,626,750 $ 2,626,750
------------ ------------ --------------
Soft Drinks 0.13%
Bottling Group LLC, 5.0%, 11/15/13 $ -- $ 53,723 $ 53,723
PepsiCo., Inc., 7.9%, 11/1/18 1,225,647 -- 1,225,647
------------ ------------ --------------
$ 1,225,647 $ 53,723 $ 1,279,370
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
32
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
1,535,000 1,535,000
1,250,000 1,250,000
3,005,000 3,005,000
3,275,000 3,275,000
5,570,000 5,570,000
3,515,000 3,515,000
3,520,000 3,520,000
2,235,000 2,235,000
1,870,000 1,870,000
3,000,000 3,000,000
4,500,000 4,500,000
1,190,000 1,190,000
7,000,000 7,000,000
2,000,000 2,000,000
930,000 930,000
2,505,000 2,505,000
1,435,000 1,435,000
1,473,000 1,473,000 8.25
2,755,000 2,755,000
2,000,000 -- 2,000,000
3,520,000 3,520,000
1,275,000 1,275,000
585,000 585,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Tobacco 0.13%
UST, Inc., 5.75%, 3/1/18 $ -- $ 1,259,785 $ 1,259,785
------------ ------------ --------------
Total Food, Beverage & Tobacco $ 3,721,767 $ 7,197,872 $ 10,919,639
------------ ------------ --------------
Household & Personal Products 0.13%
Personal Products 0.13%
Procter & Gamble Co., 4.6%, 1/15/14 $ 1,309,879 $ -- $ 1,309,879
------------ ------------ --------------
Total Household & Personal Products $ 1,309,879 $ -- $ 1,309,879
------------ ------------ --------------
Health Care Equipment & Services 0.56%
Health Care Facilities 0.24%
HCA, Inc., 9.625%, 11/15/16 $ -- $ 2,343,900 $ 2,343,900
------------ ------------ --------------
Managed Health Care 0.31%
United Health Group, 4.875%, 2/15/13 $ -- $ 3,057,619 $ 3,057,619
------------ ------------ --------------
Total Health Care Equipment & Services $ -- $ 5,401,519 $ 5,401,519
------------ ------------ --------------
Pharmaceuticals & Biotechnology 0.57%
Biotechnology 0.57%
Biogen Idec, Inc., 6.0%, 3/1/13 $ -- $ 5,509,215 $ 5,509,215
------------ ------------ --------------
Total Pharmaceuticals & Biotechnology $ -- $ 5,509,215 $ 5,509,215
------------ ------------ --------------
Banks 4.26%
Diversified Banks 0.90%
Barclays Plc, 6.05%, 12/4/17 $ -- $ 3,100,915 $ 3,100,915
Wachovia Corp., 5.75%, 6/15/17 -- 3,503,600 3,503,600
Wells Fargo Co., 4.375%, 1/31/13 -- 2,188,548 2,188,548
------------ ------------ --------------
$ -- $ 8,793,063 $ 8,793,063
------------ ------------ --------------
Regional Banks 3.36%
American Express Bank FSB, 5.5%, 4/16/13 $ -- $ 1,771,339 $ 1,771,339
Bank of America Corp., 7.8%, 2/15/10 3,073,620 -- 3,073,620
Branch Banking & Trust Co., 4.875%, 1/15/13 -- 4,239,279 4,239,279
Cobank, ACB, 7.875%, 4/16/18 -- 1,202,132 1,202,132
Countrywide, 5.5%, 4/25/35 4,887,449 -- 4,887,449
JP Morgan Chase & Co., 7.0%, 11/15/09 2,021,128 -- 2,021,128
Keycorp, 6.5%, 5/14/13 -- 857,355 857,355
Mellon Funding Corp., 5.5%, 11/15/18 -- 2,159,425 2,159,425
PNC Bank NA, 6.0%, 12/7/17 -- 1,426,126 1,426,126
PNC Funding Corp., Floating Rate Note, 5/29/49 -- 1,186,932 1,186,932
Sovereign Bancorp, 8.75%, 5/30/18 -- 2,721,761 2,721,761
Wachovia Corp., 5.75%, 6/15/17 1,990,682 -- 1,990,682
Wachovia Bank NA, 6.0%, 11/15/17 -- 3,397,948 3,397,948
Wells Fargo Capital, 9.75%, 12/29/49 -- 1,287,750 1,287,750
Zions Bancorp, 5.5%, 11/16/15 -- 413,717 413,717
------------ ------------ --------------
$ 11,972,879 $ 20,663,764 $ 32,636,643
------------ ------------ --------------
Total Banks $ 11,972,879 $ 29,456,827 $ 41,429,706
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
33
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
2,000,000 2,000,000
3,945,000 3,945,000
4,000,000 4,000,000
4,750,000 4,435,000 9,185,000
3,875,000 3,875,000
1,200,000 1,200,000
1,200,000 1,200,000
2,575,000 2,575,000
2,630,000 2,630,000
3,750,000 3,750,000
3,155,000 3,155,000 4.00
1,450,000 1,450,000 8.4
2,575,000 2,575,000
4,954,219 4,954,219
4,900,000 4,900,000
1,100,000 1,100,000
1,153,920 1,153,920
1,860,842 1,860,842
200,000 200,000
1,000,000 1,000,000
2,080,000 2,080,000
1,000,000 1,000,000
9,740,000 9,740,000 5.79
2,000,000 2,000,000
3,325,000 3,325,000
1,200,000 1,200,000
4,765,000 4,765,000
5,280,000 5,280,000
5,904,965 5,904,965
2,500,000 2,500,000
2,000,000 2,000,000
1,075,000 1,075,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Diversified Financials 7.97%
Asset Management & Custody Banks 0.98%
Bank of New York, 4.95%, 3/15/15 $ -- $ 1,918,438 $ 1,918,438
Eaton Vance Corp 6.5%, 10/2/17 -- 3,495,641 3,495,641
State Street Corp., 7.65%, 6/15/10 -- 4,161,760 4,161,760
------------ ------------ --------------
$ -- $ 9,575,839 $ 9,575,839
------------ ------------ --------------
Consumer Finance 2.19%
American General Finance, 6.9%, 12/15/17 $ 2,406,317 $ 1,919,348 $ 4,325,665
American Honda Finance, 6.7%, 10/1/13 -- 3,906,035 3,906,035
BP Capital Markets Plc, 5.25%, 11/7/13 1,252,723 -- 1,252,723
Caterpillar Financial, 7.9%, 12/15/18 1,381,378 -- 1,381,378
Caterpillar Financial, 7.05%, 10/1/18 -- 2,710,260 2,710,260
Ford Motor Credit Co., 5.7%, 1/15/10 -- 2,235,053 2,235,053
John Deere Capital Corp., 2.875%, 6/19/12 3,856,841 -- 3,856,841
SLM Corp., Floating Rate Note, 7/25/14 -- 1,590,846 1,590,846
------------ ------------ --------------
$ 8,897,259 $ 12,361,542 $ 21,258,801
------------ ------------ --------------
Diversified Financial Services 1.83%
C VAR, Floating Rate Note, Perpetual $ -- $ 957,421 $ 957,421
JP Morgan Chase & Co., 6.0%, 1/15/18 -- 2,717,974 2,717,974
JP Morgan Chase & Co., 4.9%, 2/25/35 3,789,799 -- 3,789,799
JPMorgan Chase & Co., 7.9%, 4/29/49 -- 4,075,967 4,075,967
Nationsbank Corp., 7.75%, 8/15/15 -- 1,124,927 1,124,927
PF Export Receivable Master Trust, 6.436%, 6/1/15 -- 1,142,381 1,142,381
Power Receivables Finance LLC, 6.29%, 1/1/12 -- 1,822,843 1,822,843
TNK-BP Finance SA, 6.625%, 3/20/17 -- 96,000 96,000
TNK-BP Finance SA, 6.625%, 3/20/17 -- 480,000 480,000
TNK-BP Finance SA, 7.5%, 7/18/16 -- 1,081,600 1,081,600
TNK-BP Finance SA, 7.875%, 3/13/18 -- 500,000 500,000
------------ ------------ --------------
$ 3,789,799 $ 13,999,113 $ 17,788,912
------------ ------------ --------------
Investment Banking & Brokerage 1.51%
Goldman Sachs Capital, Floating Rate Note.,
12/29/49 $ -- $ 3,744,280 $ 3,744,280
Goldman Sachs Group, Inc., 5.5%, 11/15/14 1,812,952 -- 1,812,952
Merrill Lynch & Co., 5.45%, 2/5/13 -- 3,196,143 3,196,143
Merrill Lynch & Co., 6.111%, 1/29/37 1,797,850 -- 1,797,850
Morgan Stanley Dean Witter, 6.625%, 4/1/18 -- 4,180,287 4,180,287
------------ ------------ --------------
$ 3,610,802 $ 11,120,710 $ 14,731,512
------------ ------------ --------------
Specialized Finance 1.45%
CIT Group, Inc., 7.625%, 11/30/12 $ -- $ 4,457,212 $ 4,457,212
Coso Geothermal Power, 7.0%, 7/15/26 -- 4,930,646 4,930,646
International Lease Finance Corp., 6.375%, 3/25/13 -- 1,698,240 1,698,240
National Rural Utilities Corp., 5.45%, 2/1/18 -- 1,775,818 1,775,818
National Rural Utilities Corp., 10.375%, 11/1/18 -- 1,258,189 1,258,189
------------ ------------ --------------
$ -- $ 14,120,105 $ 14,120,105
------------ ------------ --------------
Total Diversified Financials $ 16,297,860 $ 61,177,309 $ 77,475,169
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
34
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
2,800,000 2,800,000
4,620,000 4,620,000
3,035,000 3,035,000
650,000 650,000 10.75
2,650,000 2,650,000
3,742,000 3,742,000
5,000,000 5,000,000
4,135,000 4,135,000
2,270,000 2,270,000 14.00
2,000,000 2,000,000
2,150,000 2,150,000
4,720,000 4,720,000
4,125,000 4,125,000
8,180,000 8,180,000
3,470,000 3,470,000
4,125,000 4,125,000
860,000 860,000
935,000 935,000
565,000 565,000
4,845,000 4,845,000
1,800,000 1,800,000
5,070,000 5,070,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Insurance 2.59%
Life & Health Insurance 0.23%
Prudential Financial, 5.15%, 1/15/13 $ -- $ 2,274,306 $ 2,274,306
------------ ------------ --------------
Multi-Line Insurance 0.80%
Liberty Mutual Group, 7.0%, 3/15/37 $ -- $ 2,203,195 $ 2,203,195
Liberty Mutual Group, 7.3%, 6/15/14 -- 2,841,868 2,841,868
Liberty Mutual Group, Floating Rate Note, 6/15/58 -- 357,500 357,500
Loew Corp., 5.25%, 3/15/16 -- 2,392,274 2,392,274
------------ ------------ --------------
$ -- $ 7,794,837 $ 7,794,837
------------ ------------ --------------
Property & Casualty Insurance 1.02%
Ambac Financial Group, Inc., 6.15%, 2/15/37 $ -- $ 374,174 $ 374,174
Hanover Insurance Group, 7.625%, 10/15/25 -- 3,000,000 3,000,000
Kingsway America, Inc., 7.5%, 2/1/14 -- 3,445,075 3,445,075
MBIA, Inc., Floating Rate Note, 1/15/33 -- 1,157,700 1,157,700
------------ ------------ --------------
Travelers Cos, Inc., 6.25%, 6/15/37 1,922,942 -- 1,922,942
------------ ------------ --------------
$ 1,922,942 $ 7,976,949 $ 9,899,891
------------ ------------ --------------
Reinsurance 0.54%
Berkshire Hathway, Inc., 5.0%, 8/15/13 $ -- $ 2,187,068 $ 2,187,068
Platinum Underwriters HD, 7.5%, 6/1/17 -- 3,063,936 3,063,936
------------ ------------ --------------
$ -- $ 5,251,004 $ 5,251,004
------------ ------------ --------------
Total Insurance $ 1,922,942 $ 23,297,096 $ 25,220,038
------------ ------------ --------------
Real Estate 1.44%
Diversified Real Estate Activities 0.30%
WEA Finance LLC, 7.125%, 4/15/18 $ -- $ 2,926,238 $ 2,926,238
------------ ------------ --------------
Real Estate Operating Companies 0.29%
Forest City Enterprises, 7.625%, 6/1/15 $ -- $ 2,863,000 $ 2,863,000
------------ ------------ --------------
Retail Real Estate Investment Trust 0.39%
Trustreet Properties, Inc., 7.5%, 4/1/15 $ -- $ 3,765,134 $ 3,765,134
------------ ------------ --------------
Specialized Real Estate Investment Trust 0.46%
Health Care, Inc., 6.2%, 6/1/16 $ -- $ 2,640,000 $ 2,640,000
Health Care, Inc., 6.0%, 11/15/13 -- 579,026 579,026
Health Care, Inc., 8.0%, 9/12/12 -- 801,136 801,136
Ventas Realty Capital Corp., 7.125%, 6/1/15 -- 442,113 442,113
------------ ------------ --------------
$ -- $ 4,462,275 $ 4,462,275
------------ ------------ --------------
Total Real Estate $ -- $ 14,016,647 $ 14,016,647
------------ ------------ --------------
Software & Services 0.49%
Data Processing & Outsourced Services 0.49%
First Data Corp., 9.875%, 9/24/15 $ -- $ 2,931,225 $ 2,931,225
Oracle Corp., 5.75%, 4/15/18 1,882,742 -- 1,882,742
------------ ------------ --------------
$ 1,882,742 $ 2,931,225 $ 4,813,967
------------ ------------ --------------
Total Software & Services $ 1,882,742 $ 2,931,225 $ 4,813,967
------------ ------------ --------------
Technology Hardware & Equipment 0.71%
Electronic Equipment & Instruments 0.36%
Agilent Technologies, Inc, 6.5%, 11/1/17 $ -- $ 3,485,133 $ 3,485,133
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
35
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
1,700,000 1,700,000
2,170,000 2,170,000
3,140,000 3,140,000
1,200,000 1,200,000
1,000,000 1,000,000
1,990,000 1,990,000
2,100,000 2,100,000
2,725,000 2,725,000
1,000,000 1,000,000
980,000 980,000
845,617 845,617
2,270,000 2,270,000
1,714,104 1,714,104
647,850 647,850
1,925,000 1,925,000
910,000 910,000
5,055,000 5,055,000
1,224,826 1,224,826
2,690,000 2,690,000
500,000 500,000
2,500,000 2,500,000
3,550,000 3,550,000
2,450,000 2,450,000
2,675,000 2,675,000
2,105,000 2,105,000
2,610,000 2,610,000
2,748,495 2,748,495
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Computers 0.18%
Hewlett-Packard Co. $ 1,725,643 $ -- $ 1,725,643
------------ ------------ --------------
Electronic Manufacturing Services 0.18%
Flextronics International, Ltd., 6.5%, 5/15/13 $ -- $ 1,714,300 $ 1,714,300
------------ ------------ --------------
Total Technology Hardware & Equipment $ 1,725,643 $ 5,199,433 $ 6,925,076
------------ ------------ --------------
Semiconductors 0.24%
Semiconductor Equipment 0.24%
Klac Instruments Corp., 6.9%, 5/1/18 $ -- $ 2,374,879 $ 2,374,879
------------ ------------ --------------
Total Semiconductors $ -- $ 2,374,879 $ 2,374,879
------------ ------------ --------------
Telecommunication Services 0.90%
Integrated Telecommunication Services 0.90%
AT&T, Inc., 5.6%, 5/15/18 $ 1,221,773 $ -- $ 1,221,773
Bellsouth Capital Funding Corp., 7.75%, 2/15/10 1,035,080 -- 1,035,080
Embarq Corp., 7.082%, 6/1/16 -- 1,532,300 1,532,300
Verizon Communications, Inc., 8.75%, 11/1/18 -- 2,463,766 2,463,766
Windstream Corp., 8.125%, 8/1/13 -- 2,507,000 2,507,000
------------ ------------ --------------
$ 2,256,853 $ 6,503,066 $ 8,759,919
------------ ------------ --------------
Total Telecommunication Services $ 2,256,853 $ 6,503,066 $ 8,759,919
------------ ------------ --------------
Utilities 3.47%
Electric Utilities 2.35%
Alabama Power Co., 4.85%, 12/15/12 $ 1,000,077 $ -- $ 1,000,077
Commonwealth Edison, 6.15%, 9/15/17 -- 911,251 911,251
Crocket Cogeneration, 5.869%, 3/30/25 -- 673,204 673,204
Entergy Gulf States, 5.7%, 6/1/15 -- 2,049,386 2,049,386
FPL Energy America Wind LLC, 6.639%, 6/20/23 -- 1,472,587 1,472,587
FPL Energy Wind Funding, 6.876%, 6/27/17 -- 608,169 608,169
Israel Electric Corp., 7.25%, 1/15/19 -- 1,795,351 1,795,351
Nevada Power Co., 6.5%, 8/1/18 -- 875,527 875,527
NY State Gas and Electric, 6.15%, 12/15/17 -- 4,600,535 4,600,535
Orcal Geothermal, 6.21%, 12/30/20 -- 1,375,896 1,375,896
Public Service of New Mexico, 7.95%, 5/15/18 -- 2,189,009 2,189,009
Southern California Edison Co., 5.75%, 3/15/14 -- 523,969 523,969
TXU Energy Co., 10.25%, 11/1/15 -- 1,775,000 1,775,000
West Penn Power Co., 5.95%, 12/15/17 -- 2,990,705 2,990,705
------------ ------------ --------------
$ 1,000,077 $ 21,840,589 $ 22,840,666
------------ ------------ --------------
Gas Utilities 0.17%
Nakilat, Inc., 6.267%, 12/31/33 $ -- $ 1,641,721 $ 1,641,721
------------ ------------ --------------
Independent Power Producer & Energy Traders 0.84%
Intergen NV, 9.0%, 6/30/17 $ -- $ 2,193,500 $ 2,193,500
Kiowa Power Partners LLC, 5.737%, 3/30/21 -- 1,611,083 1,611,083
Panoche Energy Center, 6.885%, 7/31/29 -- 2,209,730 2,209,730
Tenaska Alabama, 7.0%, 6/30/21 -- 2,155,744 2,155,744
------------ ------------ --------------
$ -- $ 8,170,057 $ 8,170,057
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
36
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ------------- ------------ ------------ ----------
1,365,000 1,365,000
1,460,000 1,460,000
140,000 140,000
80,000 80,000
31,021,407 31,021,407
8,000,000 8,729,261 16,729,261
9,197,922 9,197,922
3,000,000 3,000,000
4,946,622 18,173,957 23,120,579
1,523,165 1,523,165
23,424 23,424
6,485 6,485
2,055 2,055
4,454,057 4,454,057
21,379,013 21,379,013
159,106 159,106
10,022,577 25,611,268 35,633,845
12,415,665 68,210,681 80,626,346
8,058,711 23,812,927 31,871,638
2,324,317 2,324,317
2,426,116 2,426,116
8,491 8,491
47,297 47,297
2,237,316 2,237,316
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- ----------------
Multi-Utilities 0.11%
NSG Holdings LLC, 7.75%, 12/15/25 $ -- $ 1,064,700 $ 1,064,700
------------ ------------ --------------
Total Utilities $ 1,000,077 $ 32,717,067 $ 33,717,144
------------ ------------ --------------
TOTAL CORPORATE BONDS $ 48,364,038 $280,793,465 $ 329,157,503
------------ ------------ --------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS 43.00%
Banks 0.14%
Diversified Banks 0.14%
Korea Development Bank, 5.3%, 1/17/13 $ -- $ 1,329,184 $ 1,329,184
------------ ------------ --------------
Total Banks $ -- $ 1,329,184 $ 1,329,184
------------ ------------ --------------
Government 42.86%
Fannie Mae, 5.24%, 8/7/18 $ -- $ 147,632 $ 147,632
Federal Home Loan Bank, 4.0%, 3/30/12 855,314 -- 855,314
Federal Home Loan Mortgage Corp., 4.5%,
11/1/18-11/1/35 -- 31,656,294 31,656,294
Federal Home Loan Mortgage Corp., 5.0%,
10/1/20-6/1/35 8,081,636 8,966,417 17,048,053
Federal Home Loan Mortgage Corp., 5.5%,
12/1/18-11/1/35 -- 9,445,073 9,445,073
Federal Home Loan Mortgage Corp., 5.75%, 1/15/12 3,353,181 -- 3,353,181
Federal Home Loan Mortgage Corp., 6.0%,
5/1/17-6/1/35 5,101,402 18,767,566 23,868,968
Federal Home Loan Mortgage Corp., 6.5%,
3/1/13-11/1/33 -- 1,589,193 1,589,193
Federal Home Loan Mortgage Corp., 7.0%,
11/1/30-12/1/30 -- 24,617 24,617
Federal Home Loan Mortgage Corp., 8.0%, 8/1/31 -- 6,775 6,775
Federal Home Loan Mortgage Corp., 8.048%, 10/1/33 -- 2,108 2,108
Federal National Mortgage Association, 4.0%,
7/1/18-3/1/36 -- 4,492,458 4,492,458
Federal National Mortgage Association, 4.5%,
4/1/19-3/1/37 -- 21,860,964 21,860,964
Federal National Mortgage Association, 4.79%, 12/1/12 -- 161,902 161,902
Federal National Mortgage Association, 5.0%,
12/1/17-6/1/36 10,108,409 26,275,243 36,383,652
Federal National Mortgage Association, 5.5%,
9/1/17-6/1/36 12,749,894 70,086,511 82,836,405
Federal National Mortgage Association, 6.0%
6/1/16-12/1/35 8,310,465 24,575,305 32,885,770
Federal National Mortgage Association, 6.5%,
7/1/29-7/1/34 -- 2,428,397 2,428,397
Federal National Mortgage Association, 7.0%,
3/1/12-1/1/32 -- 2,535,806 2,535,806
Federal National Mortgage Association, 7.5%,
8/1/20-4/1/30 -- 8,997 8,997
Federal National Mortgage Association, 8.0%,
4/1/20-5/1/31 -- 50,105 50,105
Government National Mortgage Association,
4.1437%, 6/25/34 2,154,571 -- 2,154,571
See accompanying notes to pro forma financial statements.
37
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
18,201,697 18,201,697
3,339,716 3,339,716
5,689,817 23,284,692 28,974,509
25,228,431 25,228,431
12,048,321 12,048,321
1,598,477 1,598,477
172,448 172,448
12,104 12,104
13,833 13,833
358,262 358,262
97,057 97,057
18,330 18,330
2,398,859 2,398,859
2,203,193 2,203,193
115,471 115,471
494,843 494,843
1,420,000 1,420,000
1,500,000 1,500,000
3,750,000 3,750,000
14,572,000 14,572,000
500,000 500,000
3,517,440 3,517,440
1,750,000 1,750,000
625,000 625,000
1,500,000 1,500,000
2,500,000 2,500,000
2,000,000 2,000,000
3,000,000 3,000,000
3,000,000 3,000,000
840,000 840,000
450,000 450,000
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Government (continued)
Government National Mortgage Association, 4.5%,
7/15/33-6/15/38 $ -- $ 18,596,581 $ 18,596,581
Government National Mortgage Association, 5.0%,
10/15/18-4/15/35 -- 3,455,210 3,455,210
Government National Mortgage Association, 5.5%,
10/15/17-2/15/37 5,974,775 24,096,355 30,071,130
Government National Mortgage Association, 6.0%,
4/15/14-10/15/36 -- 26,150,866 26,150,866
Government National Mortgage Association, 6.5%,
8/15/11-7/15/35 -- 12,655,108 12,655,108
Government National Mortgage Association, 7.0%,
9/15/11-5/15/32 -- 1,689,087 1,689,087
Government National Mortgage Association, 7.5%,
8/15/11-12/15/31 -- 182,842 182,842
Government National Mortgage Association,
7.75%, 11/15/29-2/15/30 -- 12,819 12,819
Government National Mortgage Association, 8.0%,
5/15/10 -- 14,469 14,469
Government National Mortgage Association, I,
6.0%, 2/15/29 -- 371,638 371,638
Government National Mortgage Association, I,
7.0%, 12/15/30-3/15/31 -- 102,654 102,654
Government National Mortgage Association, I,
7.5%, 10/15/29 -- 19,425 19,425
Government National Mortgage Association, II,
4.5%, 12/20/34-1/20/35 -- 2,426,931 2,426,931
Government National Mortgage Association, II,
5.5%, 10/20/19-11/20/34 -- 2,281,250 2,281,250
Government National Mortgage Association, II,
6.5%, 2/20/29-4/20/29 -- 121,567 121,567
Government National Mortgage Association, II,
7.0%, 11/20/28-12/20/30 -- 521,312 521,312
U.S. Treasury Bonds, 3.875%, 5/15/18 -- 1,619,242 1,619,242
U.S. Treasury Bonds, 4.25%, 11/15/13 -- 1,711,875 1,711,875
U.S. Treasury Bonds, 6.25%, 8/15/23 -- 5,114,648 5,114,648
U.S. Treasury Inflation Notes, 0.0%, 11/15/13 -- 13,453,424 13,453,424
U.S. Treasury Inflation Notes, 0.0%, 5/15/13 -- 467,624 467,624
U.S. Treasury Inflation Notes, 2.0%, 1/15/14 -- 3,332,774 3,332,774
U.S. Treasury Notes, 3.625%, 5/15/13 -- 1,922,813 1,922,813
U.S. Treasury Notes, 4.0%, 2/15/15 -- 712,109 712,109
U.S. Treasury Notes, 4.125%, 5/15/15 1,720,313 -- 1,720,313
U.S. Treasury Notes, 4.25%, 8/15/15 2,903,125 -- 2,903,125
U.S. Treasury Notes, 4.375%, 2/15/38 -- 2,678,750 2,678,750
U.S. Treasury Notes, 4.5%, 3/31/12-2/15/16 3,387,344 -- 3,387,344
U.S. Treasury Notes, 4.75%, 5/15/14 3,530,391 -- 3,530,391
U.S. Treasury Notes, 5.5%, 8/15/28 -- 1,135,303 1,135,303
U.S. Treasury Notes, 7.875%, 2/15/21 -- 668,813 668,813
------------ ------------ --------------
Total Government $ 68,230,820 $348,596,852 $ 416,827,672
------------ ------------ --------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS $ 68,230,820 $349,926,036 $ 418,156,856
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
38
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
4,380,000 4,380,000
4,600,000 4,600,000
730,000 730,000
2,350,000 2,350,000
315,000 315,000
1,795,500 1,795,500 8.00
2,930,487 2,930,487 4.34
2,375,819 2,375,819 5.50
2,955,679 2,955,679 6.72
3,391,757 3,391,757 5.44
912,849 912,849 5.56
2,969,849 2,969,849 4.24
402,514 402,514 3.10
1,214,127 1,214,127 5.05
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ ------------- --------------- -----------------
MUNICIPAL BONDS 1.22%
Municipal Higher Education 1.19%
California State University Revenue, 5.0%, 11/1/39 $ -- $ 4,033,717 $ 4,033,717
Connecticut State Health & Educational, 5.0%,
7/1/42 -- 4,541,074 4,541,074
Houston Higher Education Finance Corp., 5.0%,
5/15/47 -- 685,901 685,901
New York State Dormitory Authority, 5.0%, 7/1/38 -- 2,328,521 2,328,521
---------- ------------ --------------
$ -- $ 11,589,213 $ 11,589,213
---------- ------------ --------------
Municipal Tobacco 0.03%
Tobacco Settlement Authority Iowa, 6.79%, 6/1/10 $ -- $ 319,697 $ 319,697
---------- ------------ --------------
TOTAL MUNICIPAL BONDS $ -- $ 11,908,910 $ 11,908,910
---------- ------------ --------------
SENIOR FLOATING RATE LOAN INTERESTS ** 4.63%
Energy 0.37%
Integrated Oil & Gas 0.15%
Hudson Products Holdings, Inc., Term Loan,
8/24/15 $ -- $ 1,418,445 $ 1,418,445
---------- ------------ --------------
Oil & Gas Exploration & Production 0.22%
Calpine Corp., First Priority Term Loan, 3/31,14 $ -- $ 2,173,793 $ 2,173,793
---------- ------------ --------------
Total Energy $ -- $ 3,592,238 $ 3,592,238
---------- ------------ --------------
Materials 0.41%
Paper Packaging 0.41%
Graham Packaging Co., New Term Loan, 10/7/11 $ -- $ 1,730,388 $ 1,730,388
Graphic Packaging International, Inc., Incremental
Term, 5/16/14 -- 2,209,370 2,209,370
---------- ------------ --------------
$ -- $ 3,939,758 $ 3,939,758
---------- ------------ --------------
Total Materials $ -- $ 3,939,758 $ 3,939,758
---------- ------------ --------------
Capital Goods 0.28%
Aerospace & Defense 0.22%
Aeroflex, Inc., Tranche B-1 Term, 8/15/14 $ -- $ 2,136,807 $ 2,136,807
---------- ------------ --------------
Construction & Farm Machinery & Heavy Trucks 0.06%
Accuride Corp., Term Advance, 1/31/12 $ -- $ 631,577 $ 631,577
---------- ------------ --------------
Total Capital Goods $ -- $ 2,768,384 $ 2,768,384
---------- ------------ --------------
Commercial Services & Supplies 0.21%
Environmental & Facilities Services 0.21%
Synagro Technologies, Inc., Term Loan, 4/2/14 $ -- $ 2,004,648 $ 2,004,648
---------- ------------ --------------
Total Commercial Services & Supplies $ -- $ 2,004,648 $ 2,004,648
---------- ------------ --------------
Transportation 0.10%
Air Freight & Couriers 0.10%
TNT Logistics, Additional Pre-funded Loan, 11/4/13 $ -- $ 249,559 $ 249,559
TNT Logistics, U.S. Term Loan, 11/4/13 -- 752,758 752,758
---------- ------------ --------------
$ -- $ 1,002,317 $ 1,002,317
---------- ------------ --------------
Total Transportation $ -- $ 1,002,317 $ 1,002,317
---------- ------------ --------------
See accompanying notes to pro forma financial statements.
39
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
3,440,000 3,440,000 2.22
1,305,128 1,305,128 3.96
1,548,060 1,548,060 5.44
395,128 395,128 6.55
1,955,885 1,955,885 6.55
3,300,000 3,300,000 2.71
970,446 970,446 6.40
1,358,000 1,358,000 6.64
4,169,535 4,169,535 5.64
1,709,567 1,709,567 4.45
29,144 29,144 1.80
2,842,000 2,842,000 3.71
1,169,821 1,169,821 4.82
265,517 265,517 1.36
157,419 157,419 3.74
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Automobiles & Components 0.23%
Tires & Rubber 0.23%
Goodyear Tire & Rubber Co., Second Lien Loan,
4/30/14 $ -- $ 2,210,200 $ 2,210,200
------------ ------------ --------------
Total Automobiles & Components $ -- $ 2,210,200 $ 2,210,200
------------ ------------ --------------
Consumer Durables & Apparel 0.10%
Housewares & Specialties 0.10%
Jarden Corp., Term Loan B-3, 1/24/12 $ -- $ 1,019,305 $ 1,019,305
------------ ------------ --------------
Total Consumer Durables & Apparel $ -- $ 1,019,305 $ 1,019,305
------------ ------------ --------------
Consumer Services 0.15%
Casinos & Gaming 0.15%
Fontainebleau Las Vegas, Initial Term Loan, 6/6/14 $ -- $ 445,067 $ 445,067
Gateway Casinos & Entertainment, Delayed Draw,
9/30/14 -- 175,832 175,832
Gateway Casinos & Entertainment, Term Advance,
9/30/14 -- 870,369 870,369
------------ ------------ --------------
$ -- $ 1,491,268 $ 1,491,268
------------ ------------ --------------
Total Consumer Services $ -- $ 1,491,268 $ 1,491,268
------------ ------------ --------------
Media 0.20%
Broadcasting 0.14%
Univision Communication, Inc., Initial Term Loan,
9/29/14 $ -- $ 1,356,666 $ 1,356,666
------------ ------------ --------------
Cable & Satellite 0.06%
Knology, Inc., Term Loan, 4/30/12 $ -- $ 558,006 $ 558,006
------------ ------------ --------------
Total Media $ -- $ 1,914,672 $ 1,914,672
------------ ------------ --------------
Retailing 0.10%
Internet Retail 0.10%
Ticketmaster Corp., Term B Loan, 7/25/14 $ -- $ 937,020 $ 937,020
------------ ------------ --------------
Total Retailing $ -- $ 937,020 $ 937,020
------------ ------------ --------------
Health Care Equipment & Services 1.15%
Health Care Equipment 0.38%
Talecris Biotherapeutics Holdings, First Term Lien,
12/6/13 $ -- $ 3,658,767 $ 3,658,767
------------ ------------ --------------
Health Care Facilities 0.48%
CHS/Community Health Systems, Inc., Funded
Term, 7/13/14 $ -- $ 1,339,446 $ 1,339,446
CHS/Community Health Systems, Inc., Delayed
Draw, 7/25/14 -- 22,835 22,835
HCA, Inc., Tranche B Term, 11/18/13 -- 2,246,956 2,246,956
Sun Health Care Group, Inc., Term Loan, 4/19/14 -- 807,177 807,177
Sun Health Care Group, Inc., Synthetic LC, 4/21/14 -- 183,207 183,207
Sun Health Care Group, Inc., Delayed Draw,
4/19/14 -- 108,619 108,619
------------ ------------ --------------
$ -- $ 4,708,240 $ 4,708,240
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
40
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
2,829,716 2,829,716 3.71
1,425,597 1,425,597 4.71
216,000 216,000 3.43
1,047,375 1,047,375 5.25
5,558,000 5,558,000 4.94
2,425,253 2,425,253 4.02
1,039,395 1,039,395 6.34
330,636 330,636 7.07
1,150,614 1,150,614 6.16
240,834 240,834 4.46
2,803,993 2,803,993 6.10
796,975 796,975 3.51
1,975,000 1,975,000 5.60
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Health Care Services 0.18%
Catalent Pharma Solutions, Inc., Dollar Term Loan,
4/10/14 $ -- $ 1,719,053 $ 1,719,053
------------ ------------ --------------
Health Care Supplies 0.12%
Bausch & Lomb, Term Loan, 4/24/15 $ -- $ 977,552 $ 977,552
Bausch & Lomb, Delayed Draw, 4/24/15 -- 148,114 148,114
------------ ------------ --------------
$ -- $ 1,125,666 $ 1,125,666
------------ ------------ --------------
Total Health Care Equipment & Services $ -- $ 11,211,726 $ 11,211,726
------------ ------------ --------------
Pharmaceuticals & Biotechnology 0.10%
Life Sciences Tools & Services 0.10%
Life Technologies Corp., Term B Facility, 6/11/16 $ -- $ 984,533 $ 984,533
------------ ------------ --------------
Total Pharmaceuticals & Biotechnology $ -- $ 984,533 $ 984,533
------------ ------------ --------------
Diversified Financials 0.43%
Diversified Financial Services 0.43%
Metavante Corp., Term Loan, 11/1/14 $ -- $ 4,168,500 $ 4,168,500
------------ ------------ --------------
Total Diversified Financials $ -- $ 4,168,500 $ 4,168,500
------------ ------------ --------------
Software & Services 0.27%
IT Consulting & Other Services 0.17%
SunGard Data Systems, Inc., New U.S. Term,
2/28/14 $ -- $ 1,675,849 $ 1,675,849
------------ ------------ --------------
Systems Software 0.10%
Macrovision Solutions Corp., Term Loan, 5/2/13 $ -- $ 945,849 $ 945,849
------------ ------------ --------------
Total Software & Services $ -- $ 2,621,698 $ 2,621,698
------------ ------------ --------------
Semiconductors 0.10%
Semiconductor Equipment 0.10%
Flextronics Semiconductor, A-1-A Delayed Draw,
10/1/14 $ -- $ 212,709 $ 212,709
------------ ------------ --------------
Flextronics Semiconductor, A Closing Date Loan,
10/1/14 -- 740,228 740,228
------------ ------------ --------------
$ -- $ 952,937 $ 952,937
------------ ------------ --------------
Total Semiconductors $ -- $ 952,937 $ 952,937
------------ ------------ --------------
Telecommunication Services 0.29%
Integrated Telecommunication Services 0.22%
Telesat Canada, U.S. Term II Loan, 10/24/14 $ -- $ 166,434 $ 166,434
Telesat Canada, U.S. Term I Loan, 10/24/14 -- 1,937,758 1,937,758
------------ ------------ --------------
$ -- $ 2,104,192 $ 2,104,192
------------ ------------ --------------
Wireless Telecommunication Services 0.08%
Centennial Cellular, New Term Loan, 2/9/11 $ -- $ 761,112 $ 761,112
------------ ------------ --------------
Total Telecommunication Services $ -- $ 2,865,304 $ 2,865,304
------------ ------------ --------------
Utilities 0.14%
Electric Utilities 0.14%
Texas Competitive Electric Holdings, Initial Tranche
B-2, 10/10/13 $ -- $ 1,378,385 $ 1,378,385
------------ ------------ --------------
Total Utilities $ -- $ 1,378,385 $ 1,378,385
------------ ------------ --------------
TOTAL SENIOR FLOATING RATE LOAN INTERESTS $ -- $ 45,062,893 $ 45,062,893
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
41
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
605,028 605,028
604,946 604,946
966,880 966,880
1,089,050 1,089,050
192,361 192,361
1,210,056 1,210,056
1,089,050 1,089,050
1,108,411 1,108,411
70,088 70,088
907,542 907,542
605,028 605,028
120,950 120,950
1,210,056 1,210,056
1,089,050 1,089,050
1,210,056 1,210,056
7,870,154 -- 7,870,154
1,188,275 1,188,275
115,305 115,305
605,028 605,028
604,964 604,964
1,210,056 1,210,056
605,028 605,028
1,089,050 1,089,050
1,210,056 1,210,056
1,089,050 1,089,050
1,028,547 1,028,547
205,564 205,564
2,662,122 2,662,122
1,210,056 1,210,056
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- -------------- -----------------
TEMPORARY CASH INVESTMENTS 4.28%
Securities Lending Collateral 2.05%
Certificates of Deposit: 1.24%
Abbey National Plc, 3.15%, 8/13/09 $ -- $ 605,028 $ 605,028
Bank of Nova Scotia, 3.21%, 5/5/09 -- 604,946 604,946
Bank of Scotland NY, 2.92%, 6/5/09 -- 966,880 966,880
Barclays Bank, 1.5%, 5/27/09 -- 1,089,050 1,089,050
Calyon NY, 4.62%, 1/16/09 -- 192,361 192,361
CBA, 4.87%, 7/16/09 -- 1,210,056 1,210,056
DNB NOR Bank ASA NY, 3.04%, 6/5/09 -- 1,089,050 1,089,050
Intesa SanPaolo S.p.A., 1.44%, 5/22/09 -- 1,108,411 1,108,411
NORDEA NY, 4.13%, 4/9/09 -- 70,088 70,088
Royal Bank of Canada NY, 2.7%, 8/7/09 -- 907,542 907,542
Royal Bank of Scotland, 3.06%, 3/5/09 -- 605,028 605,028
Skandinavian Enskilda Bank NY, 3.06%, 2/13/09 -- 120,950 120,950
Societe Generale, 3.29%, 9/4/09 -- 1,210,056 1,210,056
Svenska Bank NY, 4.61%, 7/8/09 -- 1,089,050 1,089,050
U.S. Bank NA, 2.25%, 8/24/09 -- 1,210,056 1,210,056
------------ ------------ --------------
$ -- $ 12,078,550 $ 12,078,550
------------ ------------ --------------
Mutual Fund: 0.81%
Bank of New York Institutional Cash Reserves Fund $ 7,828,943 $ -- $ 7,828,943
------------ ------------ --------------
$ 7,828,943 12,078,550 19,907,493
------------ ------------ --------------
Commercial Paper: 0.90%
American Honda Finance Corp., 4.95%, 7/14/09 $ -- $ 1,188,275 $ 1,188,275
BBVA U.S., 2.83%, 3/12/09 -- 115,305 115,305
CME Group, Inc., 2.9%, 8/6/09 -- 605,028 605,028
General Electric Capital Corp., 2.86%, 3/16/09 -- 604,964 604,964
HSBC Bank, Inc., 2.5%, 8/14/09 -- 1,210,056 1,210,056
IBM, 2.39%, 9/25/09 -- 605,028 605,028
Met Life Global Funding, 3.19%, 6/12/09 -- 1,089,050 1,089,050
Monumental Global Funding, Ltd., 2.5%, 8/17/09 -- 1,210,056 1,210,056
New York Life Global, 2.13%, 09/04/09 -- 1,089,050 1,089,050
Westpac Banking Corp., 2.34%, 6/1/09 -- 1,028,547 1,028,547
------------ ------------ --------------
$ -- $ 8,745,358 $ 8,745,358
------------ ------------ --------------
Tri-party Repurchase Agreements: 0.29%
Barclays Capital Markets, 0.5%, 1/2/09 $ -- $ 205,564 $ 205,564
Deutsche Bank, 0.25%, 1/2/09 -- 2,662,122 2,662,122
------------ ------------ --------------
$ -- $ 2,867,687 $ 2,867,687
------------ ------------ --------------
Time Deposit: 0.12%
BNP Paribas, 0.01%, 1/2/09 $ -- $ 1,210,056 $ 1,210,056
------------ ------------ --------------
See accompanying notes to pro forma financial statements.
42
Regions
Morgan
Keegan
Select
Fixed Pioneer
Income Pioneer Bond
Fund Bond Fund
Principal Fund Combined
Amount Principal Principal Floating
($) Amount ($) Amount ($) Rate (b)
- ----------- ------------ ------------ ----------
302,514 302,514
3,844,626 3,844,626
3,844,626 3,844,626
907,542 907,542
Regions
Morgan
Keegan Pioneer
Select Bond
Fixed Pioneer Fund
% of Income Bond Pro-Forma
Pro-Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ ---------------- --------------- -----------------
Money Market Mutual Fund: 0.92%
Columbia Government Reserves Fund, 0.82%,
1/2/09 $ -- $ 302,514 $ 302,514
Fidelity Institutional Money Market Fund 3,844,626 -- 3,844,626
Fidelity U.S. Treasury Cash Reserve Fund 3,844,626 -- 3,844,626
JP Morgan, U.S. Government Money Market Fund,
0.98%, 1/2/09 -- 907,542 907,542
------------ ------------ --------------
$ 7,689,252 $ 1,210,056 $ 8,899,308
------------ ------------ --------------
TOTAL TEMPORARY CASH INVESTMENTS $ 15,518,195 $ 26,111,706 $ 41,629,901
------------ ------------ --------------
TOTAL INVESTMENT IN SECURITIES 101.19% $136,594,773 $847,531,331 $ 984,126,104
------------ ------------ --------------
OTHER ASSETS AND LIABILITIES ( 1.19)% $ (7,491,049) $ (4,083,900) $ (11,574,949)
------------ ------------ --------------
TOTAL NET ASSETS 100.00% $129,103,724 $843,447,431 $ 972,551,155
------------ ------------ --------------
TOTAL INVESTMENT AT COST $144,921,650 $944,191,733 $1,089,113,383
------------ ------------ --------------
(a) No adjustments are shown to the unaudited pro forma combined schedule of
investments due to the fact that upon consummation of the merger no
securities would need to be sold in order for Pioneer Cash Reserves Fund to
comply with its prospectus restrictions. The foregoing sentence shall not
restrict in any way the ability of the investment adviser of the funds from
buying or selling securities in the normal course of such fund's business
and operations.
** Senior secured floating rate loan interests in which the Portfolio invests
generally pay interest at rates that are periodically redetermined by
reference to a base lending rate plus a premium. These base lending rates
are generally (i) the lending rate offered by one or more major European
banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime rate
offered by one or more major United States banks, (iii) the certificate of
deposit or (iv) other base lending rates used by commercial lenders. The
rate shown is the coupon rate at period end.
(b) Debt obligation with a variable interest rate. Rate shown is rate at period
end.
See accompanying notes to pro forma financial statements.
43
Pro Forma Combined Statement of Assets & Liabilities for Regions Morgan Keegan
Select Fixed Income Fund and Pioneer Bond Fund
As of 12/31/08
(unaudited)
Pioneer Pioneer
Regions Morgan Pioneer Bond Fund Bond Fund
Keegan Select Bond Pro Forma Pro Forma
Fixed Income Fund Fund Adjustments Combined
------------------- ------------- ----------- --------------
ASSETS:
Investment in securities, at value (Cost $144,921,650 and
$944,533,276, respectively) $ 136,594,773 $ 847,531,331 $ 984,126,104
Cash -- 24,937,430 24,937,430
Receivables -
Investment securities sold 287 7,250 7,537
Fund shares sold 1,233,525 1,233,525
Dividends and interest 1,015,355 8,474,984 9,490,339
Due from Pioneer Investment Management, Inc. -- 94,277 94,277
Other -- 57,030 57,030
------------- ------------- --------------
Total assets $ 137,610,415 $ 882,335,827 $1,019,946,242
------------- ------------- --------------
LIABILITIES:
Payables -
Investment securities purchased $ 42,973 $ 6,412,939 $ 6,455,912
Fund shares repurchased -- 1,426,953 1,426,953
Dividends 477,073 4,230,592 4,707,665
Upon return of securities loaned 7,870,154 26,111,705 33,981,859
Due to affiliates 82,642 197,415 280,057
Unrealized depreciation on unfunded corporate loans -- 341,544 341,544
Accrued expenses 33,849 167,249 201,098
------------- ------------- --------------
Total liabilities $ 8,506,691 $ 38,888,397 47,395,088
------------- ------------- --------------
NET ASSETS:
Paid-in capital $ 160,847,007 $ 942,910,599 $1,103,757,606
Undistributed net investment income -- (1,057,540) (1,057,540
Accumulated net realized loss on investments (23,416,406) (1,745,227) (25,161,633
Net unrealized loss on investments (8,326,877) (96,660,402) (104,987,279
------------- ------------- --------------
Total net assets $ 129,103,724 $ 843,447,430 $ 972,551,154
------------- ------------- --------------
NET ASSETS BY CLASS:
Class A $ 57,938,810 $ 267,325,816 1,634,698(a)(b) $ 326,899,324
============= ============= ==============
Class B $ -- $ 29,869,377 $ 29,869,377
============= ============= ==============
Class C $ 1,634,698 $ 41,052,919 (1,634,698)(b) $ 41,052,919
============= ============= ==============
Class I $ 69,530,216 $ -- (69,530,216)(a) $ --
============= ============= ==============
Class R $ -- $ 11,702,382 $ 11,702,382
============= ============= ==============
Class Y $ -- $ 493,404,473 69,530,216(a) $ 562,934,689
============= ============= ==============
Class Z $ -- $ 92,463 $ 92,463
============= ============= ==============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 6,526,146 32,536,980 721,239(a)(b) 39,784,365
============= ============= ==============
Class B -- 3,656,358 3,656,358
============= ============= ==============
Class C 184,138 5,043,665 (184,138)(b) 5,043,665
============= ============= ==============
Class I 7,834,413 -- (7,834,413)(a) --
============= ============= ==============
Class R -- 1,410,825 1,410,825
============= ============= ==============
Class Y -- 60,570,442 8,531,315(a) 69,101,757
============= ============= ==============
Class Z -- 11,249 11,249
============= ============= ==============
NET ASSET VALUE PER SHARE:
Class A $ 8.88 $ 8.22 $ 8.22
============= ============= ==============
Class B $ -- $ 8.17 $ 8.17
============= ============= ==============
Class C $ 8.88 $ 8.14 $ 8.14
============= ============= ==============
Class I $ 8.87 $ -- $ --
============= ============= ==============
Class R $ -- $ 8.29 $ 8.29
============= ============= ==============
Class Y $ -- $ 8.15 $ 8.15
============= ============= ==============
Class Z $ -- $ 8.22 $ 8.22
============= ============= ==============
MAXIMUM OFFERING PRICE:
Class A $ 9.06 $ 8.61 $ 8.61
============= ============= ==============
(a) Class A and I shares of Regions Morgan Keegan Select Fixed Income Fund are
exchanged for Class A and Y shares of Pioneer Bond Fund, respectively.
(b) Class C shares of Regions Morgan Keegan Select Fixed Income Fund are
exchanged for Class A shares of Pioneer Bond Fund.
See accompanying notes to pro forma financial statements.
44
Pro Forma Statement of Operations
For the Year Ended December 31, 2008
(unaudited)
Regions Morgan
Keegan Select Pioneer
Fixed Income Bond
Fund Fund
---------------- ------------------
INVESTMENT INCOME:
Dividends $ 64,668 $ 372,057
Interest 7,818,663 61,410,887
Litigation fees 1,401,333
Income on securities loaned, net 109,073 249,431
------------- --------------
Total investment income $ 7,992,404 $ 63,433,708
------------- --------------
EXPENSES:
Management fees $ 759,120 $ 5,036,348
Transfer agent fees 86,515 --
Class A -- 540,325
Class B -- 105,110
Class C -- 70,606
Class R -- 13,061
Class Y -- 254,404
Class Z -- 26
Shareholder service fees - Class A Shares 213,979 --
Shareholder service fees - Class C Shares 5,233 --
Distribution fees
Class A -- 689,976
Class B -- 343,096
Class C 15,699 374,288
Class R -- 57,509
Shareholder communications expense -- 317,711
Administrative fees 136,643 304,034
Custodian fees 32,864 58,065
Registration fees 36,135 109,857
Professional fees -- 193,438
Accounting fees 45,547 --
Legal fees 21,258 --
Audit fees 10,539 --
Printing expense 13,019 67,214
Fees and expenses of nonaffiliated trustees 7,532 26,688
Insurance premiums 1,808 --
Miscellaneous 13,385 227,053
------------- --------------
Total expenses $ 1,399,276 $ 8,788,809
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. -- (586,496)
Less fees paid indirectly -- (19,460)
------------- --------------
Net expenses $ 1,399,276 $ 8,182,853
------------- --------------
Net investment income $ 6,593,128 $ 55,250,855
------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments $ (6,780,453) $ 18,002,707
------------- --------------
$ (6,780,453) $ 18,002,707
------------- --------------
Change in net unrealized gain or loss from:
Investments $ (4,213,950) $ (109,822,321)
Unfunded corporate loans -- (342,380)
------------- --------------
(4,213,950) (110,164,701)
------------- --------------
Net gain (loss) on investments $ (10,994,403) $ (92,161,994)
------------- --------------
Net increase in net assets resulting from operations $ (4,401,275) $ (36,911,139)
============= ==============
(unaudited)
Pioneer Pioneer
Bond Bond
Fund Fund
Pro Forma Pro Forma
Adjustments Combined
------------------- ------------------
INVESTMENT INCOME:
Dividends $ 436,725
Interest 69,229,550
Litigation fees 1,401,333
Income on securities loaned, net 358,504
----------- --------------
Total investment income $ -- $ 71,426,112
----------- --------------
EXPENSES:
Management fees $ 5,795,468
Transfer agent fees $ (86,515)(b) --
Class A 156,049(b) 696,374
Class B 105,110
Class C 70,606
Class R 13,061
Class Y 19,972(b) 274,376
Class Z 26
Shareholder service fees - Class A Shares (213,979)(b) --
Shareholder service fees - Class C Shares (5,233)(d) --
Distribution fees --
Class A 219,178(b) 909,154
Class B 343,096
Class C (15,699)(d) 374,288
Class R 57,509
Shareholder communications expense 317,711
Administrative fees (102,532)(b) 338,145
Custodian fees (26,707)(a) 64,222
Registration fees (21,975)(a) 124,017
Professional fees 12,313(c) 205,751
Accounting fees (45,547)(a) --
Legal fees (21,258)(a) --
Audit fees (10,539)(a) --
Printing expense (2,752)(a) 77,481
Fees and expenses of nonaffiliated trustees (3,838)(a) 30,382
Insurance premiums (1,808)(a) --
Miscellaneous (2,802)(a) 237,636
----------- --------------
Total expenses $ (153,672) $ 10,034,413
Less management fees waived and expenses assumed --
by Pioneer Investment Management, Inc. (139,482)(b) (725,978)
Less fees paid indirectly (19,460)
----------- --------------
Net expenses $ (293,154) $ 9,288,975
----------- --------------
Net investment income $ 293,154 $ 62,137,137
----------- --------------
--
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: --
Net realized gain (loss) from: --
Investments $ 11,222,254
----------- --------------
$ -- $ 11,222,254
----------- --------------
Change in net unrealized gain or loss from: --
Investments $ (114,036,271)
Unfunded corporate loans (342,380)
----------- --------------
$ -- (114,378,651)
----------- --------------
Net gain (loss) on investments $ -- $ (103,156,397)
----------- --------------
Net increase in net assets resulting from operations $ 293,154 $ (41,019,260)
=========== ==============
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Expenses and expense limitations conformed to Pioneer Bond Fund's contracts
with affiliated parties.
(c) Reflects increase in expenses due to an increase in the combined average
net assets.
(d) Reflects the exchange of Regions Morgan Keegan Select Fixed Income Fund's
Class C shares into Pioneer Bond Fund's Class A shares.
See accompanying notes to pro forma financial statements.
45
Pro Forma Notes to Combined Financial Statements for Regions Morgan Keegan
Select Fixed Income Fund and Pioneer Bond Fund As of 12/31/08
(unaudited)
1. Description of the Fund
Pioneer Bond Fund (the "Fund") is a Delaware statutory trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified, open-end management investment company. The investment objectives
of the Fund are to seek current income consistent with preservation of capital.
The Trustees have authorized the issuance of six classes of shares of the
Fund. The Fund offers six classes of shares designated as Class A, Class B,
Class C, Class R, Class Y and Class Z shares. Class R shares were first publicly
offered on April 1, 2003. As planned, on December 10, 2006, Investor Class
shares were converted to Class A shares. Class Z shares were first publicly
offered on July 6, 2007. Each class of shares represents an interest in the same
portfolio of investments of the Fund and has equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distributions fees and has exclusive voting
rights with respect to the distribution plans that have been adopted by Class A,
Class B, Class C, and Class R shareowners, respectively. There is no
distribution plan for Class Y and Class Z shares.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related
notes, are presented to show the effect of the proposed merger of Regions Morgan
Keegan Select Fixed Income Fund (the "RMK Fund") with and into the Fund (the
"Merger"), as if such merger had taken place as of January 1, 2008.
Under the terms of an Agreement and Plan of Merger between these two funds,
the combination of the Fund and the RMK Fund will be treated as a tax-free
business combination and, accordingly, will be accounted for by a method of
accounting for tax-free mergers of investment companies. The Merger will be
accomplished by an acquisition of the net assets of the RMK Fund in exchange for
shares of the Fund at their net asset values. Class A and I shares of the RMK
Fund will be exchanged for Class A and Y shares of the Fund. Class C shares of
the RMK Fund will be exchanged for Class A share of the Fund. The accompanying
schedules of investments, statements of assets and liabilities and the related
statements of operations of the Fund and the RMK Fund have been combined as of
and for the most recent twelve months ended December 31, 2008. Following the
Merger, the Fund will be the accounting survivor. All related merger costs will
be borne by Pioneer Investment Management Inc. ("Pioneer"), the investment
adviser of the Fund, and Morgan Asset Management, Inc. ("MAM"), the investment
adviser to the RMK Fund.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of the Fund and the RMK Fund included
in their respective semi-annual and annual reports to shareowners dated December
31 and November 30, 2008, respectively. Adjustments have been made to expenses
for Pioneer affiliate contractual rates and duplicate services that would not
have been incurred if the Merger took place on January 1, 2008.
3. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at prices supplied by independent pricing services, which consider such factors
as Treasury spreads, yields, maturities and ratings. Valuations may be
supplemented by dealers and other sources, as required. Securities for which
there are no other readily available valuation methods are valued at their fair
values as determined by, or under the direction of the Board of Trustees. At
December 31, 2008 there were no securities fair valued. Principal amounts of
mortgage-backed securities are adjusted for monthly paydowns. Temporary cash
investments are valued at cost which approximates market value.
All discounts/premiums on debt securities are accreted/amortized for
financial reporting purposes over the life of the respective securities, and are
included in interest income. Market discount and premium are accreted or
amortized daily. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the underlying monthly
paydowns. Interest income is recorded on the accrual basis.
46
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of
the Fund that would have been issued at December 31, 2008 in connection with the
proposed Merger. The number of shares assumed to be issued is equal to the net
assets of the RMK Fund as of December 31, 2008, divided by the net asset value
of the Fund's shares as of December 31, 2008. The pro forma number of shares
outstanding, by class, for the combined Fund consists of the following at
December 31, 2008:
- --------------------------------------------------------------------------------------
Shares of Additional Shares
The Fund Assumed Issued Total Outstanding Shares
Class of Shares Pre-Combination In Merger Post-Combination
- --------------------------------------------------------------------------------------
Class A 32,536,980 7,247,385 39,784,365
- --------------------------------------------------------------------------------------
Class B 3,656,358 -- 3,656,358
- --------------------------------------------------------------------------------------
Class C 5,043,665 -- 5,043,665
- --------------------------------------------------------------------------------------
Class R 1,410,825 -- 1,410,825
- --------------------------------------------------------------------------------------
Class Y 60,570,442 8,531,315 69,101,757
- --------------------------------------------------------------------------------------
Class Z 11,249 -- 11,249
- --------------------------------------------------------------------------------------
5. Management Agreement
Pioneer, a wholly owned indirect subsidiary of UniCredit S.p.A., manages
the Fund's portfolio. Management fees are calculated daily at the annual rate of
0.50% of the Fund's average daily net assets.
Effective November 1, 2006, Pioneer has agreed to limit ordinary operating
expenses to the extent required to reduce Fund expenses to 1.00%, 1.90%, 1.90%,
1.25% and 0.85% of the average daily net assets attributable to Class A, Class
B, Class C, Class R and Class Z shares, respectively. Class Y shares do not have
an expense limitation. These expense limitations are in effect through November
1, 2010 for Class A shares and through November 1, 2009 for Class B, Class C,
Class R and Class Z shares. Pioneer expects to continue its limitation 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 November 1, 2010 for
Class A shares and November 1, 2009 for Class B, Class C and Class R shares. The
Fund may terminate the expense limitation agreement at any time; provided,
however, that the Board of Trustees would not take such action unless it
determined termination of the agreement be in the best interests of the Fund and
its shareowners.
6. Federal Income Taxes
Each of the Fund and the RMK Fund has elected to be taxed as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). After the acquisition, it will continue to be the Fund's policy to
comply with the requirements of the Code applicable to regulated investment
companies and to distribute all of its taxable income and net realized capital
gains, if any, to its shareowners. Therefore, no federal income tax provision is
required.
The identified cost of investments for these funds is substantially the
same for both financial and federal income tax purposes. The cost of investments
will remain unchanged for the combined Fund.
47
Pro Forma Schedule of Investments for Regions Morgan Keegan Select Treasury
Money Market Fund and Pioneer Treasury Reserves Fund(a)
As of 07/31/08
(unaudited)
Regions
Morgan
Keegan
Select Pioneer
Treasury Treasury
Money Pioneer Reserves Fund
Market Treasury ProForma
Fund Reserves Combined
Amount Fund Floating Principal
($) Amount ($) Rate (b) Amount ($)
- ------------- ------------ ---------- ---------------
-- 1,000,000 1,000,000
-- 2,850,000 2.60 2,850,000
-- 4,600,000 2.39 4,600,000
-- 700,000 700,000
-- 410,000 2.39 410,000
-- 420,000 2.39 420,000
-- 860,000 2.72 860,000
-- 790,000 2.27 790,000
70,000,000 -- 70,000,000
-- 1,500,000 1,500,000
120,000,000 -- 120,000,000
-- 1,700,000 1,700,000
100,000,000 -- 100,000,000
10,000,000 -- 10,000,000
-- 2,000,000 2,000,000
105,000,000 -- 105,000,000
25,000,000 -- 25,000,000
30,000,000 -- 30,000,000
15,000,000 -- 15,000,000
40,000,000 -- 40,000,000
30,000,000 -- 30,000,000
40,000,000 -- 40,000,000
-- 3,000,000 3,000,000
-- 500,000 500,000
-- 500,000 500,000
15,000,000 -- 3.25 15,000,000
100,000,000 -- 3.125 100,000,000
110,000,000 -- 4.625 110,000,000
100,000,000 -- 4.875 100,000,000
Regions
Morgan
Keegan
Select Pioneer
Treasury Pioneer Treasury
Money Treasury Reserves
% of Market Reserves Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- -------------- ----------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS 88.9%
Federal Home Loan Bank, 2.25%, 2/13/09 $ -- $ 999,188 $ 999,188
Federal Home Loan Bank, Floating Rate Note,
2/18/09 -- 2,850,000 2,850,000
Federal Home Loan Bank, Floating Rate Note,
8/21/09 -- 4,599,813 4,599,813
Federal Home Loan Mortgage Corp., 3.125%,
6/23/09 -- 700,000 700,000
Federal Home Loan Mortgage Corp., Floating Rate
Note, 10/19/09 -- 409,963 409,963
Federal Home Loan Mortgage Corp., Floating Rate
Note, 10/8/09 -- 420,000 420,000
Federal National Mortgage Association, Floating
Rate Note, 1/28/10 -- 860,000 860,000
Federal National Mortgage Association, Floating
Rate Note, 9/3/09 -- 790,000 790,000
U.S. Treasury Bill, 1.323%-1.843%, 8/7/08 69,981,471 -- 69,981,471
U.S. Treasury Bills, 1.4065%, 8/14/08 -- 1,499,238 1,499,238
U.S. Treasury Bill, 1.384%-1.823%, 8/14/08 119,930,333 -- 119,930,333
U.S. Treasury Bills, 1.5%, 8/21/08 -- 1,698,466 1,698,466
U.S. Treasury Bill, 1.707%-1.741%, 8/28/08 99,872,987 -- 99,872,987
U.S. Treasury Bill, 1.668%, 9/4/08 9,984,511 -- 9,984,511
U.S. Treasury Bills, 3.125%, 9/15/08 -- 1,997,549 1,997,549
U.S. Treasury Bill, 1.646%-2.028%, 9/18/08 104,746,746 -- 104,746,746
U.S. Treasury Bill, 1.833%, 10/2/08 24,922,500 -- 24,922,500
U.S. Treasury Bill, 1.838%, 10/9/08 29,896,213 -- 29,896,213
U.S. Treasury Bill, 2.004%, 11/6/08 14,920,783 -- 14,920,783
U.S. Treasury Bill, 1.758%, 11/13/08 39,800,661 -- 39,800,661
U.S. Treasury Bill, 2.140%, 11/20/08 29,806,578 -- 29,806,578
U.S. Treasury Bill, 1.848%-1.859%, 12/18/08 39,719,681 -- 39,719,681
U.S. Treasury Bills, 1.8495%, 12/26/08 -- 2,977,343 2,977,343
U.S. Treasury Bills, 2.19%, 12/4/08 -- 496,198 496,198
U.S. Treasury Bills, 2.4815%, 6/4/09 -- 489,419 489,419
U.S. Treasury Note, Floating Rate Note, 8/15/08 15,009,405 -- 15,009,405
U.S. Treasury Note, Floating Rate Note, 9/15/08 100,178,347 -- 100,178,347
U.S. Treasury Note, Floating Rate Note, 9/30/08 110,507,350 -- 110,507,350
U.S. Treasury Note, Floating Rate Note, 10/31/08 100,717,010 -- 100,717,010
------------ ----------- -------------
$909,994,576 $20,787,177 $ 930,781,753
------------ ----------- -------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS $909,994,576 $20,787,177 $ 930,781,753
------------ ----------- -------------
See accompanying notes to pro forma financial statements.
48
Regions
Morgan
Keegan
Select Pioneer
Treasury Treasury
Money Pioneer Reserves Fund
Market Treasury ProForma
Fund Reserves Combined
Amount Fund Floating Principal
($) Amount ($) Rate (b) Amount ($)
- ---------------- ---------------- ---------- ---------------
Shares Shares
-- 728 728
Principal Principal
Amount Amount
($) ($)
-------------- --------------
40,000,000 -- 40,000,000
7,547,493 -- 7,547,493
1,000,000 -- 1,000,000
-- 63,000,000 63,000,000
-- 1,200,000 1,200,000
Regions
Morgan
Keegan
Select Pioneer
Treasury Pioneer Treasury
Money Treasury Reserves
% of Market Reserves Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- ------------- ---------------
MUTUAL FUND 0.0%
BlackRock Liquidity Funds FedFund Portfolio $ -- $ 728 728
------------ ----------- ---
TOTAL MUTUAL FUND $ -- $ 728 728
------------ ----------- ---
TEMPORARY CASH INVESTMENTS 10.8%
Repurchase Agreements
Goldman Sachs Financial Square Funds, 1.57%,
1/1/09 $ 40,000,000 $ -- $ 40,000,000
Blackrock Liquidity Funds Treasury Trust Fund
Portfolio, 1.49%, 1/1/09 7,547,493 -- 7,547,493
Federated US Treasury Cash Reserve Fund, 1.46%.
1/1/09 1,000,000 -- 1,000,000
Deutsche Bank, 2.12%, dated 7/31/08,
repurchase price of $63,000,000 plus accrued
interest on 8/1/08 collateralized by the following:
$6,018,410 Federal Home Loan Mortgage Corp.,
4.612-5.783%, 6/1/35-5/1/38
$47,137,372 Federal National Mortgage
Association (ARM), 4.624-6.812%,
12/1/16-12/1/37
$165,494 Federal National Mortgage Association,
5.0%, 4/1/23
$47,099,194 Freddie Mac Giant, 4.5-7.0%,
5/1/17-5/1/38
$2,494,429 Government National Mortgage
Association, 6.5-7.0%, 12/15/36-7/15/38
$22,709,564 U.S. Treasury Strip, 0.0%, 11/15/18 -- 63,000,000 63,000,000
Deutsche Bank, 2.19%, dated 7/31/08,
repurchase price of $1,200,000 plus accrued
interest on 8/1/08 collateralized by the following:
$114,636 Federal Home Loan Mortgage Corp.,
4.612-5.783%, 6/1/35-5/1/38
$897,855 Federal National Mortgage Association
(ARM), 4.624-6.812%, 12/1/16-12/1/37
$3,152 Federal National Mortgage Association,
5.0%, 4/1/23
$897,128 Freddie Mac Giant, 4.5-7.0%,
5/1/17-5/1/38
$47,513 Government National Mortgage
Association, 6.5-7.0%, 12/15/36-7/15/38
$432,563 U.S. Treasury Strip, 0.0%, 11/15/18 $ -- $ 1,200,000 $ 1,200,000
------------ ----------- ------------
TOTAL TEMPORARY CASH INVESTMENTS $ 48,547,493 $64,200,000 $112,747,493
------------ ----------- ------------
See accompanying notes to pro forma financial statements.
49
Regions
Morgan
Keegan
Select Pioneer
Treasury Treasury
Money Pioneer Reserves Fund
Market Treasury ProForma
Fund Reserves Combined
Amount Fund Floating Principal
($) Amount ($) Rate (b) Amount ($)
- ---------- ------------ ---------- ---------------
Regions
Morgan
Keegan
Select Pioneer
Treasury Pioneer Treasury
Money Treasury Reserves
% of Market Reserves Fund
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- ------------- ----------------
TOTAL INVESTMENTS IN SECURITIES 958,542,069 84,987,905 1,043,529,974
----------- ---------- -------------
OTHER ASSETS AND LIABILITIES 0.3% $ 3,030,429 172,090 $ 3,202,519
------------ ---------- --------------
TOTAL NET ASSETS 100.0% $961,572,498 $85,159,995 $1,046,732,493
------------ ----------- --------------
TOTAL INVESTMENT AT COST $958,542,069 $84,987,905 $1,043,529,974
------------ ----------- --------------
(a) No adjustments are shown to the unaudited pro forma combined schedule of
investments due to the fact that upon consummation of the merger no
securities would need to be sold in order for Pioneer Treasury Reserves
Fund to comply with its prospectus restrictions. The foregoing sentence
shall not restrict in any way the ability of the investment adviser of the
funds from buying or selling securities in the normal course of such fund's
business and operations.
(b) Debt obligation with a variable interest rate. Rate shown is rate at
period end.
See accompanying notes to pro forma financial statements.
50
Pro Forma Combined Statement of Assets & Liabilities for Regions Morgan Keegan
Select Treasury Money Market Fund and Pioneer Treasury Reserves Fund
As of 07/31/08
(unaudited)
Regions Morgan Pioneer
Keegan Select Treasury
Treasury Money Reserves
Market Fund Fund
---------------- --------------
ASSETS:
Investment in securities, at value (Cost $985,542,069 and
$84,987,905, respectively) $ 958,542,069 $84,987,905
Cash -- 174,349
Receivables -
Fund shares sold -- 300,087
Interest and dividends 4,447,207 59,063
Other -- 6,667
------------- -----------
Total assets $ 962,989,276 $85,528,071
------------- -----------
LIABILITIES:
Payables -
Fund shares repurchased $ -- $ 276,626
Dividends 872,626 46,907
Due to affiliates 468,902 2,462
Accrued expenses 75,250 42,081
------------- -----------
Total liabilities $ 1,416,778 $ 368,076
------------- -----------
NET ASSETS:
Paid-in capital $ 960,679,050 $85,112,266
Distributions in excess of net investment income -- (13,041)
Accumulated net realized gain on investments 893,448 60,770
------------- -----------
Total net assets $ 961,572,498 $85,159,995
------------- -----------
NET ASSETS BY CLASS:
Class A $ 954,410,806 $47,806,563
============= ===========
Class I $ 7,161,692 $ --
============= ===========
Class Y $ -- $37,353,432
============= ===========
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 953,530,980 47,743,468
============= ===========
Class I 7,155,166 --
============= ===========
Class Y -- 37,263,940
============= ===========
NET ASSET VALUE PER SHARE:
Class A $ 1.00 $ 1.00
============= ===========
Class I $ 1.00 $ --
============= ===========
Class Y $ -- $ 1.00
============= ===========
Pioneer Pioneer
Treasury Treasury
Reserves Reserves
Fund Fund
Pro Forma Pro Forma
Adjustments Combined
--------------------- -----------------
ASSETS:
Investment in securities, at value (Cost $985,542,069 and
$84,987,905, respectively) $1,043,529,974
Cash 174,349
Receivables -
Fund shares sold 300,087
Interest and dividends 4,506,270
Other 6,667
--------------
Total assets $1,048,517,347
--------------
LIABILITIES:
Payables -
Fund shares repurchased $ 276,626
Dividends 919,533
Due to affiliates 471,364
Accrued expenses 117,331
--------------
Total liabilities 1,784,854
--------------
NET ASSETS:
Paid-in capital $1,045,791,316
Distributions in excess of net investment income (13,041)
Accumulated net realized gain on investments 954,218
--------------
Total net assets $1,046,732,493
--------------
NET ASSETS BY CLASS:
Class A $1,002,217,369
==============
Class I (7,161,692)(a) $ --
==============
Class Y 7,161,692(a) $ 44,515,124
==============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 879,826(a) 1,002,154,274
==============
Class I (7,155,166)(a) --
==============
Class Y 7,161,692(a) 44,425,632
==============
NET ASSET VALUE PER SHARE:
Class A $ 1.00
==============
Class I $ --
==============
Class Y $ 1.00
==============
(a) Class A and I shares of Regions Morgan Keegan Select Treasury Money Market
Fund are exchanged for Class A and Y shares of Pioneer Treasury Money
Market Fund, respectively.
See accompanying notes to pro forma financial statements.
51
Pro Forma Statement of Operations
For the Year Ended July 31, 2008
(unaudited)
Pioneer Pioneer
Treasury Treasury
Regions Morgan Pioneer Reserves Reserves
Keegan Select Treasury Fund Fund
Treasury Money Reserves Pro Forma Pro Forma
Market Fund Fund Adjustments Combined
---------------- -------------- --------------------- ---------------
INVESTMENT INCOME:
Dividends $ 765,925 $ -- $ 765,925
Interest 35,188,718 2,862,969 38,051,687
Income on securities loaned, net 526,903 -- 526,903
Miscellaneous income -- 10,943 10,943
----------- ---------- -----------
Total investment income $36,481,546 $2,873,912 $39,355,458
----------- ---------- -----------
EXPENSES:
Management fees $ 2,408,264 $ 340,527 $ 2,292,811(b) $ 5,041,602
Transfer agent fees 275,473 -- (275,473)(b) --
Class A -- 18,490 257,911(b) 276,401
Class Y -- 673 1,200(b) 1,873
Shareholder service fees -- Class A Shares 3,003,864 -- (3,003,864)(b) --
Distribution fees --
Class A -- 39,263 1,795,610(b) 1,834,873
Class B -- --
Class C -- --
Administrative fees 1,083,707 19,155 (813,996)(b) 288,866
Custodian fees 107,751 29,785 (6,637)(a) 130,899
Registration fees 75,641 61,867 (9,917)(a) 127,591
Professional fees -- 44,762 268,690(c) 313,452
Accounting fees 361,235 -- (361,235)(a) --
Legal fees 152,804 -- (152,804)(a) --
Audit fees 136,198 -- (136,198)(a) --
Printing expense 127,488 17,058 (26,374)(a) 118,172
Fees and expenses of nonaffiliated trustees 4,120 5,195 41,381(c) 50,696
Insurance premiums 92,259 -- (92,259)(a) --
Miscellaneous 87,747 -- 31,623(c) 119,370
----------- ---------- ------------- -----------
Total expenses $ 7,916,551 $ 576,775 $ (189,531) $ 8,303,795
Less fees paid indirectly -- (206) (206)
----------- ---------- ------------- -----------
Net expenses $ 7,916,551 $ 576,569 $ (189,531) $ 8,303,589
----------- ---------- ------------- -----------
Net investment income $28,564,995 $2,297,343 $ 189,531 $31,051,869
----------- ---------- ------------- -----------
REALIZED GAIN ON INVESTMENTS:
Net realized gain from investments $ 1,516,853 $ 63,381 $ 1,580,234
----------- ---------- ------------- -----------
Net gain on investments $ 1,516,853 $ 63,381 $ 1,580,234
----------- ---------- ------------- -----------
Net increase in net assets resulting from operations $30,081,848 $2,360,724 $ 189,531 $32,632,103
=========== ========== ============= ===========
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Expenses and expense limitations conformed to Pioneer Treasury Reserves
Fund's contracts with affiliated parties.
(c) Reflects increase in expenses due to an increase in the combined average
net assets.
See accompanying notes to pro forma financial statements.
52
Pro Forma Notes to Combined Financial Statements for Regions Morgan Keegan
Select Treasury Money Market Fund and Pioneer Treasury Reserves Fund
As of 07/31/08
(unaudited)
1. Description of the Fund
Pioneer Treasury Reserves Fund (the "Fund") is one of four portfolios
comprising Pioneer Series Trust IV, a Delaware statutory trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified, open-end management investment company. The Fund is the successor
to the AmSouth Treasury Reserve Money Market Fund. The investment objective of
the Fund is to seek current income, preservation of capital and liquidity
through investments in high-quality short term securities.
The Fund currently offers two classes of shares designated as Class A and
Class Y shares. Class B and Class C shares are not currently offered. The Fund
may offer Class B and Class C shares in the future. Shares of Class A and Class
Y each represent an interest in the same portfolio of investments of the Fund
and have equal rights to voting, redemptions, dividends and liquidation, except
that each class of shares can bear different transfer agent and distribution
fees and have exclusive voting rights with respect to the distribution plan that
has been adopted by Class A shareowners. There is no distribution plan for Class
Y shares.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related
notes, are presented to show the effect of the proposed merger of Regions Morgan
Keegan Select Treasury Money Market Fund (the "RMK Fund") with and into the Fund
(the "Merger"), as if such merger had taken place as of August 1, 2007.
Under the terms of an Agreement and Plan of Merger between these two funds,
the combination of the Fund and the RMK Fund will be treated as a tax-free
business combination and, accordingly, will be accounted for by a method of
accounting for tax-free mergers of investment companies. The Merger will be
accomplished by an acquisition of the net assets of the RMK Fund in exchange for
shares of the Fund at their net asset values. The accompanying schedules of
investments, statements of assets and liabilities and the related statements of
operations of the Fund and the RMK Fund have been combined as of and for the
most recent twelve months ended July 31, 2008. Following the Merger, the Fund
will be the accounting survivor. All related merger costs will be borne by
Pioneer Investment Management Inc. ("Pioneer"), the investment adviser of the
Fund, and Morgan Asset Management, Inc. ("MAM"), the investment adviser to the
RMK Fund.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of the Fund and the RMK Fund included
in their respective annual reports to shareowners dated July 31 and November 30,
2008, respectively. Adjustments have been made to expenses for Pioneer affiliate
contractual rates and duplicate services that would not have been incurred if
the Merger took place on August 1, 2007.
3. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at amortized cost, which approximates fair market value. Investments purchased
at a discount or premium are valued by amortizing the difference between the
original purchase price and maturity value of the issue over the period to
maturity. Interest income, including interest on income bearing cash accounts,
is recorded on the accrual basis.
53
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of
the Fund that would have been issued at July 31, 2008 in connection with the
proposed Merger. The number of shares assumed to be issued is equal to the net
assets of the RMK Fund as of July 31, 2008, divided by the net asset value of
the Fund's shares as of July 31, 2008. The pro forma number of shares
outstanding, by class, for the combined Fund consists of the following at July
31, 2008:
- --------------------------------------------------------------------------------------
Shares of Additional Shares
The Fund Assumed Issued Total Outstanding Shares
Class of Shares Pre-Combination In Merger Post-Combination
- --------------------------------------------------------------------------------------
Class A 47,743,468 954,410,806 1,002,154,274
- --------------------------------------------------------------------------------------
Class Y 37,263,940 7,161,692 44,425,632
- --------------------------------------------------------------------------------------
5. Management Agreement
Pioneer, a wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), manages the Fund's portfolio. Management fees are
calculated daily at an annual rate equal to 0.40% of the Fund's average daily
net assets up to $1 billion and 0.35% on assets over $1 billion. The management
fee was equivalent to 0.40% of the average daily net assets for the period.
Pioneer has agreed to limit the Fund's expenses for any class of shares or
waive a portion of its management fee to maintain a net asset value of $1.00.
Under certain circumstances, this limitation may result in a 0.00% yield for one
or more classes of shares. From time to time, Pioneer and its affiliates may
limit the expenses of one or more classes for the purpose of increasing its
yield during the period of the limitation.
6. Federal Income Taxes
Each of the Fund and the RMK Fund has elected to be taxed as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). After the acquisition, it will continue to be the Fund's policy to
comply with the requirements of the Code applicable to regulated investment
companies and to distribute all of its taxable income and net realized capital
gains, if any, to its shareowners. Therefore, no federal income tax provision is
required.
The identified cost of investments for these funds is substantially the
same for both financial and federal income tax purposes. The cost of investments
will remain unchanged for the combined Fund.
54
Pro Forma Schedule of Investments for Regions Morgan Keegan Select Money Market
Fund and Pioneer Cash Reserves Fund(a)
As of 12/31/08
(unaudited)
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------- ------------- ----------
5,470,000 5,470,000 2.46
8,400,000 8,400,000 3.67
7,610,000 7,610,000 3.01
7,750,000 7,750,000 3.21
5,000,000 5,000,000 1.78
2,650,000 2,650,000
5,300,000 5,300,000 2.58
5,880,000 5,880,000 2.14
2,465,000 2,465,000 4.96
2,500,000 2,500,000 4.42
9,175,000 9,175,000 2.62
800,000 800,000
12,410,000 12,410,000 2.95
5,010,000 5,010,000
4,090,000 4,090,000
12,750,000 12,750,000 2.29
1,500,000 1,500,000
20,000,000 20,000,000 2.51
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- -------------- -----------------
CORPORATE BONDS 19.6%
Household & Personal Products 0.5%
Personal Products 0.5%
Procter & Gamble International, Floating Rate
Note, 8/19/09 $ -- $ 5,453,298 $ 5,453,298
----------- ------------ --------------
Total Household &
Personal Products $ -- $ 5,453,298 $ 5,453,298
----------- ------------ --------------
Banks 8.7%
Diversified Banks 6.6%
ABN Amro Bank NV, Floating Rate Note, 1/30/09 $ -- $ 8,408,832 $ 8,408,832
BNP Paribas SA, Floating Rate Note, 2/13/09 -- 7,610,000 7,610,000
Commonwealth Bank of Austria, Floating Rate
Note, 3/24/09 -- 7,750,000 7,750,000
Credit Agricole, Floating Rate Note, 10/22/09 -- 5,000,000 5,000,000
Nordea Bank AB, 3.89%, 10/23/09 -- 2,650,000 2,650,000
Rabobank Nederland, Floating Rate Note,
11/9/09 (144A) -- 5,300,000 5,300,000
RaboBank Nederland, Floating Rate Note, 5/15/09 -- 5,880,000 5,880,000
Royal Bank of Canada, Floating Rate
Note, 10/15/09 -- 2,465,000 2,465,000
Svenska Handelsbanken AB, Floating Rate Note,
8/6/09 -- 2,499,735 2,499,735
Wells Fargo & Co., Floating Rate Note,
7/14/08 (144A) -- 9,175,000 9,175,000
Wells Fargo & Co., 3.125%, 4/1/09 -- 800,490 800,490
Westpac Banking, Floating Rate Note,
2/6/09 (144A) -- 12,409,536 12,409,536
----------- ------------ --------------
$ -- $ 69,948,593 $ 69,948,593
----------- ------------ --------------
Regional Banks 2.1%
Bank of America NA, 4.35%, 10/3/09 $ -- $ 5,010,000 $ 5,010,000
Mellon Funding Corp., 3.25%, 4/1/09 -- 4,091,125 4,091,125
U.S. Bank NA/Cincinnati, Floating Rate
Note, 9/10/09 -- 12,750,000 12,750,000
----------- ------------ --------------
$ -- $ 21,851,125 $ 21,851,125
----------- ------------ --------------
Total Banks $ -- $ 91,799,718 $ 91,799,718
----------- ------------ --------------
Diversified Financials 7.6%
Asset Management &
Custody Banks 0.1%
Bank of New York Mellon, 3.625%, 1/15/09 $ -- $ 1,500,394 $ 1,500,394
----------- ------------ --------------
Consumer Finance 1.9%
Toyota Motor Credit Corp., Floating Rate
Note, 1/12/09 $ -- $ 20,000,000 $ 20,000,000
----------- ------------ --------------
55
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------- ------------- ----------
2,575,000 2,575,000 3.10
16,275,000 16,275,000 2.83
9,105,000 9,105,000 2.48
1,550,000 1,550,000 2.23
1,500,000 1,500,000 2.78
9,940,000 9,940,000 2.86
9,120,000 9,120,000
9,775,000 9,775,000 2.79
10,000,000 10,000,000
10,295,000 10,295,000 3.16
9,920,000 9,920,000 3.13
4,289,000 4,289,000
2,000,000 2,000,000
2,000,000 2,000,000
100,000 100,000
* 4,150,000 4,150,000
14,590,000 14,590,000
5,635,000 5,635,000
2,000,000 2,000,000
200,000 200,000
3,000,000 3,000,000
4,400,000 4,400,000
200,000 200,000
1,500,000 1,500,000
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- ---------------- -----------------
Diversified Financial Services 3.8%
Bear Stearns Co., Inc., Floating Rate Note, 9/30/09 $ -- $ 2,575,099 $ 2,575,099
General Electric Capital Corp., Floating Rate
Note, 1/5/09 -- 16,275,425 16,275,425
General Electric Capital Corp., Floating Rate
Note, 5/8/09 -- 9,103,979 9,103,979
IBM International Group Capital, Floating Rate
Note, 2/13/09 -- 1,550,209 1,550,209
JP Morgan Chase & Co., Floating Rate
Note, 12/2/08 -- 1,500,000 1,500,000
JP Morgan Chase & Co., Floating Rate
Note, 3/9/09 -- 9,942,829 9,942,829
----------- ------------- --------------
$ -- $ 40,947,541 $ 40,947,541
----------- ------------- --------------
Investment Banking & Brokerage 0.9%
Donaldson Lufkin Jenrett, 3.875%, 1/15/09 $ -- $ 9,121,454 $ 9,121,454
----------- ------------- --------------
Specialized Finance 0.9%
BP Capital Markets Plc, Floating Rate Note, 1/9/09 $ -- $ 9,775,000 $ 9,775,000
----------- ------------- --------------
Total Diversified Financials $ -- $ 81,344,389 $ 81,344,389
----------- ------------- --------------
Insurance 1.9%
Multi-Line Insurance 1.9%
MetLife Global Funding I, 4.57%, 8/7/09 $ -- $ 10,000,000 $ 10,000,000
MetLife Global Funding I, Floating Rate Note,
6/12/09 (144A) -- 10,295,022 10,295,022
----------- ------------- --------------
$ -- $ 20,295,022 $ 20,295,022
----------- ------------- --------------
Total Insurance $ -- $ 20,295,022 $ 20,295,022
----------- ------------- --------------
Technology Hardware & Equipment 0.9%
Computer Hardware 0.9%
IBM International Group Capital, Floating Rate
Note, 7/29/09 $ -- $ 9,939,994 $ 9,939,994
----------- ------------- --------------
Total Technology Hardware & Equipment $ -- $ 9,939,994 $ 9,939,994
----------- ------------- --------------
TOTAL CORPORATE BONDS $ -- $ 208,832,421 $ 208,832,421
----------- ------------- --------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS 14.5%
Government 14.5%
Fannie Mae Discount Notes,
0.601-0.701%, 1/27/09 $ 4,286,853 $ -- $ 4,286,853
Fannie Mae Discount Notes, 1.002%, 1/28/09 1,998,500 -- 1,998,500
Fannie Mae Discount Notes, 1.096%, 2/18/09 1,997,133 -- 1,997,133
Fannie Mae Discount Notes, 0.919%, 2/3/09 99,916 -- 99,916
Fannie Mae Discount Notes, 0.540%, 8/3/09 -- 4,102,119 4,102,119
Fannie Mae Discount Notes, 2.18%, 1/15/09 -- 14,578,515 14,578,515
Fannie Mae Discount Notes, 2.8%, 4/30/09 -- 5,583,283 5,583,283
Federal Home Loan Bank, 0.601%, 1/12/09 1,999,633 -- 1,999,633
Federal Home Loan Bank, 0.662%, 1/20/09 199,931 -- 199,931
Federal Home Loan Bank, 0.551%, 1/22/09 2,999,037 -- 2,999,037
Federal Home Loan Bank,
0.647%-2.364%, 1/26/09 4,393,296 -- 4,393,296
Federal Home Loan Bank, 0.651%, 1/7/09 199,978 -- 199,978
Federal Home Loan Bank, 0.150%, 2/3/09 1,499,794 -- 1,499,794
56
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------ ------------- ----------
480,000 480,000
2,000,000 2,000,000
3,000,000 3,000,000
600,000 600,000
5,000,000 5,000,000
1,000,000 1,000,000
1,000,000 1,000,000
1,000,000 1,000,000
1,000,000 1,000,000
3,400,000 3,400,000
4,000,000 4,000,000
2,090,000 2,090,000
500,000 500,000
1,000,000 1,000,000
10,845,000 10,845,000 2.64
3,000,000 3,000,000
1,035,000 1,035,000
3,000,000 3,000,000
5,000,000 5,000,000
8,505,000 8,505,000
216,000 216,000
1,000,000 1,000,000
1,700,000 1,700,000
1,070,000 1,070,000
6,166,000 6,166,000
4,925,000 4,925,000 2.73
9,700,000 9,700,000 0.33
3,500,000 3,500,000
1,000,000 1,000,000
767,000 767,000
4,805,000 4,805,000
5,610,000 5,610,000
9,620,000 9,620,000
2,615,000 2,615,000 2.40
400,000 400,000 2.44
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ --------------- --------------- -----------------
Government (continued)
Federal Home Loan Bank, 0.250%,1/14/09 479,957 -- 479,957
Federal Home Loan Bank, 1.9%, 3/20/09 2,004,739 -- 2,004,739
Federal Home Loan Bank, 2.15%, 4/14/09 2,996,825 -- 2,996,825
Federal Home Loan Bank, 2.8%, 2/25/09 602,177 -- 602,177
Federal Home Loan Bank, 2.83%, 3/3/09 5,008,108 -- 5,008,108
Federal Home Loan Bank, 3.04%, 4/24/09 1,008,258 -- 1,008,258
Federal Home Loan Bank, 3.125%, 1/22/09 1,000,269 -- 1,000,269
Federal Home Loan Bank, 3.15%, 4/20/09 1,008,296 -- 1,008,296
Federal Home Loan Bank, 3.5%, 10/22/09 1,002,524 -- 1,002,524
Federal Home Loan Bank, 4.25%, 5/15/09 3,447,883 -- 3,447,883
Federal Home Loan Bank, 5.25%, 1/14/09 4,003,503 -- 4,003,503
Federal Home Loan Bank, 5.25%, 2/13/09 2,101,824 -- 2,101,824
Federal Home Loan Bank, 6.21%, 6/2/09 511,959 -- 511,959
Federal Home Loan Bank, 6.73%, 6/22/09 1,029,319 -- 1,029,319
Federal Home Loan Bank, Floating Rate
Note, 12/15/09 -- 10,822,341 10,822,341
Federal Home Loan Mortgage Corp., 2.75%, 6/5/09 3,001,789 -- 3,001,789
Federal Home Loan Mortgage Corp.,
4.875%, 2/17/09 1,040,908 -- 1,040,908
Federal Home Loan Mortgage Corp., 5.0%, 1/16/09 3,002,826 -- 3,002,826
Federal Home Loan Mortgage Corp.,
5.25%, 5/21/09 5,054,031 -- 5,054,031
Federal National Mortgage Association,
0.092%, 1/21/09 -- 8,495,125 8,495,125
Federal National Mortgage Association,
3.74%, 2/24/09 217,052 -- 217,052
Federal National Mortgage Association,
4.57%, 6/15/09 1,018,582 -- 1,018,582
Federal National Mortgage Association,
4.875%, 4/15/09 1,715,507 -- 1,715,507
Federal National Mortgage Association,
5.0%, 4/20/09 1,077,829 -- 1,077,829
Federal National Mortgage Association,
5.25%, 1/15/09 6,173,210 -- 6,173,210
Federal National Mortgage Association, Floating
Rate Note, 2/8/10 -- 4,923,864 4,923,864
Federal National Mortgage Association, Floating
Rate Note, 9/3/09 -- 9,700,000 9,700,000
Freddie Mac Discount Notes, 1.708%, 2/11/09 3,493,224 -- 3,493,224
Freddie Mac Discount Notes, 0.200%, 2/2/09 999,822 -- 999,822
Freddie Mac Discount Notes, 0.410%, 4/15/09 766,094 -- 766,094
Freddie Mac Discount Notes, 0.043%, 4/6/09 -- 4,769,870 4,769,870
Freddie Mac Discount Notes, 2.1%, 1/7/09 -- 5,608,364 5,608,364
Freddie Mac Discount Notes, 2.2%, 1/13/09 -- 9,613,533 9,613,533
Freddie Mac, Floating Rate Note, 10/19/09 -- 2,614,208 2,614,208
Freddie Mac, Floating Rate Note, 9/18/09 -- 399,914 399,914
--------- ---------- ----------
$ 73,440,586 $ 81,211,136 $ 154,651,722
------------ ------------ --------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS $ 73,440,586 $ 81,211,136 $ 154,651,722
------------ ------------ --------------
57
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------- ------------- ----------
8,700,000 8,700,000 8.00
2,000,000 2,000,000 1.05
1,500,000 1,500,000 1.00
1,755,000 1,755,000 1.05
600,000 600,000 1.00
6,110,000 6,110,000 1.05
950,000 950,000 1.20
4,040,000 4,040,000 1.15
4,840,000 4,840,000 3.00
725,000 725,000 1.10
10,200,000 10,200,000 2.70
8,225,000 8,225,000
9,600,000 9,600,000
5,545,000 5,545,000
9,370,000 9,370,000
5,490,000 5,490,000
13,690,000 13,690,000
10,760,000 10,760,000
17,633,105 17,633,105 2.89
9,120,000 9,120,000 3.15
2,555,000 2,555,000
8,200,000 8,200,000 1.93
5,130,000 5,130,000
16,555,000 16,555,000
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- -----------------
MUNICIPAL BONDS 2.9%
Municipal Government 0.8%
Texas State Tax & Revenue Anticipation, Floating
Rate Note, 12/1/27 $ -- $ 8,700,000 $ 8,700,000
----------- ------------ --------------
Municipal Development 0.5%
Jackson County Mississippi, Floating Rate
Note, 6/1/23 $ -- $ 2,000,000 $ 2,000,000
Mississippi Business Finance Corp., Gulf
Opportunity Zone, Floating Rate Note, 12/1/30 -- 1,500,000 1,500,000
Syracuse NY Industrial Development Agency,
Floating Rate Note, 12/1/37 -- 1,755,000 1,755,000
Valdez Alaska Marine Term, Floating Rate
Note, 7/1/37 -- 600,000 600,000
----------- ------------ --------------
$ -- $ 5,855,000 $ 5,855,000
----------- ------------ --------------
Municipal Higher Education 0.6%
Athens-Clarke County Georgia, Floating Rate
Note, 8/1/33 $ -- $ 6,110,000 $ 6,110,000
----------- ------------ --------------
Municipal Medical 0.5%
New Hampshire Health & Education, Floating Rate
Note, 7/1/35 $ -- $ 950,000 $ 950,000
Weber County Utah Hospital Revenue, Floating
Rate Note, 2/15/31 -- 4,040,000 4,040,000
----------- ------------ --------------
$ -- $ 4,990,000 $ 4,990,000
----------- ------------ --------------
Municipal Single Family Housing 0.4%
Iowa Finance Authority Revenue, Floating Rate
Note, 7/1/37 $ -- $ 4,840,000 $ 4,840,000
----------- ------------ --------------
Municipal Transportation 0.1%
Valdez Alaska Marine Term, Floating Rate
Note, 7/1/37 $ -- $ 725,000 $ 725,000
----------- ------------ --------------
TOTAL MUNICIPAL BONDS $ -- $ 31,220,000 $ 31,220,000
----------- ------------ --------------
TEMPORARY CASH INVESTMENTS 62.7%
Commercial Paper 45.9%
Abbey National Treasury Services, Floating Rate
Note, 2/13/09 $ -- $ 10,200,000 $ 10,200,000
ABN Amro Bank NV/Chicago, 2.06%, 4/1/09 -- 8,237,326 8,237,326
AT&T, Inc., 2.23%, 1/23/09 (144A) -- 9,593,560 9,593,560
Banco Bilbao Vizcaya NY, 2.22%, 3/4/09 -- 5,545,187 5,545,187
Banco Bilbao Vizcaya, 0.0%, 1/14/08 (144A) -- 9,368,220 9,368,220
Banco Bilbao Vizcaya, 2.155%, 2/11/09 -- 5,490,030 5,490,030
Bank of America Corp., 0.03%, 1/2/09 -- 13,690,000 13,690,000
Bank of New York, 5.05%, 3/3/09 -- 10,794,492 10,794,492
Bank of Nova Scotia Floating Rate Note, 1/16/09 -- 17,633,172 17,633,172
Bank of Nova Scotia, Floating Rate Note, 5/6/09 -- 9,120,000 9,120,000
Barclays Bank Plc, 2.878%, 3/13/09 -- 2,549,918 2,549,918
Barclays Bank Plc/NY, Floating Rate Note, 2/11/09 -- 8,194,161 8,194,161
BNP Paribas CD, 3.03%, 1/2/09 -- 5,130,000 5,130,000
BNP Paribas/New York, 2.43%, 4/27/09 -- 16,555,000 16,555,000
58
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------- ------------- ----------
9,465,000 9,465,000
12,200,000 12,200,000
3,000,000 3,000,000
5,485,000 5,485,000
5,415,000 5,415,000
2,500,000 2,500,000
9,465,000 9,465,000
9,485,000 9,485,000
2,500,000 2,500,000
2,220,000 2,220,000 1.88
7,600,000 7,600,000 2.94
9,975,000 9,975,000 2.46
10,190,000 10,190,000 3.41
2,000,000 2,000,000
1,500,000 1,500,000
1,000,000 1,000,000
19,170,000 19,170,000
2,000,000 2,000,000
370,000 370,000
5,400,000 5,400,000
13,380,000 13,380,000
4,900,000 4,900,000 2.82
4,000,000 4,000,000
4,440,000 4,440,000
2,400,000 2,400,000
7,205,000 7,205,000
5,385,000 5,385,000
5,525,000 5,525,000
4,750,000 4,750,000 0.23
13,750,000 13,750,000
1,750,000 1,750,000
2,600,000 2,600,000
1,000,000 1,000,000 2.68
13,745,000 13,745,000
3,300,000 3,300,000 7.00
5,940,000 5,940,000 3.00
13,720,000 13,720,000
2,500,000 2,500,000 1.74
13,770,000 13,770,000
12,750,000 12,750,000
13,630,000 13,630,000
4,595,000 4,595,000 2.76
2,735,000 2,735,000 5.14
2,400,000 2,400,000 3.11
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- ----------------
Commercial Paper (continued)
CBA Delaware Finance, 1.85%, 3/9/09 -- 9,432,898 9,432,898
Chase Bank U.S.A. NA, 2.82%, 1/1/209 -- 12,200,000 12,200,000
Chevron Corp., 1.002%, 1/20/09 2,998,417 -- 2,998,417
Citibank NA, 0.0%, 3/2/09 -- 5,485,000 5,485,000
Citibank NA, 1.1%, 2/23/09 -- 5,415,000 5,415,000
Coca-Cola Co., 1.152%, 1/9/09 2,498,243 -- 2,498,243
Conoco Philips, 1.2%, 1/8/09 -- 9,463,107 9,463,107
Conoco Philips, 2.31%, 1/30/09 -- 9,475,778 9,475,778
Conoco Phillips, 0.750%, 1/9/09 2,499,583 -- 2,499,583
Credit Suisse New York, Floating Rate Note, 1/8/09 -- 2,219,479 2,219,479
Credit Suisse New York, Floating Rate
Note, 11/30/09 -- 7,599,472 7,599,472
Deutsche Bank NY, Floating Rate Note, 1/9/09 -- 9,974,618 9,974,618
Deutsche Bank NY, Floating Rate Note, 7/21/09 -- 10,190,000 10,190,000
FNP Fuels CP, 1.703%, 1/13/09 1,998,867 -- 1,998,867
Hewlett-Packard Corp., 0.250%, 1/30/09 1,499,698 -- 1,499,698
Hewlett-Packard Corp., 0.250%, 1/5/09 999,972 -- 999,972
HSBC U.S.A., Inc., 0.0%, 1/2/09 -- 19,170,000 19,170,000
Lowes Co., 0.501%, 3/12/09 1,998,056 -- 1,998,056
Lowes Co., 0.501%, 3/16/09 369,620 -- 369,620
MetLife, Inc., 1.25%, 1/9/09 (144A) -- 5,398,687 5,398,687
Nordea Bank NY, 3.23%, 7/10/09 -- 13,380,680 13,380,680
Nordea Bank NY, Floating Rate Note, 2/12/09 -- 4,900,000 4,900,000
Nordea North America, Inc., 0.0%, 1/23/09 -- 3,993,291 3,993,291
Nordea North America, Inc., 1.2%, 4/15/09 -- 4,424,756 4,424,756
Nordea North America, Inc., 1.75%, 1/16/09 -- 2,398,367 2,398,367
Philip Morris International, Inc., 2.5%, 1/23/09 -- 7,194,493 7,194,493
Philip Morris International, Inc., 0.7%, 2/20/09 -- 5,379,869 5,379,869
Procter & Gamble Co., 1.6%, 2/4/09 (144A) -- 5,516,897 5,516,897
Procter & Gamble Co., Floating Rate Note, 1/30/09 -- 4,742,980 4,742,980
Rabobank Nederland NV NY, 1.75%, 3/2/09 -- 13,750,000 13,750,000
Rabobank Nederland NV, 2.99%, 2/17/09 -- 1,750,775 1,750,775
Rabobank NY, 3.02%, 3/9/09 -- 2,600,281 2,600,281
Royal Bank of Canada NY, Floating Rate
Note, 4/16/09 -- 999,354 999,354
Royal Bank of Canada, 1.89%, 5/22/09 -- 13,745,000 13,745,000
Royal Bank of Canada, Floating Rate Note, 6/30/09 -- 3,296,516 3,296,516
Royal Bank of Canada, Floating Rate Note, 8/7/09 -- 5,933,787 5,933,787
Royal Bank of Scotland Plc, 2.18%, 3/10/09 -- 13,720,254 13,720,254
RY FLT YCD, Floating Rate Note, 10/1/09 -- 2,500,000 2,500,000
Societe General, 2.95%, 1/5/09 -- 13,770,902 13,770,902
State Street Corp., 0.0%, 1/5/09 -- 12,637,180 12,637,180
Svenska Handelsbanken, 1.95%,1/20/09 -- 13,630,068 13,630,068
Svenska Handelsbanken, Floating Rate
Note, 1/5/09 -- 4,595,147 4,595,147
Svenska Handelsbanken, Floating Rate
Note, 7/13/09 -- 2,736,867 2,736,867
Svenska Handelsbanken, Floating Rate Note, 7/8/09 -- 2,400,000 2,400,000
59
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------- ------------- ----------
6,150,000 6,150,000 4.91
13,740,000 13,740,000
2,770,000 2,770,000
13,635,000 13,635,000
2,500,000 2,500,000
7,000,000 7,000,000
5,425,000 5,425,000
13,470,000 13,470,000
5,465,000 5,465,000
500,000 500,000
370,000 370,000
2,725,000 2,725,000
2,670,000 2,670,000 0.00
30,000,000 30,000,000 1.68
4,282,704 4,282,704
4,282,703 4,282,703
27,180,000 27,180,000
38,950,000 38,950,000
38,950,000 38,950,000
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- ---------------
Commercial Paper (continued)
The Bank of New York Mellon, Floating Rate
Note, 10/14/09 -- 6,117,654 6,117,654
Toronto Dominion Bank, 1.90%, 2/19/09 -- 13,740,000 13,740,000
Toronto Dominion Bank, 1.96%, 10/6/09 -- 2,770,210 2,770,210
Toronto Dominion Bank, 2.48%, 5/26/09 -- 13,635,539 13,635,539
Toyota Motor Corp., 1.752%-1.954%, 1/5/09 2,499,497 -- 2,499,497
US Bank NA, 3.0%, 4/28/09 -- 7,000,000 7,000,000
Vanderbilt University, 0.0%, 1/8/09 -- 5,422,830 5,422,830
Westpac Banking Corp., 1.5%, 6/15/09 -- 13,470,000 13,470,000
Yale University, 0.40%, 3/2/09 -- 5,450,937 5,450,937
Yale University, 1.97%, 2/6/09 -- 499,042 499,042
Yale University, 2.2%, 2/10/09 -- 369,118 369,118
Yale University, 3.8%, 1/7/09 -- 2,723,562 2,723,562
Yale University, Floating Rate Note, 1/9/09 -- 2,668,002 2,668,002
--------- ---------- ----------
Total Commercial Paper $17,361,953 $471,989,463 $489,351,416
----------- ------------ ------------
Money Market Funds 3.6%
BlackRock Liquidity Funds Temporary
Cash Portfolio $ -- $ 30,000,000 $ 30,000,000
Fidelity Institutional Money Market Fund 4,282,704 -- 4,282,704
Pioneer Institutional Money Market Fund 4,282,703 -- 4,282,703
----------- ------------ ------------
Total Money Market Funds $ 8,565,407 $ 30,000,000 $ 38,565,407
----------- ------------ ------------
Repurchase Agreements 13.2%
Bank of America, 0.08%, dated 12/31/08,
repurchase price of $27,180,000 plus accrued
interest on 1/2/09 collateralized by
$27,256,040 Federal National Mortgage
Association, 6.0%, 10/1/38 $ -- $ 27,180,000 $ 27,180,000
Barclays Plc, 0.07%, dated 12/31/08, repurchase
price of $38,950,000 plus accrued interest on
12/1/08 collateralized by the following:
$13,977,794 Federal National Mortgage
Association, 4.0-5.0%, 9/1/23-12/1/33
$3,805,434 Federal Home Loan Mortgage Corp.,
5.924%, 1/1/37
$31,661,376 Federal National Mortgage Association
(ARM), 4.684-5.551%, 9/1/35-4/1/38 -- 38,950,000 38,950,000
Deutsche Bank, 0.10%, dated 12/31/08, repurchase
price of $38,950,000 plus accrued interest on
1/2/09 collateralized by $52,167,900 Freddie Mac
Giant, 7.0%, 11/1/37 -- 38,950,000 38,950,000
60
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
Market Reserves ProForma
Fund Fund Combined
Principal Principal Principal
Amount Amount Amount Floating
($) ($) ($) Rate (b)
- ----------- ------------ ------------ ----------
35,000,000 35,000,000
Regions Pioneer
Morgan Pioneer
Keegan Cash
Select Pioneer Reserves
Money Cash Fund
% of Market Reserves Pro Forma
Pro Forma Fund Fund Combined
Combined Market Market Market
Net Assets Value Value Value
------------ -------------- --------------- -----------------
Repurchase Agreements (continued)
JP Morgan Chase & Co., 0.07%, dated 12/31/08,
repurchase price of $35,000,000 plus accrued
interest on 1/2/09 collateralized by $54,078,605
Federal National Mortgage Association, 4.0-7.5%,
12/1/13-1/1/39 -- 35,000,000 35,000,000
----------- ---------- ----------
Total Repurchase Agreements $ -- $140,080,000 $ 140,080,000
----------- ------------ --------------
TOTAL TEMPORARY CASH INVESTMENTS $25,927,360 $642,069,463 $ 667,996,823
----------- ------------ --------------
TOTAL INVESTMENT IN SECURITIES 99.7% $99,367,946 $963,333,020 $1,062,700,966
----------- ------------ --------------
OTHER ASSETS AND LIABILITIES 0.3% $ 459,365 $ 2,646,003 $ 3,105,368
----------- ------------ --------------
TOTAL NET ASSETS 100.0% $99,827,311 $965,979,023 $1,065,806,334
----------- ------------ --------------
INVESTMENT AT COST $99,367,946 $963,333,020 $1,062,700,966
----------- ------------ --------------
(a) No adjustments are shown to the unaudited pro forma combined schedule of
investments due to the fact that upon consummation of the merger no
securities would need to be sold in order for Pioneer Cash Reserves Fund to
comply with its prospectus restrictions. The foregoing sentence shall not
restrict in any way the ability of the investment adviser of the funds from
buying or selling securities in the normal course of such fund's business
and operations.
(b) Debt obligation with a variable interest rate. Rate shown is rate at
period end.
61
Pro Forma Combined Statement of Assets & Liabilities for Regions Morgan Keegan
Select Money Market Fund and Pioneer Cash Reserves Fund
As of 12/31/08
(unaudited)
Regions Morgan
Keegan Select Pioneer
Money Market Cash Reserves
Fund Fund
---------------- ---------------
ASSETS:
Investment in securities, at value (Cost $99,367,946 and
$963,333,020, respectively) $ 99,367,946 $963,333,020
Cash -- 1,801,683
Receivables -
Fund shares sold -- 1,638,221
Interest and dividends 592,984 3,372,312
Due from Pioneer Investment Management, Inc. -- 155
Other -- 213,590
------------ ------------
Total assets $ 99,960,930 $970,358,981
------------ ------------
LIABILITIES:
Payables -
Fund shares repurchased $ -- $ 3,766,008
Dividends 62,999 337,279
Due to affiliates 52,436 82,282
Accrued expenses 18,184 194,389
------------ ------------
Total liabilities $ 133,619 $ 4,379,958
------------ ------------
NET ASSETS:
Paid-in capital $100,035,441 $966,483,918
Distributions in excess of net investment income (10,000) (203,548)
Accumulated net realized loss on investments (198,130) (301,347)
------------ ------------
Total net assets $ 99,827,311 $965,979,023
------------ ------------
NET ASSETS BY CLASS:
Class A $ 88,596,420 $667,292,993
============ ============
Class B $ -- $ 59,389,630
============ ============
Class C $ -- $ 62,303,262
============ ============
Class I $ 11,230,891 $ --
============ ============
Class R $ -- $ 1,842,575
============ ============
Class Y $ -- $175,150,563
============ ============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 88,644,741 667,771,028
============ ============
Class B -- 59,375,508
============ ============
Class C -- 62,314,975
============ ============
Class I 11,220,297 --
============ ============
Class R -- 1,843,292
============ ============
Class Y -- 175,178,581
============ ============
NET ASSET VALUE PER SHARE:
Class A $ 1.00 $ 1.00
============ ============
Class B $ -- $ 1.00
============ ============
Class C $ -- $ 1.00
============ ============
Class I $ 1.00 $ --
============ ============
Class R $ -- $ 1.00
============ ============
Class Y $ -- $ 1.00
============ ============
Pioneer
Cash Reserves Pioneer
Fund Cash Reserves
Pro Forma Fund
Adjustments Combined
---------------------- -----------------
ASSETS:
Investment in securities, at value (Cost $99,367,946 and
$963,333,020, respectively) $1,062,700,966
Cash 1,801,683
Receivables -
Fund shares sold 1,638,221
Interest and dividends 3,965,296
Due from Pioneer Investment Management, Inc. 155
Other 213,590
--------------
Total assets $1,070,319,911
--------------
LIABILITIES:
Payables -
Fund shares repurchased $ 3,766,008
Dividends 400,278
Due to affiliates 134,718
Accrued expenses 212,573
--------------
Total liabilities 4,513,577
--------------
NET ASSETS:
Paid-in capital $1,066,519,359
Distributions in excess of net investment income (213,548)
Accumulated net realized loss on investments (499,477)
--------------
Total net assets $1,065,806,334
--------------
NET ASSETS BY CLASS:
Class A $ 755,889,413
==============
Class B $ 59,389,630
==============
Class C $ 62,303,262
==============
Class I (11,230,891)(a) $ --
==============
Class R $ 1,842,575
==============
Class Y 11,230,891(a) $ 186,381,454
==============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A (48,321)(a) 756,367,448
==============
Class B 59,375,508
==============
Class C 62,314,975
==============
Class I (11,220,297)(a) --
==============
Class R 1,843,292
==============
Class Y 11,230,891(a) 186,409,472
==============
NET ASSET VALUE PER SHARE:
Class A $ 1.00
==============
Class B $ 1.00
==============
Class C $ 1.00
==============
Class I $ --
==============
Class R $ 1.00
==============
Class Y $ 1.00
==============
(a) Class A and I shares of Regions Morgan Keegan Select Money Market Fund are
exchanged for Class A and Y shares of Pioneer Cash Reserves Fund,
respectively.
See accompanying notes to pro forma financial statements.
62
Pro Forma Statement of Operations
For the Year Ended December 31, 2008
(unaudited)
Pioneer Pioneer
Regions Morgan Cash Reserves Cash Reserves
Keegan Select Pioneer Fund Fund
Money Market Cash Reserves Pro Forma Pro Forma
Fund Fund Adjustments Combined
---------------- --------------- ------------------- --------------
INVESTMENT INCOME:
Dividends $ 224,601 $ -- $ 224,601
Interest 3,433,331 28,606,688 32,040,019
Litigation fees -- 1,341,718 1,341,718
---------- ----------- -----------
Total investment income $3,657,932 $29,948,406 $33,606,338
---------- ----------- -----------
EXPENSES:
Management fees $ 327,464 $ 3,769,008 $ 190,913(b) $ 4,287,385
Transfer agent fees 32,797 -- (32,797)(b) --
Class A -- 601,254 89,474(b) 690,728
Class B -- 116,865 116,865
Class C -- 75,642 75,642
Class R -- 1,277 1,277
Class Y -- 73 556(b) 629
Shareholder service fees -- Class A Shares 301,272 -- (301,272)(b) --
Distribution fees --
Class A -- 1,072,064 180,732(b) 1,252,796
Class B -- 543,891 543,891
Class C -- 761,933 761,933
Class R -- 9,469 9,469
Shareholder communications expense -- 100,929 100,929
Administrative fees 117,887 282,594 (88,490)(b) 311,991
Custodian fees 28,698 81,149 (20,206)(a) 89,641
Registration fees 14,117 169,494 5,434(c) 189,045
Professional fees -- 80,088 7,637(c) 87,725
Accounting fees 39,296 -- (39,296)(a) --
Legal fees 22,407 -- (22,407)(a) --
Audit fees 7,657 -- (7,657)(a) --
Printing expense 3,883 58,805 394(c) 63,082
Fees and expenses of nonaffiliated trustees 9,060 26,820 (5,394)(a) 30,486
Insurance premiums 600 -- (600)(a) --
Miscellaneous 1,590 247,400 3,567(c) 252,557
---------- ----------- ----------- -----------
Total expenses $ 906,728 $ 7,998,755 (39,412) $ 8,866,071
Less management fees waived and expenses assumed by
Pioneer Investment Management, Inc. -- (155) (155)
Less fees paid indirectly -- (16,923) (16,923)
---------- ----------- ----------- -----------
Net expenses $ 906,728 $ 7,981,677 $ (39,412) $ 8,848,993
---------- ----------- ----------- -----------
Net investment income $2,751,204 $21,966,729 $ 39,412 $24,757,345
---------- ----------- ----------- -----------
REALIZED LOSS ON INVESTMENTS:
Net realized loss from investments $ (56) $ (12,518) $ (12,574)
---------- ----------- -----------
Net loss on investments $ (56) $ (12,518) $ (12,574)
---------- ----------- ------------ -----------
Net increase in net assets resulting from operations $2,751,148 $21,954,211 $ 39,412 $24,744,771
========== =========== =========== ===========
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Expenses and expense limitations conformed to Pioneer Cash Reserves Fund's
contracts with affiliated parties.
(c) Reflects increase in expenses due to an increase in the combined average
net assets.
See accompanying notes to pro forma financial statements.
63
Pro Forma Notes to Combined Financial Statements for Regions Morgan Keegan
Select Money Market Fund and
Pioneer Cash Reserves Fund
As of 12/31/08
(unaudited)
1. Description of the Fund
Pioneer Cash Reserves Fund (the "Fund"), a series of Pioneer Money Market
Trust, is a Delaware statutory trust registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as a diversified, open-end management
investment company. The investment objective of the Fund is to provide high
current income, preservation of capital and liquidity through investments in
high quality short-term securities.
The Trustees have authorized the issuance of five classes of shares of the
Fund. The Fund offers five classes of shares designated as: Class A, Class B,
Class C, Class R and Class Y shares. Class R shares and Class Y shares were
first publicly offered on April 1, 2003 and September 23, 2005, respectively. As
planned, on December 10, 2006 Investor Class shares converted to Class A shares.
Each class of shares represents an interest in the same portfolio of investments
of the Fund and have equal rights to voting, redemptions, dividends and
liquidation, except that each class of shares can bear different transfer agent
and distribution fees and have exclusive voting rights with respect to the
distribution plans that have been adopted by Class A, Class B, Class C and Class
R shareowners, respectively. There is no distribution plan for Class Y shares.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related
notes, are presented to show the effect of the proposed merger of Regions Morgan
Keegan Select Money Market Fund (the "RMK Fund") with and into the Fund (the
"Merger"), as if such merger had taken place as of January 1, 2008.
Under the terms of an Agreement and Plan of Merger between these two funds,
the combination of the Fund and the RMK Fund will be treated as a tax-free
business combination and, accordingly, will be accounted for by a method of
accounting for tax-free mergers of investment companies. The Merger will be
accomplished by an acquisition of the net assets of the RMK Fund in exchange for
shares of the Fund at their net asset values. The accompanying schedules of
investments, statements of assets and liabilities and the related statements of
operations of the Fund and the RMK Fund have been combined as of and for the
most recent twelve months ended December 31, 2008. Following the Merger, the
Fund will be the accounting survivor. All related merger costs will be borne by
Pioneer Investment Management Inc. ("Pioneer"), the investment adviser of the
Fund, and Morgan Asset Management, Inc. ("MAM"), the investment adviser to the
RMK Fund.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of the Fund and the RMK Fund included
in their respective annual reports to shareowners dated November 30 and December
31, 2008, respectively. Adjustments have been made to expenses for Pioneer
affiliate contractual rates and duplicate services that would not have been
incurred if the Merger took place on January 1, 2008.
3. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at amortized cost, which approximates fair market value. Investments purchased
at a discount or premium are valued by amortizing the difference between the
original purchase price and maturity value of the issue over the period to
maturity. Interest income, including interest on income bearing cash accounts,
is recorded on the accrual basis.
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of
the Fund that would have been issued at December 31, 2008 in connection with the
proposed Merger. The number of shares assumed to be issued is equal to the net
assets of the RMK Fund as of December 31, 2008, divided by the net asset value
of the Fund's shares as of December 31, 2008. The pro forma number of shares
outstanding, by class, for the combined Fund consists of the following at
December 31, 2008:
64
- ---------------------------------------------------------------------------------------
Shares of Additional Shares
The Fund Assumed Issued Total Outstanding Shares
Class of Shares Pre-Combination In Reorganization Post-Combination
- ---------------------------------------------------------------------------------------
Class A 667,771,028 88,596,420 756,367,448
- ---------------------------------------------------------------------------------------
Class B 59,375,508 -- 59,375,508
- ---------------------------------------------------------------------------------------
Class C 62,314,975 -- 62,314,975
- ---------------------------------------------------------------------------------------
Class R 1,843,292 -- 1,843,292
- ---------------------------------------------------------------------------------------
Class Y 175,178,581 11,230,891 186,409,472
- ---------------------------------------------------------------------------------------
5. Management Agreement
Pioneer, a wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), manages the Fund's portfolio. Effective January 1, 2006,
management fees are calculated daily at the annual rate of 0.40% of the fund's
average net daily net assets up to $1 billion and 0.35% on assets over $1
billion. Prior to January 1, 2006, management fees were calculated daily at the
annual rate of 0.40% of the Fund's average daily net assets. For the year ended,
December 31, 2008, the net management fee was equivalent to 0.40%.
Pioneer has agreed to limit the Fund's expenses for any class of shares or
waive a portion of its management fee to maintain a net asset value of $1.00.
Under certain circumstances, this limitation may result in a 0.00% yield for one
or more classes of shares. From time to time, Pioneer and its affiliates may
limit the expenses of one or more classes for the purpose of increasing its
yield during the period of the limitation. These expense limitation policies are
voluntary and temporary and may be revised or terminated by Pioneer at any time
without notice.
6. Federal Income Taxes
Each of the Fund and the RMK Fund has elected to be taxed as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). After the acquisition, it will continue to be the Fund's policy to
comply with the requirements of the Code applicable to regulated investment
companies and to distribute all of its taxable income and net realized capital
gains, if any, to its shareowners. Therefore, no federal income tax provision is
required.
The identified cost of investments for these funds is substantially the
same for both financial and federal income tax purposes. The cost of investments
will remain unchanged for the combined Fund.
65
ADDITIONAL INFORMATION ABOUT
PIONEER MID CAP GROWTH FUND II,
PIONEER GROWTH FUND
AND PIONEER INTERMEDIATE TAX FREE INCOME FUND
FUND HISTORY
Each of Pioneer Mid Cap Growth Fund II, Pioneer Growth Fund and Pioneer
Intermediate Tax Free Income Fund (referred to hereinafter as the funds) is a
diversified series of Pioneer Series Trust I, an open-end management investment
company (referred to hereinafter as the trust). Pioneer Series Trust I, which
currently has five series, was organized as a Delaware statutory trust on
[ ]. Pioneer Investment Management Inc. ("Pioneer") is each fund's
investment adviser.
INVESTMENT STRATEGIES AND RISKS
The Proxy Statement/Prospectus presents the investment objective and the
principal investment strategies and risks of each fund. This section
supplements the disclosure in the Proxy Statement/Prospectus and provides
additional information on each fund's investment policies and restrictions.
Restrictions or policies stated as a maximum percentage of each fund's assets
are only applied immediately after a portfolio investment to which the policy
or restriction is applicable (other than the limitations on borrowing and
illiquid securities). Accordingly, any later increase or decrease in a
percentage resulting from a change in values, net assets or other circumstances
will not be considered in determining whether the investment complies with each
fund's restrictions and policies.
Investment Objective
Pioneer Mid Cap Growth Fund II
- ------------------------------
The fund's investment objective is long-term capital growth.
Pioneer Growth Fund
- -------------------
The fund's investment objective is long-term capital growth.
Pioneer Intermediate Tax Free Income Fund
- -----------------------------------------
The fund's investment objective is current income exempt from regular
federal income tax.
Primary Investments and Investment Strategies
Pioneer Mid Cap Growth Fund II
- ------------------------------
Normally, the fund invests at least 80% of its net assets (plus the amount
of borrowings, if any, for investment purposes) in equity securities of
mid-size companies. Mid-size companies are those with market values, at the
time of investment, that do not exceed the greater of the market capitalization
of the largest company within the Russell Midcap Growth Index or the 3-year
rolling average of the market capitalization of the largest company within the
Russell Midcap Growth Index as measured at the end of the preceding month, and
are not less than the smallest company within the index. The Russell Midcap
Growth Index measures the performance of U.S. mid-cap growth stocks. The size
of the companies in the index changes with market conditions and the
composition of the index. 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 will provide written notice to shareholders at least 60 days
prior to any change to the requirement that it invest at least 80% of its
assets in equity securities of mid-size companies.
The fund uses a "growth" style of management and seeks to invest in
securities of issuers with above average potential for earnings and revenue
growth that are also trading at attractive market valuations. To select growth
stocks Pioneer employs quantitative analysis, 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:
66
o Market leadership in a company's primary products and services
o Companies expected to benefit from long-term trends in the economy and
society
o Low market valuations relative to earnings forecast, book value, cash flow
and sales compared to historic standards
o Increasing earnings forecast
Pioneer generally sells a portfolio security when it believes that the
issuer no longer offers the potential for above average earnings and
revenue growth. Pioneer makes that determination based upon the same
criteria it uses to select portfolio securities. The fund may invest up
to 10% of its total assets in securities of non-U.S. issuers. The fund
will not invest more than 5% of its total assets in the securities of
emerging markets issuers. 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 convertible debt securities issued by both U.S. and non-U.S.
issuers. The fund invests in debt securities when Pioneer believes they
are consistent with the fund's investment objective of capital growth,
to diversify the fund's portfolio or for greater liquidity. The fund may
invest up to 20% of its net assets in REITs.
Pioneer Growth Fund
- -------------------
Normally, the fund invests at least 80% of its net assets (plus the amount
of borrowings, if any, for investment purposes) in equity securities of large
companies, that is, companies similar in size to issuers included in the
Russell 1000 Growth Index. The Russell 1000 Growth Index is a large
capitalization index that measures the performance of those companies in the
Russell 1000 Index with higher price-to-book ratios and higher forecasted
growth values. On November 30, 2008, the index had a median market
capitalization of approximately $3.3 billion. The size of the companies in the
index may change dramatically as a result of market conditions and the
composition of the index. The fund's investments will not be confined to
securities issued by companies included in the index.
The fund will provide written notice to shareholders at least 60 days
prior to any change to its policy to invest at least 80% of its assets in
equity securities of large companies.
The fund may invest up to 20% of its total assets in equity and debt
securities of non-U.S. corporate issuers and debt securities of non-U.S.
government issuers. The fund will not invest more than 10% of its total assets
in the securities of emerging markets issuers.
The fund may invest its assets in debt securities of U.S. 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 long-term capital
growth, to diversify the fund's portfolio or for greater liquidity.
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 uses a "growth" style of management and seeks to invest in
securities of issuers with above average potential for earnings and revenue
growth. To select growth stocks, Pioneer employs quantitative analysis,
fundamental research, an evaluation of the issuer based on its financial
statements and operations, utilizing a bottom-up analytic style. 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 and securities, not on economic
sector or market-timing strategies. Factors Pioneer looks for in selecting
investments include:
o Companies with experienced management teams, strong market positions and
the potential to support above average earnings growth
o A sustainable competitive advantage such as brand name, customer base,
proprietary technology or economies of scale
o Favorable expected returns relative to perceived risk
Pioneer generally sells a portfolio security when it believes that the
issuer no longer offers the potential for above average earnings and revenue
growth. Pioneer makes that determination based upon the same criteria it uses
to select portfolio securities.
67
Pioneer Intermediate Tax Free Income Fund
- -----------------------------------------
Normally, the fund invests at least 80% of its net assets (plus the amount
of borrowings, if any, for investment purposes) in securities that provide
income that is exempt from regular federal income tax and is not subject to the
alternative minimum tax ("AMT"). These investments include bonds, notes and
other debt instruments issued by or on behalf of states, counties,
municipalities, territories and possessions of the United States and the
District of Columbia and their authorities, political subdivisions, agencies or
instrumentalities.
The fund invests primarily in investment grade securities. Under normal
circumstances, it is anticipated that the dollar-weighted average maturity of
the fund's portfolio will be between three and ten years. The fund may invest
in securities of any maturity. The fund may invest 25% or more of its assets in
issuers in any one or more states or securities the payments on which are
derived from gas, electric, telephone, sewer and water segments of the
municipal bond market. The fund may also invest up to 20% of its assets in
industrial development bonds.
The fund's investments may have fixed or variable principal payments and
all types of interest rate payment and reset terms, including fixed rate,
inverse floating rate, floating rate, zero coupon, contingent, deferred and
payment in kind and auction rate features. The fund's investments may include
instruments that allow for balloon payments or negative amortization payments.
Such investments permit the borrower to avoid paying currently a portion of the
interest accruing on the instrument. While these features make the debt
instrument more affordable to the borrower in the near term, they increase the
risk that the borrower will be unable to make the resulting higher payment or
payments that become due at the maturity of the loan.
Pioneer considers both broad economic factors and issuer specific factors
in selecting a portfolio designed to achieve the fund's investment objective.
In assessing the appropriate maturity and rating weighting of the fund's
portfolio, Pioneer considers a variety of factors that are expected to
influence economic activity and interest rates. These factors include
fundamental economic indicators, such as the rates of economic growth and
inflation, Federal Reserve monetary policy and the relative value of the U.S.
dollar compared to other currencies. Once Pioneer determines the preferable
portfolio characteristics, Pioneer selects individual securities based upon the
terms of the securities (such as yields compared to U.S. Treasuries or
comparable issues), liquidity and rating and issuer diversification. Pioneer
also employs due diligence and Pioneer also uses fundamental research, an
evaluation of the issuer based on its financial statements and operations to
assess the issuer's credit quality, taking into account financial condition,
future capital needs and potential for change in rating. In making these
portfolio decisions, 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.
A debt security is considered investment grade if it is:
o Rated BBB or higher at the time of purchase by Standard & Poor's Ratings
Group;
o Rated the equivalent rating by another nationally recognized statistical
rating organization; or
o Determined to be of equivalent credit quality by Pioneer
Securities in the lowest category of investment grade are considered to
have speculative characteristics.
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
changes the quality rating assigned to one or more of the fund's portfolio
securities, Pioneer will consider if any action is appropriate in light of the
fund's investment objective and policies. Credit ratings are only the opinions
of the companies issuing them and are not absolute guarantees of quality.
The fund may invest up to 20% of its net assets in taxable investments,
including securities of other investment companies, investment grade commercial
paper, U.S. government securities, U.S. or foreign bank instruments and
repurchase agreements.
[The fund may invest up to [ ]% of its net assets in debt securities
rated below investment grade or, if unrated, of equivalent quality as
determined by Pioneer. Debt securities rated below investment grade are
commonly referred to as "junk bonds" and are considered speculative. Below
investment grade debt securities involve greater risk of loss, are subject to
greater price volatility and are less liquid, especially during periods of
economic uncertainty or change, than higher quality debt securities. The fund
may invest in debt securities rated "D" or better, or comparable unrated
securities.]
The fund may invest in asset-backed securities issued by special entities,
such as trusts, that are backed by a pool of financial assets. The fund may
invest in collateralized debt obligations ("CDOs"), which include
collateralized bond obligations ("CBOs"), collateralized loan obligations
("CLOs") and other similarly structured securities. A CDO is a trust backed by
a pool of fixed income securities. The trust typically is split into two or
more portions, called tranches, which vary in credit quality and yield. Lower
tranches pay higher interest rates but
68
represent lower degrees of credit quality and are more sensitive to the rate of
defaults in the pool of obligations. The risks of an investment in a CDO depend
largely on the type of the underlying obligations (e.g., an underlying
obligation may decline in quality or default) and the tranche of the CDO in
which the fund invests (e.g., the fund may invest in a tranche of CDO that is
subordinate to other tranches). Investments in CDOs may be characterized by the
fund as illiquid securities, which may be difficult to sell at an advantageous
time or price.
The fund may invest up to 10% of its net assets in inverse floating rate
obligations (a type of derivative instrument). Inverse floating rate
obligations represent interests in tax exempt bonds. The interest rate on
inverse floating rate obligations will generally decrease as short-term
interest rates increase, and increase as short-term rates decrease. Due to
their leveraged structure, the sensitivity of the market value of an inverse
floating rate obligation to changes in interest rates is generally greater than
a comparable long-term bond issued by the same municipality and with similar
credit quality, redemption and maturity provisions. Inverse floating rate
obligations may be volatile and involve leverage risk.
Investment Policies
Equity Investments and Related Investments (Pioneer Mid Cap Growth Fund II and
Pioneer Growth Fund)
Investments in Equity Securities
- --------------------------------
Equity securities, such as common stock, generally represent an ownership
interest in a company. While equity securities have historically generated
higher average returns than fixed income securities, equity securities have
also experienced significantly more volatility in those returns. An adverse
event, such as an unfavorable earnings report, may depress the value of a
particular equity security held by the fund. Also, the price of equity
securities, particularly common stocks, is sensitive to general movements in
the stock market. A drop in the stock market may depress the price of equity
securities held by the fund.
Warrants
- --------
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.
As a result, an investment in warrants may be considered more speculative
than certain other types of investments. In addition, the value of a warrant
does not necessarily change with the value of the underlying securities, and
warrants expire worthless if they are not exercised on or prior to their
expiration date.
Preferred Shares
- ----------------
The fund may invest in preferred shares. Preferred shares are equity
securities, but they have many characteristics of fixed income securities, such
as a fixed dividend payment rate and/or a liquidity preference over the
issuer's common shares. However, because preferred shares are equity
securities, they may be more susceptible to risks traditionally associated with
equity investments than the fixed income securities.
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 IPOs may represent a
significant portion of the fund's investment performance. The fund cannot
assure that investments in IPOs 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 IPOs on the
overall performance of the fund is likely to decrease.
Non-U.S. Investments (Pioneer Mid Cap Growth Fund II and Pioneer Growth Fund)
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,
69
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 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.
Eurodollar Instruments and Samurai and Yankee Bonds
- ---------------------------------------------------
The fund may invest in Eurodollar instruments and Samurai and Yankee
bonds. Eurodollar instruments are bonds of corporate and government issuers
that pay interest and principal in U.S. dollars but are issued in markets
outside the United States, primarily in Europe. Samurai bonds are
yen-denominated bonds sold in Japan by non-Japanese issuers. Yankee bonds are
U.S. dollar denominated bonds typically issued in the U.S. by non-U.S.
governments and their agencies and non-U.S. banks and corporations. The fund
may also invest in Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time
Deposits ("ETDs") and Yankee Certificates of Deposit ("Yankee CDs"). ECDs are
U.S. dollar-denominated certificates of deposit issued by non-U.S. branches of
domestic banks; ETDs are U.S. dollar-denominated deposits in a non-U.S. branch
of a U.S. bank or in a non-U.S. bank; and Yankee CDs are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a
non-U.S. bank and held in the U.S. These investments involve risks that are
different from investments in securities issued by U.S. issuers, including
potential unfavorable political and economic developments, non-U.S. withholding
or other taxes, seizure of non-U.S. deposits, currency controls, interest
limitations or other governmental restrictions which might affect payment of
principal or interest.
Investments in Emerging Markets
- -------------------------------
The fund may invest in securities of issuers in countries with emerging
economies or securities markets. Emerging economies or securities markets will
generally include, but not be limited to, countries included in the Morgan
Stanley Capital International (MSCI) Emerging Markets Index. The fund will
generally focus on emerging markets that do not impose unusual trading
requirements which tend to restrict the flow of investments. In addition, the
fund may invest in unquoted securities, including securities of emerging market
issuers.
Risks of Non-U.S. Investments
- -----------------------------
Investing in securities of non-U.S. issuers involves considerations and
risks not typically associated with investing in the securities of issuers in
the U.S. These risks are heightened with respect to investments in countries
with emerging markets and economies. The risks of investing in securities of
non-U.S. issuers generally, or in issuers with significant exposure to non-U.S.
markets may be related, among other things, to (i) differences in size,
liquidity and volatility of, and the degree and manner of regulation of, the
securities markets of certain non-U.S. markets compared to the securities
markets in the U.S.; (ii) economic, political and social factors; and (iii)
foreign exchange matters, such as restrictions on the repatriation of capital,
fluctuations in exchange rates between the U.S. dollar and the currencies in
which the 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,
may undergo significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristic of more
developed countries.
Non-U.S. Securities Markets and Regulations. There may be less publicly
available information about non-U.S. markets and issuers than is available with
respect to U.S. securities and issuers. Non-U.S. companies generally are not
subject to accounting, auditing and financial reporting standards, practices
and requirements comparable to those applicable to U.S. companies. The trading
markets for most non-U.S. securities are generally less liquid and subject to
greater price volatility than the markets for comparable securities in the U.S.
The markets for securities in certain emerging markets are in the earliest
stages of their development. Even the markets for relatively widely traded
securities in certain non-U.S. markets, including emerging market countries,
may not be able to absorb, without price disruptions, a significant increase in
trading volume or trades of a size customarily undertaken by institutional
investors in the U.S.
Additionally, market making and arbitrage activities are generally less
extensive in such markets, which may contribute to increased volatility and
reduced liquidity. The less liquid a market, the more difficult it may be for
the fund to accurately price its portfolio securities
70
or to dispose of such securities at the times determined by Pioneer to be
appropriate. The risks associated with reduced liquidity may be particularly
acute in situations in which the fund's operations require cash, such as in
order to meet redemptions and to pay its expenses.
Economic, Political and Social Factors. Certain countries, including
emerging markets, may be subject to a greater degree of economic, political and
social instability than in the U.S. and Western European countries. Such
instability may result from, among other things: (i) authoritarian governments
or military involvement in political and economic decision making; (ii) popular
unrest associated with demands for improved economic, political and social
conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial conflict. Such
economic, political and social instability could significantly disrupt the
financial markets in such countries and the ability of the issuers in such
countries to repay their obligations. Investing in emerging market countries
also involves the risk of expropriation, nationalization, confiscation of
assets and property or the imposition of restrictions on foreign investments
and on repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation in any emerging country, the fund could
lose its entire investment in that country.
Certain emerging market countries restrict or control foreign investment
in their securities markets to varying degrees. These restrictions may limit
the fund's investment in those markets and may increase the expenses of the
fund. In addition, the repatriation of both investment income and capital from
certain markets in the region is subject to restrictions such as the need for
certain governmental consents. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the fund's operation.
Economies in individual countries may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Many countries have experienced substantial,
and in some cases extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had, and may continue to have,
very negative effects on the economies and securities markets of certain
emerging countries.
Unanticipated political or social developments may 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. Custodian 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.
71
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.
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 or that its
hedging activities will be successful. The fund will not attempt to hedge all
of its foreign portfolio positions and will enter into such transactions only
to the extent, if any, deemed appropriate by Pioneer.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the fund to hedge against a devaluation that is so generally
anticipated that the fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The fund may also engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency, if Pioneer determines that there is a
pattern of correlation between the two currencies. Cross-hedging may also
include entering into a forward transaction involving two foreign currencies,
using one foreign currency as a proxy for the U.S. dollar to hedge against
variations in the other foreign currency.
The 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
72
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
the dollar value of such securities, even if their value in the foreign
securities, even if their value in the foreign currency remains constant. In an
attempt to protect against such decreases in the value of portfolio securities,
the fund may purchase put options on the foreign currency. If the value of the
currency declines, the fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative effect
of currency depreciation on the value of the fund's securities quoted or
denominated in that currency.
Conversely, if a rise in the dollar value of a currency is projected for
those securities to be acquired, thereby increasing the cost of such
securities, the fund may purchase call options on such currency. If the value
of such currency increases, the purchase of such call options would enable the
fund to purchase currency for a fixed amount of dollars which is less than the
market value of such currency. Such a purchase would result in a gain that may
offset, at least partially, the effect of any currency related increase in the
price of securities the fund intends to acquire. As in the case of other types
of options transactions, however, the benefit the fund derives from purchasing
foreign currency options will be reduced by the amount of the premium and
related transaction costs. In addition, if currency exchange rates do not move
in the direction or to the extent anticipated, the fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The fund may also write options on foreign currencies for hedging
purposes. For example, if the fund anticipated a decline in the dollar value of
securities quoted or denominated in a foreign currency because of declining
exchange rates, it could, instead of purchasing a put option, write a covered
call option on the relevant currency. If the expected decline occurs, the
option will most likely not be exercised, and the decrease in value of
portfolio securities will be partially offset by the amount of the premium
received by the fund.
Similarly, the fund could write a put option on the relevant currency,
instead of purchasing a call option, to hedge against an anticipated increase
in the dollar cost of securities to be acquired. If exchange rates move in the
manner projected, the put option will expire unexercised and allow the fund to
offset such increased cost up to the amount of the premium. However, as in the
case of other types of options transactions, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of the premium,
only if rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the fund also may be required to forgo all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
currency exchange rates.
A call option written on foreign currency by the fund is "covered" if the
fund owns the underlying foreign currency subject to the call, or if it has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration. A call option is also covered if the fund holds
a call on the same foreign currency for the same principal amount as the call
written where the exercise price of the call held is (a) equal to or less than
the exercise price of the call written or (b) greater than the exercise price
of the call written if the amount of the difference is maintained by the fund
in cash or liquid securities. See "Asset Segregation."
73
The fund may close out its position in a currency option by either selling
the option it has purchased or entering into an offsetting option. An
exchange-traded options position may be closed out only on an options exchange
which provides a secondary market for an option of the same series. Although
the fund will generally purchase or write only those options for which there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular option, or at any
particular time. For some options no secondary market on an exchange may exist.
In such event, it might not be possible to effect closing transactions in
particular options, with the result that the fund would have to exercise its
options in order to realize any profit and would incur transaction costs upon
the sale of underlying currencies pursuant to the exercise of put options. If
the fund as a covered call option writer is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
currency (or security quoted or denominated in that currency) until the option
expires or it delivers the underlying currency upon exercise.
The fund may also use options on currencies to cross-hedge, which involves
writing or purchasing options on one currency to hedge against changes in
exchange rates of a different currency with a pattern of correlation.
Cross-hedging may also include using a foreign currency as a proxy for the U.S.
dollar, if Pioneer determines that there is a pattern of correlation between
that currency and the U.S. dollar.
The fund may purchase and write over-the-counter options to the extent
consistent with its limitation on investments in illiquid securities. Trading
in over-the-counter options is subject to the risk that the other party will be
unable or unwilling to close out options purchased or written by the fund.
Investment Company Securities and Real Estate Investment Trusts (All funds)
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 such purchase
would result in (i) 3% or more of the total outstanding voting securities of
any one investment company being held by the fund, (ii) 5% or more of the
fund's total assets being invested in any one investment company, or (iii) 10%
or more of the fund's total assets being invested in securities of other
investment companies. However, there are several provisions of the 1940 Act and
rules thereunder that allow more expansive investment in investment companies.
In addition, these limitations do not apply to the purchase of shares of any
investment company in connection with a reorganization, consolidation,
reorganization or acquisition of substantially all the assets of another
investment company. The fund may also invest without limit in money market
funds.
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,
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
Standard & Poor's 500 Stock Index (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.
Real Estate Investment Trusts ("REITs")
- ---------------------------------------
REITs are companies that invest primarily in income producing real estate
or real estate related loans or interests. REITs are generally classified as
equity REITs, mortgage REITs or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. REITs are not taxed on
income distributed to shareholders provided they comply with the applicable
74
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 the S&P
500.
Derivative Instruments (All funds)
Options on Securities and Securities Indices
- --------------------------------------------
For hedging purposes or to seek to increase total return, the fund may
purchase put and call options on any security in which it may invest or options
on any securities index based on securities in which it may invest. The fund
would also be able to enter into closing sale transactions in order to realize
gains or minimize losses on options it has purchased.
Writing Call and Put Options on Securities. A call option written by the
fund obligates the fund to sell specified securities to the holder of the
option at a specified price if the option is exercised at any time before the
expiration date. All call options written by the fund are covered, which means
that the fund will own the securities subject to the options as long as the
options are outstanding, or the fund will use the other methods described
below. The fund's purpose in writing covered call options is to realize greater
income than would be realized on portfolio securities transactions alone.
However, the fund may forgo the opportunity to profit from an increase in the
market price of the underlying security.
A put option written by the fund would obligate the fund to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. All put options written by
the fund would be covered, which means that the fund would have segregated
assets with a value at least equal to the exercise price of the put option. The
purpose of writing such options is to generate additional income for the fund.
However, in return for the option premium, the fund accepts the risk that it
may be required to purchase the underlying security at a price in excess of its
market value at the time of purchase.
Call and put options written by the fund will also be considered to be
covered to the extent that the fund's liabilities under such options are wholly
or partially offset by its rights under call and put options purchased by the
fund. In addition, a written call option or put may be covered by entering into
an offsetting forward contract and/or by purchasing an offsetting option or any
other option which, by virtue of its exercise price or otherwise, reduces the
fund's net exposure on its written option position.
Writing Call and Put Options on Securities Indices. The fund may also
write (sell) covered call and put options on any securities index composed of
securities in which it may invest. Options on securities indices are similar to
options on securities, except that the exercise of securities index options
requires cash payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price
fluctuations in a group of securities or segments of the securities market
rather than price fluctuations in a single security.
The fund may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying
index, or by having an absolute and immediate right to acquire such securities
without additional cash consideration (or for additional consideration if cash
in such 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.
75
Purchasing Call and Put Options. The fund would normally purchase call
options in anticipation of an increase in the market value of securities of the
type in which it may invest. The purchase of a call option would entitle the
fund, in return for the premium paid, to purchase specified securities at a
specified price during the option period. The fund would ordinarily realize a
gain if, during the option period, the value of such securities exceeded the
sum of the exercise price, the premium paid and transaction costs; otherwise
the fund would realize either no gain or a loss on the purchase of the call
option.
The fund would normally purchase put options in anticipation of a decline
in the market value of securities in its portfolio ("protective puts") or in
securities in which it may invest. The purchase of a put option would entitle
the fund, in exchange for the premium paid, to sell specified securities at a
specified price during the option period. The purchase of protective puts is
designed to offset or hedge against a decline in the market value of the fund's
securities. Put options may also be purchased by the fund for the purpose of
affirmatively benefiting from a decline in the price of securities which it
does not own. The fund would ordinarily realize a gain if, during the option
period, the value of the underlying securities decreased below the exercise
price sufficiently to more than cover the premium and transaction costs;
otherwise the fund would realize either no gain or a loss on the purchase of
the put option. Gains and losses on the purchase of protective put options
would tend to be offset by countervailing changes in the value of the
underlying portfolio securities.
The fund may terminate its obligations under an exchange-traded call or
put option by purchasing an option identical to the one it has written.
Obligations under over-the-counter options may be terminated only by entering
into an offsetting transaction with the counterparty to such option. Such
purchases are referred to as "closing purchase transactions."
Risks of Trading Options. There is no assurance that a liquid secondary
market on an options exchange will exist for any particular exchange-traded
option, or at any particular time. If the fund is unable to effect a closing
purchase transaction with respect to covered options it has written, the fund
will not be able to sell the underlying securities or dispose of its segregated
assets until the options expire or are exercised. Similarly, if the fund is
unable to effect a closing sale transaction with respect to options it has
purchased, it will have to exercise the options in order to realize any profit
and will incur transaction costs upon the purchase or sale of underlying
securities.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in
certain options; (ii) restrictions may be imposed by an exchange on opening or
closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or the Options
Clearing Corporation (the "OCC") may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange, if any,
that had been issued by the OCC as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.
The fund may purchase and sell both options that are traded on U.S. and
non-U.S. exchanges and options traded over-the-counter with broker-dealers who
make markets in these options. The ability to terminate over-the-counter
options is more limited than with exchange-traded options and may involve the
risk that broker-dealers participating in such transactions will not fulfill
their obligations. Until such time as the staff of the SEC changes its
position, the fund will treat purchased over-the-counter options and all assets
used to cover written over-the-counter options as illiquid securities, except
that with respect to options written with primary dealers in U.S. government
securities pursuant to an agreement requiring a closing purchase transaction at
a formula price, the amount of illiquid securities may be calculated with
reference to the formula.
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.
76
In addition to the risks of imperfect correlation between the fund's
portfolio and the index underlying the option, the purchase of securities index
options involves the risk that the premium and transaction costs paid by the
fund in purchasing an option will be lost. This could occur as a result of
unanticipated movements in the price of the securities comprising the
securities index on which the option is based.
Futures Contracts and Options on Futures Contracts
- --------------------------------------------------
To hedge against changes in securities prices or currency exchange rates
or to seek to increase total return, the fund may purchase and sell various
kinds of futures contracts, and purchase and write (sell) call and put options
on any of such futures contracts. The fund may also enter into closing purchase
and sale transactions with respect to any of such contracts and options. The
futures contracts may be based on various securities (such as U.S. government
securities), securities indices, foreign currencies and other financial
instruments and indices. The fund will engage in futures and related options
transactions for bona fide hedging and non-hedging purposes as described below.
All futures contracts entered into by the fund are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the Commodity Futures
Trading Commission (the "CFTC") or on non-U.S. exchanges.
Futures Contracts. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the fund
can seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling or
securities prices are rising, the fund, through the purchase of futures
contracts, can attempt to secure better rates or prices than might later be
available in the market when it effects anticipated purchases. Similarly, the
fund can sell futures contracts on a specified currency to protect against a
decline in the value of such currency and a decline in the value of its
portfolio securities which are denominated in such currency. The fund can
purchase futures contracts on a foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the fund has acquired
or expects to acquire.
Positions taken in the futures markets are not normally held to maturity
but are instead liquidated through offsetting transactions which may result in
a profit or a loss. While futures contracts on securities or currency will
usually be liquidated in this manner, the fund may instead make, or take,
delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.
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.
77
As the purchaser of an option on a futures contract, the fund obtains the
benefit of the futures position if prices move in a favorable direction but
limits its risk of loss in the event of an unfavorable price movement to the
loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the fund's assets. By
writing a call option, the fund becomes obligated, in exchange for the premium,
to sell a futures contract (if the option is exercised), which may have a value
higher than the exercise price. Conversely, the writing of a put option on a
futures contract generates a premium which may partially offset an increase in
the price of securities that the fund intends to purchase. However, the fund
becomes obligated to purchase a futures contract (if the option is exercised)
which may have a value lower than the exercise price. Thus, the loss incurred
by the fund in writing options on futures is potentially unlimited and may
exceed the amount of the premium received. The fund will incur transaction
costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The
fund's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.
Financial Futures and Options Transactions. The CFTC does not limit
futures transactions and options thereon by registered investment companies,
provided that the investment manager to the registered investment company
claims an exclusion from regulation as a commodity pool operator. The fund is
operated by persons who have claimed an exclusion, granted to operators of
registered investment companies like the fund, from registration as a
"commodity pool operator" with respect to the fund under the Commodity Exchange
Act and therefore are not subject to registration or regulation with respect to
the fund under the Commodity Exchange Act. As a result, the fund is not
restricted in its ability to enter into futures transactions and options
thereon under CFTC regulations. The fund, however, has policies with respect to
futures and options thereon as set forth below.
Other Considerations regarding Futures Contracts. The fund will engage in
futures contracts 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.
Debt Securities and Related Investments (All funds, except as otherwise
indicated)
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.
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.
78
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.
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,
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. The ratings of nationally
recognized statistical rating organizations represent their opinions as to the
quality of the securities that they undertake to rate and may not accurately
describe the risk of the security. If a rating organization downgrades the
quality rating assigned to one or more of the fund's portfolio securities,
Pioneer will consider what actions, if any, are appropriate in light of the
fund's investment objectives and policies including selling the downgraded
security or purchasing additional investment grade securities of the
appropriate credit quality as soon as it is prudent to do so.
U.S. Government Securities
- --------------------------
U.S. government securities in which the fund invests include debt
obligations of varying maturities issued by the U.S. Treasury or issued or
guaranteed by an agency, authority or instrumentality of the U.S. government,
including the Federal Housing Administration, Federal Financing Bank, 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 ("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
79
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.
Municipal Obligations Pioneer Intermediate Tax Free Income Fund)
- ---------------------
The fund may purchase municipal obligations. The term "municipal
obligations" generally is understood to include debt obligations issued by
municipalities to obtain funds for various public purposes, the income from
which is, in the opinion of bond counsel to the issuer, excluded from gross
income for U.S. federal income tax purposes. Some of the fund's municipal
obligations may be "private activity bonds," the proceeds from which are used
for the construction, repair or improvement of privately operated industrial or
commercial facilities.
The two principal classifications of municipal obligations are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit, and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source, but not from the
general taxing power. Sizable investments in these obligations could involve an
increased risk to the fund should any of the related facilities experience
financial difficulties. Private activity bonds are in most cases revenue bonds
and do not generally carry the pledge of the credit of the issuing
municipality. There are, of course, variations in the security of municipal
obligations, both within a particular classification and between
classifications.
The yields on tax-exempt bonds are dependent on a variety of factors,
including general money market conditions, general conditions of the tax-exempt
bond market, the size of a particular offering, the maturity of the obligation,
and the rating of the issue. The value of outstanding tax-exempt bonds will
vary as a result of changing evaluations of the ability of their issuers to
meet the interest and principal payments. Such values will also change in
response to changes in the interest rates payable on new issues of tax-exempt
bonds. Should such interest rates rise, the values of outstanding bonds,
including those held in the fund's portfolio, will decline and (if purchased at
principal amount) would sell at a discount, and, if such interest rates fall,
the values of outstanding bonds will increase and (if purchased at principal
amount) would sell at a premium. Changes in the value of the tax-exempt bonds
held in the fund's portfolio arising from these or other factors will cause
changes in the net asset value per share of the fund.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the U.S. federal income tax exemption for
interest on tax-exempt bonds. It can be expected that similar proposals may be
introduced in the future. If such a proposal were enacted, the availability of
tax-exempt bonds for investment by the fund and the value of the fund's
portfolio would be affected. Additionally, the fund would reevaluate its
investment objective and policies and consider changes in the structure of the
fund.
Municipal Lease Obligations (Pioneer Intermediate Tax Free Income Fund)
- ---------------------------
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease Obligations") have special risks not ordinarily
associated with other tax-exempt bonds. Although lease obligations do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged, a lease obligation ordinarily is backed by the
municipality's covenant to budget for, appropriate and make the payments due
under the lease obligations. However, certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. In addition to
the non-appropriation risk, these securities represent a relatively new type of
financing that has not yet developed the depth of marketability associated with
more conventional bonds. Although non-appropriation lease obligations are
secured by the leased property, disposition of the property in the event of
foreclosure might prove difficult. The fund will seek to minimize these risks.
80
In determining the liquidity of municipal lease obligations, Pioneer,
under guidelines established by the fund's Board of Trustees, will consider:
(1) the essential nature of the leased property; and (2) the likelihood that
the municipality will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to the operation of the
municipality. If leased property is determined not to be essential in nature or
if there is a likelihood that the municipality will discontinue appropriating
funding, then the following factors will also be considered in determining
liquidity:
(1) any relevant factors related to the general credit quality of the
municipality, which may include: (a) whether the lease can be canceled;
(b) what assurance there is that the assets represented by the lease can
be sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic and financial characteristics); and (d) the
legal recourse in the event of failure to appropriate.
(2) any relevant factors related to the marketability of the municipal lease
obligation which may include: (a) the frequency of trades and quotes for
the obligation; (b) the number of dealers willing to purchase or sell the
obligation and the number of other potential purchasers; (c) the
willingness of dealers to undertake to make a market in the obligation;
and (d) the nature of the marketplace trades, including the time needed
to dispose of the obligation, the method of soliciting offers, and the
mechanics of transfer.
Asset-Backed Securities (Pioneer Intermediate Tax Free Income Fund)
- -----------------------
The fund may invest in asset-backed securities, which are securities that
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets, most often a pool or pools of similar
assets (e.g., trade receivables). The credit quality of these securities
depends primarily upon the quality of the underlying assets and the level of
credit support and/or enhancement provided.
The underlying assets (e.g., loans) are subject to prepayments which
shorten the securities' weighted average maturity and may lower their return.
If the credit support or enhancement is exhausted, losses or delays in payment
may result if the required payments of principal and interest are not made. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the pool, the
originator of the pool, or the financial institution or trust providing the
credit support or enhancement. There may be no perfected security interest in
the collateral that relates to the financial assets that support asset-backed
securities. Asset backed securities have many of the same characteristics and
risks as the mortgage-backed securities described above.
The fund may purchase commercial paper, including asset-backed commercial
paper ("ABCP") that is issued by structured investment vehicles or other
conduits. These conduits may be sponsored by mortgage companies, investment
banking firms, finance companies, hedge funds, private equity firms and special
purpose finance entities. ABCP typically refers to a debt security with an
original term to maturity of up to 270 days, the payment of which is supported
by cash flows from underlying assets, or one or more liquidity or credit
support providers, or both. Assets backing ABCP include credit card, car loan
and other consumer receivables and home or commercial mortgages, including
subprime mortgages. The repayment of ABCP issued by a conduit depends primarily
on the cash collections received from the conduit's underlying asset portfolio
and the conduit's ability to issue new ABCP. Therefore, there could be losses
to a fund investing in ABCP in the event of credit or market value
deterioration in the conduit's underlying portfolio, mismatches in the timing
of the cash flows of the underlying asset interests and the repayment
obligations of maturing ABCP, or the conduit's inability to issue new ABCP. To
protect investors from these risks, ABCP programs may be structured with
various protections, such as credit enhancement, liquidity support, and
commercial paper stop-issuance and wind-down triggers. However there can be no
guarantee that these protections will be sufficient to prevent losses to
investors in ABCP.
Some ABCP programs provide for an extension of the maturity date of the
ABCP if, on the related maturity date, the conduit is unable to access
sufficient liquidity through the issue of additional ABCP. This may delay the
sale of the underlying collateral and a fund may incur a loss if the value of
the collateral deteriorates during the extension period. Alternatively, if
collateral for ABCP commercial paper deteriorates in value, the collateral may
be required to be sold at inopportune times or at prices insufficient to repay
the principal and interest on the ABCP. ABCP programs may provide for the
issuance of subordinated notes as an additional form of credit enhancement. The
subordinated notes are typically of a lower credit quality and have a higher
risk of default. A fund purchasing these subordinated notes will therefore have
a higher likelihood of loss than investors in the senior notes.
Asset-backed securities include collateralized debt obligations ("CDOs"),
such as collateralized bond obligations ("CBOs"), collateralized loan
obligations ("CLOs") and other similarly structured securities. A CBO is a
trust backed by a pool of fixed income securities. A CLO is a trust typically
collateralized by a pool of loans, which may include, among others, domestic
and foreign senior secured loans, senior unsecured loans, and subordinate
corporate loans, including loans that may be rated below investment grade or
equivalent unrated loans. CDOs may charge management fees and administrative
expenses.
81
The trust is typically split into two or more portions, called tranches,
varying in credit quality and yield. The riskiest portion is the "equity"
tranche which bears the bulk of defaults from the bonds or loans in the trust
and serves to protect the other, more senior tranches from default in all but
the most severe circumstances. Since it is partially protected from defaults, a
senior tranche from a CBO trust or CLO trust typically have higher ratings and
lower yields than their underlying securities, and can be rated investment
grade. Despite the protection from the equity tranche, CBO or CLO tranches can
experience substantial losses due to actual defaults, increased sensitivity to
defaults due to collateral default and the disappearance of protecting
tranches, market anticipation of defaults, as well as aversion to CBO or CLO
securities as a class.
The risks of an investment in a CDO depend largely on the type of the
collateral securities and the class of the CDO in which the fund invests.
Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in CDOs
may be characterized by the fund as illiquid securities. However, an active
dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A
treatment. In addition to the normal risks associated with fixed income
securities (e.g., interest rate risk and default risk), CDOs carry additional
risks including, but not limited to: (i) the possibility that distributions
from collateral securities will not be adequate to make interest or other
payments; (ii) the quality of the collateral may decline in value or default;
(iii) the fund may invest in CDOs that are subordinate to other classes; and
(iv) the complex structure of the security may not be fully understood at the
time of investment and may produce disputes with the issuer or unexpected
investment results.
Subordinated Securities (Pioneer Intermediate Tax Free Income Fund)
- -----------------------
The fund may also invest in other types of fixed income securities which
are subordinated or "junior" to more senior securities of the issuer, or which
represent interests in pools of such subordinated or junior securities. Such
securities may include so-called "high yield" or "junk" bonds (i.e., bonds that
are rated below investment grade by a rating agency or that are of equivalent
quality) and preferred stock. Under the terms of subordinated securities,
payments that would otherwise be made to their holders may be required to be
made to the holders of more senior securities, and/or the subordinated or
junior securities may have junior liens, if they have any rights at all, in any
collateral (meaning proceeds of the collateral are required to be paid first to
the holders of more senior securities). As a result, subordinated or junior
securities will be disproportionately adversely affected by a default or even a
perceived decline in creditworthiness of the issuer.
Structured Securities (Pioneer Intermediate Tax Free Income Fund)
- ---------------------
The fund may invest in structured securities. The value of the principal
and/or interest on such securities is determined by reference to changes in the
value of specific currencies, interest rates, commodities, indices or other
financial indicators (the "Reference") or the relative change in two or more
References. The interest rate or the principal amount payable upon maturity or
redemption may be increased or decreased depending upon changes in the
Reference. The terms of the structured securities may provide in certain
circumstances that no principal is due at maturity and, therefore may result in
a loss of the fund's investment. Changes in the interest rate or principal
payable at maturity may be a multiple of the changes in the value of the
Reference. Structured securities are a type of derivative instrument and the
payment and credit qualities from these securities derive from the assets
embedded in the structure from which they are issued. Structured securities may
entail a greater degree of risk than other types of fixed income securities.
Inverse Floating Rate Securities (Pioneer Intermediate Tax Free Income Fund)
- --------------------------------
The fund may invest in inverse floating rate obligations. The interest on
an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values.
Auction Rate Securities (Pioneer Intermediate Tax Free Income Fund)
- -----------------------
The fund may invest in auction rate securities. Auction rate securities
consist of auction rate debt securities and auction rate preferred securities
issued by closed-end investment companies. Provided that the auction mechanism
is successful, auction rate securities usually permit the holder to sell the
securities in an auction at par value at specified intervals. The dividend is
reset by "Dutch" auction in which bids are made by broker-dealers and other
institutions for a certain amount of securities at a specified minimum yield.
The dividend rate set by the auction is the lowest interest or dividend rate
that covers all securities offered for sale. While this process is designed to
permit auction rate securities to be traded at par value, there is the risk
that an auction will fail due to insufficient demand for the securities. With
respect to auction rate securities issued by a closed-end fund, the fund will
indirectly bear its proportionate share of any management fees paid by the
closed-end fund in addition to the advisory fee payable directly by the fund.
82
Zero Coupon and Deferred Interest Bonds
- ---------------------------------------
(Pioneer Intermediate Tax Free Income Fund)
Tax-exempt bonds in which the fund may invest also include zero coupon
bonds and deferred interest bonds. Zero coupon bonds and deferred interest
bonds are debt obligations which are issued at a significant discount from face
value. While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds provide for a period of delay before the regular
payment of interest begins. The discount approximates the total amount of
interest the bonds will accrue and compound over the period until maturity or
the first interest payment date at a rate of interest reflecting the market
rate of the security at the time of issuance. Zero coupon bonds and deferred
interest bonds benefit the issuer by mitigating its need for cash to service
its debt, but generally require a higher rate of return to attract investors
who are willing to defer receipt of such cash. Such investments may experience
greater volatility in value than debt obligations which make regular payments
of interest. The fund will accrue income on such investments for tax and
accounting purposes, which is distributable to shareholders. Since no cash is
received at the time of accrual, the fund may be required to liquidate other
portfolio securities to satisfy its distribution obligations.
Residual Interests in Municipal Securities
- ------------------------------------------
(Pioneer Intermediate Tax Free Income Fund)
Certain municipal securities are divided into short-term and long-term
components. The short-term component has a long-term maturity, but pays
interest at a short-term rate that is reset by means of a "dutch auction" or
similar method at specified intervals (typically 35 days). The long-term
component or "residual interest" pays interest at a rate that is determined by
subtracting the interest paid on the short-term component from the coupon rate
on the municipal securities themselves. Consequently, the interest rate paid on
residual interests will increase when short-term interest rates are declining
and will decrease when short-term interest rates are increasing. This interest
rate adjustment formula results in the market value of residual interests being
significantly more volatile than that of ordinary municipal securities. In a
declining interest rate environment, residual interests can provide the fund
with a means of increasing or maintaining the level of tax-exempt interest paid
to shareholders. However, because of the market volatility associated with
residual interests, the fund will not invest more than 10% of its total assets
in residual interests in municipal securities.
Commercial Paper and other Short Term Debt Securities
- -----------------------------------------------------
The fund invests in short-term debt securities, including commercial
paper, which is a short-term unsecured promissory note issued by a U.S. or
foreign corporation in order to finance its current operations. The fund may
also invest in variable amount master demand notes (which is a type of
commercial paper) which represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender, pursuant to which the
lender may determine to invest varying amounts. Transfer of such notes is
usually restricted by the issuer, and there is no secondary trading market for
such notes. To the extent the fund invests in master demand notes, these
investments will be included in the fund's limitation on illiquid securities.
Tax Exempt Commercial Paper (Pioneer Intermediate Tax Free Income Fund)
- ---------------------------
These are short-term securities issued by states, municipalities and their
agencies. Tax-exempt commercial paper may be structured similarly to put bonds
with credit enhancements, long nominal maturities, and mandatory put dates,
which are agreed upon by the buyer and the seller at the time of purchase. The
put date acts as a maturity date for the security, and generally will be
shorter than the maturities of Project Notes, BANs, RANs or TANs. There is a
limited secondary market for issues of tax-exempt commercial paper.
Bond Anticipation Notes ("BANs") (Pioneer Intermediate Tax Free Income Fund)
- --------------------------------
These notes are usually general obligations of state and local
governmental issuers which are sold to obtain interim financing for projects
that will eventually be funded through the sale of long-term debt obligations
or bonds. The ability of an issuer to meet the obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond
market and the likelihood that the proceeds of such bond sales will be used to
pay the principal and interest on the BANs.
Tax Anticipation Notes ("TANs") (Pioneer Intermediate Tax Free Income Fund)
- -------------------------------
These notes are issued by state and local governments to finance their
current operations. Repayment is generally to be derived from specific future
tax revenues. TANs are usually general obligations of the issuer. A weakness in
an issuer's capacity to raise taxes due to, among other things, a decline in
its tax base or a rise in delinquencies, could adversely affect the issuer's
ability to meet its obligations on outstanding TANs.
83
Revenue Anticipation Notes ("RANs") (Pioneer Intermediate Tax Free Income Fund)
- ----------------------------------
These notes are issued by governments or governmental bodies with the
expectation that future revenues from a designated source will be used to repay
the notes. In general, they also constitute general obligations of the issuer.
A decline in the receipt of project revenues, such as anticipated revenues from
another level of government, could adversely affect an issuer's ability to meet
its obligations on outstanding RANs. In addition, the possibility that the
revenues would, when received, be used to meet other obligations could affect
the ability of the issuer to pay the principal and interest on RANs.
Variable Rate and Floating Rate Demand Instruments
- --------------------------------------------------
(Pioneer Intermediate Tax Free Income Fund)
The fund may purchase variable and floating rate demand instruments that
are tax exempt municipal obligations or other debt securities that possess a
floating or variable interest rate adjustment formula. These instruments permit
the fund to demand payment of the principal balance plus unpaid accrued
interest upon a specified number of days' notice to the issuer or its agent.
The demand feature may be backed by a bank letter of credit or guarantee issued
with respect to such instrument.
The terms of the variable or floating rate demand instruments that the
fund may purchase provide that interest rates are adjustable at intervals
ranging from daily up to six months, and the adjustments are based upon current
market levels, the prime rate of a bank or other appropriate interest rate
adjustment index has provided in the respective instruments. Some of these
instruments are payable on demand on a daily basis or on not more than seven
days' notice. Others, such as instruments with quarterly or semiannual interest
rate adjustments, may be put back to the issuer on designated days on not more
than thirty days' notice. Still others are automatically called by the issuer
unless the fund instructs otherwise.
The fund may invest in participation interests in variable or floating
rate tax-exempt obligations held by financial institutions (usually commercial
banks). These participation interests provide the fund with a specific
undivided interest (up to 100%) in the underlying obligation and the right to
demand payment of its proportional interest in the unpaid principal balance
plus accrued interest from the financial institution upon a specific number of
days' notice. In addition, the participation interest generally is backed by an
irrevocable letter of credit or guarantee from the institution. The financial
institution usually is entitled to a fee for servicing the obligation and
providing the letter of credit.
Convertible Debt Securities
- ---------------------------
(Pioneer Mid Cap Growth Fund II and Pioneer Growth Fund)
The fund may invest in convertible debt securities which are debt
obligations convertible at a stated exchange rate or formula into common stock
or other equity securities. Convertible securities rank senior to common stocks
in an issuer's capital structure and consequently may be of higher quality and
entail less risk than the issuer's common stock. As with all debt securities,
the market values of convertible securities tend to increase when interest
rates decline and, conversely, tend to decline when interest rates increase.
Other Investments and Investment Techniques (All funds, except as otherwise
indicated)
Short-Term Investments
- ----------------------
For temporary defensive or cash management purposes, the fund may invest
in all types of short-term investments including, but not limited to, (a)
commercial paper and other short-term commercial obligations; (b) obligations
(including certificates of deposit and bankers' acceptances) of banks; (c)
obligations issued or guaranteed by a governmental issuer, including
governmental agencies or instrumentalities; (d) fixed income securities of
non-governmental issuers; and (e) other cash equivalents or cash. 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.
Illiquid Securities
- -------------------
The fund may invest up to 15% of its net assets in illiquid and other
securities that are not readily marketable. If due to subsequent fluctuations
in value or any other reasons, the value of the fund's illiquid securities
exceeds this percentage limitation, the fund will consider what actions, if
any, are necessary to maintain adequate liquidity. Repurchase agreements
maturing in more than seven (7) 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
of the trust (referred to hereinafter as the board). Under the direction of the
board, Pioneer monitors the application of these guidelines and procedures. The
inability of the fund to dispose of illiquid investments
84
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.
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, 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.
Reverse Repurchase Agreements
- -----------------------------
Reverse purchase agreements involve the sale of U.S. government securities
to a bank with an agreement that the fund will buy back the securities at a
fixed future date at a fixed price plus an agreed amount of "interest" which
may be reflected in the repurchase price. Reverse repurchase agreements are
considered to be borrowings by the fund. Reverse repurchase agreements involve
the risk that the market value of securities purchased by the fund with
proceeds of the transaction may decline below the repurchase price of the
securities sold by the fund that it is obligated to repurchase. The fund will
also continue to be subject to the risk of a decline in the market value of the
securities sold under the agreements because it will reacquire those securities
upon effecting their repurchase. To minimize the risk associated with reverse
repurchase agreements, the fund will segregate assets in an amount at least
equal to the repurchase price of the securities. The fund will enter into
reverse repurchase agreements only with banks that are approved in advance as
being creditworthy by the board.
Short Sales Against the Box
- ---------------------------
(Pioneer Mid Cap Growth Fund II and Pioneer Growth Fund)
The fund may sell securities "short against the box." A short sale
involves the fund borrowing securities from a broker and selling the borrowed
securities. The fund has an obligation to return securities identical to the
borrowed securities to the broker. In a short sale against the box, the fund at
all times owns an equal amount of the security sold short or securities
convertible into or exchangeable for, with or without payment of additional
consideration, an equal amount of the security sold short. The fund intends to
use short sales against the box to hedge. For example, when the fund believes
that the price of a current portfolio security may decline, the fund may use a
short sale against the box to lock in a sale price for a security rather than
selling the security immediately. In such a case, any future losses in the
fund's long position should be offset by a gain in the short position and,
conversely, any gain in the long position should be reduced by a loss in the
short position.
If the fund effects a short sale against the box at a time when it has an
unrealized gain on the security, it may be required to recognize that gain as
if it had actually sold the security (a "constructive sale") on the date it
effects the short sale. However, such constructive sale treatment may not apply
if the fund closes out the short sale with securities other than the
appreciated securities held at the time of the short sale provided that certain
other conditions are satisfied. Uncertainty regarding 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.
85
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.
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. If a borrower defaults, the value of the collateral may
decline before the fund can dispose of it. The fund will lend portfolio
securities only to firms that have been approved in advance by the board, 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.
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."
Disclosure of Portfolio Holdings
- --------------------------------
The board 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 federal securities laws and regulations 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 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
86
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 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, 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 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 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 NQ. 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.
Investment Restrictions
Fundamental Investment Restrictions
Each fund has adopted certain fundamental investment restrictions which,
along with the fund's investment objective, may not be changed without the
affirmative vote of the holders of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the fund. For this purpose, a
majority of the outstanding shares of a fund means the vote of the lesser of:
(i) 67% or more of the shares represented at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (ii)
more than 50% of the outstanding shares of the fund.
(1) Each fund may not borrow money except as permitted by (i) the 1940
Act, or interpretations or modifications by the SEC, SEC staff or other
authority of competent jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other authority of competent
jurisdiction.
(2) Each fund may not engage in the business of underwriting the
securities of other issuers except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC staff or other authority of
competent jurisdiction, or (ii) exemptive or other relief or permission from
the SEC, SEC staff or other authority of competent jurisdiction.
(3) Each fund may lend money or other assets to the extent permitted by
(i) the 1940 Act, or interpretations or modifications by the SEC, SEC staff or
other authority of competent jurisdiction or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other authority of competent
jurisdiction.
(4) Each fund may not issue senior securities except as permitted by (i)
the 1940 Act, or interpretations or modifications by the SEC, SEC staff or
other authority of competent jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other authority of competent
jurisdiction.
87
(5) Each fund may not purchase or sell real estate except as permitted by
(i) the 1940 Act, or interpretations or modifications by the SEC, SEC staff or
other authority of competent jurisdiction, or (ii) exemptive or other relief or
permission from the SEC, SEC staff or other authority of competent
jurisdiction.
(6) Each fund may purchase or sell commodities or contracts related to
commodities to the extent permitted by (i) the 1940 Act, or interpretations or
modifications by the SEC, SEC staff or other authority of competent
jurisdiction, or (ii) exemptive or other relief or permission from the SEC, SEC
staff or other authority of competent jurisdiction.
(7) Except as permitted by exemptive or other relief or permission from
the SEC, SEC staff or other authority of competent jurisdiction, each fund may
not make any investment if, as a result, the fund's investments will be
concentrated in any one industry.
(8) Normally, the fund will invest at least 80% of its net assets in
investments the income from which will be exempt from regular federal income
tax.
MANAGEMENT OF THE FUND
Trustees and Officers
The board provides broad supervision over each fund's affairs. The
officers of each fund are responsible for the fund's operations. The Trustees
of the trust (referred to hereinafter as the Trustees) and officers are listed
below, together with their principal occupations during the past five years.
Trustees who are interested persons of the funds within the meaning of the 1940
Act are referred to as Interested Trustees. Trustees who are not interested
persons of the funds are referred to as Independent Trustees. Each of the
Trustees (except Mr. West and Mr. Bock) serves as a Trustee of each of the 77
U.S. registered investment portfolios for which Pioneer serves as investment
adviser (the "Pioneer managed funds"). Mr. West serves as Trustee of [33] of
the 77 Pioneer managed funds, and Mr. Bock serves as Trustee of 76 of the 77
Pioneer managed funds. The address for all Trustees and all officers of the
funds is 60 State Street, Boston, Massachusetts 02109.
88
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Term of Office and Other Directorships
Name, Age and Address with the Fund Length of Service Principal Occupation During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustees:
- ------------------------------------------------------------------------------------------------------------------------------------
John F. Cogan, Jr.* Chairman of the Trustee since Deputy Chairman and a Director of None
(82) Board, Trustee 1982. Serves Pioneer Global Asset Management
and President until a successor S.p.A. ("PGAM"); Non-Executive Chairman
trustee is elected and a Director of Pioneer Investment
or earlier Management USA Inc. ("PIM-USA");
retirement or Chairman and a Director of Pioneer;
removal. 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
managed funds; and Of Counsel, Wilmer
Cutler Pickering Hale and Dorr LLP
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Trustee and Trustee since Director, CEO and President of PIM-USA None
Kingsbury* Executive Vice 2007. Serves (since February 2007); Director and
(50) President until a successor President of Pioneer Investment
trustee is elected Management, Inc. and Pioneer
or earlier Institutional Asset Management, Inc.
retirement or (since February 2007); Executive Vice
removal. President of all of the Pioneer managed
funds (since March 2007); Director of
PGAM (since April 2007); Head of New
Markets Division, PGAM (2000 to 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees:
- ------------------------------------------------------------------------------------------------------------------------------------
David R. Bock Trustee Trustee since Executive Vice President and Chief Director of
(64) 2005. Serves Financial Officer, I-trax, Inc. Enterprise
until a successor (publicly traded health care services Community
trustee is elected company) (2004 to 2007); Partner, Investment, Inc.
or earlier Federal City Capital Advisors (boutique (privately-held
retirement or merchant bank) (1997 to 2004 and 2008 to affordable housing
removal. present) ; and Executive Vice President finance company);
and Chief Financial Officer, Pedestal and Director of
Inc. (internet-based mortgage trading New York Mortgage
company) (2000 to 2002) Trust (publicly
traded mortgage
REIT)
- ------------------------------------------------------------------------------------------------------------------------------------
89
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Term of Office and Other Directorships
Name, Age and Address with the Fund Length of Service Principal Occupation During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush Trustee Trustee since President, Bush International, LLC Director of Marriott
(60) 1997. Serves (international financial advisory firm) International, Inc;
until a successor Director Discover
trustee is elected Financial Services
or earlier (credit card issuer
retirement or and electronic
removal. payment services);
Director of Briggs &
Stratton Co. (engine
manufacturer);
Director of UAL
Corporation (airline
holding company);
Director of Mantech
International
Corporation
(national security,
defense, and
Intelligence
technology firm):
and Member, Board of
Governors,
Investment Company
Institute
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Trustee Trustee since Professor, Harvard University Trustee, Mellon
Friedman May 2008. Institutional Funds
(64) Serves until a Investment Trust and
successor Mellon Institutional
trustee is elected Funds Master
or earlier Portfolio (oversees
retirement or 17 portfolios in
removal. fund complex)
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Trustee Trustee since Founding Director, Vice-President and None
Graham 1990. Serves Corporate Secretary, The Winthrop Group,
(61) until a successor Inc. (consulting firm); and Desautels
trustee is elected Faculty of Management, McGill University
or earlier
retirement or
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna Trustee Trustee since Private investor (2004 to present); and Director of
(58) 2006. Serves Senior Executive Vice President, The Quadriserv Inc.
until a successor Bank of New York (financial and (technology products
trustee is elected securities services) (1986 to 2004) for securities
or earlier lending industry)
retirement or
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
90
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Term of Office and Other Directorships
Name, Age and Address with the Fund Length of Service Principal Occupation During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret Trustee Trustee since President and Chief Executive Officer, Director of New
(60) 1982. Serves Newbury, Piret & Company, Inc. America High Income
until a successor (investment banking firm) Fund, Inc.
trustee is elected (closed-end
or earlier investment company)
retirement or
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West Trustee Trustee since Senior Counsel, Sullivan & Cromwell LLP Director, The Swiss
(79) 1993. Serves (law firm) Helvetia Fund, Inc.
until a successor (closed-end
trustee is elected investment company)
or earlier
retirement or
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Officers:
- ------------------------------------------------------------------------------------------------------------------------------------
Dorothy E. Bourassa Secretary Since 2003. Secretary of PIM-USA; Senior Vice None
(60) Serves at the President- Legal of Pioneer;
discretion of the Secretary/Clerk of most of PIM-USA's
board subsidiaries; and Secretary of all of
the Pioneer managed funds since
September 2003 (Assistant Secretary from
November 2000 to September 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Assistant Since 2003. Associate General Counsel of Pioneer None
Kelley Secretary Serves at the since January 2008 and Assistant
(44) discretion of the Secretary of all of the managed funds
board since September 2003; Vice President and
Senior Counsel of Pioneer from July 2002
to December 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley Treasurer Since March Vice President-Fund Accounting, None
(48) 2008. Serves at Administration and Controllership
the discretion of Services of Pioneer; and Treasurer of
the board all of the Pioneer managed funds since
March 2008; Deputy Treasurer of Pioneer
from November 2004 to March 2008;
Assistant Treasurer of all of the
Pioneer managed funds from 2004 to 2008;
and Treasurer and Senior Vice President,
CDC IXIS Asset Management Services from
2002 to 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti Assistant Since 2003. Assistant Vice President- Fund None
(43) Treasurer Serves at the Accounting, Administration and
discretion of the Controllership Services of Pioneer; and
board Assistant Treasurer of all of the
Pioneer managed funds
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan Assistant Since 2003. Fund Accounting Manager -- Fund None
(50) Treasurer Serves at the Accounting, Administration and
discretion of the Controllership Services of Pioneer; and
board Assistant Treasurer of all of the
Pioneer managed funds
- ------------------------------------------------------------------------------------------------------------------------------------
91
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Term of Office and Other Directorships
Name, Age and Address with the Fund Length of Service Principal Occupation During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
David F. Johnson Assistant Since 2008. Fund Administration Manager -- Fund None
(29) Treasurer Serves at the Accounting, Administration and
discretion of the Controllership Services since November
board 2008 and Assistant Treasurer of all of
the Pioneer Funds since January 2009;
Client Service Manager -- Institutional
Investor Services at State Street Bank
from March 2003 to March 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm Chief Since January Chief Compliance Officer of Pioneer None
(49) Compliance 2007. Serves at since December 2006 and of all the
Officer the discretion of Pioneer managed funds since January
the board 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 officers
or directors of the fund's investment adviser and certain of its affiliates.
The outstanding capital stock of PFD, Pioneer and Pioneer Investment
Management Shareholder Services, Inc. ("PIMSS") is indirectly wholly owned by
UniCredit, one of the largest banking groups in Italy. Pioneer, the funds'
investment adviser, provides investment management and financial services to
mutual funds, institutional and other clients.
Board Committees
The board 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 and Marguerite A. Piret (Chair)
Independent Trustees
--------------------
David R. Bock, Mary K. Bush, Margaret B.W. Graham (Chair), Thomas J.
Perna, Marguerite A. Piret and John Winthrop
Nominating
----------
Mary K. Bush, Marguerite A. Piret, and John Winthrop (Chair)
Valuation
---------
David R. Bock, Margaret B. W. Graham and Marguerite A. Piret (Chair)
Policy Administration
---------------------
Mary K. Bush (Chair), Thomas J. Perna and John Winthrop
The Audit, Independent Trustees, Nominating, Valuation and Policy
Administration Committees have met [ ] times, respectively, during the year
ended [November 30], 2008.
The board 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 funds' independent registered public
accounting firm and the full board;
o discuss with the funds' independent registered public accounting firm
their judgments about the quality of the funds' accounting principles and
underlying estimates as applied in the funds' financial reporting;
92
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;
o review and approve insurance coverage and allocations of premiums between
the management and the funds and among the Pioneer managed funds;
o review and approve expenses under the administration agreement between
Pioneer and the funds and allocations of such expenses among the Pioneer
managed funds; and
o receive on a periodic basis a formal written statement delineating all
relationships between the independent registered public accounting firm
and the funds 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 independent registered public accounting firm; and to
recommend that the Trustees take appropriate action in response to the
independent registered public accounting firm's report to satisfy itself
of the independent registered public accounting firm's independence.
The Nominating Committee reviews the qualifications of any candidate
recommended by the Independent Trustees to serve as an Independent Trustee and
makes a recommendation regarding that person's qualifications. The Committee
does not accept nominations from shareholders.
The Valuation Committee reviews the valuation assigned to certain
securities by Pioneer in accordance with the funds' valuation procedures.
The Policy Administration Committee reviews the implementation of certain
of the funds' administrative policies and procedures.
The Independent Trustees Committee reviews the funds' 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 Amended and Restated Agreement and Declaration of Trust of the trust,
dated July 1, 2008 and as may be amended from time to time (referred to
hereinafter as the declaration), requires the funds to indemnify each Trustee,
director, officer, employee and authorized agent to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his being or
having been such a Trustee, director, officer, employee, or agent and against
amounts paid or incurred by him in settlement thereof. The 1940 Act currently
provides that no officer or director shall be protected from liability to the
funds or shareholders for misfeasance, bad faith, gross negligence, or reckless
disregard of the duties of office. The declaration extends to Trustees,
officers and employees of the funds the full protection from liability that the
law allows.
Compensation of Officers and Trustees
The funds pay no salaries or compensation to any of their officers. The
Pioneer managed funds, including the funds, 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, as estimated for the funds' current fiscal year.
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 Independent
Trustee an annual fee of $1,000;
o the remaining compensation of the Independent Trustees is allocated to
each fund with assets greater than $250 million based on the fund's net
assets; and
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.
93
Sales Loads
Each fund offers its shares to Trustees and officers of the fund and
employees of Pioneer and its affiliates without a sales charge in order to
encourage investment in the fund by individuals who are responsible for its
management and because the sales to such persons do not entail any sales effort
by the fund, brokers or other intermediaries.
Other Information
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, UniCredit 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 managed funds and any non-U.S. funds managed by
Pioneer or its affiliates.
As of [December 31, 2008], none of the Independent Trustees, nor any of
their immediate family members, beneficially owned any securities issued by
Pioneer, UniCredit or any other entity in a control relationship to Pioneer or
PFD.
During the calendar years [2007 and 2008], 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, UniCredit, or any other entity in a
control relationship to Pioneer or PFD.
During the calendar years [2007 and 2008], 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 any of the funds
o an officer of the funds
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 [2007 and 2008], none of the Independent
Trustees, nor any of their immediate 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.
During the calendar years [2007 and 2008], 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
94
o UniCredit
o any other entity in a control relationship with Pioneer or PFD
None of the funds' Trustees or officers has any arrangement with any other
person pursuant to which that Trustee or officer serves on the board. During
the calendar years [2007 and 2008], 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 any of the funds
o any related fund
o Pioneer
o PFD
o any affiliated person of any of the funds, Pioneer or PFD
o UniCredit
o any other entity in a control relationship to the funds, 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 funds'
officers and owners in excess of 5% of any class of shares of each fund and a
table indicating the value of shares that each Trustee beneficially owns in
each fund and in all the Pioneer managed funds.
Proxy Voting Policies
Information regarding how each fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners without charge at http://www.pioneerinvestments.com
and on the SEC's website at http:// www.sec.gov. The funds' proxy voting
policies and procedures are attached as "Appendix B."
INVESTMENT ADVISER AND ADMINISTRATOR
Investment Adviser
Each fund has contracted with Pioneer to act as its investment adviser.
Pioneer is an indirect, wholly owned subsidiary of UniCredit. Certain Trustees
or officers of the funds are also directors and/or officers of certain of
UniCredit's subsidiaries (see management biographies above). Pioneer has
entered into an agreement with its affiliate, Pioneer Investment Management
Limited ("PIML"), pursuant to which PIML provides certain services and
personnel to Pioneer.
As the funds' investment adviser, Pioneer provides each fund with
investment research, advice and supervision and furnishes an investment program
for the fund consistent with the fund's investment objective and policies,
subject to the supervision of the fund's Trustees. Pioneer determines what
portfolio securities will be purchased or sold, arranges for the placing of
orders for the purchase or sale of portfolio securities, selects brokers or
dealers to place those orders, maintains books and records with respect to each
fund's securities transactions, and reports to the Trustees on the fund's
investments and performance.
The Trustees' approval of and the terms, continuance and termination of
each management agreement are governed by the 1940 Act and the Investment
Advisers Act of 1940, as applicable. Pursuant to each management agreement,
Pioneer assumes no responsibility other than to render the services called for
under the management agreement, in good faith, and Pioneer will not be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities or other
transactions for the relevant fund. Pioneer, however, is not protected against
liability by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under the management agreements. Each management
agreement requires Pioneer to furnish all necessary services, facilities and
personnel in connection with the performance of its services under the
management agreement, and except as specifically stated therein, Pioneer is not
responsible for any of the relevant fund's ordinary and extraordinary expenses.
Each management agreement may be terminated at any time, without the payment of
any penalty, by the board or by vote of a majority of the outstanding voting
securities of the relevant fund, upon not more than sixty (60) days' and not
less than thirty (30) days' written notice to Pioneer, or by Pioneer upon not
less than sixty (60) days' written notice to the relevant fund. Each management
agreement will terminate automatically in the event of its "assignment" (as
defined in the 1940 Act).
95
Manager of Managers Exemptive Order
Pioneer has received an order from the SEC that permits Pioneer, subject
to the approval of the board, to hire and terminate a subadviser or to
materially modify an existing subadvisory contract for each fund without
shareholder approval. Pioneer retains the ultimate responsibility to oversee
and recommend the hiring, termination and replacement of any subadviser. To the
extent that the SEC adopts a rule that would supersede the order, or would
provide greater flexibility than the order, Pioneer and each fund intend to
rely on such rule to permit Pioneer, subject to the approval of the board and
any other applicable conditions of the rule, to hire and terminate a subadviser
or to materially modify an existing subadvisory contract for the fund without
shareholder approval.
Advisory Fees
As compensation for its management services and expenses incurred, Pioneer
Mid Cap Growth Fund II pays Pioneer a fee at the annual rate of 0.625% of the
fund's average daily net assets up to $500 million, 0.600% of the next $500
million and 0.575% on assets over $1 billion.
As compensation for its management services and expenses incurred, Pioneer
Growth Fund pays Pioneer a fee at the annual rate of 0.65% of the fund's
average daily net assets up to $1 billion and 0.60% on assets over $1 billion.
As compensation for its management services and expenses incurred, Pioneer
Intermediate Tax Free Income pays Pioneer a fee at the annual rate of 0.50% of
the fund's average daily net assets up to $500 million and 0.45% on assets over
$500 million.
The foregoing fees are accrued daily and paid monthly.
Expense Limit
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce Pioneer Mid Cap Growth Fund II expenses to 1.25%
and 1.00% of the average daily net assets attributable to Class A and Class Y
shares, respectively. These expense limitations will be in effect for a period
of three years after the closing of the Reorganization. There can be no
assurance that Pioneer will extend the expense limitations beyond such term.
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce Pioneer Growth Fund expenses to 1.25% and 1.00%
of the average daily net assets attributable to Class A and Class Y shares,
respectively. These expense limitations will be in effect for a period of three
years after the closing of the Reorganization. There can be no assurance that
Pioneer will extend the expense limitations beyond such time.
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce Pioneer Intermediate Tax Free Income Fund
expenses to 0.93% and 0.68% of the average daily net assets attributable to
Class A and Class Y shares, respectively. These expense limitations will be in
effect for a period of three years after the closing of the Reorganization.
There can be no assurance that Pioneer will extend the expense limitations
beyond such time.
Each fund may terminate the expense limit agreement at any time; provided,
however, that the board would not take such action unless it determined
termination of the agreement to be in the best interests of the fund and its
shareholders.
Administration Agreements
Each fund has entered into an administration agreement with Pioneer
pursuant to which Pioneer acts as the fund's administrator, performing certain
accounting, administration and legal services for the fund and pursuant to
which Pioneer receives a fee at the annual rate of [0.0225]% of the fund's
average daily net assets.
Under the terms of the administration agreement with each fund, Pioneer
pays or reimburses the fund for expenses relating to its services for the fund,
with the exception of the following, which are to be paid by the fund: (a)
charges and expenses for fund accounting, pricing and appraisal services and
related overhead, including, to the extent such services are performed by
personnel of Pioneer, or its affiliates, office space and facilities and
personnel compensation, training and benefits; (b) the charges and expenses of
auditors; (c) the charges and expenses of any custodian, transfer agent, plan
agent, dividend disbursing agent and registrar appointed by the fund; (d) issue
and transfer taxes, chargeable to the fund in connection with securities
transactions to which the fund is a party; (e) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the fund to federal, state or other governmental
agencies; (f) fees and expenses involved in registering and maintaining
registrations of the fund and/or its shares with federal regulatory agencies,
state or blue sky securities agencies and foreign jurisdictions, including the
preparation of prospectuses and statements of additional information for filing
with such regulatory authorities; (g) all expenses of shareholders' and
96
Trustees' meetings and of preparing, printing and distributing prospectuses,
notices, proxy statements and all reports to shareholders and to governmental
agencies; (h) charges and expenses of legal counsel to the fund and the
Trustees; (i) any distribution fees paid by the fund in accordance with Rule
12b-1 promulgated by the SEC pursuant to the 1940 Act; (j) compensation of
those Trustees of the fund who are not affiliated with or interested persons of
Pioneer, the fund (other than as Trustees), PIM-USA or PFD; (k) the cost of
preparing and printing share certificates; (l) interest on borrowed money, if
any; (m) fees payable by the fund under management agreements and the
administration agreement; and (n) extraordinary expenses. The fund shall also
assume and pay any other expense that the fund, Pioneer or any other agent of
the fund may incur not listed above that is approved by the board (including a
majority of the Independent Trustees) as being an appropriate expense of the
fund. In addition, the fund shall pay all brokers' and underwriting commissions
chargeable to the fund in connection with securities transactions to which the
fund is a party.
Potential Conflicts of Interest
Each 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 that of the fund. Securities frequently meet the
investment objectives of the funds, 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, a fund may not be able to obtain as
large an execution of an order to sell or as high a price for any particular
portfolio security if Pioneer decides to sell on behalf of another account the
same portfolio security at the same time. On the other hand, if the same
securities are bought or sold at the same time by more than one fund or
account, the resulting participation in volume transactions could produce
better executions for 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 one of the funds, their portfolios do not generally consist of the
same investments as the fund or each other, and their performance results are
likely to differ from those of the fund.
Personal Securities Transactions
Each fund, Pioneer and PFD have adopted a code of ethics under Rule 17j-1
under the 1940 Act which is applicable to officers, trustees/
directors and designated employees of Pioneer and certain of Pioneer's
affiliates. The code permits such persons to engage in personal securities
transactions for their own accounts, including securities that may be purchased
or held by each fund, and is designed to prescribe means reasonably necessary
to prevent conflicts of interest from arising in connection with personal
securities transactions. Each code is on public file with and available from
the SEC.
97
PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS
Principal Underwriter
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal
underwriter for each fund in connection with the continuous offering of its
shares. PFD is an indirect wholly owned subsidiary of PIM-USA.
Each fund entered into an underwriting agreement with PFD which provides
that PFD will bear expenses for the distribution of the fund's shares, except
for expenses incurred by PFD for which it is reimbursed or compensated by the
fund under the distribution plans (discussed below). PFD bears all expenses it
incurs in providing services under each underwriting agreement. Such expenses
include compensation to its employees and representatives and to securities
dealers for distribution-related services performed for the relevant fund. PFD
also pays certain expenses in connection with the distribution of each fund's
shares, including the cost of preparing, printing and distributing advertising
or promotional materials, and the cost of printing and distributing
prospectuses and supplements to prospective shareholders. Each fund bears the
cost of registering its shares under federal and state securities law and the
laws of certain non-U.S. countries. Under each underwriting agreement, PFD will
use its best efforts in rendering services to the relevant fund. See "Sales
Charges" for the schedule of initial sales charge reallowed to dealers as a
percentage of the offering price of each fund's Class A shares.
The funds will not generally issue fund shares for consideration other
than cash. At each fund's sole discretion, however, the fund may issue fund
shares for consideration other than cash in connection with a bona fide
reorganization, statutory reorganization or other acquisition of portfolio
securities. It is each fund's general practice to repurchase its shares of
beneficial interest for cash consideration in any amount; however, the
redemption price of shares of the fund may, at Pioneer's discretion, be paid in
portfolio securities. Each fund has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the fund's net asset value during
any ninety (90) day period for any one shareholder. Should the amount of
redemptions by any shareholder exceed such limitation, each 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 a fund makes an in-kind distribution. The selection of such
securities will be made in such manner as the board deems fair and reasonable;
however, a fund will not distribute illiquid securities in kind.
Distribution Plan
Each fund has adopted a distribution plan (each such plan, the
"Distribution Plan") pursuant to Rule l2b-1 under the 1940 Act with respect to
its Class A shares. None of the funds has adopted a distribution plan with
respect to its Class Y shares. For each class, fees under each Distribution
Plan may be used to make payments to one or more principal underwriters,
broker-dealers, financial intermediaries (which may include banks) and other
parties that enter into a distribution, selling or service agreement with
respect to the shares of such class (each of the foregoing, a "Service Party").
Each fund, its principal underwriter or other parties also may incur expenses
in connection with the distribution or marketing and sales of the fund's shares
that may be paid or reimbursed by the fund. The aggregate amount in respect of
such fees and expenses with respect to each class shall be the amount
calculated at a percentage per annum of the average daily net assets
attributable to such class as set forth below:
Class Applicable Percentage Per Annum
- ------------------- --------------------------------
Class A ......... 0.25%
Class C ......... 1.00%
Payments are made under each Distribution Plan for distribution services
and other activities in respect of the sale of shares of the relevant fund and
to make payments for advertising, marketing or other promotional activity, and
for preparation, printing, and distribution of prospectuses, statements of
additional information and reports for recipients other than regulators and
existing shareholders. Each fund also may make payments to Service Parties
under its Distribution Plan for providing personal service or the maintenance
of shareholder accounts. The amounts paid to each recipient may vary based upon
certain factors, including, among other things, the levels of sales of fund
shares and/or shareholder services provided; provided, however, that the fees
paid to a recipient with respect to a particular class that may be used to
cover expenses primarily intended to result in the sale of shares of that
class, or that may be used to cover expenses primarily intended for personal
service and/or maintenance of shareholder accounts, may not exceed the maximum
amounts, if any, as may from time to time be permitted for such services under
the Financial Industry Regulatory Authority ("FINRA") Conduct Rule 2830 or any
successor rule, in each case as amended or interpreted by FINRA.
Each Distribution Plan also provides that the Service Parties may receive
all or a portion of any sales charges paid by investors. Each Distribution Plan
permits the relevant fund to pay fees to the Service Parties as compensation
for their services, not as reimbursement
98
for specific expenses incurred. Thus, even if their expenses exceed the fees
provided for by the Distribution Plan, the fund will not be obligated to pay
more than those fees and, if their expenses are less than the fees paid to
them, they will realize a profit. Each fund may pay the fees to the Service
Parties until the Distribution Plan or any related distribution agreement is
terminated or not renewed. In that event, a Service Party's expenses in excess
of fees received or accrued through the termination date will be such Service
Party's sole responsibility and not obligations of the fund. In their annual
consideration of the continuation of the Distribution Plan for the relevant
fund, the Trustees will review the Distribution Plan and the expenses for each
class within the fund separately.
Each Distribution Plan also recognizes that Pioneer, PFD or any other
Service Party may make payments for distribution related expenses out of its
own resources, including past profits, or payments received from the relevant
fund for other purposes, such as management fees, and that the Service Parties
may from time to time use their own resources for distribution-related
services, in addition to the fees paid under the Distribution Plan. Each
Distribution Plan specifically provides that, to the extent that such payments
might be deemed to be indirect financing of any activity primarily intended to
result in the sale of shares of the relevant fund within the context of Rule
12b-1, then the payments are deemed to be authorized by the Distribution Plan
but not subject to the maximum amounts set forth above.
Under its terms, each Distribution Plan continues in effect for one year
and thereafter for successive annual periods, provided such continuance is
specifically approved at least annually by vote of the board, including a
majority of the Independent Trustees who have no direct or indirect financial
interest in the operation of the Distribution Plan. Each Distribution Plan may
not be amended to increase materially the amount of the service and
distribution fees without shareholder approval, and all material amendments of
the Distribution Plan also must be approved by the Trustees, including all of
the Independent Trustees, in the manner described above. Each Distribution Plan
may be terminated with respect to a class of a fund at any time, without
penalty, by vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding voting securities of such class of the fund (as
defined in the 1940 Act).
Class C Shares
Pioneer Intermediate Tax Free Income Fund does not currently issue Class C
shares. For Class C shares of Pioneer Mid Cap Growth Fund II and Pioneer Growth
Fund, PFD will advance to dealers the first-year service fee at a rate equal to
1.00% of the amount invested. As compensation therefor, PFD may retain the
service fee paid by the fund with respect to such shares for the first year
after purchase. Commencing in the 13th month following the purchase of Class C
shares, dealers will become eligible for additional annual distribution fees
and service fees of up to 0.75% and 0.25%, respectively, of the net asset value
of such shares. Dealers may from time to time be required to meet certain other
criteria in order to receive service fees.
SHAREHOLDER SERVICING/TRANSFER AGENT
Each fund has contracted with PIMSS, 60 State Street, Boston,
Massachusetts 02109, to act as shareholder servicing and transfer agent for the
fund.
Under the terms of its contract with each fund, PIMSS services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the fund; (ii) distributing dividends and capital gains
associated with the fund's portfolio; and (iii) maintaining account records and
responding to shareholder inquiries.
PIMSS receives an annual fee of $[24.35] for each shareholder account from
each fund as compensation for the services described above. PIMSS is also
reimbursed by each fund for its cash out-of-pocket expenditures. Each fund may
compensate entities which have agreed to provide certain sub-accounting
services such as specific transaction processing and recordkeeping services.
Any such payments by a fund would be in lieu of the per account fee which would
otherwise be paid by the fund to PIMSS.
CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the custodian of each fund's assets. The custodian's responsibilities
include safekeeping and controlling each fund's cash and securities, handling
the receipt and delivery of securities, and collecting interest and dividends
on the fund's investments.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072,
each fund's independent registered public accounting firm, provides audit
services, tax return review, and assistance and consultation with respect to
the review of filings with the SEC.
99
PORTFOLIO MANAGEMENT
Additional Information About the Portfolio Managers
Other Accounts Managed by the Portfolio Managers
The table below indicates information about the accounts other than the
funds over which each portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of [ ], 2009. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities 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 each 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 managers may have
substantially similar investment strategies.
- ------------------------------------------------------------------------------------------------------------------------------------
Number of
Accounts Assets
Managed for Managed
which for which
Advisory Advisory
Number of Fee is Fee is
Name of Type of Accounts Total Assets Performance- Performance-
Fund Portfolio Manager Account Managed Managed Based Based
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Mid Cap Growth Fund II Ken Winston Other [ ] $[ ] [ ] [ ]
Registered
Investment
Companies
---------------------------------------------------------------------------------------------------
Other Pooled [ ] $[ ] [ ] [ ]
Investment
Vehicles
---------------------------------------------------------------------------------------------------
Other [ ] $[ ] [ ] [ ]
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Fund Timothy Mulrenan Other [ ] $[ ] [ ] [ ]
Registered
Investment
Companies
---------------------------------------------------------------------------------------------------
Other Pooled [ ] $[ ] [ ] [ ]
Investment
Vehicles
---------------------------------------------------------------------------------------------------
Other [ ] $[ ] [ ] [ ]
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Intermediate Tax Fee David Eurkus Other [ ] $[ ] [ ] [ ]
Income Fund Registered
Investment
Companies
---------------------------------------------------------------------------------------------------
Other Pooled [ ] $[ ] [ ] [ ]
Investment
Vehicles
---------------------------------------------------------------------------------------------------
Other [ ] $[ ] [ ] [ ]
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
100
Number of
Accounts Assets
Managed for Managed
which for which
Advisory Advisory
Number of Fee is Fee is
Name of Type of Accounts Total Assets Performance- Performance-
Fund Portfolio Manager Account Managed Managed Based Based
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy Pynchon Other [ ] $[ ] [ ] [ ]
Registered
Investment
Companies
---------------------------------------------------------------------------------------------------
Other Pooled [ ] $[ ] [ ] [ ]
Investment
Vehicles
---------------------------------------------------------------------------------------------------
Other [ ] $[ ] [ ] [ ]
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
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 relevant fund as
well as one or more other accounts. Although Pioneer has adopted procedures
that it believes are reasonably designed to detect and prevent violations of
the federal securities laws and to mitigate the potential for conflicts of
interest to affect its portfolio management decisions, there can be no
assurance that all conflicts will be identified or that all procedures will be
effective in mitigating the potential for such risks. Generally, the risks of
such conflicts of interest are increased to the extent that a portfolio manager
has a financial incentive to favor one account over another.
Pioneer has structured its compensation arrangements in a manner that is
intended to limit such potential for conflicts of interest. See "Compensation
of Portfolio Manager" below.
o The 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 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 The portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If the 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 the 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.
101
o The 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 The 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 the 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 the 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 the 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 managed 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 funds, 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 Pioneer Mid Cap Growth Fund
II, is the Russell Mid Cap Growth Index, in the case of Pioneer Growth
Fund, is [the Russell 1000 Growth Index], and in the case of Pioneer
Intermediate Tax Free Income Fund, is the [Barclays (formerly, Lehman
Brothers) Municipal Bond Index]. As a result of these 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 the 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 managed funds.
102
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
UniCredit and the financial performance of PGAM, 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 managed
funds.
Share Ownership by Portfolio Managers
The portfolio managers of the funds do not beneficially own any securities
of the funds, as each fund is newly-organized and has not yet commenced
operations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by Pioneer pursuant to authority contained in the fund's
management contract. Securities purchased and sold on behalf of each 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. 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 each 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, each fund may pay commissions to such broker-dealer in an amount
greater than the amount another firm may charge. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; providing stock quotation services, credit
rating service information and comparative fund statistics; furnishing
analyses, electronic information services, manuals and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and performance of accounts and particular investment decisions; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). Pioneer maintains a listing of broker-
dealers who provide such services on a regular basis. However, because many
transactions on behalf of each 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 each 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 each
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. Each 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, each
fund may incur lower expenses by directing brokerage to third-party
broker-dealers which have agreed to use part of their commission to pay the
fund's fees to service providers unaffiliated with Pioneer or other expenses.
Since the commissions paid to the third party brokers reflect a commission cost
that a fund would generally expect to incur on its brokerage transactions but
not necessarily the lowest possible commission, this arrangement is intended to
reduce the fund's operating expenses without increasing the cost of its
brokerage commissions. Since use of such directed brokerage is subject to the
requirement to achieve best execution in connection with each 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. The board periodically reviews Pioneer's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of each fund.
103
DESCRIPTION OF SHARES
Each of Pioneer Mid Cap Growth Fund II and Pioneer Growth Fund currently
issues Class A, Class C and Class Y shares. Pioneer Intermediate Tax Free
Income Fund currently issues Class A and Class Y shares. As an open-end
management investment company, each fund continuously offers its shares to the
public and, under normal conditions, must redeem its shares upon the demand of
any shareholder at the next determined net asset value per share less any
applicable contingent deferred sales charge ("CDSC"). See "Sales Charges." When
issued and paid for in accordance with the terms of its prospectus and
statement of additional information, shares of each fund are fully paid and
non-assessable. Shares will remain on deposit with each fund's transfer agent
and certificates will not normally be issued.
The shares of each class of each fund represent an interest in the same
portfolio of investments of the fund. Each class has identical rights (based on
relative net asset values) as to voting, redemption, dividends and liquidation
proceeds. 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
Distribution Plan for Class A and Class C shares, respectively.
The Trust
Each fund is a series of the trust, a Delaware statutory trust. The
trust's operations are governed by the Amended and Restated Agreement and
Declaration of Trust, dated as of July 1, 2008 (referred to herein as the
declaration). A copy of the trust's Certificate of Trust dated July 30, 2003,
as amended, is on file with the office of the Secretary of State of Delaware.
Delaware law provides a statutory framework for the powers, duties, rights and
obligations of the board (referred to in this section as the Trustees) and
shareholders of the Delaware statutory trust, while the more specific powers,
duties, rights and obligations of the Trustees and the shareholders are
determined by the Trustees as set forth declaration. Some of the more
significant provisions of the declaration are described below.
Shareholder Voting
The declaration provides for shareholder voting as required by the 1940
Act or other applicable laws but otherwise permits, consistent with Delaware
law, actions by the Trustees without seeking the consent of shareholders. The
Trustees may, without shareholder approval, where approval of shareholders is
not otherwise required under the 1940 Act, merge or consolidate the trust into
other entities, reorganize the trust or any series or class into another trust
or entity or a series or class of another entity, sell the assets of the trust
or any series or class to another entity, or a series or class of another
entity, or terminate the trust or any series or class.
The funds are not required to hold an annual meeting of shareholders, but
each fund will call special meetings of its shareholders whenever required by
the 1940 Act or by the terms of the declaration. The declaration gives the
board the flexibility to specify either per share voting or dollar-weighted
voting. Under per share voting, each share of each fund is entitled to one
vote. Under dollar-weighted voting, a shareholder's voting power is determined,
not by the number of shares the shareholder owns, but by the dollar value of
those shares determined on the record date. All shareholders of all series and
classes of the trust vote together, except where required by the 1940 Act to
vote separately by series or by class, or when the Trustees have determined
that a matter affects only the interests of one or more series or classes of
shares.
Election and Removal of Trustees
The declaration provides that the Trustees may establish the number of
Trustees and that vacancies on the board may be filled by the remaining
Trustees, except when election of Trustees by the shareholders is required
under the 1940 Act. Trustees are then elected by a plurality of votes cast by
shareholders at a meeting at which a quorum is present. The declaration also
provides that a mandatory retirement age may be set by action of two thirds of
the Trustees and that Trustees may be removed at any time or for any reason by
a majority of the board or by a majority of the outstanding shareholders of the
trust.
Amendments to the Declaration
The Trustees are authorized to amend the declaration without the vote of
shareholders, but no amendment may be made that impairs the exemption from
personal liability granted in the declaration to persons who are or have been
shareholders, Trustees, officers or employees of the trust or that limit the
rights to indemnification or insurance provided in the declaration with respect
to actions or omissions of persons entitled to indemnification under the
declaration prior to the amendment.
104
Issuance and Redemption of Shares
Each fund may issue an unlimited number of shares for such consideration
and on such terms as the Trustees may determine. Shareholders are not entitled
to any appraisal, preemptive, conversion, exchange or similar rights, except as
the Trustees may determine. Each fund may involuntarily redeem a shareholder's
shares upon certain conditions as may be determined by the Trustees, including,
for example, if the shareholder fails to provide the fund with identification
required by law, or if the fund is unable to verify the information received
from the shareholder. Additionally, as discussed below, shares may be redeemed
in connection with the closing of small accounts.
Disclosure of Shareholder Holdings
The declaration specifically requires shareholders, upon demand, to
disclose to a fund information with respect to the direct and indirect
ownership of shares in order to comply with various laws or regulations, and a
fund may disclose such ownership if required by law or regulation.
Small Accounts
The declaration provides that a fund may close out a shareholder's account
by redeeming all of the shares in the account if the account falls below a
minimum account size (which may vary by class) that may be set by the Trustees
from time to time. Alternately, the declaration permits a fund to assess a fee
for small accounts (which may vary by class) and redeem shares in the account
to cover such fees, or convert the shares into another share class that is
geared to smaller accounts.
Series and Classes
The declaration provides that the Trustees may establish series and
classes in addition to those currently established and to determine the rights
and preferences, limitations and restrictions, including qualifications for
ownership, conversion and exchange features, minimum purchase and account size,
expenses and charges, and other features of the series and classes. The
Trustees may change any of those features, terminate any series or class,
combine series with other series in the trust, combine one or more classes of a
series with another class in that series or convert the shares of one class
into another class.
Each share of each fund, as a series of the trust, represents an interest
in the fund only and not in the assets of any other series of the trust.
Shareholder, Trustee and Officer Liability
The declaration provides that shareholders are not personally liable for
the obligations of the funds and requires a fund to indemnify a shareholder
against liability arising solely from the shareholder's ownership of shares in
the fund. In addition, a fund will assume the defense of any claim against a
shareholder for personal liability at the request of the shareholder. The
declaration further provides that no Trustee, officer or employee of a fund
shall be liable to the fund or any shareholder for any action, failure to act,
error or mistake except in cases of bad faith, willful misfeasance, gross
negligence or reckless disregard of duty. The declaration requires each fund to
indemnify each Trustee, director, officer, employee and authorized agent to the
fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved as a party or otherwise by virtue of
his being or having been such a Trustee, director, officer, employee, or agent
and against amounts paid or incurred by him in settlement thereof. The 1940 Act
currently provides that no officer or director shall be protected from
liability to a fund or its shareholders for misfeasance, bad faith, gross
negligence or reckless disregard of the duties of office. The declaration
extends to Trustees, officers and employees of a fund the full protection from
liability that the law allows.
The declaration provides that the appointment or designation of a Trustee
as chairperson, a member of a committee, an expert, lead Independent Trustee or
any other special appointment shall not impose any heightened standard of care
or liability on such Trustee.
Derivative Actions
The declaration provides a detailed process for the bringing of derivative
actions by shareholders in order to permit legitimate inquiries and claims
while avoiding the time, expense, distraction, and other harm that can be
caused to a fund or its shareholders as a result of spurious shareholder
demands and derivative actions. Prior to bringing a derivative action, a demand
by three unrelated shareholders must first be made on a fund's Trustees. The
declaration details various information, certifications, undertakings and
acknowledgements that must be included in the demand. Following receipt of the
demand, the Trustees have a period of ninety (90) days, which may be extended
by an additional sixty (60) days, to consider the demand. If a majority of the
Trustees who are considered independent for the purposes
105
of considering the demand determine that maintaining the suit would not be in
the best interests of the fund, the Trustees are required to reject the demand
and the complaining shareholders may not proceed with the derivative action
unless the shareholders are able to sustain the burden of proof to a court that
the decision of the Trustees not to pursue the requested action was not a good
faith exercise of their business judgment on behalf of the fund. The
declaration further provides that shareholders owning shares representing at
least 10% of the voting power of the affected fund must join in bringing the
derivative action. If a demand is rejected, the complaining shareholders will
be responsible for the costs and expenses (including attorneys' fees) incurred
by the fund in connection with the consideration of the demand, if in the
judgment of the Independent Trustees, the demand was made without reasonable
cause or for an improper purpose. If a derivative action is brought in
violation of the declaration, the shareholders bringing the action may be
responsible for the fund's costs, including attorneys' fees.
The declaration further provides that a fund shall be responsible for
payment of attorneys' fees and legal expenses incurred by a complaining
shareholder only if required by law, and any attorneys' fees that the fund is
obligated to pay shall be calculated using reasonable hourly rates. The
declaration also requires that actions by shareholders against a fund be
brought only in federal court in Boston, Massachusetts, or if not permitted to
be brought in federal court, then in state court in Boston, Massachusetts, and
that shareholders have no right to jury trial for such actions.
SALES CHARGES
Each fund continuously offers the following classes of shares designated
as Class A and Class Y as described in the Proxy Statement/
Prospectus. Each fund offers its shares at a reduced sales charge to investors
who meet certain criteria that permit the fund's shares to be sold with low
distribution costs. These criteria are described below or in the Proxy
Statement/Prospectus.
Class A Share Sales Charges
You may buy Class A shares of Pioneer Mid Cap Growth Fund II and Pioneer
Growth Fund at the public offering price, including a sales charge, as follows:
Sales charge as % of
--------------------------------------
Net
Offering Amounts 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 million ......... 2.00% 2.04% 1.75%
$1 million or more ........................ -0- -0- See below
You may buy Class A shares of Pioneer Intermediate Tax Free Income Fund at
the public offering price, including a sales charge, as follows:
Sales charge as % of
--------------------------------------
Net
Offering Amounts Dealer
Amount of purchase Price Invested Reallowance
- ------------------------------------------ ---------- ---------- ------------
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 million......... 2.00% 2.04% 1.75%
$1 million or more........................ -0- -0- See below
The schedule of sales charges above is applicable to purchases of Class A
shares of a fund by (i) an individual, (ii) an individual and his or her spouse
and children under the age of 21 and (iii) a trustee or other fiduciary of a
trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Sections 401 or 408 of the Code although more than one beneficiary is involved.
The sales charges applicable to a current purchase of Class A shares of a 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
106
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.
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
1.00% Up to $4 million
0.50% Next $46 million
0.25% Over $50 million
These commissions shall not be payable if the purchaser is affiliated with
the broker-dealer or if the purchase represents the reinvestment of a
redemption made during the previous 12 calendar months. Broker-dealers who
receive a commission in connection with Class A share purchases at net asset
value by employer-sponsored retirement plans with at least $1 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 $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gain
distributions) made within a 13-month period pursuant to an LOI which may be
established by completing the Letter of Intent section of the Account
Application. The reduced sales charge will be the charge that would be
applicable to the purchase of the specified amount of Class A shares as if the
shares had all been purchased at the same time. A purchase not made pursuant to
an LOI may be included if the LOI is submitted to PIMSS within ninety (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 a 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. 5% of your total intended purchase amount will be
held in escrow by PIMSS, registered in your name, until the terms of the LOI
are fulfilled. When you sign the Account Application, you agree to irrevocably
appoint PIMSS your attorney-in-fact to surrender for redemption any or all
shares held in escrow with full power of substitution. An LOI is not a binding
obligation upon the investor to purchase, or a fund to sell, the amount
specified in the LOI. Any share class for which no sales charge is paid cannot
be included under the LOI.
If the total purchases, 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 twenty (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.
107
Class C Shares
Pioneer Intermediate Tax Free income Fund does not currently issue Class C
shares. You may buy Class C shares of Pioneer Mid Cap Growth Fund II and
Pioneer Growth Fund 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 1.00%. The charge will be assessed on the amount equal to the lesser of the
current market value or the original purchase cost of the shares being
redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gain distributions. Class C shares do not convert to any
other class of fund shares.
In processing redemptions of Class C shares, a fund will first redeem
shares not subject to any CDSC and then shares held for the longest period of
time during the one-year period. As a result, you will pay the lowest possible
CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to a
fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Class Y Shares
No front-end, deferred or asset based sales charges are applicable to
Class Y shares of each fund.
Additional Payments to Dealers
The financial intermediaries through which shares of the funds 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 managed funds. Pioneer Affiliates make these payments from their own
resources, which include resources that derive from compensation for providing
services to the Pioneer managed 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 managed
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 managed 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 managed 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 managed 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 Proxy Statement/Prospectus. Financial intermediaries may
categorize and disclose these arrangements differently than Pioneer Affiliates
do. To the extent financial intermediaries sell more shares of the funds or
retain shares of the funds in their clients' accounts, Pioneer Affiliates
benefit from the incremental management and other fees paid to Pioneer
Affiliates by the funds with respect to those assets.
Revenue Sharing Payments
Pioneer Affiliates make revenue sharing payments as incentives to certain
financial intermediaries to promote and sell shares of Pioneer managed 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
108
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 managed 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 managed 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 managed
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
managed funds and Asset-Based Payments primarily create incentives to retain
previously sold shares of Pioneer managed 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 managed funds. Such compensation provided by
Pioneer Affiliates may include financial assistance to financial intermediaries
that enable Pioneer Affiliates to participate in and/or present at conferences
or seminars, sales or training programs for invited registered representatives
and other employees, client entertainment, client and investor events, and
other financial intermediary-sponsored events, and travel expenses, including
lodging incurred by registered representatives and other employees in
connection with client prospecting, retention and due diligence trips. Other
compensation may be offered to the extent not prohibited by federal or state
laws or any self-regulatory agency, such as FINRA. Pioneer Affiliates make
payments for entertainment events they deem appropriate, subject to Pioneer
Affiliates' guidelines and applicable law. These payments may vary depending
upon the nature of the event or the relationship.
As of January 1, 2009, Pioneer anticipates that the following
broker-dealers or their affiliates will receive additional payments as
described in the funds' Proxy Statement/Prospectus and statements of additional
information: [To be updated.]
A.G. Edwards & Sons Inc.
AIG VALIC
Ameriprise Financial Services, Inc.
Associated Securities Corp.
AXA Advisors, LLC
Charles Schwab & Co., Inc.
Chevy Chase Securities, Inc.
Citigroup Global Markets Inc.
Commonwealth Financial Network
D.A. Davidson & Co.
Ferris, Baker Watts Inc.
Fidelity Brokerage Services LLC
First Clearing, LLC
First Command Financial Planning, Inc.
H&R Block Financial Advisors, Inc.
109
Hartford Securities Distribution Company, 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.
LPL Financial Corporation
Merrill Lynch & Co., Inc.
Mesirow Financial, Inc.
MetLife Securities Inc.
Morgan Keegan & Co., Inc.
Morgan Stanley & Co., Inc.
Mutual of Omaha Investor Services, Inc.
Mutual Service Corporation
N.I.S. Financial Services, Inc.
National Financial Services LLC
Nationwide Securities, Inc.
Northwestern Investment Services, LLC
OneAmerica Securities, Inc.
Oppenheimer & Co., Inc.
Pershing LLC
PFS Investments Inc
Prudential Financial
Primevest Financial Services, Inc.
Raymond James Financial Services, Inc.
RBC Dain Rauscher Inc.
Ridge Clearing & Outsourcing Solutions, Inc.
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.
UBS Financial Services Inc.
Wachovia Securities
Waterstong Financial Group, Inc.
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.
Since each of the funds is newly-organized, none of the funds own any
securities issued by a regular broker-dealer of the fund as of the date of this
Statement of Additional Information.
REDEEMING SHARES
Class A and Class C shares may be redeemed or repurchased by the fund.
Redemptions may be suspended or payment postponed during any period in which
any of the following conditions exist: the NYSE is closed or trading on the
Exchange is restricted; an emergency exists as a result of which disposal by a
fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for 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
110
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)
An 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. If you direct that withdrawal payments be paid to another person,
want to change the bank where payments are sent or designate an address that is
different from the account's address of record after you have opened your
account, a medallion signature guarantee must accompany your instructions.
Withdrawals under the SWP are redemptions that may have tax consequences for
you.
While you are making systematic withdrawals from your account, you may pay
unnecessary initial sales charges on additional purchases of Class A shares or
contingent deferred sales charges. SWP redemptions reduce and may ultimately
exhaust the number of shares in your account. In addition, the amounts received
by a shareholder cannot be considered as yield or income on his or her
investment because part of such payments may be a return of his or her
investment.
An 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 Proxy Statement/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.
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 Proxy
Statement/Prospectus for more information. For personal assistance, call
1-800-225-6292 between 8:00 a.m. and 7:00 p.m. (Class Y account holders should
contact Pioneer's Group Plans Department at 1-800-665-8839 between 9:00 a.m.
and 5:30 p.m.), Eastern time, on 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, each 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, a fund may be liable for any loss due to unauthorized or fraudulent
instructions. A fund may implement other procedures from time to time. In all
other cases, neither the funds, 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
111
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. A fund may implement other procedures from time
to time. Different procedures may apply if you have a non-U.S. account or if
your account is registered in the name of an institution, broker-dealer or
other third party. You may not be able to use the online transaction privilege
for certain types of accounts, including most retirement accounts.
Telephone and Website Online Access
You may have difficulty contacting a fund by telephone or accessing
www.pioneerinvestments.com during times of market volatility or disruption in
telephone or Internet services. On Exchange holidays or on days when the
Exchange closes early, Pioneer will adjust the hours for the telephone center
and for online transaction processing accordingly. If you are unable to access
www.pioneerinvestments.com or to reach a 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 thirty (30) day yields on Pioneer's fixed income funds;
o annualized seven (7) day yields and seven (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.
PRICING OF SHARES
The net asset value per share of each class of each 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 Christmas Day. The net
asset value per share of each class of each fund is also determined on any
other day on which the level of trading in its portfolio securities is
sufficiently high that the current net asset value per share might be
materially affected by changes in the value of its portfolio securities. A fund
is not required to determine its net asset value per share on any day on which
no purchase orders in good order for fund shares are received and no shares are
tendered and accepted for redemption.
Each fund generally values its portfolio securities using closing market
prices or readily available market quotations. Securities which have not traded
on the date of valuation or securities for which sales prices are not generally
reported are valued at the mean between the current bid and asked prices.
Securities quoted in foreign currencies are converted to U.S. dollars utilizing
foreign exchange rates employed by a fund's independent pricing services.
Generally, trading in non-U.S. securities is substantially completed each day
at various
112
times prior to the close of regular trading on the Exchange. The values of such
securities used in computing the net asset value of each 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, a fund uses fair value pricing methods to value its
securities in accordance with procedures approved by the fund's Trustees. Each
fund also may use fair value pricing methods to value its securities, 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.
Valuing securities using fair value methods may cause the net asset value
of a fund's shares to differ from the net asset value that would be calculated
using closing market prices. International securities markets may be open on
days when the U.S. markets are closed. For this reason, the value of any
international securities owned by a 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, a fund's Trustees may use a pricing
matrix. Cash equivalent securities with remaining maturities of sixty (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 each fund is computed by
taking the value of all of the fund's assets attributable to a class, less the
fund's liabilities attributable to that class, and dividing the result by the
number of outstanding shares of that class. For purposes of determining net
asset value, expenses of the classes of a fund are accrued daily and taken into
account. Each fund's maximum offering price per Class A share is determined by
adding the maximum sales charge to the net asset value per Class A share. Class
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).
TAX STATUS
Each fund is treated as a separate entity for U.S. federal income tax
purposes. Each fund has elected to be treated, and has qualified and intends to
continue to qualify each year, as a "regulated investment company" under
Subchapter M of the Code, so that it will not pay U.S. federal income tax on
income and capital gains distributed to shareholders. In order to qualify as a
regulated investment company under Subchapter M of the Code, each fund must,
among other things, (i) derive at least 90% of its gross income for each
taxable year from dividends, interest, payments with respect to certain
securities loans, gains from the sale or other disposition of stock, securities
or foreign currencies, or other income (including gains from options, futures
and forward contracts) derived with respect to its business of investing in
such stock, securities or currencies, and net income derived from an interest
in a qualified publicly traded partnership (as defined in Section 851(h) of the
Code) (the "90% income test") and (ii) diversify its holdings so that, at the
end of each quarter of each taxable year: (a) at least 50% of the value of the
fund's total assets is represented by (1) cash and cash items, U.S. government
securities, securities of other regulated investment companies, and (2) other
securities, with such other securities limited, in respect of any one issuer,
to an amount not greater than 5% of the value of the fund's total assets and to
not more than 10% of the outstanding voting securities of such issuer and (b)
not more than 25% of the value of the fund's total assets is invested in (1)
the securities (other than U.S. government securities and securities of other
regulated investment companies) of any one issuer, (2) the securities (other
than securities of other regulated investment companies) of two or more issuers
that the fund controls and that are engaged in the same, similar, or related
trades or businesses, or (3) the securities of one or more qualified publicly
traded partnerships. For purposes of the 90% income test, the character of
income earned by certain entities in which a fund invests that are not treated
as corporations for U.S. federal income tax purposes (e.g., partnerships other
than certain publicly traded partnerships or trusts that have not elected to be
classified as corporations under the "check-the-box" regulations) will
generally pass through to a fund. Consequently, in order to qualify as a
regulated investment company, a fund may be required to limit its equity
investments in such entities that earn fee income, rental income or other
non-qualifying income.
If a fund qualifies as a regulated investment company and properly
distributes to its shareholders each taxable year an amount equal to or
exceeding the sum of (i) 90% of its "investment company taxable income" as that
term is defined in the Code (which includes, among other things, dividends,
taxable interest, and the excess of any net short-term capital gains over net
long-term capital losses, as reduced by certain deductible expenses) without
regard to the deduction for dividends paid, and (ii) 90% of the excess of its
gross tax-exempt interest income, if any, over certain disallowed deductions,
the fund generally will not be subject to U.S. federal income tax on any income
of the fund distributed to shareholders, including "net capital gain" (the
excess of net long-term capital gain over net short-term capital loss).
However, if a fund meets such distribution requirements, but chooses to retain
some portion of its taxable income or gains, it generally will be subject to
U.S. federal income tax at regular corporate rates on the amount retained. Each
fund may designate certain amounts retained as undistributed net capital gain
in a notice to its shareholders, who (i) will be required to include in income
for U.S. federal income tax purposes, as long-term capital gain, their
proportionate shares of the undistributed amount so designated, (ii) will be
entitled to credit their proportionate shares of the income tax paid by the
fund on that undistributed amount against their federal income tax liabilities
and to claim refunds to the extent such credits exceed their liabilities, and
(iii) will be entitled to increase their tax basis, for federal income
113
tax purposes, in their shares by an amount equal to the excess of the amount of
undistributed net capital gain included in their respective income over their
respective income tax credits. Each fund intends to distribute at least
annually all or substantially all of its investment company taxable income
(computed without regard to the dividends-paid deduction), net tax-exempt
interest income, and net capital gain. If, for any taxable year, a fund does
not qualify as a regulated investment company or does not satisfy the 90%
distribution requirement, it will be treated as a U.S. corporation subject to
U.S. federal income tax, thereby subjecting any income earned by the fund to
tax at the corporate level and to a further tax at the shareholder level when
such income is distributed.
Under the Code, each fund will be subject to a nondeductible 4% U.S.
federal excise tax on a portion of its undistributed ordinary income and
capital gain net income if it fails to meet certain distribution requirements
with respect to each calendar year and the year ending October 31,
respectively. Each fund intends to make distributions in a timely manner and
accordingly does not expect to be subject to the excise tax. Each fund
generally distributes any net short- and long-term capital gains in November.
Each 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 a fund to avoid U.S. federal income or excise tax.
The Code permits tax-exempt interest received by a fund to flow through as
tax-exempt "exempt-interest dividends" to the fund's shareholders, provided
that the fund qualifies as a regulated investment company and at least 50% of
the value of the fund's total assets at the close of each quarter of its
taxable year consists of tax-exempt obligations, i.e., obligations that pay
interest excluded from gross income under Section 103(a) of the Code. That part
of a fund's net investment income which is attributable to interest from
tax-exempt obligations and which is distributed to shareholders will be
designated by the fund as an "exempt-interest dividend" under the Code. Exempt-
interest dividends are excluded from a shareholder's gross income under the
Code but are nevertheless required to be reported on the shareholder's U.S.
federal income tax return. The percentage of income designated as
exempt-interest dividends is applied uniformly to all distributions made during
each taxable year and may differ from the percentage of distributions
consisting of tax-exempt interest during any particular month. That portion of
a fund's dividends and distributions not designated as exempt-interest
dividends will be taxable as described below.
Pioneer Intermediate Tax Free Income Fund expects that most of its
distributions will constitute exempt-interest dividends. However, it is
possible that Pioneer Intermediate Tax Free Income Fund may from time to time
invest a portion of its portfolio in short-term taxable obligations and may
engage in transactions generating gain or income that is not tax-exempt, e.g.,
the fund may purchase and sell non-municipal securities, sell or lend portfolio
securities, enter into repurchase agreements, dispose of rights to when-issued
securities prior to issuance, acquire any debt obligation at a market discount,
acquire certain stripped tax-exempt obligations or their coupons or enter into
options and futures transactions. The fund's distributions of such gain or
income will not be "exempt-interest dividends" and, accordingly, will be
taxable.
Exempt-interest dividends derived from interest on certain "private
activity bonds" will be items of tax preference, which increase alternative
minimum taxable income for individuals or entities that are subject to the U.S.
federal alternative minimum tax. All exempt-interest dividends may result in or
increase a corporate shareholder's liability for the federal alternative
minimum tax.
Interest on indebtedness incurred or continued by a shareholder to
purchase or carry shares of a fund will not be deductible for U.S. federal
income tax purposes to the extent it is deemed under the Code and applicable
regulations to relate to exempt-interest dividends received from the fund.
Pioneer Intermediate Tax Free Income Fund may not be an appropriate investment
for persons who are "substantial users" of facilities financed by industrial
revenue or private activity bonds or persons related to substantial users.
Shareholders receiving social security or certain railroad retirement benefits
may be subject to U.S. federal income tax on a portion of such benefits as a
result of receiving exempt-interest dividends paid by the fund.
Unless a shareholder specifies otherwise, all distributions from a fund to
that shareholder will be automatically reinvested in additional full and
fractional shares of the fund. For U.S. federal income tax purposes, all
dividends from a fund, other than exempt-interest dividends, generally are
taxable whether a shareholder takes them in cash or reinvests them in
additional shares of the fund. In general, assuming that a fund has sufficient
earnings and profits, dividends from net investment income that is not tax
exempt and from net short-term capital gains 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 and certain other
non-corporate shareholders at a maximum 15% U.S. federal income tax rate.
Dividend income distributed to individual and certain other non-corporate
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." Qualified dividend income generally means dividend income
received from a fund's investments in common and preferred stock of U.S.
companies and stock of certain qualified foreign corporations, provided that
certain holding period and other requirements are met by both the fund and the
shareholders. Dividends received by a fund from REITs generally are not
expected to qualify for treatment as qualified dividend income. If 95% or more
114
of a fund's gross income (calculated without taking into account net capital
gain derived from sales or other dispositions of stock or securities) consists
of qualified dividend income, the fund may designate all distributions of such
income as qualified dividend income.
A foreign corporation is treated as a qualified foreign corporation for
this purpose if it is incorporated in a possession of the United States or it
is eligible for the benefits of certain income tax treaties with the United
States and meets certain additional requirements. Certain foreign corporations
that are not otherwise qualified foreign corporations will be treated as
qualified foreign corporations with respect to dividends paid by them if the
stock with respect to which the dividends are paid is readily tradable on an
established securities market in the United States. Passive foreign investment
companies are not qualified foreign corporations for this purpose.
A dividend that is attributable to qualified dividend income of a fund
that is paid by the fund to a shareholder will not be taxable as qualified
dividend income to such shareholder if (1) the dividend is received with
respect to any share of the fund held for fewer than sixty-one (61) days during
the one hundred twenty-one (121) day period beginning on the date which is
sixty (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.
Distributions by a fund in excess of the fund's current and accumulated
earnings and profits will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in its shares and any such
amount in excess of that basis will be treated as gain from the sale of shares,
as discussed below.
Dividends received by a fund from U.S. corporations in respect of any
share of stock with a tax holding period of at least forty-six (46) days during
the ninety-one (91) day period beginning on the date that is forty-five (45)
days before the date on which the stock becomes ex-dividend as to that dividend
and that is held in an unleveraged position and distributed and designated by
the fund (except for capital gain dividends or exempt-interest dividends
received from a regulated investment company) may be eligible for the 70%
dividends-received deduction generally available to corporations under the
Code. Certain preferred stock must have a holding period of at least ninety-one
(91) days during the one hundred eighty-one (181) day period beginning on the
date that is ninety (90) days before the date on which the stock becomes
ex-dividend as to that dividend in order to be eligible. 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 with
respect to those shares. The entire dividend, including the otherwise
deductible amount, will be included in determining the excess, if any, of a
corporation's adjusted current earnings over its alternative minimum taxable
income, which may increase a corporation's alternative minimum tax liability.
Any corporate shareholder should consult its tax adviser regarding the
possibility that its tax basis in its shares may be reduced, for U.S. federal
income tax purposes, by reason of "extraordinary dividends" received with
respect to the shares and, to the extent such basis would be reduced below
zero, current recognition of income may be required.
Distributions from net capital gains, if any, that are designated as
capital gain dividends by a fund are taxable as long-term capital gains for
U.S. federal income tax purposes without regard to the length of time the
shareholder has held shares of the fund. Capital gain dividends distributed by
a fund to individual and certain other non-corporate shareholders generally
will qualify for reduced U.S. federal income tax rates (currently, a maximum
rate of 15%, with lower rates applying to taxpayers in the 10% and 15% rate
brackets) 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
affected by the application of the alternative minimum tax to individual
shareholders. Under current law, the reduced maximum 15% U.S. federal income
tax rate on qualified dividend income and long-term capital gains will not
apply in taxable years beginning after December 31, 2010.
The U.S. federal income tax status of all distributions, including the
portion of such distributions that 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 a fund in October, November or December and payable to
shareholders of record in such a month that is paid during the following
January will be treated for U.S. federal income tax purposes as received by
shareholders on December 31 of the calendar year in which it is declared. In
addition, certain other distributions made after the close of a taxable year of
a fund may be "spilled back" and treated for certain purposes as paid by the
fund during such taxable year. In such case, shareholders generally will be
treated as having received such dividends in the taxable year in which the
distributions were actually made. For purposes of calculating the amount of a
regulated investment company's undistributed income
115
and gain subject to the 4% excise tax described above, such "spilled back"
dividends are treated as paid by the regulated investment company when they are
actually paid.
For U.S. federal income tax purposes, a fund is permitted to carry forward
a net capital loss for any year to offset its capital gains, if any, for up to
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in U.S. federal income
tax liability to a fund and may not be distributed as such to shareholders.
At the time of an investor's purchase of fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in a
fund's portfolio or undistributed taxable income of the fund. Consequently,
subsequent distributions by the fund with respect to these shares from such
appreciation or income may be taxable to such investor even if the net asset
value of the investor's shares is, as a result of the distributions, reduced
below the investor's cost for such shares and the distributions economically
represent a return of a portion of the investment.
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 disallowed to
the extent of any exempt-interest dividends paid with respect to such shares,
and any portion of such loss that exceeds the amount disallowed will be treated
as a long-term capital loss to the extent of any amounts treated as
distributions to the shareholder of long-term capital gain with respect to such
shares (including any amounts credited to the shareholder as undistributed
capital gains).
Losses on redemptions or other dispositions of shares may be disallowed
under "wash sale" rules in the event of other investments in a fund (including
those made pursuant to reinvestment of dividends and/or capital gain
distributions) within a period of sixty-one (61) days beginning thirty (30)
days before and ending thirty (30) days after a redemption or other disposition
of shares. In such a case, the disallowed portion of any loss generally would
be included in the U.S. federal tax basis of the shares acquired in the other
investments.
Gain may be increased (or loss reduced) upon a redemption of Class A
shares of each fund within ninety (90) days after their purchase followed by
any purchase (including purchases by exchange or by reinvestment), without
payment of an additional sales charge, of Class A shares of the fund or of
another Pioneer managed fund (or any other shares of a Pioneer managed fund
generally sold subject to a sales charge).
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
of certain greater amounts over a combination of years), the shareholder must
file with the Internal Revenue Service (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.
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 otherwise taxable fund dividends
or distributions, or on sales or exchanges of fund shares unless the fund
shares are "debt-financed property" within the meaning of the Code. However, in
the case of fund shares held through a non-qualified deferred compensation
plan, fund dividends and distributions other than tax-exempt dividends received
by the plan and sales and exchanges of fund shares by the plan generally are
taxable to the employer sponsoring such plan in accordance with the U.S.
federal income tax laws that are generally applicable to shareholders receiving
such dividends or distributions from regulated investment companies such as the
funds.
A plan participant whose retirement plan invests in a fund, whether such
plan is qualified or not, generally is not taxed on fund dividends or
distributions received by the plan or on 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
116
prohibited transactions, is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.
Foreign exchange gains and losses realized by a fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Under Treasury regulations that may be promulgated in the future,
any gains from such transactions that are not directly related to a fund's
principal business of investing in stock or securities (or its options
contracts or futures contracts with respect to stock or securities) may have to
be limited in order to enable the fund to satisfy the 90% income test.
If a fund acquires any equity interest (under Treasury regulations that
may be promulgated in the future, generally including not only stock but also
an option to acquire stock such as is inherent in a convertible bond) in
certain foreign corporations (i) that receive at least 75% of their annual
gross income from passive sources (such as interest, dividends, certain rents
and royalties, or capital gains) or (ii) where at least 50% of the
corporation's assets (computed based on average fair market value) either
produce or are held for the production of passive income ("passive foreign
investment companies"), the 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. A "qualified electing fund" election or
a "mark to market" election 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 the distribution requirements
applicable to regulated investment companies, as described above) without the
concurrent receipt of cash. In order to satisfy the distribution requirements
and avoid a tax on the fund, the fund may be required to liquidate portfolio
securities that it might otherwise have continued to hold, potentially
resulting in additional taxable gain or loss to the fund. These investments
could also result in the treatment of gains from the sale of stock of passive
foreign investment companies as ordinary income. In order for a fund to make a
"qualified electing fund" election with respect to a "passive foreign
investment company," the passive foreign investment company would have to agree
to provide certain tax information to the fund on an annual basis, which it
might not agree to do. A 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.
Each fund may invest in or hold debt obligations of issuers not currently
paying interest or that are in default. Investments in debt obligations that
are at risk of or in default present special tax issues for a fund. Federal
income tax rules are not entirely clear about issues such as when a fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities,
how payments received on obligations in default should be allocated between
principal and interest and whether certain exchanges of debt obligations in a
workout context are taxable. These and other issues will be addressed by each
fund, in the event it invests in or holds such securities, in order to seek to
ensure that it distributes sufficient income to preserve its status as a
regulated investment company and does not become subject to U.S. federal income
or excise tax.
If a 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, each fund must
distribute to its shareholders, at least annually, all or substantially all of
its investment company taxable income (determined without regard to the
deduction for dividends paid) and net tax-exempt income, including such accrued
income, to qualify to be treated as a regulated investment company under the
Code and avoid U.S. federal income and excise taxes. Therefore, a fund may have
to dispose of its portfolio securities, potentially under disadvantageous
circumstances, to generate cash, or may have to borrow the cash, to satisfy
distribution requirements. Such a disposition of securities may potentially
result in additional taxable gain or loss to the fund.
Options written or purchased and futures contracts entered into by a fund
on certain securities, indices and foreign currencies, as well as certain
forward foreign currency contracts, may cause the fund to recognize gains or
losses from marking-to-market even though such options may not have lapsed or
been closed out or exercised, or such futures or forward contracts may not have
been performed or closed out. The tax rules applicable to these contracts may
affect the characterization of some capital gains and losses realized by a 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, a 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 a fund may receive no corresponding cash amounts, possibly
requiring the disposition of portfolio securities or borrowing to obtain
117
the necessary cash. Such a disposition of securities may potentially result in
additional taxable gain or loss to the fund. Losses on certain options, futures
or forward contracts and/or offsetting positions (portfolio securities or other
positions with respect to which a 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 a 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 a fund's income and gains or losses and hence of its distributions
to shareholders.
A fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gains with
respect to its investments in those countries. Any such taxes would, if
imposed, reduce the yield on or return from those investments. Tax conventions
between certain countries and the U.S. may reduce or eliminate such taxes in
some cases. The funds do not expect to satisfy the requirements for passing
through to their respective shareholders any share of 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.
Each fund is required to 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 certain 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. A fund may
nevertheless be required to backup withhold if it receives notice from the IRS
or a broker that the number provided is incorrect or backup withholding is
applicable as a result of previous underreporting of interest or dividend
income.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons,
i.e., generally, U.S. citizens or residents or U.S. corporations, partnerships,
trusts or estates, and who are subject to U.S. federal income tax and hold
their shares as capital assets. Except as otherwise provided, this description
does not address the special tax rules that may be applicable to particular
types of investors, such as financial institutions, insurance companies,
securities dealers, other regulated investment companies, or tax-exempt or
tax-deferred plans, accounts or entities. Investors other than U.S. persons may
be subject to different U.S. federal income tax treatment, including a
non-resident alien U.S. withholding tax at the rate of 30% or any lower
applicable treaty rate on amounts treated as ordinary dividends from a fund
(other than, for taxable years of the fund beginning on or before December 31,
2009, certain dividends designated by the fund as (i) interest-related
dividends, to the extent such dividends are derived from the fund's "qualified
net interest income," or (ii) short-term capital gain dividends, to the extent
such dividends are derived from the fund's "qualified short-term gain") or, in
certain circumstances, unless an effective IRS Form W-8BEN or other authorized
withholding certificate is on file, to backup withholding at the rate of 28% on
certain other payments from the fund. "Qualified net interest income" is a
fund's net income derived from U.S.-source interest and original issue
discount, subject to certain exceptions and limitations. "Qualified short-term
gain" generally means the excess of the net short-term capital gain of a fund
for the taxable year over its net long-term capital loss, if any. Backup
withholding will not be applied to payments that have been subject to the 30%
(or lower applicable treaty rate) withholding tax on shareholders who are
neither citizens nor residents of the United States. Each fund does not expect
to be a "U.S. real property holding corporation" as defined in Section
897(c)(2) of the Code. If a fund were to be classified as a U.S. real property
holding corporation (or if it would be so classified, were it not for certain
exceptions), then distributions made by the fund to non-U.S. shareholders might
be subject to U.S. federal withholding tax, and non-U.S. shareholders might be
required to file U.S. federal income tax returns to report distributions
received from the fund.
Shareholders should consult their own tax advisers on these matters and on
state, local, foreign and other applicable tax laws.
If, as anticipated, each fund qualifies 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 corporate income tax.
The exemption of exempt-interest dividends for U.S. federal income tax
purposes does not necessarily result in exemption under the tax laws of any
state or local taxing authority, since those laws vary with respect to the
taxation of such income. Many states exempt from tax that portion of an
exempt-interest dividend which represents interest received by a fund on that
state's securities, subject in some cases to compliance with concentration
and/or reporting requirements, which the Pioneer Intermediate Tax Free Income
Fund makes no commitment to seek to satisfy. However, the Pioneer Intermediate
Tax Free Income Fund will report annually to its shareholders the percentage of
interest income received by the fund during the preceding year on federally
tax-exempt obligations indicating, on a state-by-state basis only, the source
of such income. Each shareholder of the Pioneer Intermediate Tax Free Income
Fund is advised to consult
118
his own tax adviser regarding the exemption, if any, of exempt-interest
dividends under the state and local tax laws applicable to the shareholder.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent a fund's distributions are
derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. government obligations,
provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. The funds will not
seek to satisfy any threshold or reporting requirements that may apply in
particular taxing jurisdictions, although the funds may, in their respective
sole discretions, provide relevant information to their shareholders.
FINANCIAL STATEMENTS
Since each of the funds is newly-organized and has not yet offered shares,
no financial statement information is provided for the funds. For financial
statement purposes, Regions Morgan Keegan Select Mid Cap Growth Fund will be
the accounting survivor of its reorganization with Pioneer Mid Cap Growth Fund
II, Regions Morgan Keegan Select Growth Fund will be the accounting survivor of
its reorganization with Pioneer Growth Fund and Regions Morgan Keegan Select
Intermediate Tax Exempt Bond Fund will be the accounting survivor of its
reorganization with Pioneer Intermediate Tax Free Income Fund. As accounting
survivors, the operating history of each of Regions Morgan Keegan Select Mid
Cap Growth Fund, Regions Morgan Keegan Select Growth Fund and Regions Morgan
Keegan Select Intermediate Tax Exempt Bond Fund will be used for financial
reporting purposes after the consummation of the reorganizations.
ANNUAL FEE, EXPENSE AND OTHER INFORMATION
Share Ownership
The Trustees and officers of the funds do not beneficially own any
securities of the funds, as each of the funds is newly-organized and has not
yet commenced operations.
Since each fund is newly-organized, as of the date hereof, no shareholders
or "groups" (as such term is defined in Section 13(d) of the Securities
Exchange Act of 1934) owned beneficially or of record 5% or more of the shares
of any class of any of the funds.
Trustee Ownership of Shares of the Other Pioneer Managed Funds
The following table indicates the value of shares that each Trustee
beneficially owned in the other Pioneer managed funds in the aggregate as of
[December 31, 2008]. Beneficial ownership is determined in accordance with SEC
rules. The share value of any closed-end Pioneer managed fund is based on its
closing market price on [December 31, 2008]. The share value of any open-end
Pioneer managed fund is based on the net asset value of the class of shares on
[December 31, 2008]. The dollar ranges in this table are in accordance with SEC
requirements.
Aggregate Dollar Range of Equity
Securities in All Registered Investment
Companies Overseen by Trustee in the
Name of Trustee Pioneer Family of Funds
- -------------------------------- ----------------------------------------
Interested Trustees:
John F. Cogan, Jr. ........... [ ]
Daniel K. Kingsbury .......... [ ]
Independent Trustees:
David R. Bock ................ [ ]
Mary K. Bush ................. [ ]
Benjamin M. Friedman ......... [ ]
Margaret B.W. Graham ......... [ ]
Thomas J. Perna .............. [ ]
Marguerite A. Piret .......... [ ]
Stephen K. West .............. [ ]
John Winthrop ................ [ ]
119
Compensation of Officers and Trustees
The following table sets forth certain information with respect to the
compensation of each Trustee of the funds.
Aggregate Aggregate Pension or
Compensation Aggregate Compensation Retirement Total Compensation
from Pioneer Mid Compensation from Pioneer Benefits Accrued from the Fund and
Cap Growth from Pioneer Intermediate Tax as Part of Fund Other Pioneer
Name of Trustee Fund II* Growth Fund* Free Income Fund* Expenses* Managed Funds*+
- ------------------------------ ------------------ -------------- ------------------- ------------------ -------------------
Interested Trustees:
John F. Cogan, Jr. ........... [ ] [ ] [ ] [ ] [ ]
Daniel K. Kingsbury .......... [ ] [ ] [ ] [ ] [ ]
Independent Trustees:
David R. Bock ................ [ ] [ ] [ ] [ ] [ ]
Mary K. Bush ................. [ ] [ ] [ ] [ ] [ ]
Benjamin M. Friedman ......... [ ] [ ] [ ] [ ] [ ]
Margaret B.W. Graham ......... [ ] [ ] [ ] [ ] [ ]
Thomas J. Perna .............. [ ] [ ] [ ] [ ] [ ]
Marguerite A. Piret .......... [ ] [ ] [ ] [ ] [ ]
Stephen K. West .............. [ ] [ ] [ ] [ ] [ ]
John Winthrop ................ [ ] [ ] [ ] [ ] [ ]
- ----------
* Since the fund is newly-organized and has not completed its first full year
since its organization, the information provided is an estimate of future
payments to the Trustees from the date of fund's organization through the
end of the fund's current fiscal year on [November 30], 2009.
+ There are 77 U.S. registered investment portfolios in the Pioneer family of
funds.
Management Fees
Since each of the funds is newly-organized, none of the funds has paid any
management fees as of the date hereof.
Commissions on Brokerage Transactions
Since each of the funds is newly-organized, as of the date hereof, none of
the funds has directed any commissions on brokerage transactions to brokers
because of research services provided.
Aggregate Brokerage Commissions Paid
Since each of the funds is newly-organized, none of the funds has paid any
brokerage commissions for portfolio transactions as of the date hereof.
Service or Distribution Fees
Since each of the funds is newly-organized, none of the funds has paid any
service or distribution fees as of the date hereof.
Sales Charges and Service and Distribution Plan Fees
Since each of the funds is newly-organized, PDF has not received
commissions on Class A and Class C shares and none of the funds has paid any
service or distribution fees during the last three fiscal years.
120
Appendix A
Description of Short-Term Debt, Corporate Bond and Preferred Stock Ratings1
Description of Moody's Investors Service, Inc.'s ("Moody's") Short-Term
Prime Ratings:
Moody's short-term ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers,
short-term programs or to individual short-term debt instruments. Such
obligations generally have an original maturity not exceeding thirteen months,
unless explicitly noted.
Moody's employs the following designations to indicate the relative
repayment ability of rated issuers:
P-1: Issuers (or supporting institutions) rated Prime-1 have a superior
ability to repay short-term debt obligations.
P-2: Issuers (or supporting institutions) rated Prime-2 have a strong
ability to repay short-term debt obligations.
P-3: Issuers (or supporting institutions) rated Prime-3 have an acceptable
ability to repay short-term obligations.
NP: Issuers (or supporting institutions) rated Not Prime do not fall
within any of the Prime rating categories.
Note: Canadian issuers rated P-1 or P-2 have their short-term ratings
enhanced by the senior-most long-term rating of the issuer, its guarantor or
support-provider.
Description of Moody's Debt Ratings:
Aaa: Obligations rated Aaa are judged to be of the highest quality, with
minimal credit risk.
Aa: Obligations rated Aa are judged to be of high quality and are subject
to very low credit risk.
A: Obligations rated A are considered upper-medium grade and are subject
to low credit risk.
Baa: Obligations rated Baa are subject to moderate credit risk. They are
considered medium-grade and as such may possess certain speculative
characteristics.
Ba: Obligations rated Ba are judged to have speculative elements and are
subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high
credit risk.
Caa: Obligations rated Caa are judged to be of poor standing and are
subject to very high credit risk.
Ca: Obligations rated Ca are highly speculative and are likely in, or very
near, default, with some prospect of recovery of principal and interest.
C: Obligations rated C are the lowest rated class of bonds and are
typically in default, with little prospect for recovery of principal or
interest.
Note: Moody's appends numerical modifiers "1", "2", and "3" to each
generic rating classification from "Aa" through "Caa". The modifier "1"
indicates that the obligation ranks in the higher end of its generic rating
category; the modifier "2" indicates a mid-range ranking; and the modifier "3"
indicates a ranking in the lower end of that generic rating category.
Moody's assigns long-term ratings to individual debt securities issued
from medium-term note (MTN) programs, in addition to indicating ratings to MTN
programs themselves. Notes issued under MTN programs with such indicated
ratings are rated at issuance at the rating applicable to all pari passu notes
issued under the same program, at the program's relevant indicated rating,
provided such notes do not exhibit any of the characteristics listed below:
o Notes containing features that link interest or principal to the credit
performance of any third party or parties (i.e., credit-linked notes);
o Notes allowing for negative coupons, or negative principal;
o Notes containing any provision that could obligate the investor to make
any additional payments;
o Notes containing provisions that subordinate the claim.
For notes with any of these characteristics, the rating of the individual
note may differ from the indicated rating of the program.
A-1
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.
Issue ratings are an assessment of default risk, but may incorporate an
assessment of relative seniority or ultimate recovery in the event of default.
Junior obligations are typically rated lower than senior obligations, to
reflect the lower priority in bankruptcy, as noted above. (Such differentiation
may apply when an entity has both senior and subordinated obligations, secured
and unsecured obligations, or operating company and holding company
obligations.)
AAA: An obligation rated "AAA" has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated "AA" differs from the highest-rated obligations
only to a small degree. The obligor's capacity to meet its financial commitment
on the obligation is very strong.
A: An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
BB, B, CCC, CC, and C: Obligations rated "BB", "B", "CCC", "CC", and "C"
are regarded as having significant speculative characteristics. "BB" indicates
the least degree of speculation and "C" the highest. While such obligations
will likely have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse conditions.
BB: An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB", but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness to
meet its financial commitment on the obligation.
CCC: An obligation rated "CCC" is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated "CC" is currently highly vulnerable to nonpayment.
C: A "C" rating is assigned to obligations that are currently highly
vulnerable to non-payment, obligations that have payment arrearages allowed by
the terms of the documents, or obligations of an issuer that is the subject of
a bankruptcy petition or similar action which have not experienced a payment
default. Among others, a "C" rating may be assigned to subordinated debt,
preferred stock or other obligations on which cash payments have been suspended
in accordance with the instrument's terms.
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.
NR: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
A-2
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
A-2: A short-term obligation rated "A-2" is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated "A-3" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
B: A short-term obligation rated "B" is regarded as having significant
speculative characteristics. Ratings of "B-1", "B-2", and "B-3" may be assigned
to indicate finer distinctions within the "B" category. The obligor currently
has the capacity to meet its financial commitment on the obligation; however,
it faces major ongoing uncertainties which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
B-1: A short-term obligation rated "B-1" is regarded as having significant
speculative characteristics, but the obligor has a relatively stronger capacity
to meet its financial commitments over the short-term compared to other
speculative-grade obligors.
B-2: A short-term obligation rated "B-2" is regarded as having significant
speculative characteristics, and the obligor has an average speculative-grade
capacity to meet its financial commitments over the short-term compared to
other speculative-grade obligors.
B-3: A short-term obligation rated "B-3" is regarded as having significant
speculative characteristics, and the obligor has a relatively weaker capacity
to meet its financial commitments over the short-term compared to other
speculative-grade obligors.
C: A short-term obligation rated "C" is currently vulnerable to nonpayment
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.
Local Currency and Foreign Currency Risks
Country risk considerations are a standard part of Standard & Poor's
analysis for credit ratings on any issuer or issue. Currency of repayment is a
key factor in this analysis. An obligor's capacity to repay foreign currency
obligations may be lower than its capacity to repay obligations in its local
currency due to the sovereign government's own relatively lower capacity to
repay external versus domestic debt. These sovereign risk considerations are
incorporated in the debt ratings assigned to specific issues. Foreign currency
issuer ratings are also distinguished from local currency issuer ratings to
identify those instances where sovereign risks make them different for the same
issuer.
A-3
Appendix B
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
Policy
Each of Pioneer Investment Management, Inc. and Pioneer Institutional
Asset Management, Inc. (collectively, "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 seek to vote all proxies in accordance with this policy,
which are presented in a timely manner.
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 in a timely manner will be voted in
accordance with the specific policies listed below. 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. 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.
Applicability
Pioneer's Proxy Voting policy and related 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. The Proxy
Voting policies and procedures summarize Pioneer's position on a number of
issues for which proxies may be solicited. The policies are guidelines that
provide a general indication on how Pioneer would vote but do not include all
potential voting scenarios or proxy events involving closed-end Funds. Because
of the special issues associated with proxy solicitations by closed-end Funds,
shares of closed-end Funds will be voted by Pioneer on a case-by-case basis.
Purpose
The overriding goal of Pioneer's Proxy Voting Procedure is that proxies
for all United States ("US") and non-US companies that are received in a timely
manner 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 Italiano S.p.A. ("Unicredito"). Any questions about these policies
and procedures should be directed to Pioneer's Director of Investment
Operations (the "Proxy Coordinator").
Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to ensure
that all proxy materials are received by the custodians and are processed in a
timely fashion. To the extent applicable, the proxy voting service votes all
proxies in accordance with the proxy voting guidelines established by Pioneer
and set forth herein. The proxy voting service will refer proxy questions to
the Proxy Coordinator (described below) for instructions under circumstances
where: (1) the application of the proxy voting guidelines is unclear; (2) a
particular proxy question is not covered by the guidelines; or (3) the
B-1
guidelines call for specific instructions on a case-by-case basis. The proxy
voting service is also requested to call to the Proxy Coordinator's attention
specific proxy questions that, while governed by a guideline, appear to involve
unusual or controversial issues. Pioneer reserves the right to attend a meeting
in person and may do so when it determines that the company or the matters to
be voted on at the meeting are strategically important to its clients.
Proxy Coordinator
The Proxy Coordinator coordinates the voting, procedures and reporting of
proxies on behalf of Pioneer's clients. The Proxy Coordinator will deal
directly with the proxy voting service and, in the case of proxy questions
referred by the proxy voting service, will solicit voting recommendations and
instructions from the Portfolio Management or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring that
these questions and referrals are responded to in a timely fashion and for
transmitting appropriate voting instructions to the proxy voting service. The
Proxy Coordinator is responsible for verifying with the Chief Legal Officer or
his or her designee whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an employee
benefit plan, the plan's trustee or other fiduciaries).
Referral Items
The proxy voting service will refer proxy questions to the Proxy
Coordinator or his or her designee that are described by Pioneer's proxy voting
guidelines as to be voted on a case-by-case basis, that are not covered by
Pioneer's guidelines or where Pioneer's guidelines may be unclear with respect
to the matter to be voted on. Under such circumstances, the Proxy Coordinator
will seek a written voting recommendation from the Head of Portfolio Management
U.S. or his or her designated equity portfolio-management representative. Any
such recommendation will include: (i) the manner in which the proxies should be
voted; (ii) the rationale underlying any such decision; and (iii) the
disclosure of any contacts or communications made between Pioneer and any
outside parties concerning the proxy proposal prior to the time that the voting
instructions are provided.
Securities Lending
In accordance with industry standards proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending program
or a client's managed security lending program. However, Pioneer will reserve
the right to recall lent securities so that they may be voted according to the
Pioneer's instructions. If a portfolio manager would like to vote a block of
previously lent shares, the Proxy Coordinator will work with the portfolio
manager and Investment Operations to recall the security, to the extent
possible, to facilitate the vote on the entire block of shares. Certain clients
participate in securities lending programs. Although such programs allow for
the recall of securities for any reason, Pioneer may determine not to vote
securities on loan and it may not always be possible for securities on loan to
be recalled in time to be voted.
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.
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.
B-2
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group include Pioneer's: Head of
Portfolio Management U.S. or his or her designated equity portfolio management
representative, the Director of Investment Operations, and the Chief Compliance
Officer of the Adviser and Funds. Other members of Pioneer will be invited to
attend meetings and otherwise participate as necessary. The Director of
Investment Operations will chair the Proxy Voting Oversight Group. The Proxy
Voting Oversight Group is responsible for developing, evaluating, and changing
(when necessary) Pioneer's Proxy Voting Policies and Procedures. The group
meets at least annually to evaluate and review 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. ("PGAM").
Filing Form NP-X
The Proxy Coordinator and the Regulatory Compliance Manager are
responsible for ensuring that Form NP-X documents receive the proper review by
a member of the Proxy Voting Oversight Group prior to a Fund officer signing
the forms.
The Investment Operations department will provide the Compliance
department with a copy of each Form N-PX filing prepared by the proxy voting
service.
Compliance files N-PX
The Compliance department will ensure that a corresponding Form N-PX
exists for each Pioneer registered investment company.
Following this review, each Form N-PX is formatted for public
dissemination via the EDGAR system.
Prior to submission, each Form N-PX is to be presented to the Fund officer
for a final review and signature.
Copies of the Form N-PX filings and their submission receipts are
maintained according to Pioneer record keeping policies.
Proxy Voting Guidelines
Administrative
While administrative items appear infrequently in U.S. issuer proxies,
they are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
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.
B-3
A: 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 that maybe inconsistent, in
its view, with Pioneer's goal of supporting the value of client's portfolio
holdings so that Pioneer may consider and vote on those items on a case-by-case
basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for the
company. Specifically, we will oppose the ratification of auditors and
withhold votes 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.
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.
B-4
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.
We will vote for:
o Precatory and binding resolutions requesting that the board change the
company's bylaws to stipulate that directors need to be elected with
affirmative majority of votes cast, provided that the resolutions allow
for plurality voting in cases of contested elections.
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.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
-- Control share acquisition statutes, which deny large holders
voting rights on holdings over a specified threshold.
-- Control share cash-out provisions, which require large holders to
acquire shares from other holders
-- Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control
-- Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
-- Disgorgement provisions, which require acquirers to disgorge
profits on purchases made before gaining control.
B-5
-- Fair price provisions.
-- Authorization of shareholder rights plans.
-- Labor protection provisions.
-- Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider voting
against proposals that require a supermajority vote to repeal or amend
the provision. Finally, we will consider the mechanism used to
determine the fair price; we are generally opposed to complicated
formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price provisions.
We will use the criteria used for fair price provisions in general to
determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end funds, where we
shall vote on a case-by-case basis.
o Limiting shareholder ability to remove or appoint directors. We will
support proposals to restore shareholder authority in this area. We
will review on case-by-case basis proposals that authorize the board to
make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we believe
that management should have full control over corporate funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g., amend
charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally allow
shareholders to buy additional shares at a below-market price in the
event of a change in control and may deter some bids.
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals in
this area. We will, however, reject proposals that impose high barriers to
potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Shares repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
B-6
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
-- Number of shares currently available for issuance;
-- Size of requested increase (we would normally approve increases of
up to 100% or current authorization);
-- Proposed use of the proceeds from the issuance of additional
shares, and
-- Potential consequences of a failure to increase the number of
shares outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new class
of blank-check preferred, but may approve an increase in a class
already outstanding if the company has demonstrated that it uses this
flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same time,
stock-related compensation plans have a significant economic impact and a
direct effect on the balance sheet. Therefore, while we do not want to
micromanage a company's compensation programs, we will place limits on the
potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares allocated to
ESOPs are less than 5% of outstanding shares. Larger blocks of stock in
ESOPs can serve as a takeover defense. We will support proposals to
submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act of
1993 (OBRA), including:
-- Amendments to performance plans to conform with OBRA;
-- Caps on annual grants or amendments of administrative features;
-- Adding performance goals, and
-- Cash or cash and stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricing be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to at
least 85% of the market price, where the offering period is no greater
than 27 months and where potential dilution (as defined below) is no
greater than 10%.
B-7
We will vote on a case-by-case basis on the following issues:
o Shareholder proposals seeking additional disclosure of executive and
director pay information.
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
-- The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
-- The plan must not:
-- Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval
-- Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments
-- We are generally in favor of proposals that increase participation
beyond executives.
-- We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three or four-year period with a
pro rata portion of the shares becoming exercisable on an annual
basis following grant date.
-- We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period
policies ensure that employees do not exercise options based on
insider information contemporaneous with quarterly earnings
releases and other material corporate announcements.
-- We generally support proposals asking companies to adopt stock
holding periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs and
retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions, repricing
options, lengthening exercise periods or accelerating distribution of
awards and pyramiding and cashless exercise programs.
We will vote against:
o Pensions for non-employee directors. We believe these retirement plans
reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute their
opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares in
the company.
B-8
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.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end funds or
exchange-traded funds. The non-corporate structure of these investments raises
several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes that do
not affect the investment objective or overall risk level of the fund.
We will examine more fundamental changes on a case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end funds, but will typically support such
proposals.
B-9
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.
Avoiding conflicts of interest
Pioneer addresses potential material conflicts of interest by having a
predetermined proxy voting policy. The Proxy Voting Oversight Group is
responsible for monitoring potential conflicts of interest in connection with
the voting of proxies on behalf of the Pioneer Funds and other clients. For
those proposals that are determined to present a material conflict of interest,
the Proxy Voting Oversight Group will follow additional procedures, which may
include consulting with the Board of Trustees in matters concerning the Pioneer
Funds.
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");
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.
Pioneer will abstain from voting shares of UniCredito Italiano Group,
unless otherwise directed by a client. In addition, the Proxy Coordinator 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 Chief Compliance Officer of the Adviser and Funds.
The Proxy Voting Oversight Group will review each item referred to Pioneer by
the proxy voting service to determine whether an actual or potential conflict
of interest 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 Controller's and Compliance
Department's internal list of interested persons and, for any matches found,
evaluating the anticipated magnitude and possible probability of any conflict
of interest being present. For each referral item, the determination regarding
the presence or absence of any actual or potential conflict of interest will be
documented in a Conflicts of Interest Report prepared by the Proxy Coordinator.
Supervision
Escalation
It is each associate's responsibility to contact his or her business unit
head, the Proxy Coordinator, a member of the Proxy Voting Oversight Group or
Chief Compliance Officer of the Advisor and the Funds if he or she becomes
aware of any possible deviation from this policy and procedure that may
disadvantage a client or Fund.
B-10
Training
Pioneer conducts periodic training on the Proxy Voting Policy and
Procedure. It is the responsibility of the business line policy owner and the
applicable Compliance Department to coordinate and conduct such training.
Related policies and procedures
Pioneer's Investment Management, Inc. Books and Records Policy and the
Books and Records of the Pioneer Funds' Policy.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of 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
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 in accordance
with applicable regulations.
Related regulations
Form N-1A, ICA Rule 30b1-4, Rule 31a 1-3, Rule 38a-1 & IAA 206 (4) -6,
204-2
Adopted by the Pioneer Funds' Board of Trustees
October 5, 2004
Effective Date:
October 5, 2004
Revision Date:
March 2008
B-11
PART C
OTHER INFORMATION
PIONEER BOND FUND
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the most recently filed
Registration Statement of Pioneer Bond Fund (the "Registrant") on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940 (File
Nos. 002-62436 and 811-02864), as filed with the Securities and Exchange
Commission on October 27, 2008 (Accession No. 0000276776-08-000052), which
information is incorporated herein by reference.
ITEM 16. EXHIBITS
(1)(a) Amended and Restated Agreement and Declaration of Trust (vi)
(1)(b) Certificate of Trust (i)
(1)(c) Establishment and Designation of Classes (i)
(2) Amended and Restated By-Laws (vi)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization (*)
(5) Not applicable
(6)(a) Amended and Restated Management Contract with Pioneer Investment Management, Inc. (vi)
(6)(b) Expense Limitation Agreement (vi)
(6)(c) Form of Expense Limitation Agreement (**)
(7)(a) Underwriting Agreement with Pioneer Funds Distributor, Inc. (ii)
(7)(b) Dealer Sales Agreement (v)
(8) Not applicable
(9)(a) Custodian Agreement with Brown Brothers Harriman & Co. (iv)
(9)(b) Amended Appendix A to Custodian Agreement (v)
(10)(a) Pioneer Funds Distribution Plan (vi)
(10)(b) Multiple Class Plan pursuant to Rule 18f-3 (v)
(11) Opinion of counsel as to the legality of the securities (**)
(12) Form of opinion of counsel supporting tax matters and consequences to shareholders discussed in
Part A of the Registration Statement on Form N-14 (**)
(13)(a) Master Investment Company Service Agreement with Pioneer Investment Management Shareholder
Services, Inc. (iv)
(13)(b) Amended Exhibit A to Master Investment Company Service Agreement (v)
(13)(c) Amendment to Master Investment Company Service Agreement (v)
(13)(d) Amended and Restated Administration Agreement with Pioneer Investment Management, Inc. (vi)
(13)(e) Amended Exhibit No. 1 to Administration Agreement (v)
(14) Consents of Independent Registered Public Accounting Firm (**)
(15) Not applicable
(16) Power of Attorney (**)
(17)(a) Pioneer Investment Management, Inc. Code of Ethics (vi)
(17)(b) Pioneer Funds Code of Ethics (iii)
(17)(c) Pioneer Funds Distributor, Inc. Code of Ethics (iii)
(17)(d) Form of Proxy Card (**)
(17)(e) The Prospectus and Statement of Additional Information of Regions Morgan Keegan Select Fixed
Income Fund dated April 1, 2008 (**)
(17)(f) The Annual Report of Regions Morgan Keegan Select Fixed Income Fund for the year ended
November 30, 2008 (**)
(17)(g) The Prospectuses and Statement of Additional Information of the Registrant dated November 1, 2008 (**)
(17)(h) The Annual Report of the Registrant for the year ended June 30, 2008 (**)
- ----------
(i) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 28 to the Registrant's Registration Statement on
Form N-1A (File No. 002-62436) with the Securities and Exchange Commission (the
"SEC") on May 14, 1999 (Accession No. 0000276776-99-000013).
(ii) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 34 to the Registrant's Registration Statement with
the SEC on October 29, 2001 (Accession No. 0000276776-01-500036).
(iii) Previously filed. Incorporated herein by reference from the exhibits filed
with the Post-Effective Amendment No. 41 to the Registrant's Registration
Statement on Form N-1A (File Nos. 2-62436 and 811-02864) as filed with the SEC
on October 28, 2005 (Accession No. 0000276776-05-000033).
(iv) Previously filed. Incorporated herein by reference from the exhibits filed
with the Post-Effective Amendment No. 42 to the Registrant's Registration
Statement on Form N-1A (File Nos. 2-62436 and 811-02864) as filed with the SEC
on October 27, 2006 (Accession No. 0000276776-06-000037).
(v) Previously filed. Incorporated herein by reference from the exhibits filed
with the Post-Effective Amendment No. 43 to the Registrant's Registration
Statement on Form N-1A (File Nos. 2-62436 and 811-02864) as filed with the SEC
on July 3, 2007 (Accession No. 0000276776-07-000075).
(vi) Previously filed. Incorporated herein by reference from the exhibits filed
with the Post-Effective Amendment No. 45 to the Registrant's Registration
Statement on Form N-1A (File Nos. 2-62436 and 811-02864) as filed with the SEC
on October 27, 2008 (Accession No. 0000276776-08-000052).
(*) Included in Part A to the Registration Statement on Form N-14.
(**) Filed herewith.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
Registration Statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act of 1933, as amended (the
"1933 Act"), the reoffering prospectus will contain the information called for
by the applicable registration form for the reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to this Registration
Statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
(3) The Registrant hereby undertake to file, by post-effective amendment, the
final opinion of Bingham McCutchen LLP supporting the tax consequences of the
proposed reorganizations as soon as practicable after the closing of the
reorganizations.
(4) Insofar as indemnification for liability arising under the 1933 Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Boston and
the Commonwealth of Massachusetts, on the 13th day of February, 2009.
PIONEER BOND FUND
By: /s/ Mark E. Bradley
Name: Mark E. Bradley
Title: Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ John F. Cogan, Jr.* Chairman of the Board, Trustee and February 13, 2009
- ------------------------- President
John F. Cogan, Jr.
/s/ Mark E. Bradley Treasurer February 13, 2009
- -------------------------
Mark E. Bradley
/s/ Daniel K. Kingsbury* Trustee and Executive Vice President February 13, 2009
- -------------------------
Daniel K. Kingsbury
/s/ David R. Bock* Trustee February 13, 2009
- -------------------------
David R. Bock
/s/ Mary K. Bush* Trustee February 13, 2009
- -------------------------
Mary K. Bush
/s/ Benjamin M. Friedman* Trustee February 13, 2009
- -------------------------
Benjamin M. Friedman
/s/ Margaret B.W. Graham* Trustee February 13, 2009
- -------------------------
Margaret B.W. Graham
/s/ Thomas J. Perna* Trustee February 13, 2009
- -------------------------
Thomas J. Perna
/s/ Marguerite A. Piret* Trustee February 13, 2009
- -------------------------
Marguerite A. Piret
/s/ Stephen K. West* Trustee February 13, 2009
- -------------------------
Stephen K. West
* By: /s/ Mark E. Bradley
Mark E. Bradley, Attorney-in-Fact
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(6)(c) Form of Expense Limitation Agreement
(11) Opinion of counsel as to the legality of the securities
(12) Form of opinion of counsel supporting tax matters and consequences to shareholders discussed in
Part A of the Registration Statement on Form N-14
(14) Consents of Independent Registered Public Accounting Firm
(16) Power of Attorney
(17)(d) Form of Proxy Card
(17)(e) The Prospectus and Statement of Additional Information of Regions Morgan Keegan Select Fixed
Income Fund dated April 1, 2008
(17)(f) The Annual Report of Regions Morgan Keegan Select Fixed Income Fund for the year ended
November 30, 2008
(17)(g) The Prospectuses and Statement of Additional Information of the Registrant dated November 1,
2008
(17)(h) The Annual Report of the Registrant for the year ended June 30, 2008