AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 2009
SECURITIES ACT FILE NO. 333-157342
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[X] PRE-EFFECTIVE AMENDMENT NO. 1
POST-EFFECTIVE AMENDMENT NO. [ ]
PIONEER BOND FUND
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(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.
Title of Securities Being Registered:
Class A shares and Class Y shares
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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).
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment, which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall be effective on such date as the Commission, acting pursuant to Section
8(a), may determine.
COMBINED PROXY STATEMENT
OF
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 SELECT MID CAP GROWTH FUND (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 May 8, 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 Morgan Keegan & Company, Inc., 50 North Front Street, 2nd Floor,
Memphis, Tennessee 38103, on May 8, 2009, at 11:00 a.m., Eastern Time (10:00
a.m., Central 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 Select Mid Cap Growth Fund
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 March 19, 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.
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 SELECT MID CAP GROWTH FUND (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
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.
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 Morgan Keegan &
Company, Inc., 50 North Front Street, 2nd Floor, Memphis, Tennessee 38103, on
May 8, 2009, at 11:00 a.m., Eastern Time (10:00 a.m. Central 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 Select Mid Cap Growth Fund, 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.
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Proposal RMK Fund & Shares Pioneer Fund & Shares Shareholders Entitled to Vote Page
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Proposal 1 Regions Morgan Keegan Select Pioneer Select Mid Cap Growth Regions Morgan Keegan Select Mid 10
Mid Cap Growth Fund Fund* Cap Growth Fund Shareholders
Class A
Class C Class A
Class I Class C
Class Y
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Proposal 2 Regions Morgan Keegan Select Pioneer Growth Fund* Regions Morgan Keegan Select 27
Growth Fund Growth Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
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Proposal 3 Regions Morgan Keegan Select Pioneer Fund Regions Morgan Keegan Select 43
Core Equity Fund Core Equity Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
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Proposal 4 Regions Morgan Keegan Select Pioneer Mid Cap Value Fund Regions Morgan Keegan Select Mid 61
Mid Cap Value Fund Cap Value Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
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Proposal 5 Regions Morgan Keegan Select Pioneer Cullen Value Fund Regions Morgan Keegan Select 81
Value Fund Value Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
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2
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Proposal RMK Fund & Shares Pioneer Fund & Shares Shareholders Entitled to Vote Page
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Proposal 6 Regions Morgan Keegan Select Pioneer Classic Balanced Fund Regions Morgan Keegan Select 98
Balanced Fund Balanced Fund Shareholders
Class A Class A
Class C Class C
Class I Class Y
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Proposal 7 Regions Morgan Keegan Select Pioneer Bond Fund Regions Morgan Keegan Select 119
Fixed Income Fund Fixed Income Fund Shareholders
Class A Class A
Class C Class A
Class I Class Y
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Proposal 8 Regions Morgan Keegan Select Pioneer Short Term Income Regions Morgan Keegan Select 142
Limited Maturity Fixed Fund Limited Maturity Fixed Income
Income Fund Fund Shareholders
Class A Class A
Class C Class A
Class I Class Y
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Proposal 9 Regions Morgan Keegan Select Pioneer Intermediate Tax Free Regions Morgan Keegan Select 163
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
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Proposal 10 Regions Morgan Keegan Select Pioneer Treasury Reserves Fund Regions Morgan Keegan Select 180
Treasury Money Market Fund Treasury Money Market
Class A Class A Fund Shareholders
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Proposal 11 Regions Morgan Keegan Select Pioneer Cash Reserves Fund Regions Morgan Keegan Select 190
Money Market Fund Money Market Fund
Class A Class A Shareholders
Class I Class Y
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* 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 Select Mid Cap Growth Fund,
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
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Where to Get More Information
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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."
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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."
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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.
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To ask questions about this Proxy Statement/Prospectus. Call your RMK Fund's toll-free telephone number: 1-877-757-7424.
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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 the
Reorganization involving Regions Morgan Keegan Select Treasury Money
Market Fund, Pioneer Treasury Reserves Fund will issue Class A shares to
Regions Morgan Keegan Select Treasury Money Market Fund in amounts equal
to the aggregate net asset value of Regions Morgan Keegan Select Treasury
Money Market Fund's Class A shares. In the Reorganization involving
Regions Morgan Keegan Select Money Market Fund, Pioneer Cash Reserves
Fund will issue Class A and Class Y shares, as applicable, to Regions
Morgan Keegan Select Money Market Fund in amounts equal to the aggregate
net asset value of Regions Morgan Keegan Select 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. There are no differences
between the RMK Funds' valuation policies and procedures and the Pioneer
Funds' valuation policies and procedures that are material.
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. The contingent deferred sales charge
applicable to certain purchases of Pioneer Fund Class A shares will be
waived for the Pioneer Fund Class A shares received in the
Reorganizations.
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.
5
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.
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 Select Mid Cap Growth Fund, 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, the
same or lower than the current management fee of the corresponding RMK
Fund. The RMK Board noted that (i) the pro forma management fee for
Pioneer Intermediate Tax Free Income Fund (0.50%) was higher than the
management fee for Regions Morgan Keegan Select Fixed Income Fund
(0.25%), (ii) the pro forma management fee for Pioneer Treasury Reserves
Fund (0.40%) was higher than the management fee for Regions Morgan Keegan
Select Treasury Money Market Fund (0.20%), and (iii) the pro forma
management fee for the Pioneer Cash Reserves Fund (0.40%) was higher than
the management fee for Regions Morgan Keegan Select Money Market Fund
(0.25%).
o The pro forma net expense ratio of each Pioneer Fund is, in every case,
the same or 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 the Class A and Class I share of 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 No sales load, contingent deferred sales charge, commission, redemption
fee or other transactional fee will be charged as a result of any
Reorganization. The RMK Board noted, with respect to any future purchases
of Class A shares, that (i) the initial sales charge on Class A shares of
the Pioneer equity funds (5.75%) was higher than the initial sales charge
on Class A shares of the RMK equity funds (5.50%), (ii) the initial sales
charge on Class A shares of the Pioneer fixed income funds (4.50%) was
higher than the initial sales charge on Class A shares of the RMK fixed
income funds (2.00%), and (iii) the initial sales charge on Class A
shares of the Pioneer short-term fixed income funds (2.50%) was higher
than the initial sales charge on Class A shares of the RMK short-term
fixed income funds (1.50%).
o The compliance culture and organization of Pioneer and the Pioneer Funds.
6
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.
Do Any Pioneer Funds Have Higher Pro Forma Gross Expense Ratios Than the
Corresponding RMK Fund?
Certain Pioneer Funds have higher pro forma gross expense ratios than the
corresponding RMK Fund. The pro forma gross expense ratios of Class A and Class
Y shares of Pioneer Intermediate Tax Free Income Fund (1.15% and 0.90%,
respectively) are higher than the gross expense ratios of Class A and Class I
shares, respectively, of Regions Morgan Keegan Select Intermediate Tax Exempt
Bond Fund (0.93% and 0.68%, respectively). In addition, the pro forma gross
expense ratio of Class Y shares of Pioneer Cash Reserves Fund (0.48%) is higher
than the gross expense ratio of Class I shares of Regions Morgan Keegan Select
Money Market Fund (0.46%). However, in those instances where the pro forma
gross expense ratio of a Pioneer Fund is higher than the corresponding RMK
Fund, Pioneer had contractually agreed to limit ordinary operating expenses of
the Pioneer Fund to the extent required to reduce the Pioneer Fund's pro forma
net expense ratio to be the same as or lower than the net expense ratio of the
corresponding RMK Fund for a period of at least two years from the Closing Date
of the relevant Reorganization. There can be no assurance that Pioneer will
extend the expense limitations beyond such time.
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 each pay 50% of all proxy and solicitation
costs associated with each Fund's participation in the Reorganizations.
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, will 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 representing a multiple of
the total annualized run-rate advisory revenues from the RMK Funds that are
reorganized, excluding the RMK Money Market Funds, and 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
7
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
Select Mid Cap Growth Fund, 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 March 19, 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.
8
TABLE OF CONTENTS
Page
----
INTRODUCTION ............................................................................. 2
PROPOSAL 1 -- Regions Morgan Keegan Select Mid Cap Growth Fund and Pioneer Select Mid Cap 10
Growth Fund
PROPOSAL 2 -- Regions Morgan Keegan Select Growth Fund and Pioneer Growth Fund ........... 27
PROPOSAL 3 -- Regions Morgan Keegan Select Core Equity Fund and Pioneer Fund ............. 43
PROPOSAL 4 -- Regions Morgan Keegan Select Mid Cap Value Fund and Pioneer Mid Cap Value 61
Fund
PROPOSAL 5 -- Regions Morgan Keegan Select Value Fund and Pioneer Cullen Value Fund ...... 81
PROPOSAL 6 -- Regions Morgan Keegan Select Balanced Fund and Pioneer Classic Balanced 98
Fund
PROPOSAL 7 -- Regions Morgan Keegan Select Fixed Income Fund and Pioneer Bond Fund ....... 119
PROPOSAL 8 -- Regions Morgan Keegan Select Limited Maturity Fixed Income Fund and Pioneer 142
Short Term Income Fund
PROPOSAL 9 -- Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund and Pioneer
Intermediate Tax Free
Income Fund ............................................................................. 163
PROPOSAL 10 -- Regions Morgan Keegan Select Treasury Money Market Fund and Pioneer 180
Treasury Reserves Fund
PROPOSAL 11 -- Regions Morgan Keegan Select Money Market Fund and Pioneer Cash Reserves 190
Fund
OTHER IMPORTANT INFORMATION CONCERNING THE REORGANIZATIONS ............................... 202
PORTFOLIO SECURITIES ..................................................................... 203
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION ....................................... 203
TAX STATUS OF THE REORGANIZATION ......................................................... 204
VOTING RIGHTS AND REQUIRED VOTE .......................................................... 206
COMPARISON OF DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST .................. 207
FUNDAMENTAL INVESTMENT POLICIES OF THE FUNDS ............................................. 208
ADDITIONAL INFORMATION ................................................................... 221
FINANCIAL HIGHLIGHTS ..................................................................... 235
INFORMATION CONCERNING THE MEETING ....................................................... 255
OWNERSHIP OF SHARES OF THE FUNDS ......................................................... 257
EXPERTS .................................................................................. 271
AVAILABLE INFORMATION .................................................................... 272
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
9
Regions Morgan Keegan Select Mid Cap Growth Fund
and
Pioneer Select Mid Cap Growth Fund
PROPOSAL 1
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/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 Select Mid Cap 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 Mid Cap Growth Fund to Pioneer
Select Mid Cap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------------
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, debt convertible to equity securities
- -------------------------------------------------------------------------------------------------------------------------------
10
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------------
Under normal market conditions, the fund 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
looks for companies that have revenue growth. in 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
rapid growth based on the current state of the of mid-size companies.
economy. Future growth prospects take
precedence over current valuation levels in the The fund may invest up to 20% of its total
stock selection process. Selected companies assets in debt securities of corporate and
are expected to exhibit higher-than-average government issuers. Generally, the fund
price/earnings (P/E) and price-to-book ratios. acquires debt securities that are investment
Dividends are not considered to be important grade (known as "junk bonds"), but the fund
in the stock selection process. MAM seeks to may invest up to 5% of its net assets in
identify companies that have clearly established below investment grade debt securities,
business strategies, achieve increases in including below investment grade convertible
revenues and market share and exploit market debt securities, issued by both U.S. and
inefficiencies and opportunities. MAM non-U.S. issuers. The fund invests in debt
periodically reviews market prices in relation to securities when Pioneer believes they are
target prices and adjusts the fund's holdings consistent with the fund's investment objective
accordingly. 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.
The fund uses a "growth" style of
management and seeks to invest in companies
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, fundamental research, and 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 and securities, 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
- -------------------------------------------------------------------------------------------------------------------------------
11
- -------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------------
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 20% 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.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
- -----------------------------------------------------------------------------------------------------------------------------------
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. To the extent that the fund has any
its agencies or instrumentalities. This may uninvested cash, the fund would also be
cause the fund to temporarily fail to meet its subject to risk with respect to the depository
goal and forego greater investment returns for institution holding the cash. During such
the safety of principal. periods, it may be more difficult for the fund
to achieve its investment objective. The fund
may adopt a defensive strategy when Pioneer
believes securities in which the fund normally
invests have special or unusual risks or are
less attractive due to adverse market,
economic, political or other conditions.
- -----------------------------------------------------------------------------------------------------------------------------------
12
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
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. If the fund does a lot of
do so in light of the fund's investment goal. A trading, it may incur additional operating
higher portfolio turnover rate involves greater expenses, which would reduce performance,
transaction expenses which must be borne and could cause shareowners to incur a
directly by the fund (and thus, indirectly by its higher level 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.
- -----------------------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
13
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
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, 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.
- -----------------------------------------------------------------------------------------------------------------------------------
14
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
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 $181,524,650 None
March 16, 2009)
- -----------------------------------------------------------------------------------------------------------------------------------
15
Classes of Shares, Fees and Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Mid Cap Growth Fund Pioneer Select Mid Cap 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 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. You do not
pay a contingent deferred sales charge when
you sell shares purchased through reinvestment
of dividends or capital gain distributions.
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charge as % of
Your As a % of As a % 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 or -0- -0-
$999,999 more
- -----------------------------------------------------------------------------------------------------------------------------------
$1 million or Net asset Net asset Class A shares are subject to distribution and
more value value service (12b-1) fees of up to 0.25% of average
------------------------------------------------ daily net assets. These fees are paid out of the
Your investment professional must notify the fund's assets on an ongoing basis. Over time
fund's transfer agent of eligibility for any these fees will increase the cost of investments
applicable breakpoint discount at the time of and may cost more than other types of sales
purchase. charges.
Class A shares pay a shareholder servicing fee
(non-12b-1) of up to 0.25% of average daily
net assets.
- -----------------------------------------------------------------------------------------------------------------------------------
16
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
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 12 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.
- -----------------------------------------------------------------------------------------------------------------------------------
17
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Mid Cap
Growth Fund Pioneer Select Mid Cap Growth 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 1.25%
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 23.
- -----------------------------------------------------------------------------------------------------------------------------------
18
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 ongoing global financial crisis has caused a significant decline in
the value of many securities, including securities held by the Fund, and
the continuation or further deterioration of market conditions may lead
to additional losses of value
o The values of securities held by the Fund may fall due to general market
conditions, such as real or perceived adverse economic, political, or
regulatory conditions, inflation, changes in interest or currency rates
or adverse investor sentiment. Adverse market conditions may be prolonged
and may not have the same impact on all types of securities. The values
of securities may fall due factors affecting a particular issuer or the
securities market as a whole
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
o The Fund's investment adviser's judgment about the attractiveness, growth
potential 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 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
19
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, 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:
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.
20
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 IS A REPRESENTATION OF 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
21
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) 6/30/93
- -- Return Before Taxes (with 5.75% sales charge)(2) (43.22)% (1.62)% 6.76% 10.32%
- -- Return After Taxes on Distributions(3) (43.28)% (2.82)% 4.90%
- -- Return After Taxes on Distributions and Sale of (28.03)% (1.05)% 5.33%
Fund Shares(3)
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(4) (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 July 10, 2000 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) Reflects the Pioneer Fund's Class A initial sales charge of 5.75%.
(3) 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.
(4) 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.
22
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 Regions Morgan
Keegan Select Combined Keegan Select Combined
Mid Cap Pioneer Mid Cap Pioneer
Growth Fund Pioneer Select Growth Fund Pioneer Select
(period ended Select Mid Cap (period ended Select Mid Cap
November 30, Mid Cap Growth Fund November 30, Mid Cap Growth Fund
2008) Growth Fund (Pro Forma) 2008) Growth Fund (Pro Forma)
-------------- ----------- ----------- -------------- ----------- -----------
Shareholder transaction fees
(paid directly from your investment) Class A Class A Class A Class C Class C Class C
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................ 5.50% 5.75% 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(1) None(2) 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 .................................... 0.75% 0.63% 0.63% 0.75% 0.63% 0.63%
Distribution and Service (12b-1) Fee .............. 0.25% 0.25% 0.25% 1.00% 1.00% 1.00%
Other Expenses .................................... 0.25% 0.21% 0.21% 0.25% 0.36% 0.36%
Acquired Fund Fees and Expenses ................... 0.04% 0.04% 0.04% 0.04% 0.04% 0.04%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .............. 1.29% 1.13% 1.13% 2.04% 2.03% 2.03%
- ------------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .......... 0.00% 0.00% 0.00%(4) 0.00% 0.00% 0.00%
Net Expenses ...................................... 1.29% 1.13% 1.13% 2.04% 2.03% 2.03%
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Combined
Mid Cap Pioneer
Growth Fund Pioneer Select
(period ended Select Mid Cap
November 30, Mid Cap 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% 0.63% 0.63%
Distribution and Service (12b-1) Fee ..................... 0.00% 0.00% 0.00%
Other Expenses ........................................... 0.25% 0.09% 0.09%
Acquired Fund Fees and Expenses .......................... 0.04% 0.04% 0.04%
- ----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ..................... 1.04% 0.76% 0.76%
- ----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................. 0.00% 0.00% 0.00%(4)
Net Expenses ............................................. 1.04% 0.76% 0.76%
- ----------------------------------------------------------------------------------------------------------
23
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
Regions Morgan Select
Keegan Select Mid Cap
Number of years Mid Cap Pioneer Select Mid Cap Growth Fund
you own your shares Growth Fund Growth Fund (Pro Forma)
- ------------------------------------- ---------------- ------------------------ ------------
Class A -- with or without redemption
Year 1 ............................. $ 674 $ 683 $ 683
Year 3 ............................. $ 936 $ 912 $ 912
Year 5 ............................. $1,219 $1,159 $1,159
Year 10 ............................ $2,021 $1,865 $1,865
Class C -- with redemption
Year 1 ............................. $ 307 $ 306 $ 306
Year 3 ............................. $ 640 $ 635 $ 635
Year 5 ............................. $1,098 $1,091 $1,091
Year 10 ............................ $2,369 $2,353 $2,353
Class C -- without redemption
Year 1 ............................. $ 207 $ 206 $ 206
Year 3 ............................. $ 640 $ 635 $ 635
Year 5 ............................. $1,098 $1,091 $1,091
Year 10 ............................ $2,369 $2,353 $2,353
Class I/Y
Year 1 ............................. $ 106 $ 77 $ 77
Year 3 ............................. $ 331 $ 241 $ 241
Year 5 ............................. $ 574 $ 420 $ 420
Year 10 ............................ $1,271 $ 936 $ 936
- ----------
(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 $500,000 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
24
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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%, 2.03% and
0.76%, 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 1.29%, 2.04% and 1.04%,
respectively. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
25
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund as of
March 16, 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 March 16, 2009. The table
also sets forth the pro forma combined capitalization of the combined Pioneer
Fund as if the Reorganization had occurred on March 16, 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
March 16, 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.
Pioneer
Regions Morgan Pioneer Select
Keegan Select Select Mid Cap
Mid Cap Mid Cap Growth Fund
Growth Fund Growth Fund Pro Forma
-------------- ----------- -----------
Net Assets
Class A ............................. $ 81,200,436 -- $ 81,200,436
Class C ............................. $ 3,888,418 -- $ 3,888,418
Class I/Y ........................... $ 96,435,796 -- $ 96,435,796
-------------- -- --------------
Total Net Assets of the Fund ......... $ 181,524,650 N/A $ 181,524,650
Net Asset Value Per Share
Class A ............................. $ 9.01 -- $ 9.01
Class C ............................. $ 8.52 -- $ 8.52
Class I/Y ........................... $ 9.12 -- $ 9.12
Shares Outstanding
Class A ............................. 9,013,464 -- 9,013,464
Class C ............................. 456,293 -- 456,293
Class I/Y ........................... 10,571,617 -- 10,571,617
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.
26
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.
- ------------------------------------------------------------------------------------------------------------------------------
27
- ------------------------------------------------------------------------------------------------------------------------------
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
identify companies that have clearly defined change to its policy to invest at least 80% of
business strategies, produce consistent its assets in equity securities of large
revenue streams from an established customer companies.
base, enjoy significant market share in their
respective industries, produce healthy cash The fund may invest up to 20% of its total
respective industries, produce healthy cash assets in equity and debt securities of non-
flows, achieve consistent increases in sales, U.S. corporate issuers and debt securities of
operating margins, and corporate earnings, and non-U.S. government issuers. The fund will
have experienced management teams with not invest more than 10% of its total assets in
consistent records of delivering shareholder the securities of emerging markets issuers.
value. MAM periodically reviews market prices
in relation to the stock's target price and The fund may invest in debt securities of U.S.
adjusts the 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 (known as "junk bonds")
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, debt
convertible to equity securities 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:
- ------------------------------------------------------------------------------------------------------------------------------
28
- ------------------------------------------------------------------------------------------------------------------------------
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.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
- ------------------------------------------------------------------------------------------------------------------------------
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. To the extent that the fund has any
its agencies or instrumentalities. This may uninvested cash, the fund would also be
cause the fund to temporarily fail to meet its subject to risk with respect to the depository
goal and forego greater investment returns for institution holding the cash. During such
the safety of principal. periods, it may be more difficult for the fund
to achieve its investment objective. The fund
may adopt a defensive strategy when Pioneer
believes securities in which the fund normally
invests have special or unusual risks or are
less attractive due to adverse market,
economic, political or other conditions.
- ------------------------------------------------------------------------------------------------------------------------------
29
- ------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------
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 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
MAM may trade in options or futures in order derivatives for a variety of non-principal
to 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
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
- ------------------------------------------------------------------------------------------------------------------------------
30
- ------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------
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, 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 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,
the responsibility of Charles A. Murray, CFA and and therefore, does not currently have any
David P. McGrath, CFA. The portfolio managers portfolio managers. However, the fund will
are supported by MAM's equity and/or fixed commence operations upon the
income research teams which provide consummation of the proposed
fundamental research and quantitative analysis Reorganization. At that time, day-to-day
used to run MAM's internal investment models. management of the fund's portfolio is the
responsibility of Timothy Mulrenan.
Mr. Murray is a Senior Vice President, Senior Mr. Mulrenan is supported by the domestic
Portfolio Manager, and Senior Equity Strategist equity team. Members of this team manage
for MAM. He has more than thirty years of other Pioneer funds investing primarily in U.S.
experience in investment management, equity securities. The portfolio manager and
research and banking. From 1978 to the the team also may draw upon the research
present, Mr. Murray has served as a Portfolio and investment management expertise of the
Manager for MAM and its predecessor, and global research teams, which provide
currently serves as the Portfolio Manager for fundamental and quantitative research on
the fund. From 1978 to 1988, Mr. Murray companies and include members from
served as the portfolio manager of various Pioneer's affiliate, Pioneer Investment
common trust funds at a bank later acquired Management Limited. Mr. Mulrenan, a vice
by Regions Financial Corporation. Mr. Murray president, joined Pioneer in 1997 as an
was the first portfolio manager of the First analyst and has managed portfolios
Priority Equity Fund (the predecessor fund to since 1998.
the fund) from 1992 to 1995. He assumed lead
manager of the fund in September 2001.
- ------------------------------------------------------------------------------------------------------------------------------
31
- ------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------
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.
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 an open-end management investment
organized as a Massachusetts business trust. company organized as a Delaware
statutory trust.
- ------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $207,922,375 None
March 16, 2009)
- ------------------------------------------------------------------------------------------------------------------------------
32
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 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, of
are not subject to an initial sales charge, but up to 5%, 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
a breakpoint discount. The following lists the 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. You do not
pay a contingent deferred sales charge when
------------------------------------------------ you sell shares purchased through reinvestment
Your As a % of As a % of Net of dividends or capital gain distributions.
Investment Offering Price Amounts
Invested
------------------------------------------------ ------------------------------------------------
Up to $49,999 5.50% 5.82% Sales charge as % of
------------------------------------------------ ------------------------------------------------
$50,000 to 4.50% 4.71% Amount of Offering Price Net Amounts
$ 99,999 purchase Invested
------------------------------------------------ ------------------------------------------------
$100,000 to 3.75% 3.90% Less than 5.75% 6.10%
$249,999 $ 50,000
------------------------------------------------ ------------------------------------------------
$250,000 to 2.50% 2.56% $50,000 but 4.50% 4.71%
$499,999 less than
------------------------------------------------ ------------------------------------------------
$500,000 to 2.00% 2.04% $100,000
$999,999 $100,000 but 3.50% 3.63%
------------------------------------------------ less than
$1 million Net asset Net asset $250,000
or more value value ------------------------------------------------
------------------------------------------------ $250,000 but 2.50% 2.56%
less than
Your investment professional must notify the $500,000
fund's transfer agent of eligibility for any ------------------------------------------------
applicable breakpoint discount at the time $500,000 -0- -0-
of purchase. or more
------------------------------------------------
Class A shares pay a shareholder servicing fee
(non-12b-1) of up to 0.25% of average daily There are no contingent deferred sales charges,
net assets. 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 12 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.
- ------------------------------------------------------------------------------------------------------------------------------
33
- ------------------------------------------------------------------------------------------------------------------------------
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 Class C shares are offered without an
and fees initial sales charge. initial sales charge.
Class C shares are subject to a Class C shares are subject to a
contingent deferred sales charge of contingent deferred sales charge of
1.00% if sold within one year of 1.00% if you sell your shares within one
purchase. year of purchase. Your investment firm
may receive a commission from PFD, the
Class C shares pay a shareholder fund's distributor, at the time of your
servicing fee (non-12b-1) of up to 0.25% purchase of up to 1.00%.
of average daily net assets and a
distribution (12b-1) fee of 0.75% of Class C shares are subject to
average daily net assets. 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 Class Y shares are offered without an
sales charges and fees initial sales charge. initial sales charge.
Class I shares are not subject to a Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution and service (12b-1) fees.
- ------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee The fund pays Pioneer a fee for managing
equal to 0.75% of the fund's average the fund and to cover the cost of
daily net assets. 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
limitations 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 June
1, 2012 for Class A Shares and 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
- ------------------------------------------------------------------------------------------------------------------------------
34
- ------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Growth Fund Pioneer Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------
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
39.
- ------------------------------------------------------------------------------------------------------------------------------
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 ongoing global financial crisis has caused a significant decline
in the value of many securities, including securities held by the
Fund, and the continuation or further deterioration of market
conditions may lead to additional losses of value
o The values of securities held by the Fund may fall due to general
market conditions, such as real or perceived adverse economic,
political, or regulatory conditions, inflation, changes in interest or
currency rates or adverse investor sentiment. Adverse market
conditions may be prolonged and may not have the same impact on all
types of securities. The values of securities may fall due factors
affecting a particular issuer or the securities market as a whole
o The stock market goes down or performs poorly relative to other
investments (this risk may be greater in the short term)
o Large-company stocks 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
35
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.
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,
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.
36
Regions Morgan Keegan Select Growth Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF 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
37
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 5/20/98
- ----------------------------------------------------------------------------------------------------------------
- -- Return Before Taxes (with 5.75% sales charge)(1) (38.19)% (3.35)% (3.46)% (1.54)%
- ----------------------------------------------------------------------------------------------------------------
- -- Return After Taxes on Distributions(2) (38.20)% (3.46)% (3.67)%
- ----------------------------------------------------------------------------------------------------------------
- -- Return After Taxes on Distributions and Sale of (24.82)% (2.73)% (2.82)%
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) Reflects the Pioneer Fund's Class A initial sales charge of 5.75%.
(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.
38
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%
Acquired Fund Fees and Expenses ...................... 0.01% 0.01% 0.01%
- -------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.26% 1.17% 1.17%
- -------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses ......................................... 1.26% 1.17% 1.17%
- -------------------------------------------------------------------------------------------------------
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%
Acquired Fund Fees and Expenses ...................... 0.01% 0.01% 0.01%
- -----------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 2.01% 1.88% 1.88%
- -----------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% 0.00%(4) 0.00%(4)
Net Expenses ......................................... 2.01% 1.88% 1.88%
- -----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
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%
Acquired Fund Fees and Expenses ..................... 0.01% 0.01% 0.01%
- -----------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................ 1.01% 0.82% 0.82%
- -----------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............ 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses ........................................ 1.01% 0.82% 0.82%
- ----------------------------------------------------------------------------------------------------
39
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 ............................. $ 671 $ 687 $ 687
Year 3 ............................. $ 928 $ 925 $ 925
Year 5 ............................. $1,204 $1,182 $1,182
Year 10 ............................ $1,989 $1,914 $1,914
Class C -- with redemption
Year 1 ............................. $ 304 $ 291 $ 291
Year 3 ............................. $ 630 $ 591 $ 591
Year 5 ............................. $1,083 $1,016 $1,016
Year 10 ............................ $2,338 $2,201 $2,201
Class C -- without redemption
Year 1 ............................. $ 204 $ 191 $ 191
Year 3 ............................. $ 630 $ 591 $ 591
Year 5 ............................. $1,083 $1,016 $1,016
Year 10 ............................ $2,338 $2,201 $2,201
Class I/Y
Year 1 ............................. $ 103 $ 84 $ 84
Year 3 ............................. $ 322 $ 262 $ 262
Year 5 ............................. $ 558 $ 455 $ 455
Year 10 ............................ $1,236 $1,014 $1,014
- ----------
(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 $500,000 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 June 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.
40
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 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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. The pro forma net expense ratios for the combined Pioneer Fund's
Class A, Class C and Class Y shares are anticipated to be 1.17%, 1.88% and
0.82%, 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. 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 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 June 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
41
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund as of
March 16, 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 March 16, 2009. The table
also sets forth the pro forma combined capitalization of the combined Pioneer
Fund as if the Reorganization had occurred on March 16, 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
March 16, 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 ......................... $ 76,465,973 -- $ 76,465,973
Class C ......................... $ 1,929,490 -- $ 1,929,490
Class I/Y ....................... $ 129,526,912 -- $ 129,526,912
-------------- -- --------------
Total Net Assets of Fund ......... $ 207,922,375 N/A $ 207,922,375
Net Asset Value Per Share
Class A ......................... $ 11.95 -- $ 11.95
Class C ......................... $ 11.44 -- $ 11.44
Class I/Y ....................... $ 11.92 -- $ 11.92
Shares Outstanding
Class A ......................... 6,401,241 -- 6,401,241
Class C ......................... 168,712 -- 168,712
Class I/Y ....................... 10,869,134 -- 10,869,134
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.
42
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 income and capital growth.
of income.
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments and The fund invests primarily in common stocks The fund invests in a broad list of carefully
investment strategies that MAM believes have potential primarily for selected securities that Pioneer believes are
capital growth and secondarily for income. reasonably priced rather than in securities
Income includes both current income and the whose prices reflect a premium resulting from
potential for growth of dividend income over their current market popularity. The fund
time. Under normal circumstances, the fund invests predominantly in equity securities,
invests at least 80% of the value of its net primarily of U.S. issuers. For purposes of the
assets in equity securities. The fund will fund's investment policies, equity securities
provide shareholders with at least 60 days' include common stocks, convertible debt and
prior notice of any changes to this policy. other equity instruments, such as exchange-
traded funds (ETFs) that invest primarily in
The fund typically holds a combination of equity securities, equity interests in real estate
growth stocks and value stocks. By investing investment trusts (REITs), depositary receipts,
in a blend of stocks that demonstrate strong warrants, rights and preferred stocks.
long-term earnings potential and undervalued
stocks, the fund seeks to achieve strong The fund may invest up to 20% of its total
returns with less volatility. A portion of the assets in equity and debt securities of non-
fund's assets may also be invested in preferred U.S. issuers. The fund will not invest more
stocks, bonds (primarily investment grade) than 5% of its total assets in the securities of
convertible into common stock and securities emerging markets issuers.
of foreign issuers traded in U.S. securities
- -----------------------------------------------------------------------------------------------------------------------------------
43
- -----------------------------------------------------------------------------------------------------------------------------------
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
issuers will be primarily through American assets in REITs. REITs are companies that
Depositary Receipts ("ADRs"). The fund invest primarily in real estate or real
expects to earn current income mainly from estate related loans.
dividends paid on common and preferred
stocks and from interest on convertible bonds. Pioneer uses a value approach to select the
MAM also seeks to identify companies that fund's investments. Using this investment
may increase their dividends over time. MAM style, Pioneer seeks securities selling at
utilizes both "top-down" and "bottom-up" reasonable prices or substantial discounts to
approaches in constructing the fund's portfolio. their underlying values and then holds these
This means MAM looks at the condition of the securities until the market values reflect their
overall economy and industry segments in intrinsic values. Pioneer evaluates a security's
addition to data on individual companies. MAM potential value, including the attractiveness of
performs fundamental analysis of companies its market valuation, based on the company's
by reviewing historical and relative valuation assets and prospects for earnings growth. In
along with historical and projected earnings making that assessment, Pioneer employs
growth rates. Quality and valuation ratings are fundamental research, an evaluation of the
assigned to those companies being followed. issuer based on its financial statements and
MAM selects stocks with the intent of realizing operations. Pioneer also considers a security's
long-term capital appreciation, not for quick potential to provide a reasonable amount of
turnover. MAM exercises patience and income. Pioneer relies on the knowledge,
discipline in making decisions to sell or experience and judgment of its staff and the
continue to hold individual stocks over time. staff of its affiliates who have access to a
Decisions to sell portfolio holdings are wide variety of research. Pioneer focuses on
generally the result of changes in MAM's the quality and price of individual issuers, not
assessment of a particular issue, changes in on economic sector or market-timing
industry trends or other economic or financial strategies. Factors Pioneer looks for in
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
- -----------------------------------------------------------------------------------------------------------------------------------
44
- -----------------------------------------------------------------------------------------------------------------------------------
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.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
45
- -----------------------------------------------------------------------------------------------------------------------------------
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
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
MAM may trade in options or futures in order derivatives for a variety of non-principal
to 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
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, 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 in derivatives to the
- -----------------------------------------------------------------------------------------------------------------------------------
46
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity
Fund Pioneer Fund
- -----------------------------------------------------------------------------------------------------------------------------------
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 Day-to-day management of the fund's portfolio
is the responsibility of Walter A. Hellwig and is the responsibility of John A. Carey, portfolio
John B. Russell. The portfolio managers are manager, and Walter Hunnewell, Jr., assistant
supported by MAM's equity and/or fixed portfolio manager. Mr. Carey and
income research teams which provide Mr. Hunnewell are supported by the domestic
fundamental research and quantitative analysis equity team. Members of this team manage
used to run MAM's internal investment models. other Pioneer funds investing primarily in U.S.
equity securities. The portfolio managers and
Mr. Hellwig is a Senior Vice President and the team also may draw upon the research
Senior Portfolio Manager for MAM. He has and investment management expertise of the
more than thirty years experience in global research teams, which provide
investment management and research. From fundamental and quantitative research on
2004 to present, Mr. Hellwig has served as the companies and include members from
Portfolio Manager for the fund (formerly the Pioneer's affiliate, Pioneer Investment
LEADER Growth & Income Fund). From 1997 Management Limited. Mr. Carey is director of
to 2004, Mr. Hellwig served as Senior Vice portfolio management and an executive vice
President and Senior Portfolio Manager at president of Pioneer. Mr. Carey joined Pioneer
Union Planters Investment Advisors and was as an analyst in 1979. Mr. Hunnewell, a vice
also Chairman of the firm's Equity Policy president of Pioneer, joined Pioneer as a
Committee. From 1994 to 1997, Mr. Hellwig portfolio manager in August 2001 and has
served as a Portfolio Manager for Federated been an investment professional since 1985.
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
- -----------------------------------------------------------------------------------------------------------------------------------
47
- -----------------------------------------------------------------------------------------------------------------------------------
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 management investment company organized
organized as a Massachusetts business trust. as a Delaware statutory trust with the same
name.
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets (as of $3,036,660 $3,771,860,288
March 16, 2009)
- -----------------------------------------------------------------------------------------------------------------------------------
48
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
is reduced depending upon the amount reduced or waived for large purchases and certain
invested as described below or, in certain types of investors. At the time of your purchase,
circumstances, waived. Class A shares bought your investment firm may receive a commission
as part of an investment of $1 million or more from Pioneer Funds Distributor, Inc. ("PFD"), the
are not subject to an initial sales charge, but fund's distributor, of up to 5%, declining as the
may be charged a contingent deferred sales size of your 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
a breakpoint discount. The following lists the 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 5.50% 5.82% --------------------------------------------
----------------------------------------------- Less than 5.75% 6.10%
$50,000 to 4.50% 4.71% $ 50,000
$ 99,999 --------------------------------------------
----------------------------------------------- $50,000 but 4.50% 4.71%
$100,000 to 3.75% 3.90% less than
$249,999 $100,000
----------------------------------------------- --------------------------------------------
$250,000 to 2.50% 2.56% $100,000 but 3.50% 3.63%
$499,999 less than
----------------------------------------------- $250,000
$500,000 to 2.00% 2.04% --------------------------------------------
$999,999 $250,000 but 2.50% 2.56%
----------------------------------------------- less than
$1 million Net asset Net asset $500,000
or more value value --------------------------------------------
----------------------------------------------- $500,000 -0- -0-
or more
--------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
49
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Core Equity Fund Pioneer Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales
fund's transfer agent of eligibility for any charges, except in certain circumstances when
applicable breakpoint discount at the time of the initial sales charge is waived. A contingent
purchase. deferred sales charge may be payable to PFD,
the fund's distributor, in the event of a share
Class A shares pay a shareholder servicing fee redemption within 12 months following the
(non-12b-1) of up to 0.25% of average daily share purchase at the rate of 1.00% of the
net assets. 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.
- -----------------------------------------------------------------------------------------------------------------------------------
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
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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution and service (12b-1) fees.
- -----------------------------------------------------------------------------------------------------------------------------------
50
- -----------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Core Equity Fund Pioneer Fund
- -----------------------------------------------------------------------------------------------------------------------------------
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 fund and to cover the cost of providing certain
net assets. 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.
- -----------------------------------------------------------------------------------------------------------------------------------
51
- -----------------------------------------------------------------------------------------------------------------------------------
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
57.
- -----------------------------------------------------------------------------------------------------------------------------------
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
52
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,
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'
53
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 IS A REPRESENTATION OF 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 IS A REPRESENTATION OF 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
54
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.
55
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.
56
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%
Acquired Fund Fees and Expenses ...................... 0.03% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.50% 1.19% 1.16%
- -------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% 0.00% 0.00%(4)
Total Annual Fund Operating Expenses ................. 1.50% 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%
Acquired Fund Fees and Expenses ...................... 0.03% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 2.25% 1.97% 1.95%
- ---------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% 0.00% 0.00%
Total Annual Fund Operating Expenses ................. 2.25% 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%
Acquired Fund Fees and Expenses ................................................. 0.03% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............................................ 1.25% 0.74% 0.72%
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........................................ 0.00% 0.00% 0.00%(4)
Total Annual Fund Operating Expenses ............................................ 1.25% 0.74% 0.72%
- ---------------------------------------------------------------------------------------------------------------------------------
57
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 ............................. $ 694 $ 689 $ 686
Year 3 ............................. $ 998 $ 931 $ 922
Year 5 ............................. $1,323 $1,192 $1,177
Year 10 ............................ $2,242 $1,935 $1,903
Class C -- with redemption
Year 1 ............................. $ 328 $ 300 $ 298
Year 3 ............................. $ 703 $ 618 $ 612
Year 5 ............................. $1,205 $1,062 $1,052
Year 10 ............................ $2,585 $2,296 $2,275
Class C -- without redemption
Year 1 ............................. $ 228 $ 200 $ 198
Year 3 ............................. $ 703 $ 618 $ 612
Year 5 ............................. $1,205 $1,062 $1,052
Year 10 ............................ $2,585 $2,296 $2,275
Class I/Y
Year 1 ............................. $ 127 $ 76 $ 74
Year 3 ............................. $ 397 $ 237 $ 230
Year 5 ............................. $ 686 $ 411 $ 401
Year 10 ............................ $1,511 $ 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 $500,000 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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. The pro forma
58
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 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 1.50%, 2.25% and 1.25%, respectively. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
59
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of March 16, 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 March 16, 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 ......................... $ 1,123,765 $ 3,053,018,684 $ 3,054,142,449
Class B ......................... -- $ 100,269,008 $ 100,269,008
Class C ......................... $ 58 $ 135,012,968 $ 135,013,026
Class I/Y ....................... $ 1,912,837 $ 400,696,967 $ 402,609,804
Class R ......................... -- $ 82,814,620 $ 82,814,620
Class Z ......................... -- $ 48,041 $ 48,041
------------ ---------------- ----------------
Total Net Assets of Fund ......... $ 3,036,660 $ 3,771,860,288 $ 3,774,896,948
Net Asset Value Per Share
Class A ......................... $ 3.82 $ 24.23 $ 24.23
Class B ......................... -- $ 23.59 $ 23.59
Class C ......................... $ 3.81 $ 23.22 $ 23.22
Class I/Y ....................... $ 3.86 $ 24.33 $ 24.33
Class R ......................... -- $ 24.26 $ 24.26
Class Z ......................... -- $ 24.31 $ 24.31
Shares Outstanding
Class A ......................... 294,325 125,980,362 126,026,741
Class B ......................... -- 4,249,890 4,249,890
Class C ......................... 15 5,814,210 5,814,212
Class I/Y ....................... 495,681 16,468,082 16,546,703
Class R ......................... -- 3,413,431 3,413,431
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.
60
THE RMK TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR RMK FUND VOTE
"FOR" PROPOSAL 3 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
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
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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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.
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61
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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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., total assets in equity securities of mid-size
companies whose market capitalization fall companies. Mid-size companies are those with
within the range tracked by the Russell Midcap market values, at the time of investment, that
Value Index at the time of purchase) that are do not exceed the greater of the market
judged by the fund's sub-adviser to be capitalization of the largest company within
undervalued. Under normal circumstances, the the Russell Midcap Value Index or the 3-year
fund invests at least 80% of the value of its rolling average of the market capitalization of
net assets in equity securities of mid- the largest company within the Russell Midcap
capitalization companies. The fund will provide Value Index as measured at the end of the
shareholders with at least 60 days' prior notice preceding month and are not less than the
of any changes in this policy. As of smallest company within the index. The
February 29, 2008, the capitalization of issuers Russell Midcap Value Index measures the
included in the Russell Midcap Value Index performance of U.S. mid-cap value stocks.
ranged from about $462 million to about The size of the companies in the index
$49.6 billion. changes with market conditions and the
composition of the index. The equity securities
The fund invests in common and preferred in which the fund principally invests are
stocks of companies that are judged to be common stocks, preferred stocks, depositary
intrinsically undervalued in one of two ways: receipts and debt convertible to equity
either the shares are undervalued when securities, but the fund may invest in other
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62
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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compared to the underlying value of the firm's types of equity securities to a lesser extent,
assets or the shares are undervalued when such as exchange-traded funds (ETFs), that
compared to the growth prospects of the firm. invest primarily in equity securities, equity
"Undervalued" means that a portfolio interests in real estate investment trusts
company's stock is trading on average at a (REITs), warrants and rights.
40% discount at the time of initial purchase
when compared to the sub-adviser's best The fund will provide written notice to
internal estimate of its "intrinsic value." shareholders at least 60 days prior to any
Intrinsic value is estimated by the sub-adviser change to its policy to invest at least 80% of
based on: (1) transactions involving its assets in equity securities of mid-size
comparable companies; (2) discounted cash companies.
flow analysis; and/or (3) sum-of-the-parts
analysis-looking at the assets and operations The fund may invest up to 20% of its total
of a company in parts then totaling them to assets in debt securities of U.S. and non-U.S.
estimate its intrinsic value. The overall purpose issuers. Generally the fund acquires debt
of the sub-adviser's analysis and search for securities that are investment grade, but the
undervalued opportunities is to determine what fund may invest up to 5% of its net assets in
an independent, informed third party might pay below investment grade convertible debt
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
substantial discount to the sub-adviser's when Pioneer believes they are consistent with
valuation. the fund's investment objective of capital
appreciation, to diversify the fund's portfolio
The sub-adviser seeks to identify companies or for greater liquidity.
that have clearly defined business strategies,
enjoy significant or growing market share in The fund may invest up to 20% of its net
their respective industries, historically produce assets in REITs. REITs are companies that
healthy cash flows and have experienced invest primarily in real estate or real estate
management teams with consistent records of related loans.
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 fundamental
research and 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
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63
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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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 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.
The ratings of nationally recognized statistical
ratings 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 securities. If a rating
organization changes the quality rating
assigned to one or more of the fund's
portfolio securities, or the credit quality
deteriorates, Pioneer will consider if any
action is appropriate in light of the fund's
investment objective and policies.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
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64
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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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. To the extent that the fund has any
its agencies or instrumentalities. This may uninvested cash, the fund would also be
cause the fund to temporarily fail to meet its subject to risk with respect to the depository
goal and forego greater investment returns for institution holding the cash. During such
the safety of principal. periods, it may be more difficult for the fund
to achieve its investment objective. The fund
may adopt a defensive strategy when Pioneer
believes securities in which the fund normally
invests have special or unusual risks or are
less attractive due to adverse market,
economic, political or other conditions.
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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,
transaction expenses which must be borne and could cause shareowners to incur a
directly by the fund (and thus, indirectly by its higher level 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.
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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
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65
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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The sub-adviser may trade in options or use to hedging. However, the fund may use
futures in order to hedge the fund's portfolio derivatives for a variety of purposes,
against market shifts as well as to increase including:
returns.
o As a hedge against adverse changes in
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
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, derivatives
involve risk of loss if the person 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.
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66
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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Investment adviser, Investment Adviser: Investment Adviser:
sub-adviser and portfolio MAM Pioneer
managers
Sub-adviser: Portfolio Managers:
Channing Capital Management, LLC ("CCM") Day-to-day management of the fund's portfolio
serves as the fund's sub-adviser pursuant to is the responsibility of J. Rodman Wright,
an investment sub-advisory agreement with portfolio manager, and Timothy Horan,
MAM and the fund. CCM is an independent assistant portfolio manager. Mr. Wright and
Chicago-based investment manager specializing Mr. Horan are supported by the domestic
in mid- and small-cap equity investing for equity team. Members of this team manage
institutions and individuals. Under the sub- other Pioneer funds investing primarily in U.S.
advisory agreement, CCM manages the fund, equity securities. The portfolio managers and
selects investments, and places orders for the team also may draw upon the research
purchases and sales of securities subject to the and investment management expertise of the
general supervision of MAM and the RMK global research teams, which provide
Board in accordance with the fund's investment fundamental and quantitative research on
objective, policies, and restrictions. Through its companies and include members from
portfolio management team, CCM makes the Pioneer's affiliate, Pioneer Investment
day-to-day investment decisions and Management Limited. Mr. Wright is a senior
continuously reviews and administers the vice president of Pioneer. He joined Pioneer in
investment programs of the fund. CCM's 1994 as an analyst and has been an
address is 10 South LaSalle Street, Suite 2650, investment professional since 1988. Mr. Horan
Chicago, IL 60603. A discussion regarding the joined Pioneer in 2005 as an assistant
RMK Board's basis for approving the sub- portfolio manager. Prior to joining Pioneer, he
advisory agreement is available in the fund's was employed at Boston Partners from 2004
annual report to shareholders for the fiscal to 2005 and at State Street Research from
year ended November 30, 2008. 1998 to 2004.
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
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67
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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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.
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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.
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Net assets (as of $26,068,006 $1,198,420,807
March 16, 2009)
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68
Classes of Shares, Fees and Expenses
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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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 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 Pioneer Funds Distributor,
are not subject to an initial sales charge, but Inc. ("PFD"), the fund's distributor, of up to
may be charged a contingent deferred sales 5%, declining as the size of your investment
charge of 1.00% if sold within one year increases.
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
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. 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 ---------------------------------------------
Investment Offering Price Amounts Sales charge as % of
Invested ---------------------------------------------
------------------------------------------------ Amount of Offering Price Net Amounts
Up to $49,999 5.50% 5.82% purchase Invested
------------------------------------------------ ---------------------------------------------
$50,000 to 4.50% 4.71% Less than 5.75% 6.10%
$ 99,999 $ 50,000
------------------------------------------------ ---------------------------------------------
$100,000 to 3.75% 3.90% $50,000 but 4.50% 4.71%
$249,999 less than
------------------------------------------------ $100,000
$250,000 to 2.50% 2.56% ---------------------------------------------
$499,999 $100,000 but 3.50% 3.63%
------------------------------------------------ less than
$500,000 to 2.00% 2.04% $250,000
$999,999 ---------------------------------------------
------------------------------------------------ $250,000 but 2.50% 2.56%
$1 million Net asset Net asset less than
or more value value $500,000
------------------------------------------------ ---------------------------------------------
$500,000 -0- -0-
or more
---------------------------------------------
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69
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Regions Morgan Keegan
Select Mid Cap Value Fund Pioneer Mid Cap Value Fund
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Your investment professional must notify the There are no contingent deferred sales
fund's transfer agent of eligibility for any charges, except in certain circumstances when
applicable breakpoint discount at the time of the initial sales charge is waived. A
purchase. contingent deferred sales charge may be
payable to PFD, the fund's distributor, in
Class A shares pay a shareholder servicing the event of a share redemption within 12
fee (non-12b-1) of up to 0.25% of average months following the share purchase at the
daily net assets. 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.
- ------------------------------------------------------------------------------------------------------------------------------------
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
one year of purchase. your shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing PFD, the fund's distributor, at the time of
fee (non-12b-1) of up to 0.25% of average your purchase of up to 1.00%.
daily 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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution 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 fund and to cover the cost of providing
net assets. certain services to the fund. Pioneer's fee
varies based on:
- ------------------------------------------------------------------------------------------------------------------------------------
70
- ------------------------------------------------------------------------------------------------------------------------------------
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 is compared to
the Russell Midcap 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., to a maximum
annual fee 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
- ------------------------------------------------------------------------------------------------------------------------------------
71
- ------------------------------------------------------------------------------------------------------------------------------------
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
77.
- ------------------------------------------------------------------------------------------------------------------------------------
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 ongoing global financial crisis has caused a significant decline
in the value of many securities, including securities held by the
Fund, and the continuation or further deterioration of market
conditions may lead to additional losses of value
o The values of securities held by the Fund may fall due to general
market conditions, such as real or perceived adverse economic,
political, or regulatory conditions, inflation, changes in interest or
currency rates or adverse investor sentiment. Adverse market
conditions may be prolonged and may not have the same impact on all
types of securities. The values of securities may fall due to factors
affecting a particular issuer or the securities market as a whole
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
o The Fund's investment adviser's judgement about the attractiveness,
potential 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 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.
72
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 particular to the industries in that segment, and may experience greater
market fluctuation, than a fund without the same focus. For example, industries
in the financial segment, such as banks, insurance companies, broker-dealers and
real estate investment trusts ("REITs"), may be sensitive to changes in interest
rates and general economic activity and are subject to extensive government
regulation. Industries in the technology segment, such as information
technology, communications equipment, computer hardware and software, and office
and scientific equipment, are generally 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.
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
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,
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
73
(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.
Regions Morgan Keegan Select Mid Cap Value Fund's Annual Returns -- Class A
Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF 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 IS A REPRESENTATION OF 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
74
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.
75
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) (37.64)% (2.16)% 3.44% 7.40%
- ------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (24.24)% (0.34)% 4.09% 7.56%
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) (33.59)% (0.56)% 4.54% 8.02%
- ------------------------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of (21.48)% 1.03% 5.07% 8.14%
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.
76
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%
- ------------------------------------------------------------------------------------------------------------------------------------
77
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 $500,000 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.
78
Second, the RMK Board considered that the pro forma net expense ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
79
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of March 16, 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 March 16, 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 ......................... $ 7,453,820 $ 832,911,420 $ 840,365,240
Class B ......................... -- $ 51,164,009 $ 51,164,009
Class C ......................... $ 244,366 $ 69,250,828 $ 69,495,194
Class I/Y ....................... $ 18,369,820 $ 208,541,783 $ 226,911,603
Class R ......................... -- $ 36,552,767 $ 36,552,767
------------- ---------------- ----------------
Total Net Assets of Fund ......... $ 26,068,006 $ 1,198,420,807 $ 1,224,488,813
Net Asset Value Per Share
Class A ......................... $ 5.70 $ 12.38 $ 12.38
Class B ......................... -- $ 10.34 $ 10.34
Class C ......................... $ 5.44 $ 10.25 $ 10.25
Class I/Y ....................... $ 5.70 $ 12.92 $ 12.92
Class R ......................... -- $ 12.22 $ 12.22
Shares Outstanding
Class A ......................... 1,308,475 67,282,801 67,884,887
Class B ......................... -- 4,948,978 4,948,978
Class C ......................... 44,915 6,758,391 6,782,232
Class I/Y ....................... 3,224,838 16,137,817 17,559,630
Class R ......................... -- 2,991,779 2,991,779
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.
80
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
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Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
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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.
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Primary investments and The fund invests in common and preferred The fund invests primarily in equity securities.
investment strategies stocks according to a sector-weighting strategy The fund may invest a significant portion of its
in which attractive market valuation levels are assets in equity securities of medium- and
assigned priority over prospects for future large-capitalization companies. Consequently,
earnings growth. MAM attempts to identify the fund will be subject to the risks of investing
those sectors of the economy that, given the in companies with market capitalizations of
current phase of the business cycle, are likely $1.5 billion or more.
to 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
yields generally will be higher than market invest 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.
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81
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Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
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MAM seeks to identify companies that have The fund may invest up to 30% of its total
clearly defined business strategies, produce assets in securities of non-U.S. issuers. Up to
consistent revenue streams from an 10% of the fund's total assets may be
established customer base, enjoy significant invested in securities of emerging market
market share in their respective industries, issuers. Non-U.S. securities may be issued by
produce healthy cash-flows, achieve consistent non-U.S. governments, banks or corporations
increases in sales, operating margins, and or private issuers, and certain supranational
corporate earnings, and have experienced organizations, such as the World Bank and the
management teams with consistent records of European Union. The fund may invest in
delivering shareholder value. MAM periodically securities of Canadian issuers to the same
reviews market prices in relation to the extent as securities of U.S. issuers.
stock's intrinsic value and adjusts the fund's
holdings accordingly. Pioneer has engaged Cullen to act as the
fund's 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.
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82
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Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
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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.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
- ------------------------------------------------------------------------------------------------------------------------------------
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 objectives.
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 the sub-adviser believes
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,
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.
- ------------------------------------------------------------------------------------------------------------------------------------
83
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
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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
that require payments based upon changes in and currencies, forward foreign currency
the values of designated (or underlying) exchange contracts and other derivatives. A
securities, currencies, commodities, financial derivative is a security or instrument whose
indices or other assets. Some derivative value is determined by reference to the value
contracts (such as futures, forwards and or the change in value of one or more
options) require payments relating to a future securities, currencies, indices or other
trade involving the underlying asset. Other financial instruments. Although there is no
derivative contracts (such as swaps) require specific limitation on investing in
payments relating to the income or returns derivatives, the fund does not use
from the underlying asset. derivatives as a primary investment technique
and generally limits their use to hedging.
MAM may trade in options or futures in order However, the fund may use derivatives for a
to hedge the fund's portfolio against market variety of non-principal 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
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,
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
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84
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Regions Morgan Keegan Select Value Fund Pioneer Cullen Value Fund
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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 Cullen Capital Management LLC ("Cullen") is
is the responsibility of Walter A. Hellwig. The an investment advisory firm that was
portfolio manager is supported by MAM's established in 2000. As of December 31,
equity and/or fixed income research teams 2008, Cullen had approximately $4.73 billion
which provide fundamental research and in net assets under management. Cullen is
quantitative analysis used to run MAM's located at 645 Fifth Avenue, New York, New
internal investment models. York 10022.
Mr. Hellwig is a Senior Vice President and Portfolio Managers:
Senior Portfolio Manager for MAM. He has Day-to-day management of the fund's portfolio
more than thirty years experience in is the responsibility of James P. Cullen (lead
investment management and research. From manager), President of Cullen (since 2000),
2004 to present, Mr. Hellwig has served as the John C. Gould, Executive Vice President of
Portfolio Manager for the fund. Cullen (since 2000) and Brooks H. Cullen,
From 1997 to 2004, Mr. Hellwig served as Vice President of Cullen (since 2000).
Senior Vice President and Senior 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.
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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.
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Net assets (as of $123,323,779 $2,667,764,512
March 16, 2009)
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85
Classes of Shares, Fees and Expenses
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Regions Morgan Keegan
Select Value Fund Pioneer Cullen Value Fund
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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 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 Pioneer Funds Distributor,
are not subject to an initial sales charge, but Inc. ("PFD"), the fund's distributor, of up to
may be charged a contingent deferred sales 5%, declining as the size of your investment
charge of 1.00% if sold within one year increases.
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
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. 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
Investment Offering Price Amounts ---------------------------------------------
Invested Sales charge as % of
------------------------------------------------- ---------------------------------------------
Up to $49,999 5.50% 5.82% Amount of Offering Price Net Amounts
------------------------------------------------- purchase Invested
$50,000 to 4.50% 4.71% ---------------------------------------------
$99,999 Less than 5.75% 6.10%
------------------------------------------------- $50,000
$100,000 to 3.75% 3.90% ---------------------------------------------
$249,999 $50,000 but 4.50% 4.71%
------------------------------------------------- less than
$250,000 to 2.50% 2.56% $100,000
$499,999 ---------------------------------------------
------------------------------------------------- $100,000 but 3.50% 3.63%
$500,000 to 2.00% 2.04% less than
$999,999 $250,000
------------------------------------------------- ---------------------------------------------
$1 million Net asset Net asset $250,000 but 2.50% 2.56%
or more value value less than
------------------------------------------------- $500,000
---------------------------------------------
$500,000 -0- -0-
or more
---------------------------------------------
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86
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Regions Morgan Keegan
Select Value Fund Pioneer Cullen Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Your investment professional must notify the There are no contingent deferred sales
fund's transfer agent of eligibility for any charges, except in certain circumstances when
applicable breakpoint discount at the time of the initial sales charge is waived. A
purchase. contingent deferred sales charge may be
payable to PFD, the fund's distributor, in
Class A shares pay a shareholder servicing the event of a share redemption within 12
fee (non-12b-1) of up to 0.25% of average months following the share purchase at the
daily net assets. 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.
- ------------------------------------------------------------------------------------------------------------------------------------
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 from
Class C shares pay a shareholder servicing PFD, the fund's distributor, at the time of
fee (non-12b-1) of up to 0.25% of average your purchase of up to 1.00%.
daily 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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution 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 fund and to cover the cost of providing
net assets. 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.
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87
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Regions Morgan Keegan
Select Value Fund Pioneer Cullen Value Fund
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For its services, Cullen is entitled to a
subadvisory fee from Pioneer at an annual
rate of the fund's average daily net assets
as 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
94.
- ------------------------------------------------------------------------------------------------------------------------------------
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.
88
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.
89
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,
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.
90
Regions Morgan Keegan Select Value Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF 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 IS A REPRESENTATION OF 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
91
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.
92
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.
93
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%
Acquired Fund Fees and Expenses .......................... 0.03% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ..................... 1.29% 1.13% 1.11%
- ----------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................. 0.00% 0.00%(4) 0.00%(4)(5)
Net Expenses ............................................. 1.29% 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%
Acquired Fund Fees and Expenses .......................... 0.03% 0.00% 0.00%
- -----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ..................... 2.04% 1.92% 1.90%
- -----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................. 0.00% 0.00%(4) 0.00%(4)
Net Expenses ............................................. 2.04% 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%
Acquired Fund Fees and Expenses ...................................... 0.03% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................................. 1.04% 0.82% 0.79%
- -------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............................. 0.00% 0.00% 0.00%(5)
Net Expenses ......................................................... 1.04% 0.82% 0.79%
- -------------------------------------------------------------------------------------------------------------------------------
94
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 ............................. $ 674 $ 684 $ 682
Year 3 ............................. $ 936 $ 913 $ 908
Year 5 ............................. $1,219 $1,161 $1,151
Year 10 ............................ $2,021 $1,871 $1,849
Class C -- with redemption
Year 1 ............................. $ 307 $ 295 $ 293
Year 3 ............................. $ 640 $ 603 $ 597
Year 5 ............................. $1,098 $1,037 $1,026
Year 10 ............................ $2,369 $2,243 $2,222
Class C -- without redemption
Year 1 ............................. $ 207 $ 195 $ 193
Year 3 ............................. $ 640 $ 603 $ 597
Year 5 ............................. $1,098 $1,037 $1,026
Year 10 ............................ $2,369 $2,243 $2,222
Class I/Y
Year 1 ............................. $ 106 $ 84 $ 81
Year 3 ............................. $ 331 $ 262 $ 252
Year 5 ............................. $ 574 $ 455 $ 439
Year 10 ............................ $1,271 $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 $500,000 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 limitations 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
95
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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
1.29%, 2.04% and 1.04%, respectively. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 49 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 each pay 50% of all proxy and solicitation
costs 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?"
96
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of March 16, 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 March 16, 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 ......................... $ 31,100,021 $ 1,514,377,342 $ 1,545,477,363
Class B ......................... -- $ 57,012,505 $ 57,012,505
Class C ......................... $ 845,665 $ 348,396,966 $ 349,242,631
Class I/Y ....................... $ 91,378,093 $ 742,614,347 $ 833,992,440
Class R ......................... -- $ 5,283,088 $ 5,283,088
Class Z ......................... -- $ 80,264 $ 80,264
-------------- ---------------- ----------------
Total Net Assets of Fund ......... $ 123,323,779 $ 2,667,764,512 $ 2,791,088,291
Net Asset Value Per Share
Class A ......................... $ 10.40 $ 11.64 $ 11.64
Class B ......................... -- $ 11.58 $ 11.58
Class C ......................... $ 10.44 $ 11.54 $ 11.54
Class I/Y ....................... $ 10.39 $ 11.68 $ 11.68
Class R ......................... -- $ 11.55 $ 11.55
Class Z ......................... -- $ 11.60 $ 11.60
Shares Outstanding
Class A ......................... 2,991,600 130,098,611 132,770,434
Class B ......................... -- 4,925,076 4,925,076
Class C ......................... 80,990 30,186,452 30,259,733
Class I/Y ....................... 8,795,930 63,578,643 71,402,110
Class R ......................... -- 457,538 457,538
Class Z ......................... -- 6,919 6,919
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.
97
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 assessment of current business, economic
conditions, the fund maintains at least 25% of and market conditions. Normally, equity and
its assets in senior debt securities and at least debt securities each represent 35% to 65% of
25% of its assets in common stocks. The the fund's net assets. For purposes of the
remaining 50% may be invested in those fund's investment policies, equity securities
securities, as well as American Depository include common stocks, convertible debt, and
Receipts, collateralized mortgage obligations, securities with common stock characteristics,
or other investments as determined by MAM such as equity interests in real estate
based on its assessment of the economy and investment trusts (REITs), exchange-traded
the markets. The fund's equity allocation will funds (ETFs) that invest primarily in equity
focus on high-quality companies. Using a securities, and preferred stocks. The fund's
blend of growth and value styles, MAM seeks investments in debt securities include U.S.
to identify companies that have clearly defined government securities, corporate debt
business strategies, produce revenue streams securities, mortgage- and asset-backed
from an established customer base, enjoy securities, short term debt securities, cash
significant market share in their respective and cash equivalents. Cash and cash
industries, produce healthy cash-flows, achieve equivalents include cash balances, accrued
consistent increases in sales, operating interest and receivables for items such as the
margins, and corporate earnings, and have proceeds, not yet received, from the sale of
experienced management teams with the fund's portfolio investments.
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consistent records of delivering shareholder Debt securities in which the fund invests may
value. MAM periodically reviews market prices have fixed or variable principal payments and
in relation to the stock's intrinsic value and all types of interest rate payment and reset
adjusts the fund's holdings accordingly. The terms, including fixed rate, adjustable rate,
fund's debt security allocation focuses on floating rate, inverse floating rate, zero
intermediate-term debt securities, with an coupon, contingent, deferred, payment-in-kind
emphasis on U.S. Treasury and governmental and auction rate features.
agency issues. Investment grade corporate
bond issues may also be included as yield The fund may invest up to 25% of its total
spreads become attractive. 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. 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
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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.
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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.
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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.
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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.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
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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.
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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
turnover rate involves greater transaction and may exceed 100%. If the fund does a lot
expenses which must be borne directly by the of trading, it may incur additional operating
fund (and thus, indirectly by its shareholders), expenses, which would reduce performance,
and impact fund performance. In addition, a and could cause shareowners to incur a
high rate of portfolio turnover may result in the higher level 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.
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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
MAM may trade in options or futures in order derivatives for a variety of non-principal
to 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.
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, derivatives involve risk of loss if the
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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.
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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 Charles A. Murray, CFA. is the responsibility of co-managers John A.
The portfolio manager is supported by MAM's Carey and Walter Hunnewell, Jr. (equity
equity and/or fixed income research teams securities) and Kenneth J. Taubes and Richard
which provide fundamental research and Schlanger (fixed income securities). Mr.
quantitative analysis used to run MAM's Carey, Mr. Hunnewell, Mr. Taubes and Mr.
internal investment models. Schlanger are supported by the domestic
equity team and the fixed income team.
Mr. Murray is a Senior Vice President, Senior Members of these teams manage other Pioneer
Portfolio Manager, and Senior Equity funds that invest primarily in fixed income
Strategist for MAM. He has more than thirty securities and U.S. equity securities,
years of experience in investment management, respectively. The portfolio managers and the
research and banking. From 1978 to the teams also may draw upon the research and
present, Mr. Murray has served as a Portfolio investment management expertise of the global
Manager for MAM and its predecessor, and research teams, which provide fundamental and
currently serves as the Portfolio Manager for quantitative research on companies and
the fund. From 1978 to 1988, Mr. Murray include members from Pioneer's affiliate,
served as the portfolio manager of various Pioneer Investment Management Limited. Mr.
common trust funds at a bank later acquired Carey, a senior vice president, joined
by Regions Financial Corporation. Mr. Murray Pioneer as an analyst in 1979. Mr. Hunnewell,
was the first portfolio manager of the First a vice president, joined Pioneer in August
Priority Equity Fund (the predecessor fund to 2001 and has been an investment professional
the fund) from 1992 to 1995. He assumed lead since 1985. Mr. Taubes is responsible for
manager of the fund in September 2001. Mr. overseeing the U.S. and global fixed income
Murray received a B.S. in Finance from the teams. He joined Pioneer as a senior vice
University of Alabama in 1970. He is a holder president in September 1998 and has been an
of the Chartered Financial Analyst investment professional since 1982. Mr.
designation. Schlanger, a vice president, joined Pioneer
as a portfolio manager in 1988.
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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.
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Net assets (as of $113,563,217 $107,244,402
March 16, 2009)
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Classes of Shares, Fees and Expenses
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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
is reduced depending upon the amount reduced or waived for large purchases and certain
invested as described below or, in certain types of investors. At the time of your purchase,
circumstances, waived. Class A shares bought your investment firm may receive a commission
as part of an investment of $1 million or more from Pioneer Funds Distributor, Inc. ("PFD"), the
are not subject to an initial sales charge, but fund's distributor, of up to 4.00%, declining as
may be charged a contingent deferred sales the size of your 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
a breakpoint discount. The following lists the 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 5.50% 5.82% ---------------------------------------------
------------------------------------------------ Less than 4.50% 4.71%
$50,000 to 4.50% 4.71% $100,000
$ 99,999 ---------------------------------------------
------------------------------------------------ $100,000 but 3.50% 3.63%
$100,000 to 3.75% 3.90% less than
$249,999 $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% ---------------------------------------------
$999,999 $500,000 -0- -0-
------------------------------------------------ or more
$1 million Net asset Net asset ---------------------------------------------
or more value value
------------------------------------------------
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Your investment professional must notify the There are no contingent deferred sales
fund's transfer agent of eligibility for any charges, except in certain circumstances when
applicable breakpoint discount at the time of the initial sales charge is waived. A
purchase. contingent deferred sales charge may be
payable to PFD, the fund's distributor, in
Class A shares pay a shareholder servicing the event of a share redemption within 12
fee (non-12b-1) of up to 0.25% of average months following the share purchase at the
daily net assets. 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.
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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
one year of purchase. your shares within one year of purchase. Your
investment firm may receive a commission from
Class C shares pay a shareholder servicing PFD, the fund's distributor, at the time of
fee (non-12b-1) of up to 0.25% of average your purchase of up to 1.00%.
daily 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.
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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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution and service (12b-1) fees.
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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 fund and to cover the cost of providing
net assets. 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.
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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.
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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
115.
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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"
108
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
109
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,
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.
110
Regions Morgan Keegan Select Balanced Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'99 8.82
'00 -2.86
'01 -3.19
'02 -7.40
'03 13.50
'04 2.54
'05 11.39
'06 6.92
'07 12.90
'08 -17.90
- ----------
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 FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'99 1.32
'00 10.18
'01 4.61
'02 -6.86
'03 15.70
'04 7.60
'05 4.60
'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
111
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
112
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.
113
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.
114
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 Combined
(period ended (period ended Pioneer Classic
November 30, July 31, Balanced 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% 4.50% 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) 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 .......................................... 0.33% 0.40% 0.29%
Acquired Fund Fees and Expenses ......................... 0.02% 0.00% 0.00%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................... 1.35% 1.30% 1.19%
- --------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................ 0.00% (0.14)%(4) (0.03)%(4)(5)
Net Expenses ............................................ 1.35% 1.16% 1.16%
- --------------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select Pioneer Classic
Balanced Fund Balanced Fund Combined
(period ended (period ended Pioneer Classic
November 30, July 31, Balanced 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% 0.65% 0.65%
Distribution and Service (12b-1) Fee .................... 1.00% 1.00% 1.00%
Other Expenses .......................................... 0.33% 0.45% 0.36%
Acquired Fund Fees and Expenses ......................... 0.02% 0.00% 0.00%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................... 2.10% 2.10% 2.01
- --------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ................ 0.00% (0.04)%(4) 0.00%(4)
Net Expenses ............................................ 2.10% 2.06% 2.01%
- --------------------------------------------------------------------------------------------------------------------
Regions Morgan
Keegan Select pioneer Classic Combined
Balanced Fund Balanced Fund Pioneer Classic
(period ended (period ended Balanced Fund
November 30, 2008) July 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% 0.65% 0.65%
Distribution and Service (12b-1) Fee ...................................... 0.00% 0.00% 0.00%
Other Expenses ............................................................ 0.33% 0.15% 0.15%
Acquired Fund Fees and Expenses ........................................... 0.02% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ...................................... 1.10% 0.80% 0.80%
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .................................. 0.00% 0.00% 0.00%(5)
Net Expenses .............................................................. 1.10% 0.80% 0.80%
- ---------------------------------------------------------------------------------------------------------------------------------
115
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 ............................. $ 680 $ 563 $ 563
Year 3 ............................. $ 954 $ 830 $ 808
Year 5 ............................. $1,249 $1,118 $1,072
Year 10 ............................ $2,085 $1,935 $1,826
Class C -- with redemption
Year 1 ............................. $ 313 $ 309 $ 304
Year 3 ............................. $ 658 $ 654 $ 630
Year 5 ............................. $1,129 $1,125 $1,083
Year 10 ............................ $2,431 $2,428 $2,338
Class C -- without redemption
Year 1 ............................. $ 213 $ 209 $ 204
Year 3 ............................. $ 658 $ 654 $ 630
Year 5 ............................. $1,129 $1,125 $1,083
Year 10 ............................ $2,431 $2,428 $2,338
Class I/Y
Year 1 ............................. $ 112 $ 82 $ 82
Year 3 ............................. $ 350 $ 255 $ 255
Year 5 ............................. $ 606 $ 444 $ 444
Year 10 ............................ $1,340 $ 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 $500,000 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.
116
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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
0.80%, 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
1.35%, 2.10% and 1.10%, respectively. 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 fund expenses to 1.16% and 2.06% of the average daily net
assets attributable to Class A 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
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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
117
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of March 16, 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 March 16, 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 ......................... $ 21,834,227 $ 76,519,652 $ 98,353,879
Class B ......................... -- $ 13,244,890 $ 13,244,890
Class C ......................... $ 1,662,961 $ 6,518,164 $ 8,181,125
Class I/Y ....................... $ 90,066,029 $ 10,961,696 $ 101,027,725
-------------- -------------- -------------
Total Net Assets of Fund ......... $ 113,563,217 $ 107,244,402 $ 220,807,619
Net Asset Value Per Share
Class A ......................... $ 11.79 $ 6.48 $ 6.48
Class B ......................... -- $ 6.43 $ 6.43
Class C ......................... $ 11.80 $ 6.46 $ 6.46
Class I/Y ....................... $ 11.81 $ 6.48 $ 6.48
Shares Outstanding
Class A ......................... 1,852,336 11,810,989 15,180,468
Class B ......................... -- 2,059,141 2,059,141
Class C ......................... 140,980 1,009,129 1,266,553
Class I/Y ....................... 7,628,217 1,691,077 15,590,156
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.
118
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
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Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
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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.
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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
securities, and corporate bonds. The fund will debt, of corporate and other issuers
provide shareholders with at least 60 days' rated at least investment grade at the
prior notice of any changes in this policy. time of investment, and comparably rated
commercial paper,
o cash and cash equivalents, certificates
of deposit, repurchase agreements
maturing in one week or less and
bankers' acceptances.
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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.
the future, MAM may choose to lengthen the Treasury, such as securities issued by
fund's effective duration. Likewise, when rising the Government National Mortgage
interest rates are expected, the duration of Association (GNMA);
the fund's bond portfolio may be shortened.
Consistent with the fund's primary objective of o the authority of the U.S. government to
producing current income, the fund will focus purchase certain obligations of the
on investment-grade, intermediate-term debt issuer, such as securities issued by the
securities. Federal National Mortgage Association
(Fannie Mae) 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.
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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.
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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
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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
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Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
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"securities" includes loans and other
instruments and obligations.
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
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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.
With respect to the investment strategies and
practices enumerated above, to the extent that
a percentage limitation is not specified, there
is no specific limit on the fund's ability to
engage in such strategy or practice.
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Select Fixed Income Fund Pioneer Bond Fund
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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.
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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.
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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.
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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, 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.
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Select Fixed Income Fund Pioneer Bond Fund
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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
Mr. Rice is a Senior Vice President, Fixed fundamental and quantitative research on
Income Portfolio Manager and Research Analyst companies and include members from
for MAM. He has more than 30 years experience Pioneer's affiliate, Pioneer Investment
in investment management and research. From Management Limited. Mr. Taubes is
2006 to present, Mr. Rice has served as a responsible for overseeing the U.S. and
member of MAM's taxable fixed-income team. He global fixed income teams. He joined Pioneer
currently holds portfolio management and as a senior vice president in September 1998
research analyst responsibilities. Mr. Rice and has been an investment professional
joined AmSouth Bank in April 1984 as since 1982.
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.
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Select Fixed Income Fund Pioneer Bond Fund
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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.
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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.
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Net assets $115,721,977 $849,064,865
(as of March 16, 2009)
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129
Classes of Shares, Fees and Expenses
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Regions Morgan Keegan
Select Fixed Income Fund Pioneer Bond Fund
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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 or -0- -0-
------------------------------------------------ more
$1 million or Net asset Net asset ---------------------------------------------
more value value
------------------------------------------------ There are no contingent deferred sales charges,
except in certain circumstances when the initial
Your investment professional must notify the sales charge is waived. A contingent deferred
fund's transfer agent of eligibility for any sales charge may be payable to PFD, the fund's
applicable breakpoint discount at the time of distributor, in the event of a share redemption
purchase. within 12 months following the share purchase
at the rate of 1.00% of the lesser of the value
Class A shares pay a shareholder servicing fee of the shares redeemed or the total cost of
(non-12b-1) of up to 0.25% of average daily such shares, subject to certain waivers.
net assets.
Class A shares are subject to distribution
and service (12b-1) fees of up to 0.25% of
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Regions Morgan Keegan
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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.
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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.
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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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution and service (12b-1) fees.
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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.
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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.
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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
138.
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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.
132
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, interest-only mortgages, variable rate mortgages, negative
amortization mortgages or other types of exotic 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. Although certain CDOs may receive credit enhancement in the form
of a senior-subordinate structure, over-collateralization or bond insurance,
such enhancement may not always be present, and may fail to protect a fund
against the risk of loss on default of the 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.
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
133
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,
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 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 FOLLOWING DATA IS A REPRESENTATION OF 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
134
Pioneer Bond Fund's Annual Returns -- Class A Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'99 -3.20
'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,
135
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.
136
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.
137
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 Combined
(period ended (period ended Pioneer
November 30, December 31, Bond 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 ................... 2.00% 4.50% 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) 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% 0.25% 0.25%
Other Expenses ....................................... 0.26% 0.33% 0.26%
- -------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.01% 1.08% 1.01%
- -------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% (0.23)%(4) (0.16)%(4)(5)
Net Expenses ......................................... 1.01% 0.85% 0.85%
- -------------------------------------------------------------------------------------------------------------
Regions
Morgan
Keegan
Select Fixed Pioneer
Income Fund Bond Fund Combined
(period ended (period ended Pioneer
November 30, December 31, Bond Fund
2008) 2008) (Pro Forma)
------------- ------------- -----------
Shareholder transaction fees
(paid directly from your investment) Class C Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... None 4.50% 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 ..... 1.00%(3) None(2) 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 ................. 1.00% 0.25% 0.25%
Other Expenses ....................................... 0.26% 0.33% 0.26%
- -----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.76% 1.08% 1.01%
- -----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00% (0.23)%(4) (0.16)%(4)(5)
Net Expenses ......................................... 1.76% 0.85% 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%
- ----------------------------------------------------------------------------------------------------------------------
138
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 $500,000 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. RMK Fund Class C shareholders who wish
to make future purchases of the Pioneer Fund's Class C shares will be
subject to a higher expense ratio than if they purchased Class C Shares of
the RMK Fund.
139
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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 Class
A, Class C and Class I shares of your RMK Fund are 1.01%, 1.76% and 0.76%,
respectively. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
140
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of March
16, 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 March 16, 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 .......................... $ 48,370,430 $ 269,908,150 $ 319,795,238
Class B .......................... -- $ 29,847,358 $ 29,847,358
Class C .......................... $ 1,516,658 $ 46,047,097 $ 46,047,097(1)
Class I/Y ........................ $ 65,834,889 $ 490,262,734 $ 556,097,623
Class R .......................... -- $ 12,708,126 $ 12,708,126
Class Z .......................... -- $ 291,400 $ 291,400
-------------- -------------- ----------------
Total Net Assets of Fund ......... $ 115,721,977 $ 849,064,865 $ 964,786,842
Net Asset Value Per Share
Class A .......................... $ 8.71 $ 8.12 $ 8.12
Class B .......................... -- $ 8.07 $ 8.07
Class C .......................... $ 8.71 $ 8.04 $ 8.04(1)
Class I/Y ........................ $ 8.70 $ 8.05 $ 8.05
Class R .......................... -- $ 8.20 $ 8.20
Class Z .......................... -- $ 8.16 $ 8.16
Shares Outstanding
Class A .......................... 5,555,153 33,242,522 39,386,252
Class B .......................... -- 3,697,812 3,697,812
Class C .......................... 174,197 5,725,920 5,725,920(1)
Class I/Y ........................ 7,563,553 60,907,751 69,085,998
Class R .......................... -- 1,550,298 1,550,298
Class Z .......................... -- 35,728 35,728
- ----------
(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 7 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
141
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
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Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
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Investment objective The fund's investment objective is The fund's investment objective is a high
current income. level of current income to the extent
consistent with a relatively high level of
stability of principal.
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Primary investments and The fund invests in investment grade debt The fund invests primarily in:
investment strategies securities. Under normal circumstances, the
fund invests at least 80% of the value of its
net assets in debt securities. These o Debt securities issued or guaranteed by
securities include debt securities of the the U.S. government or its agencies and
U.S. Treasury and government agencies, instrumentalities
mortgage-backed and asset-backed securities,
and corporate bonds. The fund will provide o Debt securities, including convertible
shareholders with at least 60 days' prior debt, of U.S. and non-U.S. issuers and
notice of any changes in this policy. commercial paper
The fund may invest up to 10% of its total o Mortgage-backed and asset-backed
assets in below investment grade debt securities of U.S. and non-U.S. issuers
securities. The debt securities purchased by
the fund will be rated, at the time of o Short-term money market instruments of
investment, at least CCC (or a comparable U.S. and non-U.S. issuers
rating) by at least one NRSRO or, if unrated,
determined by MAM to be of comparable Normally, at least 80% of the fund's net
quality. assets are invested in debt securities that
are rated investment grade at the time of
purchase or cash and cash equivalents. Cash
and cash equivalents include cash balances,
accrued
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Maturity Fixed Income Fund Pioneer Short Term Income Fund
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MAM employs a "top down" strategy in interest and receivables for items such as
selecting investment securities. Key factors the proceeds, not yet received, from the sale
include economic trends, inflation of the fund's portfolio investments. The fund
expectations, interest rate momentum, and normally will maintain a dollar-weighted
yield spreads. When investing in average portfolio maturity of no more than 3
non-governmental securities, MAM will conduct years.
a credit analysis of the issuer, and will
compare current yield spreads to historical Up to 10% of the fund's net assets may be
norms. The net asset value of the fund is below investment grade. A debt security is
expected to fluctuate with changes in investment grade if it is rated in one of the
interest rates and bond market conditions. top four categories by at least one
MAM will attempt to minimize principal nationally recognized statistical rating
fluctuation and increase return through, organization or Pioneer determines that the
among other things, diversification, careful security is of equivalent credit quality.
credit analysis and security selection, and Debt securities rated below investment grade
adjustments of the fund's average portfolio are commonly referred to as "junk bonds" and
maturity. are considered speculative. Lower quality
debt securities involve greater risk of loss,
The average maturity of the fund's debt are subject to greater price volatility and
securities generally will be in the range of are less liquid, especially during periods of
one to three years. When interest rates are economic uncertainty or change, than high
at higher levels and lower rates are quality debt securities. The fund may invest
forecasted for the future, MAM may choose to in debt securities rated "D" or better, or
lengthen the fund's effective duration. comparable unrated securities.
Likewise, when rising interest rates are
expected, the duration of the fund's bond The fund's investments may have fixed or
portfolio may be shortened. Consistent with variable principal payments and all types of
the fund's objective of producing current interest rate payment and reset terms,
income, the fund will focus on investment including fixed rate, adjustable rate,
grade debt securities with short- to floating rate, zero coupon, contingent,
intermediate-term maturities. 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
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Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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 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
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144
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Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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.
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Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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,
interest-only mortgages, variable rate
mortgages, negative amortization mortgages or
other types of exotic 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
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Maturity Fixed Income Fund Pioneer Short Term Income Fund
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difficult to sell at an advantageous time or
price. Although certain CDOs may receive
credit enhancement in the form of a senior-
subordinate structure, over-collateralization
or bond insurance, such enhancement may not
always be present, and may fail to protect a
fund against the risk of loss on default of
the collateral.
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
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Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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.
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.
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148
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Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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.
With respect to the investment strategies and
practices enumerated above, to the extent
that a percentage limitation is not
specified, there is no specific limit on the
fund's ability to engage in such strategy or
practice.
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Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all
temporary investments liquidity to meet shareholder redemptions of its assets to meet its investment
during adverse market conditions, the fund objective. The fund may invest the remainder
may temporarily depart from its principal of its assets in securities with remaining
investment strategy by investing up to 100% maturities of less than one year or cash
of the fund's assets in cash and cash equivalents, or may hold cash. For temporary
equivalents, including short-term bank defensive purposes, including during periods
obligations, repurchase agreements and other of unusual cash flows, the fund may depart
money market instruments and securities from its principal investment strategies and
issued and/or guaranteed as to payment of invest part or all of its assets in these
principal and interest by the U.S. securities or may hold cash. During such
government, its agencies or periods, the fund may not be able to achieve
instrumentalities. This may cause the fund to its investment objectives. The fund may adopt
temporarily fail to meet its goal and forego a defensive strategy when Pioneer believes
greater investment returns for the safety of securities in which the fund normally invests
principal. have extraordinary risks due to political or
economic factors and in other extraordinary
circumstances.
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Short-term trading Although the fund does not intend to invest The fund usually does not trade for
for the purpose of seeking short-term short-term profits. The fund will sell an
profits, securities will be sold without investment, however, even if it has only been
regard to the length of time they have been held for a short time, if it no longer meets
held when MAM believes it is appropriate to the fund's investment criteria. If the fund
do so in light of the fund's investment goal. does a lot of trading, it may incur
A higher portfolio turnover rate involves additional operating expenses, which would
greater transaction expenses which must be reduce performance, and could cause
borne directly by the fund (and thus, shareowners to incur a higher level of
indirectly by its shareholders), and impact taxable income or capital gains.
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.
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Maturity Fixed Income Fund Pioneer Short Term Income Fund
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Derivatives The fund may enter into derivative contracts. The fund may, but is not required to, use
Derivative contracts are financial futures and options on securities, indices
instruments that require payments based upon and currencies, forward foreign currency
changes in the values of designated (or exchange contracts and other derivatives. A
underlying) securities, currencies, derivative is a security or instrument whose
commodities, financial indices or other value is determined by reference to the value
assets. Some derivative contracts (such as or the change in value of one or more
futures, forwards and options) require securities, currencies, indices or other
payments relating to a future trade involving financial instruments. Although there is no
the underlying asset. Other derivative specific limitation on investing in
contracts (such as swaps) require payments derivatives, the fund does not use
relating to the income or returns from the derivatives as a primary investment technique
underlying asset. and generally limits their use to hedging.
However, the fund may use derivatives for a
MAM may trade in options or futures in order variety of non-principal purposes, including:
to hedge the fund's portfolio 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
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, 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.
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Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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 George R. McCurdy, IV, CFA. The portfolio and 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
fundamental research and quantitative Pioneer funds investing primarily in fixed
analysis used to run MAM's internal income securities. The portfolio managers and
investment models. the team may also draw upon the research and
investment management expertise of the global
Mr. Flurry is a Vice President and Senior research teams, which provide fundamental and
Portfolio Manager for MAM. He has more than quantitative research on companies and
14 years experience in investment management include members from Pioneer's affiliate,
and research. From 2003 to present, Mr. Pioneer Investment Management Limited.
Flurry has served as a fixed income Portfolio
Manager responsible for managing domestic Mr. Schlanger, a vice president, joined
fixed income portfolios for institutional Pioneer as a portfolio manager in 1988. Mr.
clients. Prior to joining MAM in 2003, Mr. Melchreit, a vice president, joined Pioneer
Flurry worked for Compass Bank in various in 2006. From 2003 to 2004 Mr. Melchreit was
capacities. From 1998 to 2003, he served as a a managing director at Cigna Investment
Vice President, managing both fixed-income Management. Prior thereto, he was a senior
and equity portfolios for institutional vice president and portfolio manager at
clients. Additionally, from 2001 to 2003, Mr. Aeltus Investment Management. Mr. Melchreit
Flurry served as a Portfolio Manager of the received an MS degree in Statistics from Yale
Expedition Equity Income Fund. From 1993 to University in 2005.
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.
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Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
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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.
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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.
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Net assets (as of March 16, $3,471,181 $10,760,468
2009)
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152
Classes of Shares, Fees and Expenses
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Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
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Class A sales charges and Class A shares are offered with an initial Class A shares are offered with an initial
fees sales charge up to 1.50% of the offering sales charge up to 2.50% of the offering
price, which is reduced depending upon the price, which is reduced or waived for large
amount invested as described below or, in purchases and certain types of investors. At
certain circumstances, waived. Class A shares the time of your purchase, your investment
bought as part of an investment of $1 million firm may receive a commission from PFD, the
or more are not subject to an initial sales fund's distributor, of up to 2%, declining as
charge, but may be charged a contingent the size of your investment increases.
deferred sales 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
Your investment may qualify for a reduction charge) when you buy Class A shares unless
or elimination of the sales charge, also you qualify to purchase shares at net asset
known as a breakpoint discount. The following value. You pay a lower sales charge as the
lists the sales charges, which will be size of your investment increases. You do not
applied to your Class A share purchase, pay a sales charge when you reinvest
subject to the breakpoint discounts dividends or capital gain distributions paid
indicated: 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 1.50% 1.52% ---------------------------------------------
------------------------------------------------- Less than 2.50% 2.56%
$50,000 to 1.25% 1.27% $ 50,000
$ 99,999 ---------------------------------------------
------------------------------------------------- $50,000 but 2.00% 2.06%
$100,000 to 1.00% 1.01% less than
$249,999 $100,000
------------------------------------------------- ---------------------------------------------
$250,000 to 0.75% 0.76% $100,000 but 1.50% 1.52%
$499,999 less than
------------------------------------------------- $250,000
$500,000 to 0.50% 0.50% ---------------------------------------------
$999,999 $250,000 but 1.00% 1.01%
------------------------------------------------- less than
$1 million or Net asset Net asset $500,000
more value value ---------------------------------------------
------------------------------------------------- $500,000 or -0- -0-
more
Your investment professional must notify the ---------------------------------------------
fund's transfer agent of eligibility for any
applicable breakpoint discount at the time of There are no contingent deferred sales
purchase. charges, except in certain circumstances when
the initial sales charge is waived. A
Class A shares pay a shareholder servicing contingent deferred sales charge may be
fee (non-12b-1) of up to 0.25% of average payable to PFD, the fund's distributor, in
daily net assets. the event of a share redemption within 12
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.
- ------------------------------------------------------------------------------------------------------------------------------------
153
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Limited
Maturity Fixed Income Fund Pioneer Short Term Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Class C sales charges and Class C shares are offered without an initial The Pioneer Fund will issue Class A shares to
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 fees
deferred sales charge of 1.00% if sold within 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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution 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 0.40% of the fund's average daily fund and to cover the cost of providing
net assets. certain 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 ordinary operating expenses to the extent
to 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 effect through January 1, 2012. In addition,
of 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 required to reduce fund expenses to 1.04% and
in effect. MAM will evaluate the continuance 0.79% of the average daily net assets
of this voluntary waiver at each month-end attributable to Class A shares and Class Y
and it can terminate this voluntary waiver at shares, respectively. Assuming the
any time. 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 159.
- ------------------------------------------------------------------------------------------------------------------------------------
154
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, interest-only mortgages, variable rate mortgages, negative
amortization mortgages or other types of exotic mortgages.
155
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. Although certain CDOs may receive credit
enhancement in the form of a senior-subordinate structure,
over-collateralization or bond insurance, such enhancement may not always be
present, and may fail to protect a fund against the risk of loss on default of
the collateral.
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,
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.
156
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund's Annual
Returns -- Class A Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF 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 -6.60
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 FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'05 1.40
'06 3.80
'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)
- ---------------------------------------------------------------------------------------------------------------
157
- ----------
(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.
158
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 Combined
Income Fund Fund (period Pioneer Short
(period ended ended Term Income
November 30, August 31, 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 ................... 1.50% 2.50% 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) 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% 0.25% 0.25%
Other Expenses ....................................... 1.23% 0.35% 0.27%
Acquired Fund Fees and Expenses ...................... 0.02% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 1.90% 1.00% 0.92%
- ------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00%(4) (0.10)%(5) (0.02)%(5)(6)
Net Expenses ......................................... 1.90% 0.90% 0.90%
- ------------------------------------------------------------------------------------------------------------
Regions
Morgan
Keegan Select
Limited Pioneer Short
Maturity Fixed Term Income Combined
Income Fund Fund (period Pioneer Short
(period ended ended Term Income
November 30, August 31, Fund
2008) 2008) (Pro Forma)
-------------- ------------- ----------------
Shareholder transaction fees
(paid directly from your investment) Class C Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price ................... None 2.50% 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 ..... 1.00%(3) None(2) 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 ................. 1.00% 0.25% 0.25%
Other Expenses ....................................... 1.23% 0.35% 0.27%
Acquired Fund Fees and Expenses ...................... 0.02% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 2.65% 1.00% 0.92%
- ------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00%(4) (0.10)%(5) (0.02)%(5)(6)
Net Expenses ......................................... 2.65% 0.90% 0.90%
- ------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Limited Maturity Fixed
Income Fund Pioneer Short Term Income Combined Pioneer Short
(period ended Fund (period ended Term Income Fund
November 30, 2008) August 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 ........................................ 0.40% 0.40% 0.40%
Distribution and Service (12b-1) Fee .................. 0.00% 0.00% 0.00%
Other Expenses ........................................ 1.23% 0.15% 0.15%
Acquired Fund Fees and Expenses ....................... 0.02% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................. 1.65% 0.55% 0.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .............. 0.00%(4) 0.00% 0.00%(6)
Net Expenses .......................................... 1.65% 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.
159
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 ............................. $ 340 $ 340 $ 340
Year 3 ............................. $ 738 $ 551 $ 534
Year 5 ............................. $1,161 $ 779 $ 745
Year 10 ............................ $2,339 $1,435 $1,351
Class C -- with redemption
Year 1 ............................. $ 368 (7) --
Year 3 ............................. $ 823 (7) --
Year 5 ............................. $1,405 (7) --
Year 10 ............................ $2,983 (7) --
Class C -- without redemption
Year 1 ............................. $ 268 (7) --
Year 3 ............................. $ 823 (7) --
Year 5 ............................. $1,405 (7) --
Year 10 ............................ $2,983 (7) --
Class I/Y
Year 1 ............................. $ 168 $ 56 $ 56
Year 3 ............................. $ 520 $ 176 $ 176
Year 5 ............................. $ 897 $ 307 $ 307
Year 10 ............................ $1,955 $ 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 $500,000 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. 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.
(7) The Pioneer Fund will issue Class A shares to the RMK Fund in exchange for
the Class C shares of the RMK Fund. RMK Fund Class C shareholders who wish
to make future purchases of the Pioneer Fund's Class C shares will be
subject to a higher expense ratio than if they purchased 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.
160
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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 Class
A, Class C and Class I shares of your RMK Fund are 1.06%, 1.81% and 0.81%,
respectively, after giving effect to MAM's voluntary fee waiver and expense
reimbursement with respect to Class A, Class C and Class I shares, which may be
terminated at any time. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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?"
161
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of March
16, 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 March 16, 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 Short Term
Select Limited Maturity Pioneer Short Term Income Fund
Fixed Income Fund Income Fund Pro Forma
------------------------- -------------------- -------------------
Net Assets
Class A ......................... $ 3,198,376 $ 13,801,839 $ 17,249,879
Class B ......................... -- $ 6,346,479 $ 6,346,479
Class C ......................... $ 249,664 $ 6,857,149 $ 6,857,149(1)
Class I/Y ....................... $ 23,141 $ 73,755,001 $ 73,778,142
------------ -------------- ---------------
Total Net Assets of Fund ......... $ 3,471,181 $ 100,760,468 $ 104,231,649
Net Asset Value Per Share
Class A ......................... $ 7.68 $ 8.86 $ 8.86
Class B ......................... -- $ 8.85 $ 8.85
Class C ......................... $ 7.68 $ 8.84 $ 8.84(1)
Class I/Y ....................... $ 7.68 $ 8.84 $ 8.84
Shares Outstanding
Class A ......................... 416,480 1,558,147 1,947,316
Class B ......................... -- 717,313 717,313
Class C ......................... 32,512 775,738 775,738(1)
Class I/Y ....................... 3,014 8,339,045 8,341,663
- ----------
(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 8 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
162
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
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
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Investment objective The fund's investment objective is current The fund's investment objective is current
income that is exempt from federal income income exempt from regular federal income
tax. tax.
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163
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
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Primary investments and The fund invests primarily in a highly Normally, the fund invests at least 80% of
investment strategies diversified portfolio of tax-exempt bonds. its net assets (plus the amount of
The fund normally invests its assets so that borrowings, if any, for investment purposes)
at least 80% of the income that it in securities that provide income that is
distributes is exempt from federal income tax exempt from regular federal income tax and is
and is not a tax preference item for purposes not subject to the alternative minimum tax
of the alternative minimum tax. This policy (AMT). These investments include bonds, notes
may not be changed without shareholder and other debt instruments issued by or on
approval. behalf of states, counties, municipalities,
territories and possessions of the United
A primary consideration of the fund is to States and the District of Columbia and their
invest a large portion of its assets in authorities, political subdivisions, agencies
securities of issuers located within the or instrumentalities. This policy may not be
southern United States. Key factors in the changed without shareholder approval.
security selection process include regional
economic trends and demographic patterns, The fund invests primarily in investment
national economic trends, interest rate grade securities. Under normal circumstances,
momentum, and yield spreads. The fund it is anticipated that the dollar-weighted
generally will invest a large portion of its average maturity of the fund's portfolio will
assets in direct general obligation bonds be between three and ten years. The fund may
consistent with MAM's economic forecast. invest in securities of any maturity. The
Revenue bonds will be used to add additional fund may invest 25% or more of its assets in
yield, particularly in periods of economic issuers in any one or more states or
growth. When investing in tax- exempt securities the payments on which are derived
securities, MAM will conduct a credit from gas, electric, telephone, sewer, water,
analysis of the issuer and will compare healthcare and transportation segments of the
current yield spreads to historical norms. municipal bond market. The fund also may
The debt securities in which the fund invests invest up to 20% of its assets in industrial
will have a minimum credit rating of "A" (or development bonds.
a comparable rating) by at least one NRSRO at
the time of purchase. In addition, the fund may invest up to 20% of
its net assets in debt securities rated below
The average maturity of the fund's debt investment grade (known as "junk bonds") or,
securities generally will be in the range of if unrated, are of equivalent credit quality
three to ten years. When interest rates are as determined by Pioneer.
at higher levels and lower rates are
forecasted for the future, MAM may choose to The fund's investments may have fixed or
lengthen the fund's effective duration. variable principal payments and all types of
Likewise, when rising interest rates are interest rate payment and reset terms,
expected, the duration of the fund's bond including fixed rate, inverse floating rate,
portfolio may be shortened and its allocation floating rate, zero coupon, contingent,
to revenue bonds increased. 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.
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164
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
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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
fundamental research and 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
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165
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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, or the credit quality
deteriorates, 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 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 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
the fund as illiquid securities, which may be
difficult to sell at an advantageous time or
price. Although certain CDOs may receive
credit enhancement in the form of a senior-
subordinate structure, over-collateralization
or bond insurance, such enhancement may not
always be present, and may fail to protect a
fund against the risk of loss on default of
the collateral.
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
- ------------------------------------------------------------------------------------------------------------------------------------
166
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
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.
With respect to the investment strategies and
practices enumerated above, to the extent
that a percentage limitation is not
specified, there is no specific limit on the
fund's ability to engage in such strategy or
practice.
- ------------------------------------------------------------------------------------------------------------------------------------
Cash management and To minimize potential losses and maintain Normally, the fund invests substantially all
temporary investments liquidity to meet shareholder redemptions of its assets to meet its investment
during adverse market conditions, the fund objective. The fund may invest the remainder
may temporarily depart from its principal of its assets in securities with remaining
investment strategy by investing up to 100% maturities of less than one year or cash
of the fund's assets in cash and cash equivalents, or may hold cash. For temporary
equivalents, including short-term bank defensive purposes, including during periods
obligations, repurchase agreements and other of unusual cash flows, the fund may depart
money market instruments and securities from its principal investment strategies and
issued and/or guaranteed as to payment of invest part or all of its assets in these
principal and interest by the U.S. securities or may hold cash. To the extent
government, its agencies or that the fund has any uninvested cash, the
instrumentalities. This may cause the fund to fund would also be subject to risk with
temporarily fail to meet its goal and forego respect to the depository institution holding
greater investment returns for the safety of the cash. During such periods, it may be more
principal. difficult for the fund to achieve its
investment objective. The fund may adopt a
defensive strategy when the sub-adviser
believes securities in which the fund
normally invests have special or unusual
risks or are less attractive due to adverse
market, economic, political or other
conditions.
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Short-term trading Although the fund does not intend to invest The fund usually does not trade for
for the purpose of seeking short-term short-term profits. The fund will sell an
profits, securities will be sold without investment, however, even if it has only been
regard to the length of time they have been held for a short time, if it no longer meets
held when MAM believes it is appropriate to the fund's investment criteria. If the fund
do so in light of the fund's investment goal. does a lot of trading, it may incur
A higher portfolio turnover rate involves additional operating expenses, which would
greater transaction expenses which must be reduce performance, and could cause
borne directly by the fund (and thus, shareowners to incur a higher level of
indirectly by its shareholders), and impact taxable income or capital gains.
fund performance. In addition, a
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167
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
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 not trade in futures and The fund may, but is not required to, use
options. 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, 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
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168
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
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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 manager
MAM Pioneer
Portfolio Manager: Portfolio Managers:
Day-to-day management of the fund's portfolio The fund has not yet commenced operations,
is the responsibility of Dorothy E. Thomas, and 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 commence operations upon the consummation of
teams 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.
Ms. Thomas is a Senior Vice President and Eurkus will be supported by Timothy Pynchon,
Director of Tax-Exempt Fixed Income for MAM. portfolio manager and the fixed income team.
Ms. Thomas has more than 30 years experience Members of this team manage other Pioneer
in investment research, trading and portfolio funds investing primarily in fixed income
management. From 1983 to present, Ms. Thomas securities. The portfolio managers and the
has overseen tax-exempt bond investments at team also may draw upon the research and
AmSouth Asset Management, Inc., which investment management expertise of Pioneer's
subsequently merged into MAM. From 1997 to affiliate, Pioneer Investment Management
2005, Ms. Thomas served as a portfolio Limited. Mr. Eurkus joined Pioneer as a
manager to the AmSouth Mutual Funds. From senior vice president in January 2001 and has
1983 to 2001, Ms. Thomas served as a Trust been an investment professional since 1969.
Portfolio Manager and from 1983 to 1989 as an Mr. Pynchon joined Pioneer as a vice
Equity Analyst at AmSouth. From 1973 to 1983, president in 2000 and has been an investment
Ms. Thomas served as a Bond Analyst and professional since 1982.
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
open-end management investment company I, an open-end management investment company
organized as a Massachusetts business trust. organized as a Delaware statutory trust.
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Net assets (as of March 16, $24,168,992 None
2009)
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169
Classes of Shares, Fees and Expenses
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
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Class A sales charges and Class A shares are offered with an initial Class A shares are offered with an initial
fees sales charge up to 2.00% of the offering sales charge up to 4.50% of the offering
price, which is reduced depending upon the price, which is reduced or waived for large
amount invested as described below or, in purchases and certain types of investors. At
certain circumstances, waived. Class A shares the time of your purchase, your investment
bought as part of an investment of $1 million firm may receive a commission from PFD, the
or more are not subject to an initial sales fund's distributor, of up to 4.00%, declining
charge, but may be charged a contingent as the size of your investment increases.
deferred sales 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
Your investment may qualify for a reduction charge) when you buy Class A shares unless
or elimination of the sales charge, also you qualify to purchase shares at net asset
known as a breakpoint discount. The following value. You pay a lower sales charge as the
lists the sales charges, which will be size of your investment increases. You do not
applied to your Class A share purchase, pay a sales charge when you reinvest
subject to the breakpoint discounts dividends or capital gain distributions paid
indicated: by the fund. You do not pay a contingent
deferred sales charge when you sell shares
------------------------------------------------- purchased through reinvestment of dividends
Your As a % of As a % of Net or capital gain distributions.
Investment Offering Price Amounts
Invested ----------------------------------------------
------------------------------------------------- Sales charge as % of
Up to $49,999 2.00% 2.04% ----------------------------------------------
------------------------------------------------- Amount of Offering Price Net Amounts
$50,000 to 1.75% 1.78% purchase Invested
$ 99,999 ----------------------------------------------
------------------------------------------------- Less than 4.50% 4.71%
$100,000 to 1.50% 1.52% $100,000
$249,999 ----------------------------------------------
------------------------------------------------- $100,000 but 3.50% 3.63%
$250,000 to 1.00% 1.01% less than
$499,999 $250,000
------------------------------------------------- ----------------------------------------------
$500,000 to 0.75% 0.76% $250,000 but 2.50% 2.56%
$999,999 less than
------------------------------------------------- $500,000
$1 million or Net asset Net asset ----------------------------------------------
more value value $500,000 or -0- -0-
------------------------------------------------- more
----------------------------------------------
Your investment professional must notify the
fund's transfer agent of eligibility for any There are no contingent deferred sales
applicable breakpoint discount at the time of charges, except in certain circumstances when
purchase. the initial sales charge is waived. A
contingent deferred sales charge may be
Class A shares pay a shareholder servicing payable to PFD, the fund's distributor, in
fee (non-12b-1) of up to 0.25% of average the event of a share redemption within 12
daily net assets. 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.
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170
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Regions Morgan Keegan Select Intermediate
Tax Exempt Bond Fund Pioneer Intermediate Tax Free Income Fund
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Class C sales charges and Class C shares are offered without an initial The Pioneer Fund will issue Class A shares to
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 fees
deferred sales charge of 1.00% if sold within 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.
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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 Class Y shares are not subject to a
contingent deferred sales charge. contingent deferred sales charge.
Class I shares are not subject to Class Y shares are not subject to
distribution and service (12b-1) fees. distribution and service (12b-1) fees.
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Management fees The fund pays MAM an annual advisory fee The fund pays Pioneer a fee for managing the
equal to 0.25% of the fund's average daily fund and to cover the cost of providing
net assets. 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.
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Fee waiver and expense None Pioneer has contractually agreed to limit
limitations ordinary operating expenses to the extent
required to reduce fund expenses to 0.82% 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 June 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.
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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
176.
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171
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 ongoing global financial crisis has caused a significant decline
in the value of many securities, including securities held by the
Fund, and the continuation or further deterioration of market
conditions may lead to additional losses of value
o The values of securities held by the Fund may fall due to general
market conditions, such as real or perceived adverse economic,
political, or regulatory conditions, inflation, changes in interest or
currency rates or adverse investor sentiment. Adverse market
conditions may be prolonged and may not have the same impact on all
types of securities. The values of securities may fall due factors
affecting a particular issuer or the securities market as a whole
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 (or other obligor) of a security owned by the Fund defaults
on its obligation to pay principal and/or interest, or otherwise
defaults or 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 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
segment, the Fund will be more susceptible to risks associated with
that state or segment
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 Fund's investment adviser is incorrect in its expectation of
changes in interest rates or the credit quality of an issuer
Although distributions of interest income from the 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.
172
To the extent the Pioneer Fund invests in issuers of securities the
payments on which are derived from gas, electric, telephone, sewer, water,
healthcare and transportation segments of the municipal bond market, the Pioneer
Fund may be subject to risks associated with such segments. Gas transmission and
distribution companies are undergoing significant changes. In the United States,
the Federal Energy Regulatory Commission is reducing its regulation of
interstate transmission of gas. In addition, gas utility companies have, in the
recent past, been adversely affected by disruptions in the oil industry,
increased concentration and increased competition. The electric utilities
segment has been experiencing, and will continue to experience, increased
competitive pressures. Federal legislation in the last few years will open
transmission access to any electricity supplier, although it is not presently
known to what extent competition will evolve. Other risks include the
availability and cost of fuel, the availability and cost of capital, the effects
of conservation on energy demand, the effects of rapidly changing environmental,
safety, and licensing requirements, and other federal, state, and local
regulations, timely and sufficient rate increases, and opposition to nuclear
power. The telephone segment is large and highly concentrated. The greatest
portion of this segment is comprised of companies that distribute telephone
services and provide access to the telephone networks. While many telephone
companies have diversified into other businesses in recent years, the
profitability of telephone utility companies could be adversely affected by
increasing competition, technological innovations, and other structural changes
in the industry. Public resistance to rate increases, costly environmental
litigation, and Federal environmental mandates are challenges faced by issuers
of water and sewer bonds. In addition, lack of water supply due to insufficient
rain, run-off, or snow pack has, in the past, had an adverse effect on the water
segment of the municipal bond market Further, the water utility segment is
highly fragmented because most of the water supplies are owned by local
authorities. Water utility companies are generally mature and are experiencing
little or no per capita volume growth. Companies in the healthcare segment are
heavily dependent on patent protection. The expiration of patents may adversely
affect the profitability of the companies and the value of their securities.
Healthcare companies are also subject to extensive litigation based on product
liability and similar claims. Many new products are subject to approval of the
Food and Drug Administration. The process of obtaining such approval can be long
and costly. Healthcare companies are also subject to competitive forces that may
make it difficult to raise prices and, in fact, may result in price discounting.
Companies in the transportation segment can be significantly affected by changes
in the economy, fuel prices, labor relations, and insurance costs. The trend in
the United States has been to deregulate the transportation industry, which
could have a favorable long-term effect, but future government decisions could
adversely affect transportation companies.
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, derivatives involve
risk of loss if the issuer of the derivative defaults on its obligation.
173
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 FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'05 0.90
'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
174
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 02/09/04
- ----------------------------------------------------------------------------------------------------
-- Return Before Taxes (with 4.50% sales charge)(1) (1.13)% 1.43%
- ----------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions(2) (1.18)% 1.39%
- ----------------------------------------------------------------------------------------------------
-- Return After Taxes on Distributions and Sale of 0.36% 1.66%
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) Reflects the Pioneer Fund's Class A initial sales charge of 4.50%.
(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 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.
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.
175
Regions
Morgan Combined
Keegan Select Pioneer
Intermediate Intermediate
Tax Exempt Tax Free
Bond Fund Pioneer Income
(period ended Intermediate Fund
November 30, Tax Free (Pro
2008) Income Fund 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 .............. 2.00% 4.50% 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) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.25% 0.50% 0.50%
Distribution and Service (12b-1) Fee ............ 0.25% 0.25% 0.25%
Other Expenses .................................. 0.43% 0.40% 0.40%
- ------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 0.93% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00% (0.33)%(4) (0.33)%(4)(5)
Net Expenses .................................... 0.93% 0.82% 0.82%
- ------------------------------------------------------------------------------------------------------
Regions
Morgan
Keegan Select
Intermediate
Tax
Exempt
Bond Combined
Fund Pioneer
(period Pioneer Intermediate
ended Intermediate Tax Free
November 30, Tax Free Income Fund
2008) Income Fund (Pro Forma)
------------- ------------ ------------
Shareholder transaction fees
(paid directly from your investment) Class C Class A Class A
Maximum sales charge (load) when you buy shares
as a percentage of offering price .............. None 4.50% 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 1.00%(3) None(2) None(2)
Annual Fund operating expenses (deducted from
fund assets) as a % of average daily net assets
Management Fee .................................. 0.25% 0.50% 0.50%
Distribution and Service (12b-1) Fee ............ 1.00% 0.25% 0.25%
Other Expenses .................................. 0.43% 0.40% 0.40%
- -------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ............ 1.68% 1.15% 1.15%
- -------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ........ 0.00% (0.33)%(4) (0.33)%(4)(5)
Net Expenses .................................... 1.68% 0.82% 0.82%
- -------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Intermediate Tax
Exempt Bond Fund Combined Pioneer
(period ended Pioneer Intermediate Tax Intermediate Tax Free
November 30, 2008) Free Income Fund Income 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 ........................................ 0.25% 0.50% 0.50%
Distribution and Service (12b-1) Fee .................. 0.00% 0.00% 0.00%
Other Expenses ........................................ 0.43% 0.40% 0.40%
Total Annual Fund Operating Expenses .................. 0.68% 0.90% 0.90%
Less: Fee Waiver and Expense Limitations .............. 0.00% (0.35)%(4) (0.35)%(4)(5)
Net Expenses .......................................... 0.68% 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.
176
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 $500,000 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 June 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. RMK Fund Class C shareholders who wish
to make future purchases of the Pioneer Fund's Class C shares will be
subject to a higher expense ratio than if they purchased Class C Shares of
the RMK Fund.
177
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. 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 Class
A, Class C and Class I shares of your RMK Fund are 0.93%, 1.68% and 0.68%,
respectively. 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 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 June 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 each pay 50% of all proxy and solicitation
costs 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
March 16, 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 March 16, 2009. The table
also sets forth the pro forma combined capitalization of the combined Pioneer
Fund as if the Reorganization had occurred on March 16, 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
March 16, 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.
178
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 .......................... $ 17,982,885 -- $18,292,776
Class C .......................... $ 309,891 -- (1)
Class I/Y ........................ $ 5,876,216 -- $5,876,216
-----------------------------------------------------------------------
Total Net Assets of Funds ......... $ 24,168,992 N/A $24,168,992
Net Asset Value Per Share
Class A .......................... $ 9.59 -- $ 9.59
Class C .......................... $ 9.59 -- (1)
Class I/Y ........................ $ 9.58 -- $ 9.58
Shares Outstanding
Class A .......................... 1,875,594 -- 1,907,908
Class C .......................... 32,317 -- (1)
Class I/Y ........................ 613,167 -- 613,167
- ----------
(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.
179
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 shares, as applicable,
to the RMK Fund in amounts equal to the aggregate net asset value of the RMK
Fund's Class A 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 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 The fund's investment objective is current
income with stability of principal and income, preservation of capital and liquidity
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
investment strategies obligations maturing in 397 days or less and seeks to maintain a constant net asset value
in repurchase agreements collateralized by of $1.00 per share by investing in
U.S. Treasury obligations. Under normal high-quality, U.S. dollar denominated money
circumstances, the fund invests at least 80% market securities. Normally, the fund invests
of the value of its net assets in U.S. at least 80% of its net assets (plus the
Treasury investments. The fund will provide amount of borrowings, if any, for investment
shareholders with at least 60 days' prior purposes) in U.S. Treasury bills, notes and
notice of any changes in this policy. The bonds, and repurchase agreements with respect
fund also may invest in short-term AAA-rated to these securities. U.S. Treasury securities
securities of other investment companies, and are direct obligations of the U.S.
engage in when-issued and delayed-delivery government.
transactions. Consistent with the fund's AAA
rating by S&P, the fund will maintain an The fund will provide written notice to
average maturity of 60 days or less. To the shareholders at least 60 days prior to any
extent that fund income is derived from change to the requirement that it invest at
investments in U.S. Treasury securities, least 80% of its assets as described above.
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
The fund will comply with the requirements of agencies and instrumentalities of the U.S.
Rule 2a-7 under the 1940 Act, which sets government, repurchase agreements with
forth portfolio quality and diversification respect to these securities and other
restrictions for money market mutual funds. eligible money market securities.
- ------------------------------------------------------------------------------------------------------------------------------------
180
- ------------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------------
181
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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 Day-to-day management of the fund's portfolio
is the responsibility of George R. McCurdy, is the responsibility of Seth Roman. Mr.
IV, CFA. The portfolio manager is supported Roman is supported by the fixed income team.
by MAM's equity and/or fixed income research Members of this team manage other Pioneer
teams which provide fundamental research and funds investing primarily in fixed income
quantitative analysis used to run MAM's securities. The portfolio manager and the
internal investment models. team also may draw upon the research and
investment management expertise of Pioneer's
Mr. McCurdy is a Senior Portfolio Manager for affiliate, Pioneer Investment Management
MAM. He has more than seven years experience Limited. Mr. Roman joined Pioneer as a
in investment management and banking. From portfolio manager in March 2006 and has been
2007 to present, Mr. McCurdy has served as an investment professional for over 10 years.
the Portfolio Manager for the fund. From 2005 Prior to joining Pioneer, Mr. Roman was a
to 2007, Mr. McCurdy served as the Assistant fixed income trader for Fidelity Management
Portfolio Manager for the fund. From 2003 to and Research Company.
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 A diversified series of Pioneer Series Trust
open-end management investment company IV, an open-end management investment company
organized as a Massachusetts business trust. organized as a Delaware statutory trust.
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (as of March 16, $753,074,416 $168,930,312
2009)
- ------------------------------------------------------------------------------------------------------------------------------------
182
Classes of Shares, Fees and Expenses
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Regions Morgan Keegan Select Treasury
Money Market Fund Pioneer Treasury Reserves Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Class A sales charges and Class A shares are sold at net asset value Class A shares are sold with no initial sales
fees with no initial sales charge; however, if you charge, but you may pay a sales charge if you
subsequently exchange those shares for Class exchange your shares for Class A shares of
A shares of another fund which imposes an another Pioneer mutual fund.
initial sales charge, an initial sales charge
will be imposed on the Class A shares Class A shares are subject to distribution
received in the exchange. and service (12b-1) fees of up to 0.15% of
average daily net assets. These fees are paid
Class A shares pay a shareholder servicing out of the fund's assets on an ongoing basis.
fee (non-12b-1) of up to 0.25% of average Over time these fees will increase the cost
daily net assets. of investments and may cost more than other
types of sales charges.
- ------------------------------------------------------------------------------------------------------------------------------------
Management fees The fund pays MAM an annual advisory fee The fund pays Pioneer a fee for managing the
equal to 0.20% of the fund's average daily fund and to cover the cost of providing
net assets. 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 Pioneer has contractually agreed to limit
limitations to waive fees and reimburse expenses to the ordinary operating expenses to the extent
extent necessary to prevent a negative yield required to reduce fund expenses to 0.65% of
for each class of shares of the fund. This the average daily net assets attributable to
undertaking is voluntary and may be modified Class A shares. Assuming the Reorganization
or discontinued by MAM at any time. is approved, this 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.
- ------------------------------------------------------------------------------------------------------------------------------------
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
187.
- ------------------------------------------------------------------------------------------------------------------------------------
183
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. 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.
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. In the reorganization, the predecessor fund
exchanged its assets for Class A shares of the Pioneer Fund. The performance of
Class A shares of the Pioneer Fund includes the net asset value performance of
the predecessor fund's Class A shares prior to the reorganization, which has
been restated to reflect differences in any applicable sales charges (but not
differences in expenses).
184
Regions Morgan Keegan Select Treasury Money Market Fund's Annual Returns --
Class A Shares
(Years ended December 31)
[THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL]
'99 4.28
'00 5.60
'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 FOLLOWING DATA IS A REPRESENTATION OF 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 4.20
'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
185
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%
- ----------------------------------------------------------------------------------
- ----------
(1) The RMK Fund's 7-day yield for the period December 25, 2008 through
December 31, 2008 for the Class A shares was 0.004%. 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%
- -----------------------------------------------------------------------------------------------------------------
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 for the Class A shares was 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.
The most recent portfolio managers' discussion of the Funds is attached as
Exhibit B.
186
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 Combined
Fund Treasury Pioneer
(period ended Reserves Fund Treasury
November 30, (period ended Reserves Fund
2008) July 31, 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 ........................................ 0.20% 0.40% 0.40%
Distribution and Service (12b-1) Fee .................. 0.25% 0.15% 0.15%
Other Expenses ........................................ 0.20% 0.30% 0.10%
Acquired Fund Fees and Expenses ....................... 0.01% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .................. 0.66% 0.85% 0.65%
- ---------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations .............. 0.00%(1) 0.00%(2) 0.00%(2)(3)
Net Expenses .......................................... 0.66% 0.85% 0.65%
- ---------------------------------------------------------------------------------------------------------------
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 ............................. $ 67 $ 87 $ 66
Year 3 ............................. $ 211 $ 271 $ 208
Year 5 ............................. $ 368 $ 471 $ 362
Year 10 ............................ $ 822 $1,049 $ 810
- ----------
(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
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.
187
(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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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 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 each pay 50% of all proxy and solicitation
costs 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?"
188
CAPITALIZATION
The following table sets forth the capitalization of the RMK Fund and the
Pioneer Fund as of March 16, 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 March 16, 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 .......................... $ 751,378,534 $ 129,719,896 $ 881,098,430
Class I/Y ........................ $ 1,695,882 $ 39,210,416 $ 40,906,298(1)
---------------------------------------------------------------
Total Net Assets of Fund ......... $ 753,074,416 $ 168,930,312 $ 922,004,728
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 .......................... 751,252,454 129,664,895 880,917,349
Class I/Y ........................ 1,695,389 39,111,059 40,806,448(1)
- ----------
(1) Prior to the close of business on March 19, 2009, all Class I shares of the
RMK Fund were redeemed by 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 10 TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
189
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.
Each Fund has been accepted as a participant in the U.S. Treasury
Department's Temporary Guarantee Program for Money Market Funds (the "Program")
and was required to make a payment to the U.S. Treasury Department in connection
therewith. Participation in any extensions of the Program will require
additional payments to the Treasury. For the RMK Fund, this expense has been
borne by MAM. For the Pioneer Fund, this expense has been borne by the Pioneer
Fund. Based on certain assumptions discussed later in this Proposal, a further
extension of the Program would increase the combined Pioneer Fund's net expense
ratios such that they would be higher than those of the corresponding RMK Fund.
Please see footnote 1 to the Fee Table under the heading "The Funds' Fees and
Expenses."
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 The fund's investment objective is high
current income with preservation of capital current income, preservation of capital and
and liquidity. liquidity through investment in high-quality
short-term securities.
- ------------------------------------------------------------------------------------------------------------------------------------
190
- ------------------------------------------------------------------------------------------------------------------------------------
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
investment strategies denominated high-quality money market seeks to maintain a constant net asset value
instruments, including U.S. government of $1.00 per share by investing in
securities, taxable municipal debt, high-quality, U.S. dollar denominated money
commercial paper and other corporate debt market securities of U.S. and non-U.S.
obligations, certificates of deposit, issuers, including those issued by:
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 o U.S. and non-U.S. corporate or private
foreign banks. At the time of purchase, all issuers
of the fund's investments (other than U.S.
government securities and related repurchase o The U.S. government and its agencies and
agreements) will be rated in the highest instrumentalities
short-term rating category by a NRSRO (for
example, A-1 or A-1+ by S&P) or, if unrated, o Non-U.S. governments
deemed by the MAM to be of comparable
quality. In addition, all fund investments o Multinational organizations such as the
will be deemed to have a maturity of 397 days World Bank
or less, and the fund's average maturity will
not exceed 90 days. While the fund typically The fund may invest more than 25% of its
holds securities until maturity, decisions to total assets in U.S. government securities
sell portfolio holdings are generally the and obligations of U.S. banks. The fund may
result of a change in financial condition of invest in any money market instrument that is
the issuer of a security, for liquidity a permissible investment for a money market
purposes, or to rebalance the portfolio. fund under the rules of the Securities and
Exchange Commission, including commercial
paper, certificates of deposit, time
The fund will comply with the requirements of deposits, bankers' acceptances,
Rule 2a-7 under the 1940 Act, which sets mortgage-backed and asset-backed securities,
forth portfolio quality and diversification repurchase agreements, municipal obligations
restrictions for money market mutual funds. and other short-term debt securities. These
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.
- ------------------------------------------------------------------------------------------------------------------------------------
191
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
192
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Derivatives The fund may not trade in futures. The fund No stated strategy.
may 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 Day-to-day management of the fund's portfolio
is the responsibility of George R. McCurdy, is the responsibility of Seth Roman. Mr.
IV, CFA. The portfolio manager is supported Roman is supported by the fixed income team.
by MAM's equity and/or fixed income research Members of this team manage other Pioneer
teams which provide fundamental research and funds investing primarily in fixed income
quantitative analysis used to run MAM's securities. The portfolio manager and the
internal investment models. team also may draw upon the research and
investment management expertise of Pioneer's
Mr. McCurdy is a Senior Portfolio Manager for affiliate, Pioneer Investment Management
MAM. He has more than seven years experience Limited. Mr. Roman joined Pioneer as a
in investment management and banking. From portfolio manager in March 2006 and has been
2007 to present, Mr. McCurdy has served as an investment professional for over 10 years.
the Portfolio Manager for the fund. From 2005 Prior to joining Pioneer, Mr. Roman was a
to 2007, Mr. McCurdy served as the Assistant fixed income trader for Fidelity Management
Portfolio Manager for the fund. From 2003 to and Research Company.
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 A diversified series of Pioneer Money Market
open-end management investment company Trust, an open-end management investment
organized as a Massachusetts business trust. company organized as a Delaware statutory
trust.
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (as of March 16, $83,704,722 $1,020,484,184
2009)
- ------------------------------------------------------------------------------------------------------------------------------------
193
Classes of Shares, Fees and Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan
Select Money Market Fund Pioneer Cash Reserves Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Class A sales charges and Class A shares are sold at net asset value Class A shares are sold with no initial sales
fees with no initial sales charge; however, if you charge, but you may pay a sales charge if you
subsequently exchange those shares for Class exchange your shares for Class A shares of
A shares of another fund which imposes an another Pioneer mutual fund.
initial sales charge, an initial sales charge
will be imposed on the Class A shares Class A shares are subject to distribution
received in the exchange. and service (12b-1) fees of up to 0.15% of
average daily net assets. These fees are paid
Class A shares pay a shareholder servicing out of the fund's assets on an ongoing basis.
fee (non-12b-1) of up to 0.25% of average Over time these fees will increase the cost
daily net assets. 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. Class I shares are not subject sales charge. Class Y shares are not subject
to a contingent deferred sales charge. Class to a contingent deferred sales charge. Class
I shares are not subject to distribution and 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 The fund pays Pioneer a fee for managing the
equal to 0.25% of the fund's average daily fund and to cover the cost of providing
net assets. 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
limitations waive fees and reimburse expenses to the ordinary operating expenses to the extent
extent necessary to prevent a negative yield required to reduce fund expenses to 0.70% and
for each class of shares of the fund. This 0.45% of the average daily net assets
undertaking is voluntary and may be modified attributable to Class A shares and Class Y
or discontinued by MAM at any time. shares, respectively. Assuming 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.
- ------------------------------------------------------------------------------------------------------------------------------------
194
- ------------------------------------------------------------------------------------------------------------------------------------
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
198.
- ------------------------------------------------------------------------------------------------------------------------------------
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
195
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 FOLLOWING DATA IS A REPRESENTATION OF 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 FOLLOWING DATA IS A REPRESENTATION OF 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
196
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.
197
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%(1) 0.14%(1)
Acquired Fund Fees and Expenses ...................... 0.01% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 0.71% 0.73% 0.69%
- ----------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00%(2) 0.00%(3) 0.00%(3)(4)
Net Expenses ......................................... 0.71% 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%(1) 0.08%(1)
Acquired Fund Fees and Expenses ...................... 0.01% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ................. 0.46% 0.52% 0.48%
- -------------------------------------------------------------------------------------------------------------
Less: Fee Waiver and Expense Limitations ............. 0.00%(2) 0.00%(3) (0.03)%(3)(4)
Net Expenses ......................................... 0.46% 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 ............................. $ 73 $ 75 $ 70
Year 3 ............................. $ 227 $ 233 $ 221
Year 5 ............................. $ 395 $ 406 $ 384
Year 10 ............................ $ 883 $ 906 $ 859
Class I/Y
Year 1 ............................. $ 47 $ 53 $ 46
Year 3 ............................. $ 148 $ 167 $ 151
Year 5 ............................. $ 258 $ 291 $ 266
Year 10 ............................ $ 579 $ 653 $ 601
- ----------
(1) "Other Expenses" do not include the extraordinary expenses incurred by the
Pioneer Fund to participate in the U.S. Treasury Department's Temporary
Guarantee Program for Money Market Funds (the "Program"). The Program is
described in detail later in this Proposal under the heading "Additional
Information." These expenses have been borne by the Fund without regard to
any expense limitation currently in effect. Unless extended by the
Treasury, the Program will expire on April 30, 2009. Assuming (i) the
Program is extended to September 18, 2009, (ii) the Fund elects to
participate in the extended Program, and (iii) the fee payable to the
Treasury for the extended period will be 0.015% of the Fund's net asset
value as of the close of business on September 19, 2008, then the effect of
the cost of the Program as reflected in the pro forma "Other Expenses,"
"Total Annual Fund Operating Expenses" and "Net Expenses" of the combined
Pioneer Fund would be as follows:
Class A Class Y
Other Expenses 0.17% 0.11%
Total Annual Fund Operating Expenses 0.72% 0.51%
Net Expenses 0.72% 0.48%
198
Any additional cost to participate in the entended Program will be borne by
the Fund without regard to any expense limitation then in effect for the
Fund. The fee to participate in the Program, if it is extended beyond April
30, 2009, is not known at this time and may be higher or lower than that
estimated.
(2) 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.
(3) 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.
(4) 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.
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 ratio of
the combined Pioneer Fund is expected to be the same or lower for each class of
shares of the combined Pioneer Fund as compared to the corresponding classes of
your RMK Fund. The pro forma net expense ratios for the combined Pioneer Fund's
Class A and Class Y shares are anticipated to be 0.69% 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 0.71% and 0.46%,
respectively. 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 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 $49 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. As of December 31,
2008, the Pioneer family of mutual funds offers over 75 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.
199
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 each pay 50% of all proxy and solicitation
costs 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 and the
Pioneer Fund as of March 16, 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 March 16, 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 .......................... $ 72,289,657 $ 694,285,150 $ 766,574,807
Class B .......................... -- $ 62,196,075 $ 62,196,075
Class C .......................... -- $ 102,227,129 $ 102,227,129
Class I/Y ........................ $ 11,415,065 $ 159,622,887 $ 171,037,952
Class R .......................... -- $ 2,152,943 $ 2,152,943
------------- ---------------- ----------------
Total Net Assets of Fund ......... $ 83,704,722 $ 1,020,484,184 $ 1,104,188,906
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 .......................... 72,328,377 694,651,863 766,980,240
Class B .......................... -- 62,173,661 62,173,661
Class C .......................... -- 102,230,204 102,230,204
Class I/Y ........................ 11,407,547 159,619,976 171,027,523
Class R .......................... -- 2,153,373 2,153,373
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 Program. 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
200
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 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.
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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 corresponding Pioneer Fund immediately
after the applicable 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 May 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.
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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 the
Reorganization involving Regions Morgan Keegan Select Treasury Money
Market Fund, Pioneer Treasury Reserves Fund will issue Class A shares
to Regions Morgan Keegan Select Treasury Money Market Fund in amounts
equal to the aggregate net asset value of Regions Morgan Keegan Select
Treasury Money Market Fund's Class A shares. In the Reorganization
involving Regions Morgan Keegan Select Money Market Fund, Pioneer Cash
Reserves Fund will issue Class A and Class Y shares, as applicable, to
Regions Morgan Keegan Select Money Market Fund in amounts equal to the
aggregate net asset value of Regions Morgan Keegan Select 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. There are no differences between the RMK Funds'
valuation policies and procedures and the Pioneer Funds' valuation
policies and procedures that are material.
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. The contingent
deferred sales charge applicable to certain purchases of Pioneer Fund
Class A shares will be waived for the Pioneer Fund Class A shares
received in the Reorganizations.
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 Reorganizations 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
203
satisfactory opinion concerning the tax consequences of the
Reorganization from Bingham McCutchen LLP, counsel to the Pioneer
Funds.
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,
204
(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;
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). The amount of such
distributions to the shareholders of each RMK Fund is estimated as of [ ], 2009
to be as follows.
- --------------------------------------------------------------------------------------------------------------
Distribution amount
Fund (per share)
- --------------------------------------------------------------------------------------------------------------
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 Treasury Money Market Fund
- --------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market Fund
- --------------------------------------------------------------------------------------------------------------
Such distributions may result in taxable income to an RMK Fund shareholder.
Under regulations 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 Funds as Massachusetts
business trusts. Such adverse consequences will generally be avoided so long as
each RMK Fund, or in the case of Regions Morgan Keegan Select Mid Cap Growth
Fund, Regions Morgan Keegan Select Growth Fund and Regions
205
Morgan Keegan Select Intermediate Tax Exempt Bond Fund, the successor Pioneer
Fund, distributes all of its accumulated earnings and profits for the current
taxable year at or before the end of the taxable year. It is intended that each
RMK Fund, or in the case 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, the successor Pioneer Fund, will distribute
all of its accumulated earnings and profits for the current taxable year as
required by the regulations.
If, however, the Massachusetts Department of Revenue determines that an RMK
Fund (or, as applicable, the successor Pioneer Fund) did not properly distribute
all of its accumulated earnings and profits for the current taxable year, or
that an RMK Fund had accumulated and undistributed earnings and profits from any
prior taxable year, adverse Massachusetts tax consequences could be triggered by
a shareholder's sale or disposition of RMK Fund shares or shares of the
successor Pioneer Fund at any time prior to the distribution of all accumulated
earnings and profits earned prior to the Reorganizations. Such tax consequences
would include a deemed taxable distribution of the shareholder's proportionate
share of the applicable Fund's accumulated and undistributed earnings and
profits. 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 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)
- ------------------------------------------------------------------------------------------------------------------------------------
Signed Proxy with Vote to Considered "present" at meeting for purposes Abstentions do not constitute a vote "for" the
Abstain 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.
206
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.
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. The declaration of trust for each Pioneer Fund provides
that shareholders are not personally liable for the obligations of the Fund and
requires the Fund to indemnify a shareholders against liability arising solely
from the shareholder's ownership of shares in the Fund. The declaration of trust
for each Pioneer Fund also provides that the Fund will assume the defense of any
claim against a shareholder for personal liability at the request of the
shareholder. The declaration of trust for each RMK Fund contains similar
provisions.
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. The declaration of trust for each Pioneer Fund sets forth
a detailed process for the bringing of derivative actions on behalf of the Fund
by shareholders. Under the declaration of trust for each Pioneer Fund, prior to
bringing a derivative action, a demand by three unrelated shareholders must
first be made on the Fund's Trustees. The declaration of trust for each Pioneer
Fund details various information, certifications, undertakings and
acknowledgements that must be included in the demand. 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.
Both a Delaware statutory trust and a Massachusetts business trust can
limit a trustee's personal liability in the declaration of trust. The
declaration of trust for each Pioneer Fund extends to Trustees, officers and
employees of the Fund the fullest protection from liability that the law allows
and, in addition, requires the Fund to indemnify them to the extent permitted by
law against liability and against all expenses reasonably incurred in connection
with any claim, action, suit or proceeding in which the Trustee, officer or
employee becomes involved as a party or otherwise by virtue of being or having
been such a Trustee, director, officer, employee, or agent and against amounts
paid or incurred in settlement thereof. The declaration of trust for each RMK
Fund contains a similar indemnification provision. The 1940 Act currently
provides that no officer or director shall be protected from liability to the
Fund or shareholders for misfeasance, bad faith, gross negligence, or reckless
disregard of the duties of office.
Neither a Delaware statutory trust nor a Massachusetts business trust is
required to hold shareholder meetings or get shareholder approval for certain
actions unless the declaration of trust requires it. The declaration of trust of
each Pioneer Fund provides for shareholder voting as required by the 1940 Act or
other applicable laws but otherwise permits, consistent with Delaware law,
actions by the Board without seeking the consent of shareholders. The 1940 Act
requires a vote of shareholders on matters that Congress has determined may have
a material effect on shareholders and their investments. For example,
shareholder consent is required to approve new investment advisory agreements in
most cases, increases in advisory fees or 12b-1 fees, changes to fundamental
investment policies, election of trustees in certain circumstances, and the
merger or reorganization of a fund in certain circumstances, particularly where
the merger or consolidation involves an affiliated party. The declaration of
trust of each RMK Fund specifically provides that shareholders have the power to
vote (i) for the election or removal of Trustees, (ii) to approve new investment
advisory or sub-investment advisory agreement, (iii)
207
to the same extent as the shareholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
shareholders, and (iv) with respect to such additional matters relating to the
Trust as may be required by applicable law. In addition, the declaration of
trust of each RMK Fund provides that shareholders have the power to vote with
respect to the amendment of the declaration of trust, except for any amendments
that change the name of the Trust, and certain amendments with respect to the
establishment and designation of any series or class of shares of the Trust,
which may be made without shareholder approval. In contrast, subject to the
limitations imposed by the 1940 Act, the declaration of trust of each Pioneer
Fund authorizes the Trustees to amend the declaration without shareholder
approval.
FUNDAMENTAL INVESTMENT POLICIES OF THE FUNDS
Each Fund has adopted certain fundamental investment policies 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.
208
- -------------------------------------------------------------------------------------
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 Select Mid Cap Growth Fund
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.
- -------------------------------------------------------------------------------------
209
- -------------------------------------------------------------------------------------
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 Select Mid Cap Growth Fund
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.
- -------------------------------------------------------------------------------------
210
- -------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------
Investments in For Regions Morgan Keegan Select Intermediate Tax
Municipal Exempt Bond Fund only:
Securities
The fund normally invests its assets so that at least
80% of the income that it distributes is exempt from
federal income tax and is not a tax preference item for
purposes of the alternative minimum tax.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Pioneer Select Mid Cap Growth Fund
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
- -------------------------------------------------------------------------------------
Investments in For Pioneer Intermediate Tax Free Income Fund
Municipal only:
Securities
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.
- -------------------------------------------------------------------------------------
***
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
211
- -------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity Fund
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Pioneer Fund
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
212
- -------------------------------------------------------------------------------------
Regions Morgan Keegan Select Core Equity Fund
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
Buying on The RMK Fund may not purchase securities on margin
Margin (except such short term credits as are necessary for
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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Pioneer Fund
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
Buying on No stated fundamental policy.
Margin
- -------------------------------------------------------------------------------------
213
***
- -------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market 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, except as a
temporary measure for extraordinary or emergency
purposes (but not for the purpose of investment), in
excess of 10% of its total assets (taken at cost) or 5%
of such total assets (taken at current value), whichever
is lower.
- -------------------------------------------------------------------------------------
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 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.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Pioneer Cash Reserves 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.
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
214
- -------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market Fund
- -------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------
215
- -------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select Money Market Fund Pioneer Cash Reserves Fund
- -------------------------------------------------------------------------------------------------------------------
Buying on The RMK Fund may not purchase securities on margin No stated fundamental policy.
Margin (but it may obtain such short-term credits as may be
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.
- -------------------------------------------------------------------------------------------------------------------
216
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
Regions Morgan Keegan Select Money Market Fund) or Initial sales charges may apply, and if you invest
the next business day (for the other RMK Funds). Each in the Pioneer Fund through investment
RMK Fund reserves the right to reject any purchase professionals or other financial intermediaries,
request. other conditions, fees, or charges may apply.
Each RMK Fund maintains policies to deter short-term If you place an order to purchase shares with the
trading that may be disruptive to the efficient transfer agent or an authorized agent by the close
management of the RMK Funds. These policies may of regular trading on the NYSE (currently 4:00
limit your ability to purchase shares. p.m. Eastern Time), your transaction will be
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.
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RMK Funds
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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.
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Maximum Shares of an RMK Fund are not subject to a maximum
purchase purchase amount.
amounts
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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.
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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.
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Maximum Purchases of fund shares are limited to $499,999
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.
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218
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RMK Funds Pioneer Funds
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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.
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219
- -------------------------------------------------------------------------------------------------------------------------------
RMK Funds Pioneer Funds
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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 manner.
Fund or before the close of the NYSE (normally 4:00
p.m. Eastern Time, 3:00 p.m. Central Time) for all other If the shares you are selling are subject to a
RMK Funds in order for shares to be redeemed at that deferred sales charge, it will be deducted from the
day's closing share price. Requests received after these sale proceeds.
times on any business day will be executed the
following business day, at that day's closing share price. In some circumstances, redemption requests
must be in writing and bear signature guarantees.
In some circumstances, redemption requests must be in
writing and bear signature guarantees. Additional conditions may also apply to
redemptions involving excessive trading or
Sales charges may apply when redeeming Class A and systematic withdrawal plans.
Class C shares.
With respect to your Class A shares and Class C
Additional conditions may also apply to redeeming shares, if you have an eligible non-retirement
recently purchased shares, the availability of redemption account, you may sell up to $100,000 per account
proceeds, and in-kind redemptions. 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).
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220
- -------------------------------------------------------------------------------------------------------------------------------
RMK Funds Pioneer 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 securities plus any other assets minus its
the total assets attributable to each class of shares and operating expenses and other liabilities. Each
dividing the result by the number of shares outstanding. Pioneer Fund calculates a net asset value for each
Each RMK Fund calculates its net asset value as of the class of shares every day the NYSE is open when
close of regular trading (approximately 4:00 p.m. regular trading closes (normally 4:00 p.m. Eastern
Eastern Time, or any earlier NYSE closing time that day) time). Pioneer Treasury Reserves Fund and
on each day the NYSE is open for trading. 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 considered
that RMK Fund shareholders would experience higher sales loads in certain
circumstances. 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
Currently, 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, and Regions Morgan Keegan Select Limited Maturity Fixed
Income Fund (together, the "Securities Lending Funds") participate in a
securities lending program (the "Program") administered by The Bank of New York
Mellon Corporation ("BNY Mellon"). As part of this program, BNY Mellon
facilitates the lending of securities owned by the Securities Lending Funds to
third parties. In connection with the Program,
221
the Securities Lending Funds are investors in BNY Institutional Cash Reserves
Fund (the "BNY Fund"), an unregistered money market investment fund managed by
the Bank of New York Mellon. The BNY Fund provides a short-term investment
vehicle for the cash collateral received by the Securities Lending Funds and
other participants in securities lending transactions under the Program.
The fixed-income securities currently held by the BNY Fund include (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 Security") and (ii) certain floating rate debt
securities of Lehman Brothers Holdings Incorporated, maturing on October 14,
2008 and October 22, 2008, respectively (the "Lehman Securities" and, together
with the Whistlejacket Security, the "Securities"). Each issuer of the
Securities has filed for bankruptcy protection and thereby defaulted under the
terms of its respective Security. Consequently, the market value of each
Security has decreased substantially below its par value and the Securities have
become substantially illiquid.
In response to these events, BNY Mellon has undertaken to provide certain
limited capital support for the BNY Fund or, alternatively, directly to each
investor in the BNY Fund (each, an "Investor") in respect of the Whistlejacket
Security, and to offer certain limited capital support in respect of the Lehman
Securities, in each case to the extent of such Investor's indirect,
proportionate interest in each Security, subject to certain terms and
conditions. In respect of the Whistlejacket Security, BNY Mellon has undertaken
to provide capital support such that the Securities Lending Funds would recover
approximately 100% of their respective proportionate share of the par value of
the Whistlejacket Security (the "Whistlejacket Support"). In respect of the
Lehman Securities, BNY Mellon has undertaken to provide capital support such
that the Securities Lending Funds would recover at least 80% of their respective
proportionate share of the par value of the Lehman Securities (the "Lehman
Support").
The Pioneer Funds do not participate in the Program. For that reason, the
Securities Lending Funds will exit the Program prior to the Reorganizations and
redeem their interests in the BNY Fund for cash, except in respect of that
portion of the net asset value redeemed that represents the Whistlejacket
Security and the Lehman Securities. These assets will be redeemed for in-kind
proceeds consisting of a proportionate share of the Whistlejacket Security and
the Lehman Securities pursuant to the terms of the Whistlejacket Support and the
Lehman Support.
Under the terms of the Lehman Support, the Lehman Support will be lost
immediately upon the Securities Lending Funds' withdrawal from the Program. In
the case of the Whistlejacket Security, while the Whistlejacket Support
continues after withdrawal from the Program (subject to certain terms and
conditions), the benefit of such support in these circumstances effectively
would not, because Pioneer has informed Regions and MAM that the Pioneer Funds
would not accept the Whistlejacket Security as part of the Reorganizations.
Pioneer also has informed Regions and MAM that the Pioneer Funds would not
accept the Lehman Securities as part of the Reorganizations.
In order to make the impact of withdrawing from the Program neutral to the
Securities Lending Funds, Regions has undertaken to purchase the Securities from
the Securities Lending Funds at such time as such Securities are delivered to
the Securities Lending Funds in connection with the Securities Lending Funds'
withdrawal from the Program, on terms that would give the Securities Lending
Funds current value equal to or better than the realizable value of the
Securities as accompanied by the Whistlejacket Support and Lehman Support.
Specifically, Regions will purchase each Securities Lending Fund's proportionate
share of the Whistlejacket Security at 100% of par value, and each Securities
Lending Fund's proportionate share of the Lehman Securities at 80% of par value.
Regions also has undertaken that if the aggregate amount ultimately realized by
Regions in respect of the Securities is more than the sum of (a) any purchase
price paid to a Securities Lending Fund by Regions for such Securities and (b)
any income due on such Securities from and after the date that Regions purchase
such Securities from a Securities Lending Fund, at the rate(s) specified in the
applicable Securities, Regions will remit such excess amount (after deducting
all reasonable expenses, if any, incurred in connection with the recovery)
promptly to the Securities Lending Fund. Notwithstanding anything to the
contrary herein, the foregoing obligation of Regions 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.
222
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.
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.
223
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 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
the Fund's 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. Certain securities may trade in relatively thin markets and/or
in markets that experience significant volatility. The prices used by a Pioneer
Fund to value its securities may differ from the amounts that would be realized
if these securities were sold and these differences could be significant. 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, or Class A shares under certain circumstances, you may pay a
contingent deferred sales charge depending on how long you have owned your
shares.
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
224
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. The
intermediary may earn a profit on these payments if the amount of the payment to
the intermediary 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 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.
225
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 (usually 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 regular 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 the close of
regular trading on the NYSE, 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
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
226
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
$499,999 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.
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.
227
You generally will 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 day
worth of shares per account per 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.
- -------------------------------------------------------------------------------------------------------------------------------
228
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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
- -------------------------------------------------------------------------------------------------------------------------------
229
- -------------------------------------------------------------------------------------------------------------------------------
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
Each Pioneer Fund has authorized PFD to act as its agent in To request a transaction using FactFone(SM) call 1-800-225-4321
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
BY FAX
You may receive your sale proceeds: 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
- -------------------------------------------------------------------------------------------------------------------------------
230
- -------------------------------------------------------------------------------------------------------------------------------
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.
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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 of the Pioneer Fund 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
231
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.
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.
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.
232
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 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.
233
When you sell or exchange Fund shares you will generally recognize a
capital gain or capital loss in an amount equal to the difference between the
net amount of sale proceeds (or, in the case of an exchange, the fair market
value of the shares) that you receive and your tax basis for the shares that you
sell or exchange. 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.
234
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 Select Mid Cap
Growth Fund, 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 Select Mid Cap Growth
Fund, 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.
Pioneer Fund -- Class A shares
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
Class A --------------- ------------ ------------ -------------- -------------
Net asset value, beginning of period $ 46.32 $ 48.10 $ 44.21 $ 42.06 $ 38.00
---------- ---------- --------- ---------- ----------
Increase from investment operations:
Net investment income $ 0.45 $ 0.41 $ 0.43 $ 0.37 $ 0.35
Net realized and unrealized gain (loss) on investments (16.33) 1.79 6.72 2.31 4.05
---------- ---------- --------- ---------- ----------
Net increase (decrease) from investment operations $ (15.88) $ 2.20 $ 7.15 $ 2.68 $ 4.40
Distributions to shareowners:
Net investment income (0.45) (0.41) (0.43) (0.39) (0.34)
Net realized gain (0.86) (3.57) (2.83) (0.14) --
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value $ (17.19) $ (1.78) $ 3.89 $ 2.15 $ 4.06
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 29.13 $ 46.32 $ 48.10 $ 44.21 $ 42.06
========== ========== ========== ========== ==========
Total return* (34.38)% 4.71% 16.39% 6.40% 11.64%
Ratio of net expenses to average net assets+ 1.19% 1.09% 1.11% 1.08% 1.06%
Ratio of net investment income to average net assets+ 1.11% 0.81% 0.90% 0.88% 0.90%
Portfolio turnover rate 11% 10% 9% 13% 14%
Net assets, end of period (in thousands) $3,767,132 $ 6,299,615 $6,681,712 $5,648,986 $5,626,270
Ratios with reductions for fees paid indirectly:
Net expenses 1.18% 1.08% 1.10% 1.08% 1.06%
Net investment income 1.12% 0.82% 0.91% 0.88% 0.90%
* 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.
235
Pioneer Fund -- Class C shares
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
Class C ------------ ------------ ------------ ------------ -----------
Net asset value, beginning of period $ 44.55 $ 46.44 $ 42.78 $ 40.73 $ 36.84
-------- -------- -------- -------- --------
Increase from investment operations:
Net investment income $ 0.13 $ 0.02 $ 0.06 $ 0.04 $ 0.04
Net realized and unrealized gain (loss) on investments (15.70) 1.72 6.52 2.22 3.91
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ (15.57) $ 1.74 $ 6.58 $ 2.26 $ 3.95
Distributions to shareowners:
Net investment income ( 0.16) (0.06) (0.09) (0.07) (0.06)
Net realized gain ( 0.86) (3.57) (2.83) (0.14) --
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (16.59) $ (1.89) $ 3.66 $ 2.05 $ 3.89
-------- -------- -------- -------- --------
Net asset value, end of period $ 27.96 $ 44.55 $ 46.44 $ 42.78 $ 40.73
======== ======== ======== ======== ========
Total return* (34.91)% 3.88% 15.52% 5.55% 10.74%
Ratio of net expenses to average net assets+ 1.97% 1.88% 1.89% 1.87% 1.84%
Ratio of net investment income to average net assets+ 0.32% 0.02% 0.12% 0.09% 0.11%
Portfolio turnover rate 11% 10% 9% 13% 14%
Net assets, end of period (in thousands) $169,362 $296,094 $309,868 $292,453 $313,420
Ratios with reduction for fees paid indirectly:
Net expenses 1.97% 1.87% 1.88% 1.87% 1.84%
Net investment income 0.32% 0.03% 0.13% 0.09% 0.11%
* 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.
236
Pioneer Fund -- Class Y shares
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
Class Y ------------ ------------ ------------ ------------ -----------
Net asset value, beginning of period $ 46.45 $ 48.23 $ 44.31 $ 42.16 $ 38.09
-------- ------- -------- -------- --------
Increase from investment operations:
Net investment income $ 0.61 $ 0.60 $ 0.60 $ 0.58 $ 0.52
Net realized and unrealized gain (loss) on investments (16.35) 1.80 6.77 2.28 4.06
-------- ------- -------- ------- --------
Net increase (decrease) from investment operations $ (15.74) $ 2.40 $ 7.37 $ 2.86 $ 4.58
Distributions to shareowners:
Net investment income (0.63) (0.61) (0.62) (0.57) (0.51)
Net realized gain (0.86) (3.57) (2.83) (0.14) --
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (17.23) $ (1.78) $ 3.92 $ 2.15 $ 4.07
-------- -------- -------- -------- --------
Net asset value, end of period $ 29.22 $ 46.45 $ 48.23 $ 44.31 $ 42.16
======== ======== ======== ======== ========
Total return* (34.07)% 5.11% 16.88% 6.83% 12.15%
Ratio of net expenses to average net assets+ 0.74% 0.70% 0.70% 0.65% 0.61%
Ratio of net investment income to average net assets+ 1.62% 1.21% 1.31% 1.31% 1.34%
Portfolio turnover rate 11% 10% 9% 13% 14%
Net assets, end of period (in thousands) $462,572 $487,357 $401,391 $269,333 $155,647
Ratios with reduction for fees paid indirectly:
Net expenses 0.74% 0.70% 0.70% 0.65% 0.61%
Net investment income 1.62% 1.21% 1.31% 1.31% 1.34%
* 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.
237
Pioneer Mid Cap Value Fund -- Class A 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 A --------------- ------------ ------------ -------------- --------------
Net asset value, beginning of period $ 25.62 $ 25.33 $ 22.84 $ 25.57 $ 22.25
---------- ---------- ---------- ---------- ----------
Increase (decrease) from investment operations:
Net investment income $ 0.17 $ 0.11 $ 0.12 $ 0.04 $ 0.01
Net realized and unrealized gain (loss) on investments (8.99) 3.58 3.24 2.86 3.83
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from investment operations $ (8.82) $ 3.69 $ 3.36 $ 2.90 $ 3.84
Distributions to shareowners:
Net investment income (0.10) (0.10) (0.02) -- --
Net realized gain (1.66) (3.30) (0.85) (5.63) (0.52)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value $ (10.58) $ 0.29 $ 2.49 $ (2.73) $ 3.32
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.04 $ 25.62 $ 25.33 $ 22.84 $ 25.57
========== ========== ========== ========== ==========
Total return* (36.70)% 16.47% 15.11% 11.90% 17.65%
Ratio of net expenses to average net assets+ 1.13% 1.03% 1.08% 1.10% 1.21%
Ratio of net investment income to average net assets+ 0.80% 0.48% 0.46% 0.16% 0.05%
Portfolio turnover rate 61% 54% 91% 74% 59%
Net assets, end of period (in thousands) $1,101,941 $ 2,048,721 $1,946,583 $1,957,797 $1,547,823
Ratios with reduction for fees paid indirectly:
Net expenses 1.13% 1.02% 1.07% 1.10% 1.21%
Net investment income 0.80% 0.49% 0.47% 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.
238
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.
239
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.
240
Pioneer Cullen Value Fund -- Class A shares
Six Months
Ended
12/31/08 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 6/30/08 6/30/07 6/30/06 6/30/05(a) 6/30/04
Class A ------------ ---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.97 $ 21.21 $ 18.28 $ 16.19 $ 13.96 $ 11.27
---------- ---------- ---------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.11 $ 0.24 $ 0.26 $ 0.14 $ 0.05 $ 0.02
Net realized and unrealized gain (loss) on investments (4.75) (2.16) 2.86 2.23 2.55 2.71
---------- ---------- ---------- -------- ------- -------
Net increase (decrease) from investment operations $ (4.64) $ (1.92) $ 3.12 $ 2.37 $ 2.60 $ 2.73
Distributions to shareowners:
Net investment income (0.18) (0.27) (0.18) (0.06) (0.03) (0.04)
Net realized gain -- (0.05) (0.01) (0.22) (0.34) --
---------- ---------- ---------- -------- ------- -------
Net increase (decrease) in net asset value $ (4.82) $ (2.24) $ 2.93 $ 2.09 $ 2.23 $ 2.69
---------- ---------- ---------- -------- ------- -------
Net asset value, end of period $ 14.15 $ 18.97 $ 21.21 $ 18.28 $ 16.19 $ 13.96
========== ========== ========== ======== ======= =======
Total return* (24.41)% (9.22)% 17.13% 14.73% 18.81% 24.24%
Ratio of net expenses to average net assets+ 1.13% 1.09% 1.09% 1.15% 1.66% 1.92%
Ratio of net investment income to average net assets+ 1.45% 1.28% 1.67% 1.57% 0.62% 0.32%
Portfolio turnover rate 26% 13% 15% 21% 49% 70%
Net assets, end of period (in thousands) $1,803,623 $2,224,629 $1,828,453 $809,593 $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 1.13% 1.09% 1.09% 1.15% 1.64% 1.92%
Net investment income 1.45% 1.28% 1.67% 1.57% 0.64% 0.32%
Ratios with reimbursement of fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.13% 1.09% 1.08% 1.15% 1.66% 2.00%
Net investment income 1.45% 1.29% 1.68% 1.57% 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.
241
Pioneer Cullen Value Fund -- Class C shares
Six Months
Ended
12/31/08 Year Ended Year Ended Year Ended 2/28/05(a)
(unaudited) 6/30/08 6/30/07 6/30/06 to 6/30/05
Class C ------------- ------------ ----------- ------------ ----------------
Net asset value, beginning of period $ 18.72 $ 20.95 $ 18.12 $ 16.15 $ 16.05
-------- -------- ------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.05 $ 0.09 $ 0.11 $ 0.05 $ 0.01
Net realized and unrealized gain (loss) on investments ( 4.68) (2.15) 2.82 2.17 0.09
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 4.63 $ (2.06) $ 2.93 $ 2.22 $ 0.10
Distributions to shareowners:
Net investment income (0.04) (0.12) (0.09) (0.03) --
Net realized gain -- (0.05) (0.01) (0.22) --
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (4.67) $ (2.23) $ 2.83 $ 1.97 $ 0.10
-------- ------- -------- -------- --------
Net asset value, end of period $ 14.05 $ 18.72 $ 20.95 $ 18.12 $ 16.15
======== ======== ======== ======== ========
Total return* (24.71)% (9.92)% 16.21% 13.81% 0.62%***
Ratio of net expenses to average net assets+ 1.92% 1.85% 1.87% 1.94% 2.15%**
Ratio of net investment income to average net assets+ 0.65% 0.51% 0.89% 0.83% 0.34%**
Portfolio turnover rate 26% 13% 15% 21% 49%
Net assets, end of period (in thousands) $439,649 $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 1.92% 1.85% 1.87% 1.94% 2.27%**
Net investment income 0.65% 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 1.92% 1.84% 1.87% 1.94% 2.15%**
Net investment income 0.65% 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.
242
Pioneer Cullen Value Fund -- Class Y shares
Six Months
Ended
12/31/08 Year Ended Year Ended Year Ended 2/28/05(a)
(unaudited) 6/30/08 6/30/07 6/30/06 to 6/30/05
Class Y ------------- ------------ ---------- ---------- -----------
Net asset value, beginning of period $ 19.07 $ 21.30 $ 18.34 $ 16.20 $ 16.05
-------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.08 $ 0.29 $ 0.28 $ 0.10 $ 0.03
Net realized and unrealized gain (loss) on investments (4.72) (2.14) 2.91 2.33 0.12
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ (4.64) $ (1.85) $ 3.19 $ 2.43 $ 0.15
Distributions to shareowners:
Net investment income (0.24) (0.33) (0.22) (0.07) --
Net realized gain -- (0.05) (0.01) (0.22) --
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (4.88) $ (2.23) $ 2.96 $ 2.14 $ 0.15
-------- -------- -------- -------- --------
Net asset value, end of period $ 14.19 $ 19.07 $ 21.30 $ 18.34 $ 16.20
======== ======== ======== ======== ========
Total return* (24.28)% (8.87)% 17.47% 15.12% 0.93%***
Ratio of net expenses to average net assets+ 0.82% 0.75% 0.77% 0.83% 0.99%**
Ratio of net investment income to average net assets+ 1.77% 1.62% 2.00% 1.91% 1.60%**
Portfolio turnover rate 26% 13% 15% 21% 49%
Net assets, end of period (in thousands) $865,363 $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 0.82% 0.75% 0.77% 0.83% 0.99%**
Net investment income 1.77% 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 0.82% 0.75% 0.77% 0.83% 0.99%**
Net investment income 1.77% 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.
243
Pioneer Classic Balanced Fund -- Class A shares
Year Ended Year Ended Year Ended Year Ended Year Ended
7/31/08 7/31/07 7/31/06 (b) 7/31/05 7/31/04
Class A ------------ ------------ ----------- ---------- -----------
Net asset value, beginning of period $ 10.80 $ 11.19 $ 13.05 $ 12.10 $ 11.37
-------- -------- -------- -------- --------
Increase from investment operations:
Net investment income $ 0.31 $ 0.37 $ 0.31 $ 0.22 $ 0.20
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.99) 0.73 0.51 1.01 0.75
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ (0.68) $ 1.10 $ 0.82 $ 1.23 $ 0.95
Distributions to shareowners:
Net investment income (0.33) (0.38) (0.29) (0.25) (0.22)
Net realized gain (1.14) (1.11) (2.39) (0.03) --
-------- -------- -------- -------- --------
Total Distributions $ (1.47) $ (1.49) $ (2.68) $ (0.28) $ (0.22)
-------- -------- -------- -------- --------
Capital Contributions $ -- $ -- $ -- $ 0.00(a) $ --
-------- -------- -------- -------- --------
Redemption Fee $ -- $ -- $ -- $ -- $ 0.00(a)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (2.15) $ (0.39) $ (1.86) $ 0.95 $ 0.73
-------- -------- -------- -------- --------
Net asset value, end of period $ 8.65 $ 10.80 $ 11.19 $ 13.05 $ 12.10
======== ======== ======== ======== ========
Total return* (7.52)% 10.42% 7.52% 10.33% 8.36%
Ratio of net expenses to average net assets+ 1.17% 1.16% 1.24% 1.34% 1.32%
Ratio of net investment income to average net assets+ 3.22% 3.29% 2.65% 1.77% 1.64%
Portfolio turnover rate 50% 64% 115% 70% 19%
Net assets, end of period (in thousands) $111,667 $163,391 $ 66,691 $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 1.30% 1.25% 1.24% 1.39% 1.41%
Net investment income 3.09% 3.20% 2.65% 1.72% 1.55%
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% 1.34% 1.32%
Net investment income 3.23% 3.29% 2.65% 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.
244
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.
245
Pioneer Classic Balanced Fund -- Class Y shares
Year Ended Year Ended Year Ended Year Ended Year Ended
7/31/08 7/31/07 7/31/06 (b) 7/31/05 7/31/04
Class Y ------------ ----------- ------------ --------- ---------
Net asset value, beginning of period $ 10.80 $ 11.20 $ 13.05 $ 12.11 $ 11.38
------- ------- -------- --------- --------
Increase decrease from investment operations:
Net investment income $ 0.36 $ 0.40 $ 0.79 $ 0.24 $ 0.22
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (1.01) 0.74 0.07 1.00 0.75
------- -------- -------- --------- --------
Net increase (decrease) from investment operations $ (0.65) $ 1.14 $ 0.86 $ 1.24 $ 0.97
Distributions to shareowners:
Net investment income (0.36) (0.43) (0.32) (0.27) (0.24)
Net realized gain (1.14) (1.11) (2.39) (0.03) --
------- -------- -------- --------- -------
Total distributions $ (1.50) $ (1.54) $ (2.71) $ (0.30) $ (0.24)
------- -------- -------- --------- --------
Capital Contributions $ -- $ -- $ -- $ 0.00(a) $ --
------- -------- -------- --------- --------
Redemption fee $ -- $ -- $ 0.00(a) $ -- $ --
------- -------- -------- --------- --------
Net increase (decrease) in net asset value $ (2.15) $ (0.40) $ (1.85) $ 0.94 $ 0.73
------- -------- -------- --------- --------
Net asset value, end of period $ 8.65 $ 10.80 $ 11.20 $ 13.05 $ 12.11
======= ======== ======== ========= ========
Total return* (7.25)% 10.82% 7.89% 10.40% 8.52%
Ratio of net expenses to average net assets+ 0.80% 0.80% 0.92% 1.19% 1.17%
Ratio of net investment income to average net assets+ 3.57% 3.61% 2.99% 1.95% 1.80%
Portfolio turnover rate 50% 64% 115% 70% 19%
Net assets, end of period (in thousands) $19,655 $ 27,743 $ 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 0.80% 0.80% 0.92% 1.29% 1.31%
Net investment income 3.57% 3.61% 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 0.80% 0.80% 0.92% 1.19% 1.17%
Net investment income 3.57% 3.61% 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.
246
Pioneer Bond Fund -- Class A shares
Six Months
Ended Year Year Year Year Year
12/31/08 Ended Ended Ended Ended Ended
(unaudited) 6/30/08 6/30/07 6/30/06 6/30/05 6/30/04
CLASS A ------------- ---------- -------- --------- -------- ---------
Net asset value, beginning of period $ 9.10 $ 8.95 $ 8.89 $ 9.40 $ 9.18 $ 9.41
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.25 $ 0.43 $ 0.40 $ 0.35 $ 0.40 $ 0.41
Net realized and unrealized gain (loss) on investments (0.74) 0.16 0.07 (0.47) 0.29 (0.14)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ (0.49) $ 0.59 $ 0.47 $ (0.12) $ 0.69 $ 0.27
Distributions to shareowners:
Net investment income (0.28) (0.44) (0.41) (0.39) (0.47) (0.50)
Net realized gain (0.11) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.88) $ 0.15 $ 0.06 $ (0.51) $ 0.22 $ (0.23)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.22 $ 9.10 $ 8.95 $ 8.89 $ 9.40 $ 9.18
======== ======== ======== ======== ======== ========
Total return* (5.37) % 6.64% 5.31% (1.25)% 7.64% 2.98%
Ratio of net expenses to average net assets+ 0.93%** 1.00% 1.00% 1.00% 1.05% 1.14%
Ratio of net investment income to average net assets+ 5.89%** 4.60% 4.48% 3.91% 4.27% 4.42%
Portfolio turnover rate 25%** 73% 31% 60% 49% 63%
Net assets, end of period (in thousands) $267,325 $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 1.08%** 1.04% 1.00% 1.11% 1.18% 1.14%
Net investment income 5.74%** 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 0.93%** 1.00% 1.00% 1.00% 1.05% 1.14%
Net investment income 5.89%** 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.
** Annualized.
+ Ratio with no reduction for fees paid indirectly.
247
Pioneer Bond Fund -- Class Y shares
Six Months
Ended Year Year Year Year Year
12/31/08 Ended Ended Ended Ended Ended
(unaudited) 6/30/08 6/30/07 6/30/06 6/30/05 6/30/04
CLASS Y --------------- ---------- ------------ ------------- ----------- ---------
Net asset value, beginning of period $ 9.02 $ 8.88 $ 8.83 $ 9.33 $ 9.12 $ 9.35
-------- -------- -------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.27 $ 0.45 $ 0.44 $ 0.39 $ 0.44 $ 0.46
Net realized and unrealized gain (loss) on investments (0.74) 0.16 0.06 (0.46) 0.28 (0.14)
-------- -------- -------- -------- ------- -------
Net increase (decrease) from investment operations $ (0.47) $ 0.61 $ 0.50 $ (0.07) $ 0.72 $ 0.32
Distributions to shareowners:
Net investment income (0.29) (0.47) (0.45) (0.43) (0.51) (0.55)
Net realized gain (0.11) -- -- -- -- --
-------- -------- -------- -------- ------- -------
Net increase (decrease) in net asset value $ (0.87) $ 0.14 $ 0.05 $ (0.50) $ 0.21 $ (0.23)
-------- -------- -------- -------- ------- -------
Net asset value, end of period $ 8.15 $ 9.02 $ 8.88 $ 8.83 $ 9.33 $ 9.12
======== ======== ======== ======== ======= =======
Total return* (5.15)% 6.91% 5.65% (0.77)% 8.07% 3.48%
Ratio of net expenses to average net assets+ 0.63%** 0.59% 0.57% 0.58% 0.61% 0.58%
Ratio of net investment income to average net assets+ 6.11%** 5.02% 4.89% 4.20% 4.43% 5.05%
Portfolio turnover rate 25%** 73% 31% 60% 49% 63%
Net assets, end of period (in thousands) $493,404 $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 0.68%** 0.61% 0.57% 0.58% 0.61% 0.58%
Net investment income 6.07%** 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 0.63%** 0.59% 0.57% 0.58% 0.61% 0.58%
Net investment income 6.11%** 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.
** Annualized.
+ Ratio with no reduction for fees paid indirectly.
248
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.
249
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.
250
Pioneer Treasury Reserves Fund -- Class A shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
7/31/08 7/31/07 7/31/06 (b) 7/31/05 7/31/04
Class A ----------- ----------- ------------ ---------- -----------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------- --------
Increase from investment operations:
Net investment income $ 0.03 $ 0.05 $ 0.03 $ 0.02 $ 0.00(a)
------- ------- ------- -------- --------
Distributions to shareowners:
Net investment income $ (0.03) $ (0.05) $ (0.03) $ (0.02) $ (0.00)(a)
------- ------- ------- -------- --------
Capital contributions $ -- $ -- $ -- $ 0.00(a) $ --
------- ------- ------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======== ========
Total return* 2.55% 4.59% 3.36% 1.62% 0.25%
Ratio of net expenses to average net assets+ 0.85% 0.68% 0.90% 0.70% 0.77%
Ratio of net investment income to average net assets+ 2.37% 4.55% 3.36% 1.62% 0.26%
Net assets, end of period (in thousands) $47,807 $26,293 $31,687 $ 70,793 $ 72,929
Ratios with no waiver of management fees and assumption of
expenses by the advisor and no reduction for fees paid
indirectly:
Net expenses 0.85% 0.68% 0.92% 0.69% 1.02%
Net investment income 2.37% 4.55% 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 0.84% 0.68% 0.90% 0.70% 0.77%
Net investment income 2.38% 4.55% 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.
251
Pioneer Treasury Reserves Fund -- Class Y shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
7/31/08 7/31/07 7/31/06 (b) 7/31/05 7/31/04
Class Y ----------- ----------- ------------- -------- ------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.03 $ 0.05 $ 0.03 $ 0.02 $ 0.00(a)
------- ------- ------- -------- --------
Distributions to shareowners:
Net investment income $ (0.03) $ (0.05) $ (0.03) $ (0.02) $ (0.00)(a)
------- ------- ------- -------- --------
Capital contributions $ -- $ -- $ -- $ 0.00(a) $ --
------- ------- ------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======== ========
Total return* 2.78% 4.76% 3.56% 1.67% 0.33%
Ratio of net expenses to average net assets+ 0.60% 0.56% 0.69% 0.65% 0.69%
Ratio of net investment income to average net assets+ 2.84% 4.66% 3.59% 1.60% 0.35%
Net assets, end of period (in thousands) $37,353 $71,565 $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 0.60% 0.56% 0.72% 0.85% 0.92%
Net investment income 2.84% 4.66% 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 0.60% 0.56% 0.69% 0.65% 0.69%
Net investment income 2.84% 4.66% 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.
252
Pioneer Cash Reserves Fund -- Class A shares
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
Class A ------------- ------------- ------------- ------------- ------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Increase from investment operations:
Net investment income $ 0.024 $ 0.046 $ 0.043 $ 0.023 $ 0.005
-------- -------- -------- -------- --------
Distributions to shareowners:
Net investment income $ (0.024) $ (0.046) $ (0.043) $ (0.023) $ (0.005)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return* 2.46% 4.72% 4.38% 2.37% 0.45%
Ratio of net expenses to average net assets+ 0.73% 0.71% 0.75% 0.83% 0.93%
Ratio of net investment loss to average net assets+ 2.46% 4.61% 4.33% 2.62% 0.45%
Net assets, end of period (in thousands) $667,293 $739,517 $708,103 $571,418 $192,860
Ratios with no reductions for fees paid indirectly:
Net expenses 0.73% 0.71% 0.75% 0.83% 0.93%
Net investment income 2.46% 4.61% 4.33% 2.62% 0.45%
Ratios with reductions for fees paid indirectly:
Net expenses 0.73% 0.71% 0.75% 0.83% 0.93%
Net investment income 2.46% 4.61% 4.33% 2.62% 0.45%
* 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.
253
Pioneer Cash Reserves Fund -- Class Y shares
Year Year Year
Ended Ended Ended 9/23/05 (a)
12/31/08 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 $ 0.027 $ 0.048 $ 0.046 $ 0.009
-------- -------- -------- ----------
Distributions to shareowners:
Net investment income $ (0.027) $ (0.049) $ (0.046) $ (0.009)
-------- -------- -------- ----------
Net asset value,
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ==========
Total return* 2.70% 4.96% 4.67% 2.44%(b)
Ratio of net expenses to average net assets+ 0.52% 0.47% 0.47% 0.44%**
Ratio of net investment income to average net assets+ 2.63% 4.85% 4.54% 3.46%**
Net assets, end of period (in thousands) $175,151 $ 83,209 $ 76,726 $ 116,039
Ratios with no reductions for fees paid indirectly:
Net expenses 0.52% 0.47% 0.47% 0.44%**
Net investment income 2.63% 4.85% 4.54% 3.45%**
Ratios with reduction for fees paid indirectly:
Net expenses 0.52% 0.47% 0.47% 0.44%**
Net investment income 2.63% 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.
254
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. Broadridge Investor Communication
Solutions, MIS has been retained to provide proxy solicitation services to the
RMK Funds at a cost of approximately $20,000. 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 March 19, 2009 (the "record date") are
entitled to notice of and to vote at the meeting. As of the close of business on
the record date, the following shares of each RMK Fund were outstanding:
Shares Outstanding
Fund (as of March 19, 2009)
- ------------------------------------------------ -----------------------
Regions Morgan Keegan Select Mid Cap Growth Fund
Class A ....................................... 8,928,273.946
Class C ....................................... 456,267.789
Class I ....................................... 10,605,797.623
Regions Morgan Keegan Select Growth Fund
Class A ....................................... 6,359,399.067
Class C ....................................... 168,250.704
Class I ....................................... 10,855,738.908
Regions Morgan Keegan Select Core Equity Fund
Class A ....................................... 294,542.030
Class C ....................................... 15.178
Class I ....................................... 491,493.776
Regions Morgan Keegan Select Mid Cap Value Fund
Class A ....................................... 1,294,702.688
Class C ....................................... 44,902.324
Class I ....................................... 3,217,979.296
Regions Morgan Keegan Select Value Fund
Class A ....................................... 2,966,129.289
Class C ....................................... 81,002.709
Class I ....................................... 8,786,890.081
Regions Morgan Keegan Select Balanced Fund
Class A ....................................... 1,846,836.387
Class C ....................................... 141,031.472
Class I ....................................... 7,618,946.433
255
Shares Outstanding
Fund (as of March 19, 2009)
- --------------------------------------------------------------- -----------------------
Regions Morgan Keegan Select Fixed Income Fund
Class A ...................................................... 5,477,237.504
Class C ...................................................... 175,020.469
Class I ...................................................... 7,520,244.259
Regions Morgan Keegan Select Limited Maturity Fixed Income Fund
Class A ...................................................... 412,311.964
Class C ...................................................... 32,520.194
Class I ...................................................... 3,013.627
Regions Morgan Keegan Select Intermediate Tax Exempt Bond Fund
Class A ...................................................... 1,875,176.658
Class C ...................................................... 32,316.702
Class I ...................................................... 613,167.409
Regions Morgan Keegan Select Treasury Money Market Fund
Class A ...................................................... 770,282,870.230
Regions Morgan Keegan Select Money Market Fund
Class A ...................................................... 71,225,025.120
Class I ...................................................... 11,353,788.620
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.
256
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 March 16, 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 Select A Regions Morgan Keegan 2,669,933.241 29.62%
Mid Cap Growth Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 1,914,273.358 21.24%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
C Regions Morgan Keegan 44,527.264 9.76%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
I Regions Morgan Keegan 6,140,061.047 58.08%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 2,666,374.6 25.22%
Trust-GPC Securities
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 1,257.417.144 11.89%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- -----------------------------------------------------------------------------------------------------------
257
- -----------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- -----------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 3,320,650.883 51.88%
Growth Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 754,273.058 11.78%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 345,009.32 5.39%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
C Regions Morgan Keegan 61,928.359 36.71%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Barry Graham Oil Service LLC 14,526.989 8.61%
401K
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Alpha Packaging Inc. 13,776.409 8.17%
401K
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
I Regions Morgan Keegan 6,597,036.274 60.70%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 3,220,408.251 29.63%
Trust-GPC Securities
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 738,394.751 6.79%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- ------------------------------------------------------------------------------------------------------------
258
- -----------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- -----------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 15,754.784 5.35%
Core Equity Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
C Morgan Properties, LLC 15.178 100%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
I Regions Morgan Keegan 157,194.57 31.71%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 154,818.552 31.23%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 81,341.064 16.41%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- -----------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 882,223.047 67.42%
Mid Cap Value Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 152,451.136 11.65%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
C Regions Morgan Keegan 39,872.722 88.77%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
I Regions Morgan Keegan 2,702,969.154 83.82%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 425,591.13 13.20%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- -----------------------------------------------------------------------------------------------------------
259
- -----------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- -----------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 1,787,068.038 59.74%
Value Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 484,946.008 16.21%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
C Regions Morgan Keegan 26,253.092 32.42%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
I Regions Morgan Keegan 5,592,121.056 63.58%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 2,740,705.615 31.16%
Trust-GPC Securities
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- -----------------------------------------------------------------------------------------------------------
260
- ------------------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- ------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 332,130.092 17.93%
Balanced Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
SAAD Enterprises, Inc. and Affiliate 180,651.627 9.75%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
NHS Affiliated Companies 401K 140,736.6 7.60%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Budweiser-Busch Distributing Co. 128,307.579 6.93%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Regions Morgan Keegan 126,978.667 6.86%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
C Patricia A. Canty 10,148.988 7.20%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Barry Graham Oil Services LLC 401K 9,879.215 7.01%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Chris Banakas and Melba L. Banakas 7,265.71 5.15%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
I Regions Morgan Keegan 7,599,759.490 99.63%
Trust-GPC Securities
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- ------------------------------------------------------------------------------------------------------------------
261
- -----------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- -----------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 4,249,786.478 76.50%
Fixed Income Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 531,836.406 9.57%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
C Regions Morgan Keegan 94,681.533 54.35%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 21,362.397 12.26%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Sullivan Oil Co., Inc. 401K 8,997.406 5.17%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Apollo Industries, Inc. 8,967.059 5.15%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
V's Holding Corp. 8,820.165 5.06%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
------------------------------------------------------------------------
I Regions Morgan Keegan 4,273,648.877 56.50%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 1,682,094.320 22.24%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------
Regions Morgan Keegan 1,270,412.068 16.80%
Trust-GPC Securities
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- -----------------------------------------------------------------------------------------------------------
262
- ------------------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- ------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 252,737.779 60.68%
Limited Maturity Fixed Income Trust-Kenneburt
Fund c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Regions Morgan Keegan 57,526.317 13.81%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
C James Thomas Gary and Lloyd E. Gary 8,429.616 25.93%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Daniel Dupree 3,941.770 12.12%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
James A. House 3,712.005 11.42%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Wilmon Timberlands 401K Plan 2,278.033 7.01%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Sullivan Oil Co., Inc. 401K 2,196.224 6.76%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Gerda Pierce 2,010.580 6.18%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Edward C. Pou 1,928.827 5.93%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
----------------------------------------------------------------------
Clarence E. Morgan and Geoffrey C. 1,910.329 5.88%
Morgan
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
I Regions Morgan Keegan 3,001.775 99.61%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- ------------------------------------------------------------------------------------------------------------------
263
- ------------------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- ------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 1,797,168.735 95.82%
Intermediate Tax Exempt Bond Trust-Kenneburt
Fund c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
C JoAnne Vanzandt 12,360.949 38.25%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Rita Jo N. Dedek 6,663.461 20.62%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 381030
-----------------------------------------------------------------------
Eddie Harbert 2,568.199 7.95%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Edna R. Wyatt-Collins 2,356.868 7.29%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Estate of John Bradley McMillan 2,119.891 6.56%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Brannon Wiley 1,898.236 5.87%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Huey B. Gordon and Mary Lou Gordon 1,647.840 5.10%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
I Regions Morgan Keegan 460,247.261 75.06%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Regions Morgan Keegan 141,666.721 23.10%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- ------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Regions Morgan Keegan 497,178,461.561 66.18%
Treasury Money Market Fund Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Morgan Keegan Money Market Dept. 157,621,325.000 20.98%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- ------------------------------------------------------------------------------------------------------------------
264
- ------------------------------------------------------------------------------------------------------------------
Share Number of Percent
Fund Class Record Holder Shares of Class
- ------------------------------------------------------------------------------------------------------------------
Regions Morgan Keegan Select A Morgan Keegan Money Market Dept. 38,638,888.35 53.42%
Money Market Fund c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-----------------------------------------------------------------------
Regions Morgan Keegan 30,358,401.78 41.97%
Trust-Kenneburt
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
-------------------------------------------------------------------------------
I Regions Morgan Keegan Trust 11,403,434.32 99.96%
c/o Morgan Keegan & Co., Inc
50 North Front Street
Memphis, TN 38103
- ------------------------------------------------------------------------------------------------------------------
265
To the knowledge of each Pioneer Fund, as of March 16, 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 NFS LLC FEBO 5,407,521.17 16.28%
Regions BK DBA Kenneburt Co.
250 Riverchase Pkwy E FL 5
Birmingham AL 35244-1832
------------------------------------------------------------------------------
C MLPF&S For The Sole Benefit Of 2,251,224.64 38.72%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
-----------------------------------------------------------------------
Citigroup Global Markets Inc 419,740.44 7.22%
Attn: Peter Booth
00109801250
333 West 34th St 7th Fl
New York, NY 10001-2402
------------------------------------------------------------------------------
Y NFS LLC FEBO 22,089,436.65 36.32%
Regions BK DBA Kenneburt Co.
250 Riverchase Pkwy E FL 5
Birmingham AL 35244-1832
-----------------------------------------------------------------------
Edward D Jones & Co 4,008,879.12 24.36%
Attn Mutual Funds
Shareholder Accounting
201 Progress Pkwy
Maryland Hts, MO 63043-3009
-----------------------------------------------------------------------
State of Florida Public Employees 2,751,324.81 16.72%
Optional Retirement Program
1801 Hermitage Blvd Ste 100
Tallahassee, FL 32308-7743
-----------------------------------------------------------------------
State St Bank And Trust Trustee 2,340,161.24 14.22%
FBO Pacificorp K Plus Savings Plan
Trust DTD 1/9/1996
805 Pennsylvania AVE
5TH Floor, Tower 2
Kansas City, MO 64105
-----------------------------------------------------------------------
NFS LLC FEBO 5,999,456.81 9.86%
Regions BK DBA Kenneburt Co.
250 Riverchase Pkwy E FL 5
Birmingham AL 35244-1832
-----------------------------------------------------------------------
MLPF&S For The Sole Benefit Of 5,970,123.40 9.82%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
-----------------------------------------------------------------------
GPC Securities Inc As Agent For 994,166.37 6.04%
Reliance Trust Co CUST
Regions Morgan Keegan TR
FBO Regions Finan Corp 401K
P.O. Box 105117
Atlanta, GA 30348-5117
-----------------------------------------------------------------------
MLPF&S For The Sole Benefit Of 897,632.26 5.45%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
- --------------------------------------------------------------------------------------------------
266
- ----------------------------------------------------------------------------------------------------------------
Share Number Percent
Fund Class Record Holder of Shares of Class
- ----------------------------------------------------------------------------------------------------------------
Pioneer Mid Cap Value Fund A Pioneer Global Investments Limited 3,932,187.41 5.85%
1 George's Quay Plaza
George's Quay
Dublin 2
Ireland
-------------------------------------------------------------------------------
C MLPF&S For The Sole Benefit Of 1,015,496.50 15.03%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
-----------------------------------------------------------------------
Citigroup Global Markets Inc 658,303.27 9.74%
Attn: Peter Booth
00109801250
333 West 34th St 7th Fl
New York, NY 10001-2402
-------------------------------------------------------------------------------
Y First Command Financial SVS Inc 7,601,518.94 47.12%
FBO First Command SIP
Attn: Trust Dept
P.O. Box 901075
Ft Worth, TX 76101-2075
-----------------------------------------------------------------------
MLPF&S For The Sole Benefit Of 2,616,138.65 16.22%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
- ----------------------------------------------------------------------------------------------------------------
267
- -----------------------------------------------------------------------------------------------------------------
Share Number Percent
Fund Class Record Holder of Shares of Class
- ----------------------------------------------------------------------------------------------------------------
Pioneer Cullen Value Fund A Charles Schwab & CO 14,022,505.86 10.80%
For the Sole Benefit of Its Customers
Attn: Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4151
------------------------------------------------------------------------
MLPF&S For The Sole Benefit Of 9,133,992.90 7.03%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
-------------------------------------------------------------------------------
C MLPF&S For The Sole Benefit Of 6,113,089.36 20.27%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
------------------------------------------------------------------------
Citigroup Global Markets Inc 3,946,820.59 13.09%
Attn: Peter Booth
00109801250
333 West 34th St 7th Fl
New York, NY 10001-2402
-------------------------------------------------------------------------------
Y Prudential Investment Management 15,707,216.58 24.72%
Services FBO Mutual Fund Clients
Attn: Pruchoice Unit
Mail Stop NJ 05-11-20
100 Mulberry St 3 Gateway Cen Fl 11
Newark, NJ 07102
------------------------------------------------------------------------
First Command Financial SVS Inc 12,620,771.05 19.86%
FBO First Command SIP
Attn: Trust Dept
P.O. Box 901075
------------------------------------------------------------------------
Ft Worth, TX 76101-2075
Charles Schwab & Co, Inc 5,425,007.87 8.54%
Special Custody Account for the
Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4151
------------------------------------------------------------------------
Massachusetts Mutual Life 3,586,689.67 5.65%
Insurance Company
1295 State St
Springfield, MA 01111-0001
------------------------------------------------------------------------
Citigroup Global Markets Inc 3,482,696.12 5.48%
Attn: Peter Booth
00109801250
333 West 34th St 7th Fl
New York, NY 10001-2402
- ----------------------------------------------------------------------------------------------------------------
268
- ----------------------------------------------------------------------------------------------------------------
Share Number Percent
Fund Class Record Holder of Shares of Class
- ----------------------------------------------------------------------------------------------------------------
Pioneer Classic Balanced Fund Y NFS LLC FEBO 907,469.06 53.66%
Regions BK DBA Kenneburt Co.
250 Riverchase Pkwy E FL 5
Birmingham AL 35244-1832
--------------------------------------------------------------------
BISYS Retirement Services FBO 542,094.89 32.06%
Warrior Tractor Equipment 401K
700 17th Street
Suite 300
Denver, CO 80202-3531
- ----------------------------------------------------------------------------------------------------------------
Pioneer Bond Fund A MLPF&S For The Sole Benefit Of 3,020,967.35 9.10%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
----------------------------------------------------------------------------
Y Brown Brothers Harriman & Co 3,226,857.43 5.31%
As Custodian For REINVEST
ATTN Investment Funds Global
Distribution Center
525 Washington Blvd
Jersey City, NJ 07310-1606
- ----------------------------------------------------------------------------------------------------------------
269
- -----------------------------------------------------------------------------------------------------------------
Share Number Percent
Fund Class Record Holder of Shares of Class
- -----------------------------------------------------------------------------------------------------------------
Pioneer Short Term Income A Amsouth Bancorporation 154,107.72 9.94%
Fund Deferred Compensation Plan
c/o State Street Bank & Trust
200 Newport Ave. 7S
N Quincy, MA 02171-2102
-------------------------------------------------------------------------
GPC as Agent for RTC CUST 133,251.15 8.60%
Regions Morgan Keegan Trust
FBO Sweetwater Hospital
Association 401K Plan
P.O. Box 105117
Atlanta, GA 30348-5117
--------------------------------------------------------------------------------
Y Brown Brothers Harriman & Co 2,043,164.92 24.44%
As Custodian For REINVEST
ATTN Investment Funds Global
Distribution Center
525 Washington Blvd
Jersey City, NJ 07310-1606
-------------------------------------------------------------------------
Brown Brothers Harriman & Co 1,282,429.52 15.34%
As Custodian For REINVEST
ATTN Investment Funds Global
Distribution Center
525 Washington Blvd
Jersey City, NJ 07310-1606
-------------------------------------------------------------------------
Brown Brothers Harriman & Co 1,122,628.67 13.43%
As Custodian For REINVEST
ATTN Investment Funds Global
Distribution Center
525 Washington Blvd
Jersey City, NJ 07310-1606
-------------------------------------------------------------------------
Brown Brothers Harriman & Co 983,576.89 11.77%
As Custodian For REINVEST
ATTN Investment Funds Global
Distribution Center
525 Washington Blvd
Jersey City, NJ 07310-1606
-------------------------------------------------------------------------
Brown Brothers Harriman & Co 950,852.82 11.38%
As Custodian For REINVEST
ATTN Investment Funds Global
Distribution Center
525 Washington Blvd
Jersey City, NJ 07310-1606
-------------------------------------------------------------------------
NFS LLC FEBO 989,060.36 11.83%
Regions BK DBA Kenneburt Co.
250 Riverchase Pkwy E FL 5
Birmingham AL 35244-1832
-------------------------------------------------------------------------
NFS LLC FEBO 477,877.09 5.72%
Regions BK DBA Kenneburt Co.
250 Riverchase Pkwy E FL 5
Birmingham AL 35244-1832
- -----------------------------------------------------------------------------------------------------------------
Pioneer Treasury Reserves A Morgan Keegan & Co., Inc. 101,507,541.20 78.25%
Fund For the Exclusive Benefit of Customers
50 N Front St.
Memphis, TN 38103-2126
- -----------------------------------------------------------------------------------------------------------------
270
- --------------------------------------------------------------------------------------------------------------------
Share Number Percent
Fund Class Record Holder of Shares of Class
- --------------------------------------------------------------------------------------------------------------------
Pioneer Cash Reserves Fund A Morgan Keegan & Co., Inc. 260,780,046.48 37.55%
For the Exclusive Benefit of Customers
50 N Front St.
Memphis, TN 38103-2126
-----------------------------------------------------------------------------------
Y Kennebert & Co. 151,312,352.11 93.68%
FEE'D
Regions Bank Trust Operations
250 Riverchase Pkwy E 5th Floor
Birmingham, AL 35244-1832
---------------------------------------------------------------------------
MLPF&S For The Sole Benefit Of 9,297,891.91 5.76%
Its Customers
Mutual Fund Administration
4800 Deer Lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
- --------------------------------------------------------------------------------------------------------------------
Each of Pioneer Select Mid Cap Growth Fund, Pioneer Growth Fund and Pioneer
Intermediate Tax Free Income Fund is a newly formed fund that will commence
operations upon consummation of the proposed Reorganization relating thereto.
Therefore, none of Pioneer Select Mid Cap Growth Fund, Pioneer Growth Fund and
Pioneer Intermediate Tax Free Income Fund has any shares outstanding as of the
date of this Proxy Statement/Prospectus.
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.
271
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.
272
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
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(1) To be deleted for RMK Select Intermediate Tax Exempt Bond Fund Agreement.
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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.
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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
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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
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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;
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(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;
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(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")
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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;
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(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.
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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
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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,
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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.
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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.
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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.]
* * * * *
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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:
Title: Assistant Secretary Title: [Vice] President
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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;
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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:
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 12/31/08
The year 2008 was one of the worst on record for investors. The American
banking system all but collapsed, industrial activity slowed markedly, and
unemployment rose significantly. Business and consumer confidence dropped.
Companies both large and small ran into trouble, and some ceased to exist or
were absorbed into other companies, occasionally with U.S. government prodding.
The fall Presidential election turned largely into a debate over what to do
next as both major candidates seemed unable to offer any reassurance that
everything could be put right quickly. As the United States settled into
recession, many other countries around the world also saw their economies
weaken. When the year ended, the world seemed to be confronting the first truly
global slowdown in quite some time. In the following interview, John Carey,
portfolio manager of the Pioneer Fund, discusses the market environment during
the 12 months ended December 31, 2008, and how it affected the Fund's
performance.
Q: How did the Fund fare through the end of 2008, one of the most tumultuous
years in the history of equity markets?
A: The performance of the Pioneer Fund suffered during the downturn, though the
results were somewhat better than those of the overall market and competing
funds. For the 12 months ended December 31, 2008, Class A shares of the Fund
returned -34.38% at net asset value, versus the -36.99% return for the
benchmark Standard & Poor's 500 Index (the S&P 500), and the -37.23% average
return for the 851 funds in Lipper Analytical Services' large-cap core
category. Most of the losses came in the second half of the year: for the six
months ended December 31, 2008, Class A shares of the Fund returned -27.31%
at net asset value, versus returns of -28.48% for the S & P 500 and -29.22%
for the average fund in the Lipper category. During the year as a whole and
also during the second half of 2008, both our stock selection and our sector
allocations provided the performance advantage over the Fund's competitors
and the benchmark. Of course we realize that relative performance is small
consolation to our shareholders when the absolute performance numbers are so
weak, but we take some satisfaction from having preserved just a bit more
value than the majority of portfolios in our Lipper category.
Q: Please discuss the Fund's performance during the last six months of 2008.
Specifically, which holdings and sector allocations had the greatest positive
and negative effects on performance relative to the benchmark S&P 500 Index?
A: The most important contributors to relative performance were the Fund's
underweights and stock selections in the underperforming financials and
energy sectors. While managing to avoid some of the worst stocks among the
financials, including American International Group and Citigroup, the Fund
also had two of the few stocks in that sector that performed comparatively
well, Chubb and SAFECO. In energy, the Fund's light investment in the
swooning oil-services industry was the key factor. Negative factors in
performance for the Fund included our overweight and stock selections in the
underperforming materials sector and our stock selections in the consumer
discretionary and staples sectors. After doing well earlier in the year, the
metals and mining stocks within materials plummeted in the second half as
commodities prices fell sharply. In the consumer sectors, the Fund was hurt
by not owning some of the stocks that held up particularly well in the
economic downturn, including Procter & Gamble and Wal-Mart Stores.
Q: Energy prices soared to historic highs during the year, and then plunged
later in the year as global economic growth slowed and consumers cut back on
energy usage. How is the Fund positioned in energy and other commodities, and
what is your view of the commodities over the next year?
A: At December 31, 2008, the Fund was still underweight the energy sector, but
remained overweight the materials sector. If one takes the two natural
resources sectors together, however, the Fund was only slightly underweight
the S&P 500 allocation to the sectors. The Fund was underweight the energy
sector from the beginning of the year because of concern over the rising
costs for the companies and skepticism of the high oil prices. Sure enough,
oil prices came down, and profits for the companies were squeezed. We did
make new investments in energy in the second half, believing that the sharply
lower share prices for many of the companies no longer reflected the positive
longer-term prospects. Marathon Oil is a leading refiner of petroleum
products and also has international exploration-and-production operations.
Schlumberger is perhaps the leading international oil-services company. But
overall we are still cautious on energy.
With respect to materials, we were, in retrospect, much too sanguine about
the potential for metals. The economic slowdown hit the miners very hard, and
the performance of the stocks later in the year was even more dismal than
that of the energy names. The longer-term picture appears bright, with
growing demand for metals from industrializing parts of the world. In the
near term, though, it will all be about survival, particularly in view of the
leveraged balance sheets of some of the miners that made acquisitions near
peak prices.
B-12
Q: Oftentimes a weak stock market presents investment opportunities. Did you
find some over the second half of the reporting period, and, overall, can you
discuss changes you made to the Fund?
A: As we look at the stock market, we see many stocks selling at lower prices
than we have seen in a long time. The sell-off has been, we think, quite
undiscriminating, as investors have seemed just to want to "get out of the
market," no matter what the price. So, yes, we have seen what we regarded as
bargains. At the same time, we have also sold stocks of companies we did not
think were as well positioned for the difficult times in which we find
ourselves. Overall, we added eight names to the Fund during the six months
ended December 31, 2008, and eliminated thirteen.
With respect to initiated positions, we have already mentioned Marathon Oil
and Schlumberger. Monsanto is a leading producer of seeds, pesticides, and
herbicides, with a premier reputation in the agricultural market. Stryker
makes surgical and medical devices and equipment and is most noted for its
orthopedic implants, including artificial hips, knees, and shoulders. Aflac
is a supplemental insurance provider with a particularly strong market
presence in Japan. International Business Machines is the most diversified
technology company, with leading businesses in computer software, hardware,
and services. First Energy and PPL are public utilities. What all the stocks
had in common was a lower share price at our time of purchase than our
appraisal of underlying, long-term value.
With respect to sales from the Fund, good gains were realized on the stocks
of two companies that were acquired at premium prices by other companies:
SAFECO, which was bought by fellow insurance company Liberty Mutual; and Barr
Pharmaceuticals, which was taken over by Teva Pharmaceuticals, also a Fund
holding. The acquisition of Barr was in exchange for a combination of cash
and Teva shares. Our other sales were made for a variety of reasons,
including disappointment with growth prospects, concern for financial
condition, and less attractive prospects than we had originally envisioned.
That liquidation list comprised Ford Motor, Gannett, Zimmer, Banco Bilbao
Vizcaya Argentaria (BBVA), Hartford Financial, MetLife, Microsoft, Corning,
Motorola, Dell, and Sun Microsystems.
Q: A year like 2008 can cause even the most confident of investors to lose
heart, and even some of the bluest of the blue-chip stocks took a beating
over the last year. That said, what is your outlook for the coming year?
A: The biggest issue for investors currently is uncertainty over the length of
the ongoing economic recession in the U.S. The spread of the recession
overseas has also affected the ability of American companies to expand the
exports on which so many of them have come to depend for growth. With respect
to the public-policy responses to date, in the form of massive bail-outs and
other "rescue packages," the jury is still out on whether they are likely to
help much. We do know that the programs are expensive, and there is concern
among investors over the longer-range budgetary implications of what the
outgoing administration has already done and the incoming administration is
promising. For now, the Federal Reserve is much more focused on the economic
contraction than on the more distant risk of inflation and so has pushed
short-term interest rates down to very low, almost negligible levels. But
that emphasis could change quickly if the economy does appear over the next
few quarters to have regained its footing.
Despite everything, however, we are of the opinion that this is a business
cycle and not the spiral to oblivion, and that in due course, no matter
whether the government responses are effective or not, the economy will
improve. We continue to have great faith in the resilience of our country and
its people. We have also observed that investments made during past periods
of economic distress and extreme uncertainty, at the bargain basement prices
often prevailing, have often worked out well when held for the long term by
patient shareholders. Certainly we are excited by the low prices of many
stocks today. Will this time be different, and will investors instead be
disappointed? We are proceeding under the assumption that that will not be
the case, but we must emphasize the risks and the unknown time horizon.
Thank you for your support.
Please refer to the Schedule of Investments on pages 18-26 of the Fund's Annual
Report for the year ended December 31, 2008 for a full listing of Fund
securities.
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-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 of the Fund's Annual
Report for the year ended October 31, 2008 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 prices, after trending downward in early 2008, dropped precipitously
during the year's final six months as weakness that started in the financials
sector spread through economies both in the United States and abroad. In the
following interview, James P. Cullen discusses the factors that influenced the
performance of Pioneer Cullen Value Fund during the six months ended December
31, 2008. 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 last six months of 2008?
A: Pioneer Cullen Value Fund Class A shares returned -24.41%, at net asset value
for the six months ended December 31, 2008. During the same six month period,
the Fund's benchmark, the Standard & Poor's 500 Index, an index for the
overall stock market, returned -28.48%. Over the same six months, the Russell
1000 Value Index, which measures the performance of large-cap U.S. Value
stocks, returned -26.93%, and the average return of the 610 mutual funds in
Lipper's Large Cap Value category was -27.93%.
Q: What were the principal factors affecting the Fund's performance during the
six months ended December 31, 2008?
A: Virtually all stocks fell hard during the period. Credit problems, which
first surfaced in mid-2007 among subprime mortgages and then spread
throughout the financials sector, undercut the economic expansion that had
produced positive results in the market for more than five years. The
widespread perception that the economic expansion had ended was confirmed
when the U.S. government announced that the nation's gross domestic product
(GDP) declined at a 0.5% annual rate in the third quarter of 2008. As
economic worries escalated, investors grew increasingly apprehensive, fleeing
equities as well as corporate bonds. In a general flight to quality,
investors at times were willing to accept virtually no yield for investments
in short-term Treasury bills because they carried no credit risk.
We maintained our investment discipline for the Fund during this challenging
period, focusing on companies with strong balance sheets and relatively low
stock valuations. We also emphasized corporations with a global presence, as
we believed companies competing internationally would have more opportunities
to succeed. Our stock selections led to relatively heavy exposures for the
Fund in the consumer staples and industrials sectors. At the same time, we
continued to lighten the Fund's weighting in the financials sector, the area
that was hurt most directly as credit markets deteriorated.
While we maintained a relatively concentrated portfolio of stocks in about 35
different corporations, we kept the Fund well diversified by industry. At the
end of the six-month period, on December 31, 2008, for example, the Fund had
investments in 29 different industries. The largest weightings were in two
traditionally defensive industries, the pharmaceuticals and packaged foods
groups, which comprised 11% and 10% of Fund assets, respectively, at the end
of the six-month period. Household products and defense contractors had the
next largest weightings, each with about 6% of Fund assets. The Fund was
significantly underweighted in the financials sector.
Q: What changes did you make in the Fund over the six months ended December 31,
2008, and how did they affect performance?
A: As we did in the first half of the year, we continued to reduce the Fund's
exposure to the financials sector because of our belief that financials
companies would continue to be pressured by the effects of the credit crisis.
We added to the Fund's already strong presence in pharmaceuticals while also
acquiring shares of some very attractively priced large-cap growth companies
with global reaches. Bristol-Myers Squibb, a major pharmaceuticals
corporation, entertainment conglomerate Disney and software corporation
Oracle all were added to the Fund's portfolio during the six-month period.
Each of the companies has a global presence and each was selling at very
attractive prices. We also continued to reduce the Fund's investments in
financials stocks, selling shares of investment bank Morgan Stanley and
insurer Met Life. We also sold positions in General Electric (GE) and
Brazilian oil company Petrobras. We sold GE in large part because of the
difficulties that management had in explaining the problems in its financials
divisions, while we took profits in Petrobras' after its share price had
appreciated sharply on reaction to the discovery of new oil fields.
Our investment decisions were made on a stock-by-stock basis, but the
effective move away from financials stocks and toward defensive areas such as
consumer staples and pharmaceuticals helped the Fund withstand the most
severe effects of volatility in the market. In addition, we believe our
investments in several large-cap growth companies with global franchises and
low stock prices have positioned the Fund favorably for the future. During
the six months ended December 31, 2008, the Fund's better performing
investments included Bristol-Myers Squibb, insurance company Chubb and
telecommunications services corporation Verizon. The poorer performing
holdings included several companies whose profits were hurt when the prices
for oil and other commodities prices fell sharply, such as Enso Energy and
Devon Energy, as well as Anglo-American, a mining company.
B-16
Q: What is your investment outlook?
A: We maintain a five-year horizon in our strategy for the Fund, as we believe
history has shown that high-quality, lower-priced corporations have performed
well over the longer term, despite shorter-term market disruptions. We also
have several reasons to think the market may start recovering in the next
year. First, historical trends indicate that the equity markets typically
start rising three-to-six months before a recession ends. The current
recession likely started more than a year ago. Normally, recessions don't
last for more than 18 months, and so we think there is potential for stock
prices to begin recovering by mid-year.
Second, the market as of December 31, 2008, remained inexpensive. Even
assuming a 20% drop in earnings, the stock market currently is cheap by
historical standards after stock indices declined by almost 40% in the past
year. One would have to go back to the 1980s to find a time when stocks have
been so inexpensive.
Third, a new administration is taking office. The first year in the term of a
new president usually is a very good period for the stock market, and Barack
Obama has made it clear he intends to hit the ground running, pushing an
aggressive package to re-stimulate the economy. In addition, governments all
over the world also are launching stimulus programs, which we believe could
give added impetus for a global economic recovery.
Fourth, cash is available for equity investments. Corporations have plenty of
cash on their balance sheets and investors also have huge sums parked in
short-term Treasuries and other low-yielding investments. There is money
available to fuel a market recovery.
Individually, these factors may not be sufficient enough to stimulate a
market recovery. But when added together they suggest to us that it is
reasonable to expect some improvement in the equity market in the months to
come, especially for those investors who take a longer-term view. The long
term historical record indicates that lower-priced stocks generally perform
very well during the five years following a low in the market. We believe
this is a reasonable time for long-term investors to be exposed to equities,
particularly those equities that are priced attractively.
Please refer to the Schedule of Investments on pages 18-23 of the Fund's
Semi-Annual Report for the period ended December 31, 2008 for a full listing of
Fund securities.
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.
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-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 of the Fund's
Annual Report for the year ended July 31, 2008 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
As a widening credit crisis undermined the health of the U.S. economy,
fixed-income investors fled to the relative safety of Treasuries and other
high-quality investments during the second half of 2008. Corporate bonds and
other fixed-income securities exposed to credit risk performed poorly,
especially in the final three months of the year. In the following interview,
Kenneth J. Taubes discusses the factors that influenced the performance of
Pioneer Bond Fund during the six months ended December 31, 2008. Mr. Taubes,
Head of U.S. Portfolio Management at Pioneer Investments, is responsible for
the daily management of the Fund.
Q: How did the Fund perform during the six months ended December 31, 2008?
A: Pioneer Bond Fund Class A shares had a total return of -5.37% at net asset
value during the six months ended December 31, 2008, while the Barclays
Capital (formerly Lehman Brothers) Aggregate Bond Index returned 4.07% and
the Barclays Capital Government/ Credit Bond Index returned 4.68% over the
same period. During the same six-month period, the average return for the 173
mutual funds in Lipper's Corporate Debt, A-Rated category was -5.19%. On
December 31, 2008, the 30-day SEC yield of the Fund's Class A shares was
6.78%.
Q: What was the investment environment like during the last six months of 2008?
A: It was a very challenging period for any fixed-income portfolio that included
securities with credit risk. The widespread investor flight to quality, which
benefited U.S. Treasuries and other high-grade investments, accelerated
during the final six months of the year, particularly over the final quarter
of 2008. Fears of recession had first surfaced in late 2007 and continued
into the early months of 2008, as a deteriorating credit crisis resulted in
less lending, which choked both corporate investments and consumer spending.
Unemployment rose, manufacturing activity weakened, housing values declined
and consumer spending fell. The crisis only intensified in September when
investment bank Lehman Brothers was forced into bankruptcy and several other
major financial institutions required emergency government rescues because of
their exposures to deteriorating credit. Stocks and corporate bond prices
fell precipitously in the final months of the year, particularly in October
and November, as major commercial and investment banks teetered on the edge
of collapse, economic production contracted and consumer spending plummeted.
In response to all the developments, the Federal government acted
aggressively. The U.S. Federal Reserve Board (the Fed) lowered short-term
interest rates to near-zero, while making other policy changes to inject
liquidity into the financial system. Congress and the Bush Administration
agreed upon a $700 billion financial rescue plan, and the incoming Obama
Administration began preparing an additional economic stimulus plan for
consideration in 2009. As the economic outlook continued to deteriorate, the
yield spreads between corporate bonds and Treasuries widened. Government
agency mortgages trailed Treasuries, but outperformed investment-grade
corporates, which in turn fared better than high-yield bonds.
In this environment, the Fund underperformed the more passive Barclays
indices, primarily because of investments in high-yield bonds and bank loans,
as the indices had little or no exposure to high-yield debt.
Q: What were your principal strategies for the Fund during the six months ended
December 31, 2008?
A: Throughout the period, we focused on government agency mortgage backed
securities, principally investing in Ginnie Mae, Fannie Mae and Freddie Mac
mortgages. We emphasized them because of their high quality and superior
yields to Treasuries. They also carried significantly less credit risk than
corporate debt. The Fund had a relatively small position in Treasuries
because we thought they were overpriced. As the period progressed and
corporate bond prices fell lower following months of underperformance, we
began building the Fund's positions in corporate securities, primarily
investment-grade debt, where we saw appealing values, especially in light of
our assessment of the relative risks. We also established a position for the
Fund in non-government agency residential mortgages, where we saw market
values falling to extraordinarily low levels that were inconsistent with the
default records of those mortgages.
At the end of the year, approximately half the Fund's assets remained
invested in government agency mortgages, while about 13% of assets were
invested in high-yield corporate debt, including bank loans. At December 31,
2008, the average credit quality of Fund holdings was A+. We kept the Fund's
average effective duration--which is a measure of price risk from changes in
interest rates--relatively low, at 3.64 years, as we saw little value in
investing in longer-maturity bonds when Treasury yields had fallen to
extremely low absolute levels.
B-21
Q: What types of investments had the greatest influence on the Fund's
performance during the six-month period ended December 31, 2008?
A: The Fund's exposure to high-yield debt and its underweight position in
Treasuries were the principal factors contributing to underperformance
relative to the Barclays bond indices. Investments in both high-yield and
investment-grade corporate bonds held back the Fund's relative results,
especially in the final quarter of 2008, when corporate bond values
plummeted. Security selection also hurt the Fund's performance, as several of
our picks underperformed despite continuing to meet all their debt
obligations. In addition, our short duration positioning held back the Fund's
relative performance as longer-maturity Treasuries continued to rally in the
closing weeks of the period.
Among the investments that detracted from the Fund's results were: securities
of American General Finance, a subsidiary of American International Group
(AIG); Forest City Enterprises, a higher-quality real estate developer; and
Sallie Mae, a student loan provider. Asset-backed securities of Domino's, the
pizza chain, also underperformed. All these securities continued to meet
their debt obligations during the six-month period, however. We also had a
very small position in Washington Mutual, which defaulted when the banking
company failed, but that investment had a negligible impact on overall Fund
performance.
The Fund did see good performance from several selections, including: bonds
of Constellation Brands, a leading producer and marketer of wines, beer and
spirits; and the bank loans to Talecris, a health care services company
specializing in processing blood supplies.
Q: What is your investment outlook?
A: As we look ahead at the start of 2009, the market prices of high-yield and
investment-grade corporate debt have been approaching Depression-like lows.
However, we think the actions of the Federal government demonstrate that
officials are determined not to repeat the mistakes that preceded the Great
Depression of the 1930s. The Fed has eased the flow of money into the credit
markets, and the incoming administration has made it clear that stimulating
the economy is more important than balancing the budget during an economic
crisis.
We think that one day we may look back and recognize that this was a period
when there were extraordinary opportunities to invest in corporate debt and
other securities whose prices reflected an extremely pessimistic view of the
economy. We think many of the worst possible scenarios already are factored
into the prices of investments such as corporate bonds, bank loans,
non-agency mortgages and asset-backed debt. Given the extremely low
valuations, we have been increasing the Fund's investments in
investment-grade corporates, non-agency mortgages and some selective
high-yield bonds, which we think have excellent potential once the economy
starts to reverse its downslide and begins to recover.
Please refer to the Schedule of Investments on pages 18-40 of the Fund's
Semi-Annual Report for the period ended December 31, 2008 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 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.
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-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 of the Fund's Annual
Report for the year ended August 31, 2008 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 of the Fund's Annual
Report for the year ended July 31, 2008 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
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER CASH RESERVES FUND 12/31/08
Against the backdrop of a spreading credit crisis that threatened many major
financial institutions and undermined investor confidence, the U.S. Federal
Reserve Board (the Fed) slashed short-term interest rates throughout 2008.
Yields on short-term securities declined markedly over the 12 months ended
December 31, 2008, while investors became increasingly cautious about any
exposure to credit risk as the year progressed. In the following interview,
Seth Roman reviews the investment environment and the strategies that affected
Pioneer Cash Reserves Fund during 2008. Mr. Roman is a member of Pioneer's
Fixed Income Group, which is responsible for the daily management of the Fund.
Pioneer Cash Reserves Fund invests exclusively in high-quality money market
instruments issued by the U.S. government and domestic corporations and banks.
Q: How did the Fund perform during 2008?
A: Pioneer Cash Reserves Class A shares had a total return of 2.46% at net asset
value for the 12 months ended December 31, 2008. During the same period, the
average return of the 328 funds in Lipper's Money Market category was 2.04%.
On December 31, 2008, the 7-day effective SEC yield on Class A shares was
1.20%. The Fund's net asset value per share remained stable at $1.00
throughout the year.
Q: What were the principal factors affecting the Fund's performance during the
12 months ended December 31, 2008?
A: The year saw a dramatic increase in fear throughout the capital markets,
which made it especially important to focus on paying careful attention to
any potential credit risks and maintaining liquidity in the Fund. During the
course of the year, the Fed, as part of its effort to inject liquidity into
the financial system and slow the deterioration in the health of the overall
economy, cut interest rates repeatedly. In two separate moves during the
first month of 2008, the Fed slashed the target fed funds rate from 4.25% to
2.75%. In March, as investment bank Bear Stearns collapsed and investors
became increasingly anxious, the Fed cut the target rate to 2.25%. In April,
the rate was lowered to 2.00%. In October, as investment bank Lehman Brothers
filed for bankruptcy and the federal government rushed to the rescue of other
financial institutions, the Fed made two more cuts, bringing the influential
rate to 1.00%. Finally, on December 16, 2008, the Fed brought the target rate
down to a range of 0.00% to 0.25%.
Q: What were your principal strategies during the period and how did they affect
the Fund's performance?
A: We focused primarily on preserving capital and maintaining liquidity, while
typically maintaining an average duration (a measure of sensitivity to
changes in interest rates) of between 40 and 50 days to capture whatever
yields were available in the market. In general, we avoided those parts of
the market that posed credit risk or were potentially illiquid. While we did
have exposure to Bear Stearns securities early in the year, they matured at
par value, incurring no loss. While the Fund had exposure to Bear Stearns,
Lehman, AIG, and Morgan Stanley during the year, securities matured, were
sold, or were not renewed. As a result, the Fund did not incur any losses. We
considered the brokerage industry to be a particularly risky area.
In our effort to maintain high quality and liquidity, we made investments in
Treasury bills, which, despite their low yields, added to the Fund's
performance when we were able to sell them at a profit. We also invested in
bank certificates of deposit (CDs). The CDs offered added protection to the
Fund's net asset price because they are higher in the capital structure than
many other securities. Our investments in both Treasury bills and bank CDs
helped support the Fund's performance during the 12-month period.
The primary factor holding back the Fund's performance during the period was
the dramatic decline in short-term interest rates in the market, which
reduced the Fund's ability to produce higher yields.
During the year, we also decided to join the government's new Temporary
Guarantee Program for money market mutual funds that was introduced by the
Treasury Department in September in an effort to stabilize the market for
short-term corporate securities.
Q: What is your investment outlook?
A: As we start 2009, the target fed funds rate is effectively at zero, which
makes it particularly challenging to find attractive yields in short-term
securities. We anticipate that the economy will continue to be weak for much
of the first half of the year, and so we expect to continue to be very
cautious, with an emphasis on highly liquid securities such as government
agency securities and bank certificates of deposit. When considering
commercial paper, we intend to invest only in very high-quality products
backed by top-tier corporations. When the opportunity presents itself, we may
extend the Fund's duration to capture more yield, but we do not intend to do
so at any risk to the Fund's credit quality or liquidity.
B-27
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.
The Fund has enrolled in the U.S. Treasury Department's Temporary Guarantee
Program for Money Market Funds (the "Program"). The Program seeks to guarantee
the $1.00 net asset value (NAV) 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 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 the Fund as of September 19, 2008, are eligible
to receive the benefit of the guarantee. Any increase in the number of shares
held in the 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.
If a shareholder's account is closed with the Fund, any future investments in
the Fund will not be guaranteed.
The Treasury has extended the Program's expiration date from December 18, 2008
to April 30, 2009. The Treasury has discretion to continue the Program until
September 18, 2009. The Fund has submitted an extension notice to the Treasury
in order to participate in the extended Program. 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 Fund will participate in
the Program if it is extended beyond April 30, 2009.
In order to participate in the initial three-month period of the Program, the
Fund paid to the U.S. Treasury Department a fee in the amount of 0.01 % of the
Fund's net asset value as of the close of business on September 19, 2008. In
order to participate in the extended period of the Program, the Fund paid to
the U.S. Treasury Department a fee in the amount of 0.015% of the Fund's net
asset value as of the close of business on September 19, 2008. These expenses
will be borne by the Fund without regard to any expense limitation currently in
effect for the Fund and are reflected in the Statement of Operations. Any
additional cost to participate in the extended Program also will be borne by
the Fund.
For more information about the Program's scope and limitations, please see the
Fund's most recent prospectus as supplemented on December 22, 2008.
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. Investing in foreign and/or emerging markets securities
involves risks relating to interest rates, currency exchange rates, economic,
and political conditions.
Please refer to the Schedule of Investments on pages 13-19 the Fund's Annual
Report for the period ended December 31, 2008 for a full listing of Fund
securities.
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-28
SUBJECT TO COMPLETION, DATED [_______], 2009
PIONEER SELECT MID CAP GROWTH FUND (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 Select Mid Cap Growth Fund*
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
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 SELECT MID CAP GROWTH FUND, PIONEER GROWTH FUND AND PIONEER
INTERMEDIATE TAX FREE INCOME FUND ............................................................. 55
FUND HISTORY .................................................................................. 55
INVESTMENT STRATEGIES AND RISKS ............................................................... 55
MANAGEMENT OF THE FUND ........................................................................ 80
INVESTMENT ADVISOR AND ADMINISTRATOR .......................................................... 86
PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS .................................................. 89
SHAREHOLDER SERVICING/TRANSFER AGENT .......................................................... 90
CUSTODIAN ..................................................................................... 90
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ................................................. 91
PORTFOLIO MANAGEMENT .......................................................................... 91
PORTFOLIO TRANSACTIONS ........................................................................ 94
DESCRIPTION OF SHARES ......................................................................... 95
SALES CHARGES ................................................................................. 97
REDEEMING SHARES .............................................................................. 102
TELEPHONE AND ONLINE TRANSACTIONS ............................................................. 102
PRICING OF SHARES ............................................................................. 104
TAX STATUS .................................................................................... 104
FINANCIAL STATEMENTS .......................................................................... 110
ANNUAL FEE, EXPENSE AND OTHER INFORMATION ..................................................... 110
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 May 8, 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 Select Mid Cap Growth Fund, 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.
4. Pioneer Fund's Annual Report for the fiscal year ended December 31, 2008
(File No. 811-01466), as filed with the SEC on February 27, 2009
(Accession No. 0000276776-09-000009) is incorporated herein by
reference.
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
February 27, 2009 (Accession No. 0000078713-09-000011) is incorporated
herein by reference.
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
February 27, 2009 (Accession No. 0000276776-09-000007) is incorporated
herein by reference.
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.
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.
4
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.
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
February 27, 2009 (Accession No. 0000276776-09-000008) is incorporated
herein by reference.
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, Pioneer Short Term Income Fund
and Pioneer Cash Reserves 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
March 16, 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 Select Mid Cap Growth Fund, 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 Select Mid Cap Growth Fund, 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
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- --------- ---------- -----------
CONVERTIBLE PREFERRED STOCK 0.7%
Commercial Services & Supplies 0.7%
Office Services & Supplies 0.7%
-- 55,440 55,440 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%
-- 24,730 24,730 Royal Dutch Shell Plc (A.D.R.) $ -- $1,750,637 $ 1,750,637
----------- ---------- -----------
Oil & Gas Drilling 1.1%
-- 31,194 31,194 Diamond Offshore Drilling, Inc. $ -- $3,721,444 $ 3,721,444
----------- ---------- -----------
Oil & Gas Exploration & Production 4.6%
42,000 -- 42,000 Devon Energy Corp. $ 3,985,380 $ -- $ 3,985,380
40,000 -- 40,000 Exxon Mobil Corp. 3,217,200 -- 3,217,200
30,000 -- 30,000 Occidental Petroleum Corp. 2,364,900 -- 2,364,900
30,000 30,000 Southwestern Energy Corp. 1,089,300 -- 1,089,300
40,000 -- 40,000 Sunoco, Inc. 1,624,400 -- 1,624,400
30,000 31,884 61,884 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%
40,000 -- 40,000 Halliburton Co. $ 1,792,800 $ -- $ 1,792,800
20,000 -- 20,000 National Oilwell Varco, Inc. 1,572,600 -- 1,572,600
10,000 -- 10,000 Oceaneering International, Inc. 606,400 -- 606,400
30,000 -- 30,000 Schlumberger Ltd. 3,048,000 -- 3,048,000
20,000 -- 20,000 Smith International, Inc. 1,487,600 -- 1,487,600
20,000 -- 20,000 Weatherford International Ltd. 754,600 -- 754,600
----------- ---------- -----------
$ 9,262,000 $ -- $ 9,262,000
----------- ---------- -----------
Coal 0.6%
24,000 -- 24,000 Arch Coal, Inc. $ 1,351,440 $ -- $ 1,351,440
10,000 10,000 Peabody Energy Corp. 676,500 -- 676,500
----------- ---------- -----------
$ 2,027,940 $ -- $ 2,027,940
----------- ---------- -----------
Oil & Gas Storage & Transportation 0.5%
50,000 36,087 86,087 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%
- -- 10,744 10,744 Alcoa, Inc. $ -- $ 362,610 $ 362,610
----------- ---------- -----------
Diversified Chemical 0.3%
- -- 23,506 23,506 E.I. du Pont de Nemours and Co. $ -- $1,029,798 $ 1,029,798
----------- ---------- -----------
Diversified Metals & Mining 1.3%
- -- 45,760 45,760 Freeport-McMoRan Copper & Gold, Inc. $ -- $4,427,280 $ 4,427,280
----------- ---------- -----------
(Class B)
Fertilizers & Agricultural Chemicals 0.4%
- -- 6,190 6,190 Potash Corp. Saskatchewan, Inc. $ -- $1,264,431 $ 1,264,431
----------- ---------- -----------
6
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- --------- ----------- -----------
Mining 2.9%
36,000 -- 36,000 Agnico-Eagle Mines Ltd. $ 1,967,400 $ -- $ 1,967,400
100,000 -- 100,000 Barrick Gold Corp. 4,235,000 -- 4,235,000
70,000 -- 70,000 Newmont Mining Corp. 3,357,200 -- 3,357,200
----------- ---------- -----------
$ 9,559,600 $ -- $ 9,559,600
----------- ---------- -----------
Paper Packaging 0.2%
-- 29,453 29,453 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%
24,000 48,626 72,626 United Technologies Corp. $ 1,535,520 $3,111,091 $ 4,646,611
----------- ---------- -----------
Electrical Component & Equipment 1.7%
-- 86,690 86,690 Emerson Electric Co. $ -- $4,221,803 $ 4,221,803
-- 30,409 30,409 Rockwell International Corp. -- 1,353,505 1,353,505
----------- ---------- -----------
$ -- $5,575,308 $ 5,575,308
----------- ---------- -----------
Industrial Conglomerates 0.2%
-- 9,543 9,543 3M Co. $ -- $ 671,732 $ 671,732
----------- ---------- -----------
Construction & Engineering 0.8%
40,000 -- 40,000 Fluor Corp. $ 325,400 $ -- $ 325,400
28,000 -- 28,000 Jacobs Engineering Group Inc. 2,165,520 -- 2,165,520
----------- ---------- -----------
$ 2,490,920 $ -- $ 2,490,920
----------- ---------- -----------
Industrial Machinery 1.4%
30,000 -- 30,000 Caterpillar, Inc. $ 2,085,600 $ -- $ 2,085,600
6,000 -- 6,000 Precision Castparts Corp. 560,580 -- 560,580
30,000 -- 30,000 Deere & Co. 2,104,800 -- 2,104,800
----------- ---------- -----------
$ 4,750,980 $ -- $ 4,750,980
----------- ---------- -----------
Industrial Conglomerates 0.5%
50,000 -- 50,000 General Electric Co. $ 1,414,500 $ -- $ 1,414,500
8,000 -- 8,000 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%
-- 38,346 38,346 R.R. Donnelly & Sons Co. $ -- $1,023,838 $1,023,838
----------- ---------- -----------
Data Processing Services 0.1%
2,000 -- 2,000 MasterCard Inc. $ 488,300 $ -- $ 488,300
----------- ---------- -----------
Total Commercial Services & Supplies $ 488,300 $1,023,838 $ 1,512,138
----------- ---------- -----------
Transportation 1.4%
Airlines 0.1%
-- 39,419 39,419 Delta Air Lines, Inc. $ -- $ 297,219 $ 297,219
----------- ---------- -----------
Railroads 1.4%
18,000 -- 18,000 Burlington Northern Santa Fe Corp. $ 1,874,340 $ -- $ 1,874,340
32,000 -- 32,000 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
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- --------- ----------- -----------
Automobiles & Components 0.2%
Auto Parts & Equipment 0.2%
-- 19,376 19,376 Johnson Controls, Inc. $ -- $ 584,380 $ 584,380
----------- ---------- -----------
Total Automobiles & Components $ -- $ 584,380 $ 584,380
----------- ---------- -----------
Consumer Durables & Apparel 0.2%
Household Appliances 0.2%
-- 10,801 10,801 Snap-On, Inc. $ -- $ 607,988 $ 607,988
----------- ---------- -----------
Total Consumer Durables & Apparel $ -- $ 607,988 $ 607,988
----------- ---------- -----------
Consumer Services 2.1%
Restaurants 1.2%
-- 64,284 64,284 McDonald's Corp. $ -- $3,843,540 $ 3,843,540
----------- ---------- -----------
General Merchandise Stores 1.0%
20,000 -- 20,000 Lowe's Companies, Inc. $ 406,400 $ -- $ 406,400
20,000 -- 20,000 Starbucks Corp. 293,800 -- 293,800
30,000 -- 30,000 The Home Depot, Inc. 714,900 -- 714,900
30,000 -- 30,000 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%
-- 169,759 169,759 Regal Entertainment Group $ -- $2,826,487 $ 2,826,487
-- 38,095 38,095 Viacom, Inc. (Class B) -- 1,063,993 1,063,993
----------- ---------- -----------
$ -- $3,890,480 $ 3,890,480
----------- ---------- -----------
Publishing 0.1%
-- 9,786 9,786 McGraw-Hill Co., Inc. $ -- $ 397,997 $ 397,997
----------- ---------- -----------
Total Media $ -- $4,288,477 $ 4,288,477
----------- ---------- -----------
Retailing 0.7%
Department Stores 0.5%
-- 37,719 37,719 J.C. Penney Co., Inc. $ -- $1,162,877 $ 1,162,877
-- 16,310 16,310 Nordstrom, Inc. -- 468,749 468,749
----------- ---------- -----------
$ -- $1,631,626 $ 1,631,626
----------- ---------- -----------
Apparel 0.2%
10,000 -- 10,000 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%
-- 56,595 56,595 CVS Corp. $ -- $2,065,718 $ 2,065,718
-- 49,288 49,288 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%
40,000 -- 40,000 Altria Group, Inc. $ 814,000 $ -- $ 814,000
-- 50,410 50,410 Lorillard, Inc. -- 3,383,015 3,383,015
40,000 84,860 124,860 Phillip Morris International 2,066,000 4,383,019 6,449,019
----------- ---------- -----------
$ 2,880,000 $7,766,034 $10,646,034
----------- ---------- -----------
8
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ----------- ----------- -----------
Agricultural Products 0.4%
14,000 -- 14,000 Bunge Ltd. $ 1,384,880 $ -- $ 1,384,880
----------- ----------- -----------
Soft Drinks 0.4%
20,000 -- 20,000 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%
28,000 30,322 58,322 Procter & Gamble Co. $ 1,833,440 $ 1,985,485 $ 3,818,925
----------- ----------- -----------
Personal Products 0.5%
-- 34,525 34,525 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%
-- 37,216 37,216 McKesson Corp. $ -- $ 2,083,724 $ 2,083,724
10,000 -- 10,000 UnitedHealth Group Inc. 280,800 -- 280,800
6,000 -- 6,000 WellPoint, Inc. 314,700 -- 314,700
----------- ----------- -----------
$ 595,500 $ 2,083,724 $ 2,679,224
----------- ----------- -----------
Biotechnology 1.1%
16,000 -- 16,000 Celgene Corp. $ 1,207,840 $ -- $ 1,207,840
24,000 -- 24,000 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%
34,000 54,199 88,199 Abbott Laboratories $ 1,915,560 $ 3,053,572 $ 4,969,132
-- 129,764 129,764 Bristol-Myers Squibb Co. -- 2,740,616 2,740,616
16,000 61,611 77,611 Eli Lilly & Co. 753,760 2,902,494 3,656,254
24,000 -- 24,000 Johnson & Johnson Co. 1,643,280 -- 1,643,280
20,000 -- 20,000 Medtronic, Inc. 1,056,600 -- 1,056,600
10,000 10,000 Genzyme, Inc. 766,500 -- 766,500
32,000 -- 32,000 Gilead Sciences, Inc. 1,727,360 -- 1,727,360
-- 100,640 100,640 Schering-Plough Corp. -- 2,121,491 2,121,491
-- 99,113 99,113 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%
20,000 101,707 121,707 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%
-- 7,465 7,465 Franklin Resources, Inc. $ -- $ 751,054 $ 751,054
5,000 20,167 25,167 The Bank of New York Mellon., Corp. 177,500 715,929 893,429
----------- ----------- -----------
$ 177,500 $ 1,466,983 $ 1,644,483
----------- ----------- -----------
9
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ----------- ---------- -----------
Investment Banking & Brokerage 1.2%
-- 75,562 75,562 Lazard, Ltd. $ -- $3,083,685 $ 3,083,685
-- 19,797 19,797 Morgan Stanley -- 781,586 781,586
----------- ---------- -----------
$ -- $3,865,271 $ 3,865,271
----------- ---------- -----------
Specialized Finance 1.1%
2,000 525 2,525 CME Group, Inc. $ 720,260 $ 189,068 $ 909,328
32,000 -- 32,000 Citigroup, Inc. 598,080 -- 598,080
20,000 -- 20,000 American Express Co. 742,400 -- 742,400
7,000 -- 7,000 The Goldman Sachs Group, Inc. 1,288,280 -- 1,288,280
-- 2,679 2,679 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%
10,000 11,221 21,221 Aflac, Inc. $ 556,100 $ 624,000 $ 1,180,100
20,000 -- 20,000 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%
-- 35,894 35,894 Citrix Systems, Inc. $ -- $ 956,216 $ 956,216
----------- ---------- -----------
Total Software & Services $ -- $ 956,216 $ 956,216
----------- ---------- -----------
Technology Hardware & Equipment 7.4%
Communications Equipment 3.6%
90,000 96,519 186,519 Cisco Systems, Inc. $ 1,979,100 $2,122,453 $ 4,101,553
-- 183,597 183,597 Corning, Inc. -- 3,673,776 3,673,776
5,000 150,751 155,751 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%
5,000 -- 5,000 Apple Computer, Inc. $ 794,750 $ -- $ 794,750
30,000 -- 30,000 Dell Inc. 737,100 -- 737,100
34,000 47,361 81,361 Hewlett-Packard Co. 1,523,200 2,121,773 3,644,973
30,000 -- 30,000 IBM Corp. 3,839,400 -- 3,839,400
12,000 -- 12,000 Research In Motion Ltd. 1,473,840 -- 1,473,840
----------- ---------- -----------
$ 8,368,290 $2,121,773 $10,490,063
----------- ---------- -----------
Systems Software 0.6%
80,000 -- 80,000 Oracle Corp. $ 1,722,400 $ -- $ 1,722,400
10,000 -- 10,000 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%
25,000 130,502 155,502 Intel Corp. $ 554,750 $2,895,839 $ 3,450,589
50,000 -- 50,000 Applied Materials, Inc. 866,000 -- 866,000
20,000 -- 20,000 Texas Instruments Inc. 487,600 -- 487,600
----------- ---------- -----------
Total Semiconductors $ 1,908,350 $2,895,839 $ 4,804,189
----------- ---------- -----------
10
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- -------- -------- -------- -------- ---------- ----------- ----------- ------------
Telecommunication Services 2.7%
Integrated Telecommunication Services 2.0%
-- 81,805 81,805 Frontier Communications Corp. $ -- $ 945,666 $ 945,666
30,000 -- 30,000 Qualcomm, Inc. 1,660,200 -- 1,660,200
20,000 32,160 52,160 Verizon Communications, Inc. 680,800 1,094,726 1,775,526
-- 189,268 189,268 Windstream Corp. -- 2,256,075 2,256,075
----------- ----------- ------------
$ 2,341,000 $ 4,296,467 $ 6,637,467
----------- ----------- ------------
Internet 0.7%
5,000 -- 5,000 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%
-- 12,175 12,175 Questar Corp. $ -- $ 643,813 $ 643,813
----------- ----------- ------------
Total Utilities $ -- $ 643,813 $ 643,813
----------- ----------- ------------
TOTAL COMMON STOCKS $98,424,450 $99,781,476 $198,205,926
----------- ----------- ------------
Principal Principal Principal
Amount Amount Amount
($) ($) ($)
- --------- --------- ---------
ASSET BACKED SECURITIES 0.5%
Energy 0.1%
Oil & Gas Equipment & Services 0.1%
-- 200,000 200,000 5.78 Sevan Marine ASA, Floating Rate Note, $ -- $ 182,000 $ 182,000
5/14/13 ----------- ----------- ------------
Total Energy $ -- $ 182,000 $ 182,000
----------- ----------- ------------
Transportation 0.0%
Airlines 0.0%
-- 8,676 8,676 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%
-- 200,000 200,000 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%
-- 325,000 325,000 2.56 Carrington Mortgage, Floating Rate Note, $ -- $ 297,739 $ 297,739
10/25/36
-- 245,608 245,608 Local Insight Media Finance, LLC, 5.88%, -- 195,944 195,944
10/23/37 ----------- ----------- ------------
$ -- $ 493,683 $ 493,683
----------- ----------- ------------
Total Banks $ -- $ 493,683 $ 493,683
----------- ----------- ------------
Diversified Financials 0.2%
Diversified Financial Services 0.2%
-- 60,000 60,000 2.90 Asset Backed Securities Corp., Floating
Rate Note,
4/25/35 $ -- $ 52,563 $ 52,563
-- 169,457 169,457 PF Export Receivable Master Trust, 6.436%, -- 167,949 167,949
6/1/15
-- 295,627 295,627 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
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ----------- ---------- -----------
Utilities 0.1%
Electric Utilities 0.1%
-- 224,466 224,466 FPL Energy America Wind LLC, 6.639%, $ -- $ 230,933 $ 230,933
6/20/23
-- 123,400 123,400 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%
-- 350,000 350,000 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%
-- 512,299 512,299 ABN Amro Mortgage Corp., 4.75%, 5/25/18 $ -- $ 503,214 $ 503,214
-- 543,277 543,277 5.21 SARM 2004-12 7A1, Floating Rate Note, -- 507,177 507,177
2/25/34 -------- ---------- ----------
$ -- $1,010,391 $1,010,391
-------- ---------- ----------
Total Banks $ -- $1,010,391 $1,010,391
-------- ---------- ----------
Diversified Financials 0.0%
Diversified Financial Services 0.0%
-- 140,000 140,000 Global Signal, 7.036%, 2/15/36 $ -- $ 129,647 $ 129,647
-------- ---------- ----------
Total Diversified Financials $ -- $ 129,647 $ 129,647
-------- ---------- ----------
Government 0.6%
Government 0.6%
-- 411,751 411,751 Fannie Mae, 5.45%, 12/25/20 $ -- $ 418,041 $ 418,041
-- 74,526 74,526 Federal Home Loan Bank, 5.0%, 1/15/16 -- 75,318 75,318
-- 70,858 70,858 Federal Home Loan Bank, 6.0%, 4/15/32 -- 73,305 73,305
-- 418,964 418,964 Federal Home Loan Mortgage Corp., 5.5%,
12/15/20 -- 424,999 424,999
-- 173,400 173,400 Federal Home Loan Mortgage Corp., 5.875%,
5/15/16 -- 177,139 177,139
-- 381,638 381,638 Federal Home Loan Mortgage Corp., 6.0%,
12/15/21 -- 390,695 390,695
-- 200,528 200,528 Freddie Mac, 5.5%, 6/15/32 -- 203,861 203,861
-- 362,026 362,026 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%
500,000 -- 500,000 ConocoPhillips, 4.750%, 10/15/2012 $506,224 $ -- $ 506,224
-- 160,000 160,000 Occidental Petroleum, 6.75%, 1/15/12 -- 172,351 172,351
-- 25,000 25,000 Petro-Canada, 4.0%, 7/15/13 -- 23,547 23,547
-------- ---------- ----------
$506,224 $ 195,898 $ 702,122
-------- ---------- ----------
12
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ---------- ---------- ----------
Oil & Gas Equipment & Services 0.1%
-- 200,000 200,000 Weatherford International, Inc., 6.625%, $ -- $ 208,964 $ 208,964
---------- ---------- ----------
11/15/11
Oil & Gas Exploration & Production 0.1%
-- 175,000 175,000 Canadian National Resources, 5.9%, 2/1/18 $ -- $ 173,236 $ 173,236
-- 65,000 65,000 Pemex Project Funding Master, 9.125%, -- 70,135 70,135
10/13/10
-- 92,610 92,610 Ras Laffan Liquefied Natural Gas, 3.437%, -- 92,794 92,794
9/15/09
-- 45,000 45,000 Southern Star Central Corp., 6.75%, 3/1/16 -- 42,300 42,300
---------- ---------- ----------
$ -- $ 378,465 $ 378,465
---------- ---------- ----------
Oil & Gas Refining & Marketing 0.0%
-- 90,000 90,000 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ -- $ 83,920 $ 83,920
---------- ---------- ----------
Oil & Gas Storage & Transportation 0.2%
-- 125,000 125,000 Buckeye Partners, LP 6.05%, 1/15/18 $ -- $ 121,670 $ 121,670
-- 320,000 320,000 NGPL Pipeco LLC, 6.514%, 12/15/12 -- 322,871 322,871
-- 400,000 400,000 7.00 Teppco Partners LP, Floating Rate Note, -- 345,699 345,699
6/1/67 ---------- ---------- ----------
$ -- $ 790,240 $ 790,240
---------- ---------- ----------
Total Energy $ 506,224 $1,657,487 $2,163,711
---------- ---------- ----------
Materials 0.3%
Aluminum 0.0%
-- 150,000 150,000 Novelis, Inc., 7.25%, 2/15/15 $ -- $ 138,750 $ 138,750
---------- ---------- ----------
Commodity Chemicals 0.1%
-- 300,000 300,000 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ -- $ 273,000 $ 273,000
---------- ---------- ----------
Diversified Metals & Mining 0.1%
-- 425,000 425,000 Inco, Ltd., 7.2%, 9/15/32 $ -- $ 410,374 $ 410,374
---------- ---------- ----------
Fertilizers & Agricultural Chemicals 0.0%
-- 30,000 30,000 Potash Corp., Saskatchewan, 4.875%, 3/1/13 $ -- $ 30,246 $ 30,246
---------- ---------- ----------
Steel 0.1%
-- 230,000 230,000 Arcelormittal, 6.125%, 6/1/18 $ -- $ 220,870 $ 220,870
-- 70,000 70,000 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%
-- 25,000 25,000 Boeing Co., 5.125%, 2/15/13 $ -- $ 25,337 $ 25,337
-- 80,000 80,000 Honeywell International, 7.5%, 3/1/10 -- 84,593 84,593
1,000,000 -- 1,000,000 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%
-- 157,505 157,505 Orcal Geothermal, 6.21%, 12/30/20 $ -- $ 161,078 $ 161,078
---------- ---------- ----------
Industrial Conglomerates 0.2%
-- 145,000 145,000 General Electric Capital Corp., 6.125%, $ -- $ 151,356 $ 151,356
2/22/11
-- 120,000 120,000 General Electric Capital Corp., 6.75%, -- 120,412 120,412
3/15/32
-- 250,000 250,000 General Electric Capital Corp., 5.625%, -- 243,390 243,390
9/15/17 ---------- ---------- ----------
$ -- $ 515,158 $ 515,158
---------- ---------- ----------
13
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ---------- ---------- ----------
Trading Companies & Distributors 0.2%
-- 495,000 495,000 GATX Corp., 5.5%, 2/15/12 $ -- $ 493,685 $ 493,685
-- 300,000 300,000 Glencore Funding LLC, 6.0%, 4/15/14 -- 287,138 287,138
---------- ---------- ----------
$ -- $ 80,823 $ 780,823
---------- ---------- ----------
Total Capital Goods $1,020,277 $1,566,989 $2,587,266
Commercial Services & Supplies 0.1%
Office Services & Supplies 0.1%
-- 250,000 250,000 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%
-- 500,000 500,000 Southwest Airlines Co $ -- $ 451,522 $ 451,522
---------- ---------- ----------
Total Transportation $ -- $ 451,522 $ 451,522
---------- ---------- ----------
Automobiles & Components 0.2%
Auto Parts & Equipment 0.1%
-- 460,000 460,000 TRW Automotive, Inc., 7.25%, 3/15/17 $ -- $ 395,600 $ 395,600
Automobile Manufacturers 0.1%
-- 80,000 80,000 Ford Motor Co., 7.25%, 10/1/08 $ -- $ 78,800 $ 78,800
-- 500,000 500,000 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%
-- 345,000 345,000 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%
-- 700,000 700,000 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%
-- 125,000 125,000 British Sky Broadcasting, 6.1%, 2/15/18 $ -- $ 121,650 $ 121,650
-- 80,000 80,000 Comcast Corp., 5.3%, 1/15/14 -- 77,346 77,346
-- 400,000 400,000 Cox Communications, 7.125%, 10/1/12 -- 418,232 418,232
$ -- $ 617,228 $ 617,228
Media 0.2%
-- 500,000 500,000 Comcast Cable Corp., 6.75%, 1/30/11 $ -- $ 517,228 $ 517,228
Publishing 0.2%
-- 512,000 512,000 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%
-- 500,000 500,000 Target Corp., 5.875%, 3/1/12 $ -- $ 517,429 $ 517,429
Specialty Stores 0.4%
-- 435,000 435,000 Tanger Factory Outlet Centers, Inc.,
6.15%, 11/15/15
$ -- $ 405,262 $ 405,262
1,000,000 -- 1,000,000 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
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ---------- ---------- ----------
Food, Beverage & Tobacco 0.5%
Agricultural Products 0.1%
-- 250,000 250,000 Cargill, Inc. 5.2%, 1/22/13 $ -- $ 247,353 $ 247,353
---------- ---------- ----------
Brewers 0.0%
-- 35,000 35,000 Miller Brewing Co., 5.5%, 8/15/13 $ -- $ 35,056 $ 35,056
---------- ---------- ----------
Food Distributors 0.3%
1,000,000 -- 1,000,000 Kraft Foods, Inc., 4.125%, 11/12/2009 $ 996,495 $ -- $ 996,495
---------- ---------- ----------
Soft Drinks 0.1%
-- 35,000 35,000 Bottling Group LLC, 5.0%, 11/15/13 $ -- $ 35,341 $ 35,341
-- 350,000 350,000 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%
1,000,000 -- 1,000,000 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%
-- 250,000 250,000 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%
-- 450,000 450,000 Biogen IDEC, 6.0%, 3/1/13 $ -- $ 446,968 $ 446,968
---------- ---------- ----------
Pharmaceuticals 0.6%
1,000,000 -- 1,000,000 Abbott Laboratories, Note, 3.500%, $1,001,207 $ -- $1,001,207
2/17/2009
1,000,000 -- 1,000,000 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%
-- 250,000 250,000 Kazkommerts International BV, 8.0%, $ -- $ 191,250 $ 191,250
11/3/15
-- 120,000 120,000 Korea Development Bank, 5.3%, 1/17/13 -- 118,721 118,721
-- 400,000 400,000 TNK-BP Finance SA, 7.5%, 3/13/13 -- 387,000 387,000
1,000,000 -- 1,000,000 Wells Fargo & Co., 5.125%, 9/1/2012 993,429 -- 993,429
---------- ---------- ----------
$ 993,429 $ 696,971 $1,690,400
---------- ---------- ----------
Regional Banks 0.4%
-- 705,000 705,000 Barclays Plc, 6.05%, 12/4/17 $ -- $ 679,308 $ 679,308
-- 500,000 500,000 Branch Banking & Trust Co., 4.875%, -- 467,849 467,849
1/15/13
-- 50,000 50,000 Keycorp, 6.5%, 5/14/13 -- 41,765 41,765
---------- ---------- ----------
$ -- $1,188,922 $1,188,922
---------- ---------- ----------
Thrifts & Mortgage Finance 0.1%
-- 450,000 450,000 Sovereign Bancorp, 8.75%, 5/30/18 $ -- $ 392,155 $ 392,155
---------- ---------- ----------
Total Banks $ 993,429 $2,278,048 $3,271,477
---------- ---------- ----------
15
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ---------- ---------- -----------
Diversified Financials 3.4%
Asset Management & Custody Banks 0.1%
-- 90,000 90,000 Eaton Vance Corp., 6.5%, 10/2/17 $ -- $ 90,521 $ 90,521
-- 200,000 200,000 Mellon Funding Corp., 5.5%, 11/15/18 -- 182,492 182,492
---------- ---------- -----------
$ -- $ 273,013 $ 273,013
---------- ---------- -----------
Consumer Finance 0.1%
-- 250,000 250,000 American Express Bank FSB, 5.5%, 4/16/13 $ -- $ 242,085 $ 242,085
-- 265,000 265,000 4.00 SLM Corp., Floating Rate Note, 7/25/14 -- 183,059 183,059
---------- ---------- -----------
$ -- $ 425,144 $ 425,144
---------- ---------- -----------
Investment Banking & Brokerage 0.5%
500,000 -- 500,000 Goldman Sachs Group, Inc., 4.500%, $ 500,958 $ -- $ 500,958
6/15/2010
-- 200,000 200,000 Merrill Lynch & Co. 5.45%, 2/5/13 -- 185,528 185,528
1,000,000 -- 1,000,000 Morgan Stanley, 5.050% 1/21/2011 987,425 -- 987,425
---------- ---------- -----------
$1,488,383 $ 185,528 $ 1,673,911
---------- ---------- -----------
Diversified Financial Services 2.1%
-- 300,000 300,000 Brascan Corp., 5.75%, 3/1/10 $ -- $ 295,883 $ 295,883
1,000,000 -- 1,000,000 Caterpillar Financial Services, 3.700%, 1,000,231 -- 1,000,231
8/15/2008
1,000,000 -- 1,000,000 Caterpillar Financial Services, 4.500% 1,008,799 -- 1,008,799
6/15/2009
1,000,000 -- 1,000,000 Citigroup Inc, 4.625%, 8/3/2010 991,633 -- 991,633
1,000,000 -- 1,000,000 General Electric Co., 4.875%, 10/21/2010 1,021,730 -- 1,021,730
1,000,000 -- 1,000,000 General Electric Co., 5.500%, 11/15/2011 1,003,280 -- 1,003,280
500,000 -- 500,000 IBM Intl Group, 5.050%, 10/22/2012 511,764 -- 511,764
1,000,000 -- 1,000,000 John Deere Capital Corp., 4.875%, 3/16/2009 1,010,498 -- 1,010,498
-- 235,000 235,000 WEA Finance LLC, 7.125%, 4/15/18 -- 238,995 238,995
---------- ---------- -----------
$6,547,935 $ 534,878 $ 7,082,813
---------- ---------- -----------
Specialized Finance 0.6%
-- 250,000 250,000 CIT Group Inc., 7.625%, 11/30/12 $ -- $ 212,321 $ 212,321
-- 500,000 500,000 2.95 Citigroup Inc., Floating Rate Note, 1/30/09 -- 478,258 478,258
-- 247,899 247,899 Coso Geothermal Power, 7.0%, 7/15/26 -- 241,392 241,392
1,000,000 -- 1,000,000 International Lease Finance, 5.450%, 923,651 -- 923,651
3/24/2011
-- 100,000 100,000 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%
-- 275,000 275,000 Prudential Financial, 5.15%, 1/15/13 $ -- $ 268,422 $ 268,422
---------- ---------- -----------
Multi-Line Insurance 0.5%
-- 100,000 100,000 AFC Capital Trust I, 8.207%, 2/3/27 $ -- $ 82,490 $ 82,490
-- 375,000 375,000 American General Finance, 6.9%, 12/15/17 -- 300,817 300,817
-- 100,000 100,000 Hanover Insurance Group, 7.625%, 10/15/25 -- 85,696 85,696
-- 200,000 200,000 International Lease, 6.375%, 3/25/13 -- 177,520 177,520
-- 480,000 480,000 7.00 Liberty Mutual Group, 7.0%, 3/15/37 -- 390,091 390,091
-- 200,000 200,000 Loew Corp., 5.25%, 3/15/16 -- 189,468 189,468
500,000 -- 500,000 MetLife Inc, 5.375% 12/15/2012 493,150 -- 493,150
---------- ---------- -----------
$ 493,150 $1,226,082 $ 1,719,232
---------- ---------- -----------
16
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ---------- ---------- ----------
Property & Casualty Insurance 0.3%
-- 125,000 125,000 Berkshire Hathway, Inc., 5.0%, 8/15/13 $ -- $ 124,825 $ 124,825
-- 280,000 280,000 Kingsway America, Inc., 7.5%, 2/1/14 -- 234,500 234,500
-- 60,000 60,000 14.00 MBIA, Inc., Floating Rate Note, 1/15/33 -- 33,000 33,000
-- 500,000 500,000 Ohio Casualty Corp., 7.3%, 6/15/14 -- 503,658 503,658
---------- ---------- ----------
$ -- $ 895,983 $ 895,983
---------- ---------- ----------
Reinsurance 0.0%
-- 100,000 100,000 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%
-- 400,000 400,000 Colonial Reality LP, 6.15%, 4/15/13 $ -- $ 371,881 $ 371,881
-- 700,000 700,000 Health Care REIT, Inc., 6.2%, 6/1/16 -- 642,926 642,926
-- 250,000 250,000 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%
-- 500,000 500,000 First Data Corp., 9.875%, 9/24/15 $ -- $ 442,500 $ 442,500
---------- ---------- ----------
Systems Software 0.2%
500,000 -- 500,000 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%
-- 185,000 185,000 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%
500,000 -- 500,000 AT&T Inc, 5.100% 9/15/2014 $ 490,190 $ -- $ 490,190
500,000 -- 500,000 AT&T Inc, 5.300% 11/15/2010 512,999 -- 512,999
1,000,000 -- 1,000,000 AT&T Inc, 5.875%, 8/15/2012 1,029,968 -- 1,029,968
-- 500,000 500,000 Intelsat Sub Holdings, 8.5%, 1/15/13 -- 495,000 495,000
1,000,000 -- 1,000,000 New York Telephone Co, 6.125% 1/15/2010 1,022,870 -- 1,022,870
-- 250,000 250,000 Telecom Italia Capital, 4.875%, 10/1/10 -- 248,146 248,146
-- 300,000 300,000 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%
-- 225,000 225,000 Commonwealth Edison, 6.15%, 9/15/17 $ -- $ 224,501 $ 224,501
1,000,000 -- 1,000,000 Cons Edison NY, 3.850%, 6/15/2013 948,670 -- 948,670
500,000 -- 500,000 Detroit Edison Co., 6.125%, 10/1/2010 517,621 -- 517,621
1,000,000 -- 1,000,000 Duke Energy, 4.200%, 10/1/2008 1,001,020 -- 1,001,020
-- 225,000 225,000 Entergy Gulf States, 5.7%, 6/1/15 -- 215,551 215,551
-- 200,000 200,000 Israel Electric Corp., Ltd., 7.25%, -- 198,102 198,102
1/15/19
-- 125,000 125,000 Nevada Power Co., 6.5%, 8/1/18 -- 126,563 126,563
-- 250,000 250,000 West Penn Power Co., 5.95%, 12/15/17 -- 247,666 247,666
---------- ---------- ----------
$2,467,311 $1,012,383 $3,479,694
---------- ---------- ----------
17
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ----------- ----------- -----------
Gas Utilities 0.1%
-- 250,000 250,000 Questar Pipeline Co., 5.83%, 2/1/18 $ -- $ 249,088 $ 249,088
----------- ----------- -----------
Multi-Utilities 0.2%
-- 300,000 300,000 NSG Holdings LLC, 7.75%, 12/15/25 $ -- $ 294,000 $ 294,000
-- 410,000 410,000 NY State Gas and Electric, 6.15%, 12/15/17 -- 406,203 406,203
-- 100,000 100,000 Public Service of New Mexico, 7.95%, -- 101,460 101,460
5/15/18 ----------- ----------- -----------
$ -- $ 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%
-- 100,000 100,000 Fannie Mae, 5.24%, 8/7/18 $ -- $ 101,429 $ 101,429
-- 250,000 250,000 Federal Farm Credit Bank 4.875%, 1/17/17 -- 255,427 255,427
500,000 -- 500,000 Federal Home Loan Bank 3.625%, 5/29/13 490,923 -- 490,923
1,000,000 -- 1,000,000 Federal Home Loan Bank 6.210%, 6/2/09 1,027,165 -- 1,027,165
1,000,000 -- 1,000,000 Federal Home Loan Bank 4.375%, 10/22/10 1,022,926 -- 1,022,926
1,000,000 -- 1,000,000 Federal Home Loan Bank 4.750%, 1/19/16 1,019,860 -- 1,019,860
2,000,000 -- 2,000,000 Federal Home Loan Bank 5.450%, 9/2/11 2,004,356 -- 2,004,356
-- 589,504 589,504 Federal Home Loan Mortgage Corp., 4.5%, -- 569,493 569,493
12/1/20
-- 1,092,920 1,092,920 Federal Home Loan Mortgage Corp., 5.0%,
4/1/34-11/1/34 -- 1,043,067 1,043,067
-- 2,387,623 2,387,623 Federal Home Loan Mortgage Corp., 5.5%,
10/1/16-12/1/35 -- 2,367,142 2,367,142
-- 1,099,017 1,099,017 Federal Home Loan Mortgage Corp.., 6.0%,
1/1/33-5/1/36 -- 1,109,952 1,109,952
-- 356,751 356,751 Federal Home Loan Mortgage Corp., 6.5%,
5/1/09-11/1/33 -- 369,166 369,166
-- 168,583 168,583 Federal Home Loan Mortgage Corp., 7.0%, -- 173,961 173,961
10/1/46
-- 422,502 422,502 5.05 Federal Home Loan Mortgage Corp., Floating
Rate Note, 11/1/35 -- 427,945 427,945
1,500,000 -- 1,500,000 Federal National Mortgage Association,
4.25%, 8/15/10 1,530,978 -- 1,530,978
1,000,000 -- 1,000,000 Federal National Mortgage Association,
4.625%, 10/15/13 1,026,146 -- 1,026,146
-- 941,544 941,544 Federal National Mortgage Association,
4.5%, 11/1/20-4/1/38 -- 885,327 885,327
-- 93,770 93,770 Federal National Mortgage Association,
4.78%, 12/1/12 -- 93,595 93,595
-- 630,994 630,994 Federal National Mortgage Association,
4.905%, 12/1/36 -- 636,720 636,720
1,000,000 2,535,403 3,535,403 Federal National Mortgage Association,
5.0%, 10/15/11-6/1/34 1,040,960 2,489,882 3,530,842
-- 8,565,465 8,565,465 Federal National Mortgage Association,
5.5%, 8/1/14-12/1/37 -- 8,505,421 8,505,421
1,000,000 -- 1,000,000 Federal National Mortgage Association,
5.625%, 8/22/11 1,001,543 -- 1,001,543
-- 4,372,534 4,372,534 Federal National Mortgage Association,
6.0%, 1/1/29-12/1/37 -- 4,402,773 4,402,773
-- 541,168 541,168 Federal National Mortgage Association,
6.5%, 12/1/21-10/1/32 -- 561,321 561,321
18
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ---------- ---------- ----------
Government (continued)
-- 659,579 659,579 Federal National Mortgage Association,
7.0%, 10/1/19-1/1/36 $ -- $ 692,935 $ 692,935
-- 38,990 38,990 Federal National Mortgage Association,
8.0%, 4/1/20-5/1/31 -- 42,237 42,237
-- 233,081 233,081 Government National Mortgage Association,
4.5%, 1/15/35-4/15/35 -- 216,158 216,158
4,706,292 -- 4,706,292 Government National Mortgage Association,
5.0 %, 2/15/18-8/15/19 4,704,235 -- 4,704,235
-- 1,086,576 1,086,576 Government National Mortgage Association,
5.5%, 8/15/19-12/15/34 -- 1,086,118 1,086,118
-- 1,007,313 1,007,313 Government National Mortgage Association,
6.0%, 8/15/13-9/15/34 -- 1,023,295 1,023,295
-- 1,338,123 1,338,123 Government National Mortgage Association,
6.5%, 10/15/28-5/15/33 -- 1,385,804 1,385,804
-- 8,662 8,662 Government National Mortgage Association,
7.0%, 4/15/28-8/15/28 -- 9,258 9,258
-- 15,313 15,313 Government National Mortgage Association,
7.5%, 9/20/29-1/15/30 -- 16,412 16,412
-- 2,188 2,188 Government National Mortgage Association,
7.75%, 11/15/29 -- 2,375 2,375
-- 14,307 14,307 Government National Mortgage Association,
8.0%, 2/15/30 -- 15,647 15,647
-- 256,325 256,325 Government National Mortgage Association II,
5.5%, 2/20/34 -- 253,905 253,905
-- 292,166 292,166 Government National Mortgage Association II,
6.0%, 10/20/33 -- 296,451 296,451
-- 396,968 396,968 Government National Mortgage Association II,
6.49%, 8/20/36 -- 408,752 408,752
-- 200,000 200,000 U.S. Treasury Inflation Protected Security,
0.0%, 11/15/15 -- 151,250 151,250
-- 80,000 80,000 U.S. Treasury Bonds, 3.875%, 5/15/18 -- 79,312 79,312
-- 320,000 320,000 U.S. Treasury Bonds, 5.25%, 11/15/28 -- 344,250 344,250
-- 100,000 100,000 U.S. Treasury Bonds, 7.125%, 2/15/23 -- 127,523 127,523
-- 100,000 100,000 U.S. Treasury Notes, 4.25%, 11/15/14 -- 104,742 104,742
1,000,000 -- 1,000,000 U.S. Treasury Notes, 3.5%, 12/15/09 1,016,562 -- 1,016,562
1,000,000 -- 1,000,000 U.S. Treasury Notes, 4.375%, 8/15/2012 1,050,625 -- 1,050,625
2,000,000 -- 2,000,000 U.S. Treasury Notes, 4.750%, 5/15/2014 2,148,124 -- 2,148,124
6,000,000 -- 6,000,000 U.S. Treasury Notes, 4.500%, 6,335,157 -- 6,335,157
11/30/11-2/15/16
4,000,000 -- 4,000,000 U.S. Treasury Notes, 4.875%, 8/15/2016 4,300,312 -- 4,300,312
2,000,000 -- 2,000,000 U.S. Treasury Notes, 4.625%, 2/15/2017 2,107,656 -- 2,107,656
-- 110,000 110,000 U.S. Treasury Notes, 5.375%, 2/15/31 -- 120,871 120,871
-- 345,000 345,000 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%
12,000 -- 12,000 iShares MSCI EAFE Index $ 796,680 $ -- $ 796,680
160,000 -- 160,000 iShares Silver Trust 2,804,800 -- 2,804,800
----------- ----------- -----------
TOTAL EXCHANGE TRADED FUNDS $ 3,601,480 $ -- $ 3,601,480
----------- ----------- -----------
19
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- --------- ---------- ----------
TEMPORARY CASH INVESTMENTS 19.8%
Securities Lending Collateral 16.1%
Certificates of Deposit: 1.7%
-- 230,332 230,332 American Express, 2.72%, 8/8/08 $ -- $ 230,332 $ 230,332
-- 172,404 172,404 Bank of America, 2.88%, 8/11/08 -- 172,404 172,404
-- 344,809 344,809 CBA, 3.02%, 7/16/09 -- 344,809 344,809
-- 172,404 172,404 Citibank, 2.85%, 7/29/08 -- 172,404 172,404
-- 62,077 62,077 Banco Santander NY, 2.80%, 10/7/08 -- 62,077 62,077
-- 172,547 172,547 Banco Santander NY, 3.09%, 12/22/08 -- 172,547 172,547
998,893 -- 998,893 Bank of Ireland, 2.46%, 2/12/09 998,893 -- 998,893
-- 172,352 172,352 Bank of Nova Scotia, 3.18%, 5/05/09 -- 172,352 172,352
-- 86,202 86,202 Bank of Scotland NY, 2.72%, 8/15/08 -- 86,202 86,202
-- 62,013 62,013 Bank of Scotland NY, 2.89%, 11/4/08 -- 62,013 62,013
-- 86,166 86,166 Bank of Scotland NY, 3.03%, 9/26/08 -- 86,166 86,166
-- 310,328 310,328 Barclays Bank, 3.18%, 5/27/09 -- 310,328 310,328
-- 258,607 258,607 Bank Bovespa NY, 2.705%, 8/8/08 -- 258,607 258,607
-- 103,443 103,443 Calyon NY, 2.85%, 8/25/08 -- 103,443 103,443
-- 144,820 144,820 Calyon NY, 2.64%, 9/29/08 -- 144,820 144,820
-- 54,704 54,704 Calyon NY, 2.69%, 01/16/09 -- 54,704 54,704
-- 68,962 68,962 Deutsche Bank Financial, 2.72%, 8/4/08 -- 68,962 68,962
-- 127,809 127,809 Dexia Bank NY, 3.37%, 09/29/08 -- 127,809 127,809
-- 310,328 310,328 DNB NOR Bank ASA NY, 2.90%, 6/8/09 -- 310,328 310,328
-- 14,815 14,815 Fortis, 3.11%, 09/30/08 -- 14,815 14,815
-- 315,845 315,845 Intesa SanPaolo S.p.A., 2.72%, 5/22/09 -- 315,845 315,845
-- 86,202 86,202 Lloyds Bank, 2.61%, 8/18/08 -- 86,202 86,202
-- 117,235 117,235 Natixis, 2.83%, 8/4/08 -- 117,235 117,235
-- 172,404 172,404 NORDEA NY, 2.81%, 8/29/08 -- 172,404 172,404
-- 19,929 19,929 NORDEA NY, 2.72%, 4/9/09 -- 19,929 19,929
-- 16,528 16,528 NORDEA NY, 2.73%, 12/01/08 -- 16,528 16,528
-- 27,582 27,582 Rabobank Nederland NY, 2.37%, 8/29/08 -- 27,582 27,582
-- 172,406 172,406 Royal Bank of Canada NY, 2.6%, 9/5/08 -- 172,406 172,406
-- 103,443 103,443 Bank of Scotland NY, 2.7%, 8/1/08 -- 103,443 103,443
-- 103,497 103,497 Bank of Scotland NY, 2.96%, 11/3/08 -- 103,497 103,497
-- 19,989 19,989 Skandinavian Enskilda Bank NY, 3.18%, -- 19,989 19,989
09/22/08
34,408 34,408 Skandinavian Enskilda Bank NY, 3.06% -- 34,408 34,408
02/13/09
-- 310,328 310,328 Svenska Bank NY, 2.70%, 7/08/09 -- 310,328 310,328
-- 217,230 217,230 Toronto Dominion Bank NY, 2.77%, 9/5/08 -- 217,230 217,230
-- 103,443 103,443 Toronto Dominion Bank NY, 2.75%, 11/5/08 -- 103,443 103,443
-- 34,425 34,425 Wachovia, 3.62%,10/28/08 -- 34,425 34,425
-------- ---------- ----------
$998,893 $4,810,020 $5,808,913
-------- ---------- ----------
Commercial Paper: 0.9%
-- 53,108 53,108 Bank of America, 2.70%, 8/26/08 $ -- $ 53,108 $ 53,108
-- 68,912 68,912 Bank of America, 2.60%, 8/11/08 -- 68,912 68,912
-- 171,274 171,274 Citigroup, 2.83%, 10/24/08 -- 171,274 171,274
-- 171,673 171,673 HSBC Securities, Inc., 2.88%, 9/29/08 -- 171,673 171,673
-- 338,602 338,602 Honda Finance Corp., 2.92%, 7/14/09 -- 338,602 338,602
-- 137,804 137,804 ING Funding, 2.70%, 8/13/08 -- 137,804 137,804
-- 309,666 309,666 Macquarie bank, 2.75%, 8/29/08 -- 309,666 309,666
-- 42,584 42,584 PARFIN, 3.18%, 8/1/08 -- 42,584 42,584
-- 274,558 274,558 Rabobank, 2.68%, 10/3/08 -- 274,558 274,558
-- 68,503 68,503 Royal Bank of Scotland, 2.66%, 10/21/08 -- 68,503 68,503
20
Regions
Regions Morgan Pioneer
Morgan Pioneer Keegan Pioneer Classic
Keegan Pioneer Classic Select Classic Balanced
Select Classic Balanced % of Balanced Balanced Fund
Balanced Balanced Fund Pro Forma Fund Fund Combined
Fund Fund Combined Floating Combined Market Market Market
Shares Shares Shares Rate (b) Net Assets Value Value Value
- ------ -------- -------- -------- ---------- ------------- ---------- ----------
Commercial Paper (continued):
-- 68,939 68,939 Societe Generale, 3.18%, 8/5/08 $ -- $ 68,939 $ 68,939
-- 137,713 137,713 Societe Generale, 3.18%, 8/22/08 -- 137,713 137,713
-- 68,912 68,912 SVSS NY, 3.18%, 8/11/08 -- 68,912 68,912
-- 32,810 32,810 Bank Bovespa NY, 2.79%, 3/12/09 -- 32,810 32,810
-- 155,135 155,135 General Electric Capital Corp., 2.77%, -- 155,135 155,135
1/5/09
-- 172,349 172,349 General Electric Capital Corp., 2.82%, -- 172,349 172,349
3/16/09
-- 63,761 63,761 IBM, 3.18%, 2/13/09 -- 63,761 63,761
-- 172,404 172,404 IBM, 3.18%, 6/26/09 -- 172,404 172,404
-- 310,328 310,328 Met Life Global Funding, 3.16%, 6/12/09 -- 310,328 310,328
-- 293,088 293,088 WestPac, 3.18%, 6/1/09 -- 293,088 293,088
------------ ------------ ------------
$ -- $ 3,112,123 $ 3,112,123
------------ ------------ ------------
Mutual Funds: 12.5%
-- 517,213 517,213 AIM Short Term Investment Trust, 2.47% $ -- $ 517,213 $ 517,213
-- 517,213 517,213 BlackRock Liquidity Money Market Fund, -- 517,213 517,213
3.18%
------------ ------------ ------------
40,080,513 -- 40,080,513 Bank of New York Institutional Cash 40,080,513 -- 40,080,513
------------ ------------ ------------
Reserves Fund
-- 517,213 517,213 Dreyfus Preferred Money Market Fund,
3.18% -- 517,213 517,213
$ 40,080,513 $ 1,551,640 $ 41,632,153
Tri-party Repurchase Agreements: 0.9%
-- 8,117 8,117 Barclays Capital Markets, 2.15% 8/1/08 $ -- $ 8,117 $ 8,117
-- 577,193 577,193 Deutsche Bank, 2.18% 8/1/08 -- 577,193 577,193
-- 2,413,663 2,413,663 Lehman Brothers, 2.13% 8/1/08 -- 2,413,663 2,413,663
------------ ------------ ------------
$ -- $ 2,998,973 $ 2,998,973
------------ ------------ ------------
Other: 0.0%
-- 68,068 68,068 ABS CFAT 2008-A A1, 3.005%, 4/27/09 $ -- $ 68,068 $ 68,068
------------ ------------ ------------
$ 41,079,406 $ 12,540,825 $ 53,620,231
------------ ------------ ------------
Mutual Funds 3.7%
6,201,892 -- 6,201,892 Fidelity Institutional Money Market Fund $ 6,201,892 $ -- $ 6,201,892
6,201,892 -- 6,201,892 Lehman Brothers Prime Money Market Fund 6,201,892 -- 6,201,892
------------ ------------ ------------
$ 12,403,784 $ -- $ 12,403,784
------------ ------------ ------------
TOTAL TEMPORARY CASH INVESTMENTS $ 53,483,190 $12,540,825 $ 66,024,015
------------ ------------ ------------
TOTAL INVESTMENT IN SECURITIES 115.7% $210,417,762 $173,880,961 $384,298,723
------------ ------------ ------------
OTHER ASSETS AND LIABILITIES (15.7)% $(40,348,636) $(11,834,808) $(52,183,444)
------------ ------------ ------------
TOTAL NET ASSETS 100.0% $170,069,126 $162,046,153 $332,115,279
------------ ------------ ------------
TOTAL INVESTMENTS AT COST $181,651,154 $177,817,628 $359,468,782
------------ ------------ ------------
(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.
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)
Pioneer Pioneer
Regions Morgan Pioneer Independence Independence
Keegan Select Classic Fund Fund
Balanced Balanced Pro Forma Pro Forma
Fund Fund Adjustments Combined
------------- ------------- ----------- ------------
ASSETS:
Investment in securities, at value (Cost $181,651,154 and
$177,817,628, respectively) $ 210,417,762 $ 173,880,961 $384,298,723
Cash -- 162,778 162,778
Foreign currencies, at value (cost $0 and $12,825, respectively) -- 13,637 13,637
Receivables -
Investment securities sold -- 363,295 363,295
Fund shares sold -- 13,549 13,549
Dividends, interest and foreign taxes withheld 884,079 792,841 1,676,920
Due from Pioneer Investment Management, Inc. -- 26,719 26,719
Other -- 7,946 7,946
------------- ------------- ------------
Total assets $ 211,301,841 $ 175,261,726 $386,563,567
------------- ------------- ------------
LIABILITIES:
Payables -
Investment securities purchased $ -- $ 326,234 $ 326,234
Fund shares repurchased -- 203,103 203,103
Dividends -- 8,335 8,335
Upon return of securities loaned 41,079,406 12,540,825 53,620,231
Due to affiliates 142,402 60,497 202,899
Accrued expenses 10,907 76,579 87,486
------------- ------------- ------------
Total liabilities $ 41,232,715 $ 13,215,573 54,448,288
------------- ------------- ------------
NET ASSETS:
Paid-in capital $ 140,243,331 $ 176,281,659 $316,524,990
Undistributed net investment income 437,951 201,870 639,821
Accumulated net realized gain (loss) on investments and foreign
currency transactions 621,236 (10,501,521) (9,880,285)
Net unrealized gain (loss) on investments 28,766,608 (3,936,667) 24,829,941
Net unrealized gain on options and other assets and liabilities
denominated in foreign currencies -- 812 812
------------- ------------- ------------
Total net assets $ 170,069,126 $ 162,046,153 $332,115,279
------------- ------------- ------------
NET ASSETS BY CLASS:
Class A $ 34,860,782 $ 111,667,460 $146,528,242
------------- ------------- ------------
Class B $ -- $ 21,652,120 $ 21,652,120
------------- ------------- ------------
Class C $ 3,758,718 $ 9,071,283 $ 12,830,001
------------- ------------- ------------
Class I $ 131,449,626 $ -- (131,449,626)(a) $ --
------------- ------------- ------------ ------------
Class Y $ -- $ 19,655,290 131,449,626(a) $151,104,916
------------- ------------- ------------ ------------
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 2,251,121 12,908,309 1,779,027(a) 16,938,457
------------- ------------- ------------ ------------
Class B -- 2,515,167 2,515,167
------------- ------------- ------------ ------------
Class C 242,543 1,050,596 192,997(a) 1,486,136
------------- ------------- ------------ ------------
Class I 8,476,209 -- (8,476,209)(a) --
------------- ------------- ------------ ------------
Class Y -- 2,271,050 15,196,449(a) 17,467,499
------------- ------------- ------------ ------------
NET ASSET VALUE PER SHARE:
Class A $ 15.49 $ 8.65 $ 8.65
------------- ------------- ------------
Class B $ -- $ 8.61 $ 8.61
------------- ------------- ------------
Class C $ 15.50 $ 8.63 $ 8.63
------------- ------------- ------------
Class I $ 15.51 $ -- $ --
------------- ------------- ------------
Class Y $ -- $ 8.65 $ 8.65
------------- ------------- ------------
MAXIMUM OFFERING PRICE:
Class A $ 16.39 $ 9.06 $ 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)
Pioneer Pioneer
Regions Morgan Classic Balanced Classic Balanced
Keegan Select Pioneer Fund Fund
Balanced Classic Balanced Pro Forma Pro Forma
Fund Fund Adjustments Combined
-------------- ---------------- ---------------- ----------------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $6,095 and
$39,420, respectively) $ 1,922,199 $ 4,449,427 $ 6,371,626
Interest 2,390,933 4,508,447 6,899,380
Income on securities loaned, net 160,761 47,790 208,551
------------ ------------- -------------
Total investment income $ 4,473,893 $ 9,005,664 $ 13,479,557
------------ ------------- -------------
EXPENSES:
Management fees $ 1,308,260 $ 1,335,339 $ (175,607)(b) $ 2,467,992
Transfer agent fees 85,181 (85,181)(b) --
Class A -- 375,947 222,547(b) 598,494
Class B -- 89,322 89,322
Class C -- 33,535 10,805(b) 44,340
Class Y -- 886 41,211(b) 42,097
Shareholder service fees - Class A Shares 306,280 -- (306,280)(b) --
Shareholder service fees - Class C Shares 11,340 -- (11,340)(b) --
Distribution fees
Class A -- 359,413 305,786(b) 665,199
Class B -- 265,894 265,894
Class C 34,018 109,919 11,292(b) 155,229
Administrative fees 156,992 46,223 (117,785)(b) 85,430
Custodian fees 37,389 29,038 (17,677)(a) 48,750
Registration fees 20,223 61,418 14,978(c) 96,619
Professional fees -- 66,421 32,854(c) 99,275
Accounting fees 52,331 -- (52,331)(a) --
Legal fees 13,444 -- (13,444)(a) --
Audit fees 29,751 -- (29,751)(a) --
Printing expense 10,170 59,331 20,337(a) 89,838
Fees and expenses of nonaffiliated trustees 4,398 3,812 (878)(a) 7,332
Insurance premiums 9,426 -- (9,426)(a) --
Miscellaneous 8,873 23,639 3,795(c) 36,307
------------ ------------- ----------- -------------
Total expenses $ 2,088,076 $ 2,860,137 (156,095) $ 4,792,118
Less management fees waived and expenses assumed by
Pioneer Investment Management, Inc. -- (211,060) (35,607)(b) (246,667)
Less fees paid indirectly -- (14,495) (14,495)
------------ ------------- ----------- -------------
Net expenses $ 2,088,076 $ 2,634,582 $ (191,702) $ 4,530,956
------------ ------------- ----------- -------------
Net investment income $ 2,385,817 $ 6,371,082 $ 191,702 $ 8,948,601
------------ ------------- ----------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 8,195,249 $ (8,183,370) $ 11,879
Written options closed/expired 935,935 -- 935,935
------------ ------------- -------------
$ 9,131,184 $ (8,183,370) $ 947,814
------------ ------------- -------------
Change in net unrealized gain or loss from:
Investments $ (5,794,143) $ (12,705,418) $ (18,499,561)
Forward foreign currency contracts and other assets
and liabilities in foreign currencies -- 812 812
------------ ------------- -------------
$ (5,794,143) $ (12,704,606) $ (18,498,749)
------------ ------------- -------------
Net gain (loss) on investments, options and foreign
currency transactions $ 3,337,041 $ (20,887,976) $ (17,550,935)
------------ ------------- ----------- -------------
Net increase in net assets resulting from operations $ 5,722,858 $ (14,516,894) $ 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 $5 billion. The management fee was
equivalent to 0.65% of the average daily net assets for the period.
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce Fund expenses to 1.16%, 2.06% and 2.06% of the
average daily net assets attributable to Class A, Class B and Class C shares,
respectively. Class Y shares do not have an expense limitation. These expense
limitations are in effect through December 1, 2009 for Class A shares and
through December 1, 2008 for Class B and Class C shares. There can be no
assurance that Pioneer will extend the expense limitations beyond such time.
6. Federal Income Taxes
Each of the Fund and the RMK Fund has elected to be taxed as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). After the acquisition, it will continue to be the Fund's policy to
comply with the requirements of the Code applicable to regulated investment
companies and to distribute all of its taxable income and net realized capital
gains, if any, to its shareowners. Therefore, no federal income tax provision is
required.
The identified cost of investments for these funds is substantially the
same for both financial and federal income tax purposes. The cost of investments
will remain unchanged for the combined Fund.
25
Pro Forma Schedule of Investments for Regions Morgan Keegan Select Fixed Income
Fund and Pioneer Bond Fund(a)
As of 12/31/08
(unaudited)
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- ------ --------- --------- -------- ---------- -------- ------ ------
CONVERTIBLE CORPORATE BONDS 0.79%
Consumer Services 0.20%
Casinos & Gaming 0.20%
-- 2,300,000 2,300,000 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%
-- 2,570,000 2,570,000 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%
-- 2,100,000 2,100,000 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%
-- 2,800,000 2,800,000 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%
-- 4,880 4,880 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%
-- 153,800 153,800 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%
-- 347,245 347,245 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%
-- 4,535,000 4,535,000 Dunkin Brands Master Finance LLC,
8.28%, 6/20/31 $ -- $2,923,805 $2,923,805
------------ ------------ ------------
Total Consumer Services $ -- $2,923,805 $2,923,805
------------ ------------ ------------
See accompanying notes to pro forma financial statements.
26
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- --------- -------- ---------- ------- ----------- -----------
Food & Drug Retailing 0.22%
Food Retail 0.22%
5,325,000 5,325,000 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%
2,150,000 2,150,000 0.57 Carrington Mortgage, Floating Rate Note, $ -- $ 1,824,303 $ 1,824,303
10/25/36
1,684,495 1,684,495 0.62 CMLTI 2006-WFH2 A2A, Floating Rate Note,
8/25/36 -- 1,253,752 1,253,752
1,875,000 1,875,000 0.98 Countrywide Asset Backed Certificates,
Floating
Rate Note, 11/25/35 -- 1,617,285 1,617,285
667,038 667,038 Countrywide Asset-Backed, 5.069%, 2/25/36 -- 614,070 614,070
3,395,000 3,395,000 0.89 Countrywide Asset-Backed Certificates,
Floating
Rate Note, 8/25/35 -- 3,100,976 3,100,976
1,175,000 1,175,000 0.93 Countrywide Asset-Backed Certificates,
Floating
Rate Note, 10/25/35 -- 965,654 965,654
2,203,090 2,203,090 FBR Securitization T, 2.76188%, 9/25/35 -- 1,873,129 1,873,129
586,240 586,240 Lehman XS Trust., 3.3485%, 5/25/46 -- 577,649 577,649
5,183,519 5,183,519 Local Insight Media Finance LLC, 5.88%, -- 3,881,970 3,881,970
10/23/37
1,620,192 1,620,192 0.52 Morgan Stanley Ixis Real Estate, Floating
Rate
Note, 11/25/36 -- 1,535,915 1,535,915
1,570,501 1,570,501 0.72 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%
1,069,101 1,069,101 0.59 Nomura Home Equity Trust, Floating Rate
Note,
3/25/36 $ -- $ 1,015,516 $ 1,015,516
1,500,000 1,500,000 0.91 RASC 2005-KS7 M1, Floating Rate Note, -- 1,161,461 1,161,461
8/25/35
------- ----------- -----------
$ -- $ 2,176,977 $ 2,176,977
------- ----------- -----------
Diversified Financial Services 0.05%
420,000 420,000 0.91 Asset Backed Securities Corp., Floating
Rate Note,
4/25/35 $ -- $ 348,179 $ 348,179
212,264 212,264 1.01 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%
822,771 822,771 0.54 GSAMP Trust, Floating Rate Note, 1/25/37 $ -- $ 749,682 $ 749,682
927,250 927,250 0.73 GSAMP Trust, Floating Rate Note, 11/25/35 -- 853,433 853,433
1,217,527 1,217,527 0.90 GSAMP Trust, Floating Rate Note, 3/25/35 -- 1,119,864 1,119,864
1,725,000 1,725,000 0.63 MLMI 2006-AR1 A2C, Floating Rate Note, -- 1,168,548 1,168,548
3/25/37
------- ----------- -----------
$ -- $ 3,891,527 $ 3,891,527
------- ----------- -----------
Specialized Finance 0.08%
900,000 900,000 3.67 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 $31,371,847
------- ----------- -----------
See accompanying notes to pro forma financial statements.
27
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- --------- -------- ---------- ------- ----------- ----------
COLLATERALIZED MORTGAGE OBLIGATIONS 9.68%
Materials 0.12%
Steel 0.12%
120,154,349 120,154,349 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%
1,871,149 1,871,149 RALI 2005-QA10 A41, 5.7412%, 9/25/35 $ -- $ 1,034,287 $ 1,034,287
Thrifts & Mortgage Finance 6.37%
1,440,000 1,440,000 Bank of America Commercial Mortgage, Inc.,
4.877%, 7/10/42 $ -- $ 1,204,751 $ 1,204,751
4,370,029 4,370,029 Chase Mortgage Finance Corp., 5.5%, -- 3,520,125 3,520,125
5/25/37
3,955,416 3,955,416 Countrywide Alternative Loan Trust, 6.0%, -- 2,489,440 2,489,440
6/25/35
3,375,000 3,375,000 GMAC Commercial Mortgage Securities, Inc.,
4.864%, 12/10/41 -- 2,788,893 2,788,893
2,900,000 2,900,000 GS Mortgage Securities Corp., II, 7.12%, -- 2,774,808 2,774,808
11/18/29
1,266,317 1,266,317 0.87 IMPAC CMB Trust, Floating Rate Note, -- 627,333 627,333
11/25/35
10,135,000 10,135,000 JP Morgan Chase Commercial Mortgage
Security Corp., 6.065392%, 4/15/45 -- 8,085,265 8,085,265
2,600,000 2,600,000 JP Morgan Mortgage Trust, 4.5%, 8/25/19 -- 2,128,820 2,128,820
4,045,295 4,045,295 JP Morgan Mortgage Trust, 6.0%, 8/25/34 -- 3,557,332 3,557,332
1,750,000 1,750,000 JPMCC 2002-C3 B, 5.146%, 7/12/35 -- 1,570,207 1,570,207
1,750,000 1,750,000 JPMCC 2004-PNC1 A3, 5.299%, 6/12/41 -- 1,581,631 1,581,631
10,000,000 10,000,000 LB-UBS Commercial Mortgage, 5.372%, -- 7,845,059 7,845,059
9/15/39
1,097,989 1,097,989 MASTR Asset Securitization Trust, 5.5% , -- 962,769 962,769
11/25/33
8,510,000 8,510,000 5.70 SASC 2007 BHC1 A1, Floating Rate Note, -- 2,830,171 2,830,171
12/18/49
2,890,000 2,890,000 5.74 SASC 2007 BHC1 A2, Floating Rate Note, -- 958,989 958,989
12/18/49
2,010,000 2,010,000 SBA CMBS Trust, 6.709%, 11/15/36 -- 1,366,800 1,366,800
1,435,000 1,435,000 T SRA R 2006-1 B, 5.7467%, 10/15/36 -- 875,126 875,126
4,470,000 4,470,000 TSTAR 2006-1A A, 5.668%, 10/15/36 -- 3,589,445 3,589,445
3,787,250 3,787,250 Wachovia Bank Commercial Mortgage Trust,
4.803%, 10/15/41 -- 3,040,079 3,040,079
1,977,233 1,977,233 WAMU Mortgage Pass-Through Certificates,
4.5%, 8/25/18 -- 1,559,291 1,559,291
2,921,516 2,921,516 0.70 WAMU Mortgage Pass-Through Certificates,
Floating Rate Note, 4/25/45 -- 1,379,204 1,379,204
1,450,000 1,450,000 WBCMT 2003-C9 B, 5.109%, 12/15/35 -- 1,262,822 1,262,822
3,380,786 3,380,786 Wells Fargo Mortgage Backed Securities
5.0%, 11/25/20 -- 3,199,068 3,199,068
2,821,761 2,821,761 Wells Fargo Mortgage Backed Securities,
5.0%, 3/25/21 -- 2,049,304 2,049,304
717,986 717,986 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 $63,023,997
------- ----------- -----------
See accompanying notes to pro forma financial statements.
28
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- `---------- ---------- -------- ---------- ---------- ----------- ----------
Diversified Financials 2.05%
Diversified Financial Services 2.05%
2,127,761 2,127,761 CMSI 2006-1 3A1, 5.0%, 2/25/36 $ -- $ 1,612,040 $ 1,612,040
812,986 812,986 DSLA 2004-AR3 2A2A, 1.84375%, 7/19/44 509,019 -- 509,019
692,097 692,097 First Horizon Mortgage Pass- Through
Trust, 5.0%,
3/25/18 -- 675,660 675,660
1,270,000 1,270,000 Global Signal, 7.036%, 2/15/36 -- 834,885 834,885
331,175 331,175 0.87 Impac Securities Assets Corp., Floating
Rate Note,
11/25/34 -- 164,344 164,344
1,656,181 1,656,181 0.82 Impac Securities Assets Corp., Floating
Rate Note,
5/25/36 -- 1,175,694 1,175,694
2,808,450 2,808,450 J.P. Morgan Alternative Loan Trust, 6.0%, -- 2,059,179 2,059,179
3/25/36
3,494,856 3,494,856 MARM 2005-1 9A1, 5.1939%, 1/25/35 2,340,491 -- 2,340,491
4,898,824 4,898,824 Master Alternative Loans Trust, 6.0%, -- 3,818,021 3,818,021
7/25/34
1,405,622 1,405,622 Morgan Stanley Capital I, 5.25%, 12/25/17 -- 1,376,675 1,376,675
426,588 426,588 Morgan Stanley Capital I, 7.0%, 7/25/33 -- 402,992 402,992
919,750 919,750 0.57 Residential Accredit Loans, Inc.,
Floating Rate
Note, 9/25/46 -- 726,051 726,051
2,444,768 2,444,768 Residential Funding Mtg Sec I, 5.5%, -- 2,062,797 2,062,797
11/25/35
500,000 500,000 RFMSI 2004-S9 1A24, 4.6%, 1/15/14 403,511 -- 403,511
202,444 202,444 Salomon Brothers Mortgage Securities,
8.0%,
9/25/30 -- 152,529 152,529
1,000,000 1,000,000 SARM 2006-3 3A2, 5.75%, 4/25/36 162,869 -- 162,869
4,168,284 4,168,284 Structured 2005-1 5A, 5.16%, 2/25/35 1,065,830 -- 1,065,830
575,000 575,000 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%
4,318,725 4,318,725 CS First Boston Mortgage Security, 3.5%, $ -- $ 3,791,275 $ 3,791,275
7/25/18
722,923 722,923 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%
741,304 741,304 Fannie Mae, 5.69%, 1/25/32 $ -- $ 755,877 $ 755,877
700,421 700,421 Federal Home Loan Bank, 6.0%, 4/15/32 -- 718,246 718,246
5,626 5,626 Federal National Mortgage Association,
10.3%,
4/25/19 -- 5,922 5,922
7,751 7,751 Federal National Mortgage Association,
10.3%,
4/25/19 -- 9,098 9,098
448,762 448,762 Freddie Mac, 5.0%, 8/15/35 -- 453,399 453,399
3,824,108 3,824,108 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 $94,150,991
---------- ----------- -----------
See accompanying notes to pro forma financial statements.
29
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ------- ----------- ----------
CORPORATE BONDS 33.84%
Energy 2.56%
Integrated Oil & Gas 0.09%
990,000 990,000 Marathon Oil Corp. 5.9%, 3/15/18 $ -- $ 826,813 $ 826,813
45,000 45,000 Petro-Canada, 4.0%, 7/15/13 -- 38,588 38,588
------- ----------- -----------
$ -- $ 865,401 $ 865,401
------- ----------- -----------
Oil & Gas Drilling 0.25%
1,600,000 1,600,000 Transocean Sedco, 1.5%, 12/15/37 $ -- $ 1,296,000 $ 1,296,000
1,275,000 1,275,000 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%
1,000,000 1,000,000 0.00 Sevan Marine ASA, Floating Rate Note, $ -- $ 500,900 $ 500,900
------- ----------- -----------
5/14/13
Oil & Gas Exploration & Production 0.48%
2,180,000 2,180,000 Canadian National Resources, 5.9%, 2/1/18 $ -- $ 1,883,479 $ 1,883,479
2,181,573 2,181,573 Gazprom International SA, 7.201%, 2/1/20 -- 1,592,549 1,592,549
1,605,000 1,605,000 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%
2,475,000 2,475,000 Spectra Energy Capital, 6.2%, 4/15/18 $ -- $ 2,147,681 $ 2,147,681
------- ----------- -----------
Oil & Gas Storage & Transportation 1.47%
435,000 435,000 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ -- $ 351,741 $ 351,741
1,535,000 1,535,000 Buckeye Partners LP, 6.05%, 1/15/18 -- 1,286,729 1,286,729
1,150,000 1,150,000 Holly Energy Partners LP, 6.25%, 3/1/15 -- 770,500 770,500
3,250,000 3,250,000 Kinder Morgan Energy 5.95%, 2/15/18 -- 2,773,761 2,773,761
2,915,000 2,915,000 NGPL Pipeco LLC, 6.514%, 12/15/12 -- 2,766,390 2,766,390
2,700,000 2,700,000 Plains All America Pipeline, 6.125%, -- 2,147,016 2,147,016
1/15/17
3,885,000 3,885,000 Questar Pipeline Co., 5.83%, 2/1/18 -- 3,591,286 3,591,286
1,895,000 1,895,000 7.20 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%
2,290,000 2,290,000 Novelis, Inc., 7.25%, 2/15/15 $ -- $ 1,328,200 $ 1,328,200
------- ----------- -----------
Commodity Chemicals 0.09%
2,000,000 2,000,000 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ -- $ 830,000 $ 830,000
------- ----------- -----------
Construction Materials 0.12%
2,260,000 2,260,000 C8 Capital SPV, Ltd., 6.64%, 12/31/49 $ -- $ 1,145,820 $ 1,145,820
------- ----------- -----------
Diversified Metals & Mining 0.20%
2,965,000 2,965,000 5.88 Freeport-McMoran Copper & Gold, Floating
Rate
Note, 4/1/15 $ -- $ 1,956,900 $ 1,956,900
------- ----------- -----------
Fertilizers & Agricultural Chemicals 0.45%
4,510,000 4,510,000 Agrium, Inc., 6.75%, 1/15/19 $ -- $ 4,317,188 $ 4,317,188
45,000 45,000 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 Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ---------- ----------- ----------
Steel 0.38%
3,900,000 3,900,000 ArcelorMittal 6.125%, 6/1/18 $ -- $ 2,670,556 $ 2,670,556
1,230,000 1,230,000 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%
40,000 40,000 Boeing Co., 5.125%, 2/15/13 $ -- $ 39,961 $ 39,961
---------- ----------- -----------
Building Products 0.11%
2,225,000 2,225,000 6.72 C10 Capital SPV Ltd, Floating Rate Note, $ -- $ 1,058,722 $ 1,058,722
---------- ----------- -----------
12/31/49
Electrical Component & Equipment 0.43%
2,665,000 2,665,000 Anixter International Corp., 5.95%, 3/1/15 $ -- $ 2,132,000 $ 2,132,000
2,670,000 2,670,000 Belden CDT, Inc., 7.0%, 3/15/17 -- 2,002,500 2,002,500
---------- ----------- -----------
$ -- $ 4,134,500 $ 4,134,500
---------- ----------- -----------
Diversified Machinery 0.14%
1,400,000 1,400,000 Ingersoll-Rand Global Holding Co., Ltd.,
6.875%, 8/15/18 $1,338,847 $ -- $ 1,338,847
---------- ----------- -----------
Trading Companies & Distributors 0.65%
5,660,000 5,660,000 GATX Financial Corp., 6.0%, 2/15/18 $ -- $ 5,031,814 $ 5,031,814
3,100,000 3,100,000 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%
3,110,000 3,110,000 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%
1,158,244 1,158,244 Southwest Airlines Co., 7.67%, 1/2/14 $ -- $ 1,128,593 $ 1,128,593
---------- ----------- -----------
Railroads 1.01%
2,140,000 2,140,000 Burlington Sante Fe Corp., 5.75%, 3/15/08 $ -- $ 2,062,919 $ 2,062,919
3,400,000 3,400,000 Kansas City Southern Mexico, 7.625%, -- 2,788,000 2,788,000
12/1/13
5,125,000 5,125,000 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%
3,255,000 3,255,000 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%
4,235,000 4,235,000 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 Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ---------- ---------- ----------
Consumer Services 0.60%
Casinos & Gaming 0.01%
1,780,000 1,780,000 Station Casinos, Inc., 6.625%, 3/15/18 $ -- $ 102,350 $ 102,350
---------- ---------- ----------
Education Services 0.59%
2,470,000 2,470,000 President & Fellows of Harvard, 3.7%, $ -- $2,436,532 $2,436,532
4/1/13
3,095,000 3,095,000 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%
2,620,000 2,620,000 Grupo Telivisa SA, 6.0%, 5/15/18 $ -- $2,203,158 $2,203,158
4,250,000 4,250,000 Intelsat Sub, 8.5%, 1/15/13 -- 3,931,250 3,931,250
1,000,000 1,000,000 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%
1,600,000 1,600,000 British Sky Broadcasting, 6.1%, 2/15/18 $ -- $1,313,758 $1,313,758
135,000 135,000 Comcast Corp., 5.3%, 1/15/14 -- 126,243 126,243
425,000 425,000 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%
25,000 25,000 Nordstrom, Inc., 5.625%, 1/15/09 $ -- $ 25,017 $ 25,017
2,000,000 2,000,000 Target Corp., 5.375%, 5/1/17 1,819,378 -- 1,819,378
2,000,000 2,000,000 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%
3,545,000 3,545,000 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%
3,500,000 3,500,000 Cargill Inc., 5.2%, 1/22/13 $ -- $3,206,333 $3,206,333
---------- ---------- ----------
Food 0.26%
1,500,000 1,500,000 Kellogg Co., 5.125%, 12/3/12 $1,249,578 $ -- $1,249,578
1,200,000 1,200,000 McDonald's Corp., 5.35%, 3/1/18 1,246,542 -- 1,246,542
---------- ---------- ----------
$2,496,120 $ -- $2,496,120
---------- ---------- ----------
Brewers 0.01%
55,000 55,000 Miller Brewing Co., 5.5%, 8/15/13 $ -- $ 51,281 $ 51,281
---------- ---------- ----------
Distillers & Vintners 0.27%
2,765,000 2,765,000 Constellation Brands, Inc., 8.375%, $ -- $2,626,750 $2,626,750
---------- ---------- ----------
12/15/14
Soft Drinks 0.13%
55,000 55,000 Bottling Group LLC, 5.0%, 11/15/13 $ -- $ 53,723 $ 53,723
1,000,000 1,000,000 PepsiCo., Inc., 7.9%, 11/1/18 1,225,647 -- 1,225,647
---------- ---------- ----------
$1,225,647 $ 53,723 $1,279,370
---------- ---------- ----------
See accompanying notes to pro forma financial statements.
32
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ----------- ----------- - ----------
Tobacco 0.13%
1,535,000 1,535,000 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%
1,250,000 1,250,000 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%
3,005,000 3,005,000 HCA, Inc., 9.625%, 11/15/16 $ -- $ 2,343,900 $ 2,343,900
----------- ----------- -----------
Managed Health Care 0.31%
3,275,000 3,275,000 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%
5,570,000 5,570,000 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%
3,515,000 3,515,000 Barclays Plc, 6.05%, 12/4/17 $ -- $ 3,100,915 $ 3,100,915
3,520,000 3,520,000 Wachovia Corp., 5.75%, 6/15/17 -- 3,503,600 3,503,600
2,235,000 2,235,000 Wells Fargo Co., 4.375%, 1/31/13 -- 2,188,548 2,188,548
----------- ----------- -----------
$ -- $ 8,793,063 $ 8,793,063
----------- ----------- -----------
Regional Banks 3.36%
1,870,000 1,870,000 American Express Bank FSB, 5.5%, 4/16/13 $ -- $ 1,771,339 $ 1,771,339
3,000,000 3,000,000 Bank of America Corp., 7.8%, 2/15/10 3,073,620 -- 3,073,620
4,500,000 4,500,000 Branch Banking & Trust Co., 4.875%,
1/15/13 -- 4,239,279 4,239,279
1,190,000 1,190,000 Cobank, ACB, 7.875%, 4/16/18 -- 1,202,132 1,202,132
7,000,000 7,000,000 Countrywide, 5.5%, 4/25/35 4,887,449 -- 4,887,449
2,000,000 2,000,000 JP Morgan Chase & Co., 7.0%, 11/15/09 2,021,128 -- 2,021,128
930,000 930,000 Keycorp, 6.5%, 5/14/13 -- 857,355 857,355
2,505,000 2,505,000 Mellon Funding Corp., 5.5%, 11/15/18 -- 2,159,425 2,159,425
1,435,000 1,435,000 PNC Bank NA, 6.0%, 12/7/17 -- 1,426,126 1,426,126
1,473,000 1,473,000 8.25 PNC Funding Corp., Floating Rate Note, -- 1,186,932 1,186,932
5/29/49
2,755,000 2,755,000 Sovereign Bancorp, 8.75%, 5/30/18 -- 2,721,761 2,721,761
2,000,000 -- 2,000,000 Wachovia Corp., 5.75%, 6/15/17 1,990,682 -- 1,990,682
3,520,000 3,520,000 Wachovia Bank NA, 6.0%, 11/15/17 -- 3,397,948 3,397,948
1,275,000 1,275,000 Wells Fargo Capital, 9.75%, 12/29/49 -- 1,287,750 1,287,750
585,000 585,000 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 $41,429,706
----------- ----------- -----------
See accompanying notes to pro forma financial statements.
33
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ----------- ----------- -----------
Diversified Financials 7.97%
Asset Management & Custody Banks 0.98%
2,000,000 2,000,000 Bank of New York, 4.95%, 3/15/15 $ -- $ 1,918,438 $ 1,918,438
3,945,000 3,945,000 Eaton Vance Corp 6.5%, 10/2/17 -- 3,495,641 3,495,641
4,000,000 4,000,000 State Street Corp., 7.65%, 6/15/10 -- 4,161,760 4,161,760
----------- ----------- -----------
$ -- $ 9,575,839 $ 9,575,839
----------- ----------- -----------
Consumer Finance 2.19%
4,750,000 4,435,000 9,185,000 American General Finance, 6.9%, 12/15/17 $ 2,406,317 $ 1,919,348 $ 4,325,665
3,875,000 3,875,000 American Honda Finance, 6.7%, 10/1/13 -- 3,906,035 3,906,035
1,200,000 1,200,000 BP Capital Markets Plc, 5.25%, 11/7/13 1,252,723 -- 1,252,723
1,200,000 1,200,000 Caterpillar Financial, 7.9%, 12/15/18 1,381,378 -- 1,381,378
2,575,000 2,575,000 Caterpillar Financial, 7.05%, 10/1/18 -- 2,710,260 2,710,260
2,630,000 2,630,000 Ford Motor Credit Co., 5.7%, 1/15/10 -- 2,235,053 2,235,053
3,750,000 3,750,000 John Deere Capital Corp., 2.875%, 6/19/12 3,856,841 -- 3,856,841
3,155,000 3,155,000 4.00 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%
1,450,000 1,450,000 8.4 C VAR, Floating Rate Note, Perpetual $ -- $ 957,421 $ 957,421
2,575,000 2,575,000 JP Morgan Chase & Co., 6.0%, 1/15/18 -- 2,717,974 2,717,974
4,954,219 4,954,219 JP Morgan Chase & Co., 4.9%, 2/25/35 3,789,799 -- 3,789,799
4,900,000 4,900,000 JPMorgan Chase & Co., 7.9%, 4/29/49 -- 4,075,967 4,075,967
1,100,000 1,100,000 Nationsbank Corp., 7.75%, 8/15/15 -- 1,124,927 1,124,927
1,153,920 1,153,920 PF Export Receivable Master Trust, 6.436%,
6/1/15 -- 1,142,381 1,142,381
1,860,842 1,860,842 Power Receivables Finance LLC, 6.29%,
1/1/12 -- 1,822,843 1,822,843
200,000 200,000 TNK-BP Finance SA, 6.625%, 3/20/17 -- 96,000 96,000
1,000,000 1,000,000 TNK-BP Finance SA, 6.625%, 3/20/17 -- 480,000 480,000
2,080,000 2,080,000 TNK-BP Finance SA, 7.5%, 7/18/16 -- 1,081,600 1,081,600
1,000,000 1,000,000 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%
9,740,000 9,740,000 5.79 Goldman Sachs Capital, Floating Rate Note.,
12/29/49 $ -- $ 3,744,280 $ 3,744,280
2,000,000 2,000,000 Goldman Sachs Group, Inc., 5.5%, 11/15/14 1,812,952 -- 1,812,952
3,325,000 3,325,000 Merrill Lynch & Co., 5.45%, 2/5/13 -- 3,196,143 3,196,143
1,200,000 1,200,000 Merrill Lynch & Co., 6.111%, 1/29/37 1,797,850 -- 1,797,850
4,765,000 4,765,000 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%
5,280,000 5,280,000 CIT Group, Inc., 7.625%, 11/30/12 $ -- $ 4,457,212 $ 4,457,212
5,904,965 5,904,965 Coso Geothermal Power, 7.0%, 7/15/26 -- 4,930,646 4,930,646
2,500,000 2,500,000 International Lease Finance Corp., 6.375%,
3/25/13 -- 1,698,240 1,698,240
2,000,000 2,000,000 National Rural Utilities Corp., 5.45%,
2/1/18 -- 1,775,818 1,775,818
1,075,000 1,075,000 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 $77,475,169
----------- ----------- -----------
See accompanying notes to pro forma financial statements.
34
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ---------- ----------- -----------
Insurance 2.59%
Life & Health Insurance 0.23%
2,800,000 2,800,000 Prudential Financial, 5.15%, 1/15/13 $ -- $ 2,274,306 $ 2,274,306
---------- ----------- -----------
Multi-Line Insurance 0.80%
4,620,000 4,620,000 Liberty Mutual Group, 7.0%, 3/15/37 $ -- $ 2,203,195 $ 2,203,195
3,035,000 3,035,000 Liberty Mutual Group, 7.3%, 6/15/14 -- 2,841,868 2,841,868
650,000 650,000 10.75 Liberty Mutual Group, Floating Rate Note,
6/15/58 -- 357,500 357,500
2,650,000 2,650,000 Loew Corp., 5.25%, 3/15/16 -- 2,392,274 2,392,274
---------- ----------- -----------
$ -- $ 7,794,837 $ 7,794,837
---------- ----------- -----------
Property & Casualty Insurance 1.02%
3,742,000 3,742,000 Ambac Financial Group, Inc., 6.15%,
2/15/37 $ -- $ 374,174 $ 374,174
5,000,000 5,000,000 Hanover Insurance Group, 7.625%, 10/15/25 -- 3,000,000 3,000,000
4,135,000 4,135,000 Kingsway America, Inc., 7.5%, 2/1/14 -- 3,445,075 3,445,075
2,270,000 2,270,000 14.00 MBIA, Inc., Floating Rate Note, 1/15/33 -- 1,157,700 1,157,700
---------- ----------- -----------
2,000,000 2,000,000 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%
2,150,000 2,150,000 Berkshire Hathway, Inc., 5.0%, 8/15/13 $ -- $ 2,187,068 $ 2,187,068
4,720,000 4,720,000 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%
4,125,000 4,125,000 WEA Finance LLC, 7.125%, 4/15/18 $ -- $ 2,926,238 $ 2,926,238
---------- ----------- -----------
Real Estate Operating Companies 0.29%
8,180,000 8,180,000 Forest City Enterprises, 7.625%, 6/1/15 $ -- $ 2,863,000 $ 2,863,000
---------- ----------- -----------
Retail Real Estate Investment Trust 0.39%
3,470,000 3,470,000 Trustreet Properties, Inc., 7.5%, 4/1/15 $ -- $ 3,765,134 $ 3,765,134
---------- ----------- -----------
Specialized Real Estate Investment Trust 0.46%
4,125,000 4,125,000 Health Care, Inc., 6.2%, 6/1/16 $ -- $ 2,640,000 $ 2,640,000
860,000 860,000 Health Care, Inc., 6.0%, 11/15/13 -- 579,026 579,026
935,000 935,000 Health Care, Inc., 8.0%, 9/12/12 -- 801,136 801,136
565,000 565,000 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%
4,845,000 4,845,000 First Data Corp., 9.875%, 9/24/15 $ -- $ 2,931,225 $ 2,931,225
1,800,000 1,800,000 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%
5,070,000 5,070,000 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 Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ---------- ----------- -----------
Computers 0.18%
1,700,000 1,700,000 Hewlett-Packard Co. $1,725,643 $ -- $ 1,725,643
---------- ----------- -----------
Electronic Manufacturing Services 0.18%
2,170,000 2,170,000 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%
3,140,000 3,140,000 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%
1,200,000 1,200,000 AT&T, Inc., 5.6%, 5/15/18 $1,221,773 $ -- $ 1,221,773
1,000,000 1,000,000 Bellsouth Capital Funding Corp., 7.75%,
2/15/10 1,035,080 -- 1,035,080
1,990,000 1,990,000 Embarq Corp., 7.082%, 6/1/16 -- 1,532,300 1,532,300
2,100,000 2,100,000 Verizon Communications, Inc., 8.75%,
11/1/18 -- 2,463,766 2,463,766
2,725,000 2,725,000 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%
1,000,000 1,000,000 Alabama Power Co., 4.85%, 12/15/12 $1,000,077 $ -- $ 1,000,077
980,000 980,000 Commonwealth Edison, 6.15%, 9/15/17 -- 911,251 911,251
845,617 845,617 Crocket Cogeneration, 5.869%, 3/30/25 -- 673,204 673,204
2,270,000 2,270,000 Entergy Gulf States, 5.7%, 6/1/15 -- 2,049,386 2,049,386
1,714,104 1,714,104 FPL Energy America Wind LLC, 6.639%,
6/20/23 -- 1,472,587 1,472,587
647,850 647,850 FPL Energy Wind Funding, 6.876%, 6/27/17 -- 608,169 608,169
1,925,000 1,925,000 Israel Electric Corp., 7.25%, 1/15/19 -- 1,795,351 1,795,351
910,000 910,000 Nevada Power Co., 6.5%, 8/1/18 -- 875,527 875,527
5,055,000 5,055,000 NY State Gas and Electric, 6.15%, 12/15/17 -- 4,600,535 4,600,535
1,224,826 1,224,826 Orcal Geothermal, 6.21%, 12/30/20 -- 1,375,896 1,375,896
2,690,000 2,690,000 Public Service of New Mexico, 7.95%,
5/15/18 -- 2,189,009 2,189,009
500,000 500,000 Southern California Edison Co., 5.75%,
3/15/14 -- 523,969 523,969
2,500,000 2,500,000 TXU Energy Co., 10.25%, 11/1/15 -- 1,775,000 1,775,000
3,550,000 3,550,000 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%
2,450,000 2,450,000 Nakilat, Inc., 6.267%, 12/31/33 $ -- $ 1,641,721 $ 1,641,721
---------- ----------- -----------
Independent Power Producer & Energy 0.84%
Traders
2,675,000 2,675,000 Intergen NV, 9.0%, 6/30/17 $ -- $ 2,193,500 $ 2,193,500
2,105,000 2,105,000 Kiowa Power Partners LLC, 5.737%, 3/30/21 -- 1,611,083 1,611,083
2,610,000 2,610,000 Panoche Energy Center, 6.885%, 7/31/29 -- 2,209,730 2,209,730
2,748,495 2,748,495 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 Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- ---------- ---------- ---------- -------- ---------- ----------- ------------ ------------
Multi-Utilities 0.11%
1,365,000 1,365,000 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%
1,460,000 1,460,000 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%
140,000 140,000 Fannie Mae, 5.24%, 8/7/18 $ -- $ 147,632 $ 147,632
80,000 80,000 Federal Home Loan Bank, 4.0%, 3/30/12 855,314 -- 855,314
31,021,407 31,021,407 Federal Home Loan Mortgage Corp., 4.5%,
11/1/18-11/1/35 -- 31,656,294 31,656,294
8,000,000 8,729,261 16,729,261 Federal Home Loan Mortgage Corp., 5.0%,
10/1/20-6/1/35 8,081,636 8,966,417 17,048,053
9,197,922 9,197,922 Federal Home Loan Mortgage Corp., 5.5%,
12/1/18-11/1/35 -- 9,445,073 9,445,073
3,000,000 3,000,000 Federal Home Loan Mortgage Corp., 5.75%,
1/15/12 3,353,181 -- 3,353,181
4,946,622 18,173,957 23,120,579 Federal Home Loan Mortgage Corp., 6.0%,
5/1/17-6/1/35 5,101,402 18,767,566 23,868,968
1,523,165 1,523,165 Federal Home Loan Mortgage Corp., 6.5%,
3/1/13-11/1/33 -- 1,589,193 1,589,193
23,424 23,424 Federal Home Loan Mortgage Corp., 7.0%,
11/1/30-12/1/30 -- 24,617 24,617
6,485 6,485 Federal Home Loan Mortgage Corp., 8.0%,
8/1/31 -- 6,775 6,775
2,055 2,055 Federal Home Loan Mortgage Corp., 8.048%,
10/1/33 -- 2,108 2,108
4,454,057 4,454,057 Federal National Mortgage Association,
4.0%, 7/1/18-3/1/36 -- 4,492,458 4,492,458
21,379,013 21,379,013 Federal National Mortgage Association,
4.5%, 4/1/19-3/1/37 -- 21,860,964 21,860,964
159,106 159,106 Federal National Mortgage Association,
4.79%, 12/1/12 -- 161,902 161,902
10,022,577 25,611,268 35,633,845 Federal National Mortgage Association,
5.0%, 12/1/17-6/1/36 10,108,409 26,275,243 36,383,652
12,415,665 68,210,681 80,626,346 Federal National Mortgage Association,
5.5%, 9/1/17-6/1/36 12,749,894 70,086,511 82,836,405
8,058,711 23,812,927 31,871,638 Federal National Mortgage Association,
6.0% 6/1/16-12/1/35 8,310,465 24,575,305 32,885,770
2,324,317 2,324,317 Federal National Mortgage Association,
6.5%, 7/1/29-7/1/34 -- 2,428,397 2,428,397
2,426,116 2,426,116 Federal National Mortgage Association,
7.0%, 3/1/12-1/1/32 -- 2,535,806 2,535,806
8,491 8,491 Federal National Mortgage Association,
7.5%, 8/1/20-4/1/30 -- 8,997 8,997
47,297 47,297 Federal National Mortgage Association,
8.0%, 4/1/20-5/1/31 -- 50,105 50,105
2,237,316 2,237,316 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 Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ----------- ------------ -------------
Government (continued)
18,201,697 18,201,697 Government National Mortgage Association,
4.5%, 7/15/33-6/15/38 $ -- $ 18,596,581 $ 18,596,581
3,339,716 3,339,716 Government National Mortgage Association,
5.0%, 10/15/18-4/15/35 -- 3,455,210 3,455,210
5,689,817 23,284,692 28,974,509 Government National Mortgage Association,
5.5%, 10/15/17-2/15/37 5,974,775 24,096,355 30,071,130
25,228,431 25,228,431 Government National Mortgage Association,
6.0%, 4/15/14-10/15/36 -- 26,150,866 26,150,866
12,048,321 12,048,321 Government National Mortgage Association,
6.5%, 8/15/11-7/15/35 -- 12,655,108 12,655,108
1,598,477 1,598,477 Government National Mortgage Association,
7.0%, 9/15/11-5/15/32 -- 1,689,087 1,689,087
172,448 172,448 Government National Mortgage Association,
7.5%, 8/15/11-12/15/31 -- 182,842 182,842
12,104 12,104 Government National Mortgage Association,
7.75%, 11/15/29-2/15/30 -- 12,819 12,819
13,833 13,833 Government National Mortgage Association,
8.0%, 5/15/10 -- 14,469 14,469
358,262 358,262 Government National Mortgage Association,
I, 6.0%, 2/15/29 -- 371,638 371,638
97,057 97,057 Government National Mortgage Association,
I, 7.0%, 12/15/30-3/15/31 -- 102,654 102,654
18,330 18,330 Government National Mortgage Association,
I, 7.5%, 10/15/29 -- 19,425 19,425
2,398,859 2,398,859 Government National Mortgage Association,
II, 4.5%, 12/20/34-1/20/35 -- 2,426,931 2,426,931
2,203,193 2,203,193 Government National Mortgage Association,
II, 5.5%, 10/20/19-11/20/34 -- 2,281,250 2,281,250
115,471 115,471 Government National Mortgage Association,
II, 6.5%, 2/20/29-4/20/29 -- 121,567 121,567
494,843 494,843 Government National Mortgage Association,
II, 7.0%, 11/20/28-12/20/30 -- 521,312 521,312
1,420,000 1,420,000 U.S. Treasury Bonds, 3.875%, 5/15/18 -- 1,619,242 1,619,242
1,500,000 1,500,000 U.S. Treasury Bonds, 4.25%, 11/15/13 -- 1,711,875 1,711,875
3,750,000 3,750,000 U.S. Treasury Bonds, 6.25%, 8/15/23 -- 5,114,648 5,114,648
14,572,000 14,572,000 U.S. Treasury Inflation Notes, 0.0%, -- 13,453,424 13,453,424
11/15/13
500,000 500,000 U.S. Treasury Inflation Notes, 0.0%, -- 467,624 467,624
5/15/13
3,517,440 3,517,440 U.S. Treasury Inflation Notes, 2.0%, -- 3,332,774 3,332,774
1/15/14
1,750,000 1,750,000 U.S. Treasury Notes, 3.625%, 5/15/13 -- 1,922,813 1,922,813
625,000 625,000 U.S. Treasury Notes, 4.0%, 2/15/15 -- 712,109 712,109
1,500,000 1,500,000 U.S. Treasury Notes, 4.125%, 5/15/15 1,720,313 -- 1,720,313
2,500,000 2,500,000 U.S. Treasury Notes, 4.25%, 8/15/15 2,903,125 -- 2,903,125
2,000,000 2,000,000 U.S. Treasury Notes, 4.375%, 2/15/38 -- 2,678,750 2,678,750
3,000,000 3,000,000 U.S. Treasury Notes, 4.5%,
3/31/12-2/15/16 3,387,344 -- 3,387,344
3,000,000 3,000,000 U.S. Treasury Notes, 4.75%, 5/15/14 3,530,391 -- 3,530,391
840,000 840,000 U.S. Treasury Notes, 5.5%, 8/15/28 -- 1,135,303 1,135,303
450,000 450,000 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 $418,156,856
----------- ------------ ------------
See accompanying notes to pro forma financial statements.
38
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ------- ----------- -----------
MUNICIPAL BONDS 1.22%
Municipal Higher Education 1.19%
4,380,000 4,380,000 California State University Revenue, $ -- $ 4,033,717 $ 4,033,717
5.0%, 11/1/39
4,600,000 4,600,000 Connecticut State Health & Educational,
5.0%, 7/1/42 -- 4,541,074 4,541,074
730,000 730,000 Houston Higher Education Finance Corp.,
5.0%, 5/15/47 -- 685,901 685,901
2,350,000 2,350,000 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%
315,000 315,000 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%
1,795,500 1,795,500 8.00 Hudson Products Holdings, Inc., Term Loan,
8/24/15 $ -- $ 1,418,445 $ 1,418,445
------- ----------- ------------
Oil & Gas Exploration & Production 0.22%
2,930,487 2,930,487 4.34 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%
2,375,819 2,375,819 5.50 Graham Packaging Co., New Term Loan,
10/7/11 $ -- $ 1,730,388 $ 1,730,388
2,955,679 2,955,679 6.72 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%
3,391,757 3,391,757 5.44 Aeroflex, Inc., Tranche B-1 Term, 8/15/14 $ -- $ 2,136,807 $ 2,136,807
------- ----------- ------------
Construction & Farm Machinery & Heavy 0.06%
Trucks
912,849 912,849 5.56 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%
2,969,849 2,969,849 4.24 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%
402,514 402,514 3.10 TNT Logistics, Additional Pre-funded $ -- $ 249,559 $ 249,559
Loan, 11/4/13
1,214,127 1,214,127 5.05 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 Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ------- ---------- -----------
Automobiles & Components 0.23%
Tires & Rubber 0.23%
3,440,000 3,440,000 2.22 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%
1,305,128 1,305,128 3.96 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%
1,548,060 1,548,060 5.44 Fontainebleau Las Vegas, Initial Term $ -- $ 445,067 $ 445,067
Loan, 6/6/14
395,128 395,128 6.55 Gateway Casinos & Entertainment, Delayed
Draw, 9/30/14 -- 175,832 175,832
1,955,885 1,955,885 6.55 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%
3,300,000 3,300,000 2.71 Univision Communication, Inc., Initial
Term Loan,
9/29/14 $ -- $1,356,666 $1,356,666
------- ---------- ----------
Cable & Satellite 0.06%
970,446 970,446 6.40 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%
1,358,000 1,358,000 6.64 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%
4,169,535 4,169,535 5.64 Talecris Biotherapeutics Holdings, First
Term Lien, 12/6/13 $ -- $3,658,767 $3,658,767
------- ---------- ----------
Health Care Facilities 0.48%
1,709,567 1,709,567 4.45 CHS/Community Health Systems, Inc., Funded
Term, 7/13/14 $ -- $1,339,446 $1,339,446
29,144 29,144 1.80 CHS/Community Health Systems, Inc.,
Delayed Draw, 7/25/14 -- 22,835 22,835
2,842,000 2,842,000 3.71 HCA, Inc., Tranche B Term, 11/18/13 -- 2,246,956 2,246,956
1,169,821 1,169,821 4.82 Sun Health Care Group, Inc., Term Loan, -- 807,177 807,177
4/19/14
265,517 265,517 1.36 Sun Health Care Group, Inc., Synthetic -- 183,207 183,207
LC, 4/21/14
157,419 157,419 3.74 Sun Health Care Group, Inc., Delayed Draw,
4/19/14 -- 108,619 108,619
------- ---------- ----------
$ -- $4,708,240 $4,708,240
------- ---------- ----------
See accompanying notes to pro forma financial statements.
40
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ------- ----------- -----------
Health Care Services 0.18%
2,829,716 2,829,716 3.71 Catalent Pharma Solutions, Inc., Dollar
Term Loan, 4/10/14 $ -- $ 1,719,053 $ 1,719,053
------- ----------- -----------
Health Care Supplies 0.12%
1,425,597 1,425,597 4.71 Bausch & Lomb, Term Loan, 4/24/15 $ -- $ 977,552 $ 977,552
216,000 216,000 3.43 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%
1,047,375 1,047,375 5.25 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%
5,558,000 5,558,000 4.94 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%
2,425,253 2,425,253 4.02 SunGard Data Systems, Inc., New U.S. Term,
2/28/14 $ -- $ 1,675,849 $ 1,675,849
------- ----------- -----------
Systems Software 0.10%
1,039,395 1,039,395 6.34 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%
330,636 330,636 7.07 Flextronics Semiconductor, A-1-A Delayed
Draw, 10/1/14 $ -- $ 212,709 $ 212,709
------- ----------- -----------
1,150,614 1,150,614 6.16 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%
240,834 240,834 4.46 Telesat Canada, U.S. Term II Loan, $ -- $ 166,434 $ 166,434
10/24/14
2,803,993 2,803,993 6.10 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%
796,975 796,975 3.51 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%
1,975,000 1,975,000 5.60 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 $45,062,893
------- ----------- -----------
See accompanying notes to pro forma financial statements.
41
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ---------- ----------- -----------
TEMPORARY CASH INVESTMENTS 4.28%
Securities Lending Collateral 2.05%
Certificates of Deposit: 1.24%
605,028 605,028 Abbey National Plc, 3.15%, 8/13/09 $ -- $ 605,028 $ 605,028
604,946 604,946 Bank of Nova Scotia, 3.21%, 5/5/09 -- 604,946 604,946
966,880 966,880 Bank of Scotland NY, 2.92%, 6/5/09 -- 966,880 966,880
1,089,050 1,089,050 Barclays Bank, 1.5%, 5/27/09 -- 1,089,050 1,089,050
192,361 192,361 Calyon NY, 4.62%, 1/16/09 -- 192,361 192,361
1,210,056 1,210,056 CBA, 4.87%, 7/16/09 -- 1,210,056 1,210,056
1,089,050 1,089,050 DNB NOR Bank ASA NY, 3.04%, 6/5/09 -- 1,089,050 1,089,050
1,108,411 1,108,411 Intesa SanPaolo S.p.A., 1.44%, 5/22/09 -- 1,108,411 1,108,411
70,088 70,088 NORDEA NY, 4.13%, 4/9/09 -- 70,088 70,088
907,542 907,542 Royal Bank of Canada NY, 2.7%, 8/7/09 -- 907,542 907,542
605,028 605,028 Royal Bank of Scotland, 3.06%, 3/5/09 -- 605,028 605,028
120,950 120,950 Skandinavian Enskilda Bank NY, 3.06%,
2/13/09 -- 120,950 120,950
1,210,056 1,210,056 Societe Generale, 3.29%, 9/4/09 -- 1,210,056 1,210,056
1,089,050 1,089,050 Svenska Bank NY, 4.61%, 7/8/09 -- 1,089,050 1,089,050
1,210,056 1,210,056 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%
7,870,154 -- 7,870,154 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%
1,188,275 1,188,275 American Honda Finance Corp., 4.95%,
7/14/09 $ -- $ 1,188,275 $ 1,188,275
115,305 115,305 BBVA U.S., 2.83%, 3/12/09 -- 115,305 115,305
605,028 605,028 CME Group, Inc., 2.9%, 8/6/09 -- 605,028 605,028
604,964 604,964 General Electric Capital Corp., 2.86%,
3/16/09 -- 604,964 604,964
1,210,056 1,210,056 HSBC Bank, Inc., 2.5%, 8/14/09 -- 1,210,056 1,210,056
605,028 605,028 IBM, 2.39%, 9/25/09 -- 605,028 605,028
1,089,050 1,089,050 Met Life Global Funding, 3.19%, 6/12/09 -- 1,089,050 1,089,050
1,210,056 1,210,056 Monumental Global Funding, Ltd., 2.5%,
8/17/09 -- 1,210,056 1,210,056
1,089,050 1,089,050 New York Life Global, 2.13%, 09/04/09 -- 1,089,050 1,089,050
1,028,547 1,028,547 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%
205,564 205,564 Barclays Capital Markets, 0.5%, 1/2/09 $ -- $ 205,564 $ 205,564
2,662,122 2,662,122 Deutsche Bank, 0.25%, 1/2/09 -- 2,662,122 2,662,122
---------- ----------- -----------
$ -- $ 2,867,687 $ 2,867,687
---------- ----------- -----------
Time Deposit: 0.12%
1,210,056 1,210,056 BNP Paribas, 0.01%, 1/2/09 $ -- $ 1,210,056 $ 1,210,056
---------- ----------- -----------
See accompanying notes to pro forma financial statements.
42
Regions
Morgan Regions
Keegan Morgan
Select Keegan Pioneer
Fixed Pioneer Select Bond
Income Pioneer Bond Fixed Pioneer Fund
Fund Bond Fund % of Income Bond Pro-Forma
Principal Fund Combined Pro-Forma Fund Fund Combined
Amount Principal Principal Floating Combined Market Market Market
($) Amount ($) Amount ($) Rate (b) Net Assets Value Value Value
- --------- ---------- ---------- -------- ---------- ------------ ------------ --------------
Money Market Mutual Fund: 0.92%
302,514 302,514 Columbia Government Reserves Fund,
0.82%, 1/2/09 $ -- $ 302,514 $ 302,514
3,844,626 3,844,626 Fidelity Institutional Money Market
Fund 3,844,626 -- 3,844,626
3,844,626 3,844,626 Fidelity U.S. Treasury Cash Reserve
Fund 3,844,626 -- 3,844,626
907,542 907,542 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)
Pioneer Pioneer
Regions Morgan Bond Bond
Keegan Select Pioneer Fund Fund
Fixed Income Bond Pro Forma Pro Forma
Fund Fund Adjustments Combined
--------------- -------------- ------------- --------------
INVESTMENT INCOME:
Dividends $ 64,668 $ 372,057 $ 436,725
Interest 7,818,663 61,410,887 69,229,550
Litigation fees 1,401,333 1,401,333
Income on securities loaned, net 109,073 249,431 358,504
------------- -------------- ----------- --------------
Total investment income $ 7,992,404 $ 63,433,708 $ -- $ 71,426,112
------------- -------------- ----------- --------------
EXPENSES:
Management fees $ 759,120 $ 5,036,348 $ 5,795,468
Transfer agent fees 86,515 -- $ (86,515)(b) --
Class A -- 540,325 156,049(b) 696,374
Class B -- 105,110 105,110
Class C -- 70,606 70,606
Class R -- 13,061 13,061
Class Y -- 254,404 19,972(b) 274,376
Class Z -- 26 26
Shareholder service fees - Class A Shares 213,979 -- (213,979)(b) --
Shareholder service fees - Class C Shares 5,233 -- (5,233)(d) --
Distribution fees --
Class A -- 689,976 219,178(b) 909,154
Class B -- 343,096 343,096
Class C 15,699 374,288 (15,699)(d) 374,288
Class R -- 57,509 57,509
Shareholder communications expense -- 317,711 317,711
Administrative fees 136,643 304,034 (102,532)(b) 338,145
Custodian fees 32,864 58,065 (26,707)(a) 64,222
Registration fees 36,135 109,857 (21,975)(a) 124,017
Professional fees -- 193,438 12,313(c) 205,751
Accounting fees 45,547 -- (45,547)(a) --
Legal fees 21,258 -- (21,258)(a) --
Audit fees 10,539 -- (10,539)(a) --
Printing expense 13,019 67,214 (2,752)(a) 77,481
Fees and expenses of nonaffiliated trustees 7,532 26,688 (3,838)(a) 30,382
Insurance premiums 1,808 -- (1,808)(a) --
Miscellaneous 13,385 227,053 (2,802)(a) 237,636
------------- -------------- ----------- --------------
Total expenses $ 1,399,276 $ 8,788,809 $ (153,672) $ 10,034,413
Less management fees waived and expenses assumed --
by Pioneer Investment Management, Inc. -- (586,496) (139,482)(b) (725,978)
Less fees paid indirectly -- (19,460) (19,460)
------------- -------------- ----------- --------------
Net expenses $ 1,399,276 $ 8,182,853 $ (293,154) $ 9,288,975
------------- -------------- ----------- --------------
Net investment income $ 6,593,128 $ 55,250,855 $ 293,154 $ 62,137,137
------------- -------------- ----------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: --
Net realized gain (loss) from: --
Investments $ (6,780,453) $ 18,002,707 $ 11,222,254
------------- -------------- ----------- --------------
$ (6,780,453) $ 18,002,707 $ -- $ 11,222,254
------------- -------------- ----------- --------------
Change in net unrealized gain or loss from: --
Investments $ (4,213,950) $ (109,822,321) $ (114,036,271)
Unfunded corporate loans -- (342,380) (342,380)
------------- -------------- ----------- --------------
(4,213,950) (110,164,701) $ -- (114,378,651)
------------- -------------- ----------- --------------
Net gain (loss) on investments $ (10,994,403) $ (92,161,994) $ -- $ (103,156,397)
------------- -------------- ----------- --------------
Net increase in net assets resulting from operations $ (4,401,275) $ (36,911,139) $ 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, 2008, Pioneer has agreed to limit ordinary operating
expenses to the extent required to reduce Fund expenses to 0.85%, 1.90%, 1.90%,
1.25% and 0.65% 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, 2013 for Class A and Class Z shares and through November 1, 2009
for Class B, Class C and Class R 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 Regions
Morgan Morgan
Keegan Pioneer Keegan
Select Treasury Select Pioneer
Treasury Reserves Treasury Pioneer Treasury
Money Pioneer Fund Money Treasury Reserves
Market Treasury ProForma % of Market Reserves Fund
Fund Reserves Combined Pro Forma Fund Fund Combined
Amount Fund Floating Principal Combined Market Market Market
($) Amount ($) Rate (b) Amount ($) Net Assets Value Value Value
- --------- ---------- -------- ----------- ---------- ------------ ----------- ------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS 88.9%
-- 1,000,000 1,000,000 Federal Home Loan Bank, 2.25%, 2/13/09 $ -- $ 999,188 $ 999,188
-- 2,850,000 2.60 2,850,000 Federal Home Loan Bank, Floating Rate
Note, 2/18/09 -- 2,850,000 2,850,000
-- 4,600,000 2.39 4,600,000 Federal Home Loan Bank, Floating Rate
Note, 8/21/09 -- 4,599,813 4,599,813
-- 700,000 700,000 Federal Home Loan Mortgage Corp.,
3.125%, 6/23/09 -- 700,000 700,000
-- 410,000 2.39 410,000 Federal Home Loan Mortgage Corp.,
Floating Rate Note, 10/19/09 -- 409,963 409,963
-- 420,000 2.39 420,000 Federal Home Loan Mortgage Corp.,
Floating Rate Note, 10/8/09 -- 420,000 420,000
-- 860,000 2.72 860,000 Federal National Mortgage Association,
Floating Rate Note, 1/28/10 -- 860,000 860,000
-- 790,000 2.27 790,000 Federal National Mortgage Association,
Floating Rate Note, 9/3/09 -- 790,000 790,000
70,000,000 -- 70,000,000 U.S. Treasury Bill, 1.323%-1.843%,
8/7/08 69,981,471 -- 69,981,471
-- 1,500,000 1,500,000 U.S. Treasury Bills, 1.4065%, 8/14/08 -- 1,499,238 1,499,238
120,000,000 -- 120,000,000 U.S. Treasury Bill, 1.384%-1.823%,
8/14/08 119,930,333 -- 119,930,333
-- 1,700,000 1,700,000 U.S. Treasury Bills, 1.5%, 8/21/08 -- 1,698,466 1,698,466
100,000,000 -- 100,000,000 U.S. Treasury Bill, 1.707%-1.741%,
8/28/08 99,872,987 -- 99,872,987
10,000,000 -- 10,000,000 U.S. Treasury Bill, 1.668%, 9/4/08 9,984,511 -- 9,984,511
-- 2,000,000 2,000,000 U.S. Treasury Bills, 3.125%, 9/15/08 -- 1,997,549 1,997,549
105,000,000 -- 105,000,000 U.S. Treasury Bill, 1.646%-2.028%,
9/18/08 104,746,746 -- 104,746,746
25,000,000 -- 25,000,000 U.S. Treasury Bill, 1.833%, 10/2/08 24,922,500 -- 24,922,500
30,000,000 -- 30,000,000 U.S. Treasury Bill, 1.838%, 10/9/08 29,896,213 -- 29,896,213
15,000,000 -- 15,000,000 U.S. Treasury Bill, 2.004%, 11/6/08 14,920,783 -- 14,920,783
40,000,000 -- 40,000,000 U.S. Treasury Bill, 1.758%, 11/13/08 39,800,661 -- 39,800,661
30,000,000 -- 30,000,000 U.S. Treasury Bill, 2.140%, 11/20/08 29,806,578 -- 29,806,578
40,000,000 -- 40,000,000 U.S. Treasury Bill, 1.848%-1.859%,
12/18/08 39,719,681 -- 39,719,681
-- 3,000,000 3,000,000 U.S. Treasury Bills, 1.8495%, 12/26/08 -- 2,977,343 2,977,343
-- 500,000 500,000 U.S. Treasury Bills, 2.19%, 12/4/08 -- 496,198 496,198
-- 500,000 500,000 U.S. Treasury Bills, 2.4815%, 6/4/09 -- 489,419 489,419
15,000,000 -- 3.25 15,000,000 U.S. Treasury Note, Floating Rate Note,
8/15/08 15,009,405 -- 15,009,405
100,000,000 -- 3.125 100,000,000 U.S. Treasury Note, Floating Rate Note,
9/15/08 100,178,347 -- 100,178,347
110,000,000 -- 4.625 110,000,000 U.S. Treasury Note, Floating Rate Note,
9/30/08 110,507,350 -- 110,507,350
100,000,000 -- 4.875 100,000,000 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 $930,781,753
------------ ----------- ------------
See accompanying notes to pro forma financial statements.
48
Regions Regions
Morgan Morgan
Keegan Pioneer Keegan
Select Treasury Select Pioneer
Treasury Reserves Treasury Pioneer Treasury
Money Pioneer Fund Money Treasury Reserves
Market Treasury ProForma % of Market Reserves Fund
Fund Reserves Combined Pro Forma Fund Fund Combined
Amount Fund Floating Principal Combined Market Market Market
($) Amount ($) Rate (b) Amount ($) Net Assets Value Value Value
- ---------- ---------- -------- ---------- ---------- ----------- ----------- -----------
Shares Shares MUTUAL FUND 0.0%
-- 728 728 BlackRock Liquidity Funds FedFund Portfolio $ -- $ 728 728
----------- ----------- ------------
TOTAL MUTUAL FUND $ -- $ 728 728
----------- ----------- ------------
Principal Principal
Amount Amount
($) ($)
TEMPORARY CASH INVESTMENTS 10.8%
Repurchase Agreements
40,000,000 -- 40,000,000 Goldman Sachs Financial Square Funds,
1.57%, 1/1/09 $40,000,000 $ -- $ 40,000,000
7,547,493 -- 7,547,493 Blackrock Liquidity Funds Treasury Trust
Fund Portfolio, 1.49%, 1/1/09 7,547,493 -- 7,547,493
1,000,000 -- 1,000,000 Federated US Treasury Cash Reserve Fund,
1.46%. 1/1/09 1,000,000 -- 1,000,000
-- 63,000,000 63,000,000 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%, -- 63,000,000 63,000,000
11/15/18
-- 1,200,000 1,200,000 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 $112,747,493
----------- ----------- ------------
See accompanying notes to pro forma financial statements.
49
Regions Regions
Morgan Morgan
Keegan Keegan
Select Pioneer Select Pioneer
Treasury Treasury Treasury Pioneer Treasury
Money Pioneer Reserves Fund Money Treasury Reserves
Market Treasury ProForma % of Market Reserves Fund
Fund Reserves Combined Pro Forma Fund Fund Combined
Amount Fund Floating Principal Combined Market Market Market
($) Amount ($) Rate (b) Amount ($) 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)
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
---------------- ------------ -------------- ---------------
ASSETS:
Investment in securities, at value (Cost $985,542,069 and
$84,987,905, respectively) $ 958,542,069 $84,987,905 $1,043,529,974
Cash -- 174,349 174,349
Receivables -
Fund shares sold -- 300,087 300,087
Interest and dividends 4,447,207 59,063 4,506,270
Other -- 6,667 6,667
------------- ----------- --------------
Total assets $ 962,989,276 $85,528,071 $1,048,517,347
------------- ----------- --------------
LIABILITIES:
Payables -
Fund shares repurchased $ -- $ 276,626 $ 276,626
Dividends 872,626 46,907 919,533
Due to affiliates 468,902 2,462 471,364
Accrued expenses 75,250 42,081 117,331
------------- ----------- --------------
Total liabilities $ 1,416,778 $ 368,076 1,784,854
------------- ----------- --------------
NET ASSETS:
Paid-in capital $ 960,679,050 $85,112,266 $1,045,791,316
Distributions in excess of net investment income -- (13,041) (13,041)
Accumulated net realized gain on investments 893,448 60,770 954,218
------------- ----------- --------------
Total net assets $ 961,572,498 $85,159,995 $1,046,732,493
------------- ----------- --------------
NET ASSETS BY CLASS:
Class A $ 954,410,806 $47,806,563 $1,002,217,369
------------- ----------- --------------
Class I $ 7,161,692 $ -- (7,161,692)(a) $ --
------------- ----------- --------------
Class Y $ -- $37,353,432 7,161,692(a) $ 44,515,124
------------- ----------- --------------
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
Class A 953,530,980 47,743,468 879,826(a) 1,002,154,274
------------- ----------- --------------
Class I 7,155,166 -- (7,155,166)(a) --
------------- ----------- --------------
Class Y -- 37,263,940 7,161,692(a) 44,425,632
------------- ----------- --------------
NET ASSET VALUE PER SHARE:
Class A $ 1.00 $ 1.00 $ 1.00
------------- ----------- --------------
Class I $ 1.00 $ -- $ --
------------- ----------- --------------
Class Y $ -- $ 1.00 $ 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
ADDITIONAL INFORMATION ABOUT
PIONEER SELECT MID CAP GROWTH FUND,
PIONEER GROWTH FUND
AND
PIONEER INTERMEDIATE TAX FREE INCOME FUND
FUND HISTORY
Each of Pioneer Select Mid Cap Growth Fund, 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 February 13, 2004. 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 Select Mid Cap Growth Fund
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 Select Mid Cap 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
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, debt convertible to equity securities
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 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 (known as "junk bonds"), 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.
55
The fund may invest up to 20% of its net assets in REITs. The fund uses a
"growth" style of management and seeks to invest in companies 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, fundamental research, and 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 and economic sector analysis, not
on 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.
The fund may invest up to 20% 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.
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 (known as "junk bonds") 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, debt convertible to equity securities 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.
56
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, water, healthcare and
transportation segments of the municipal bond market. The fund may also invest
up to 20% of its assets in industrial development bonds.
In addition, the fund may invest up to 20% of its net assets in debt
securities rated below investment grade (known as "junk bonds") or, if unrated,
are of equivalent credit quality as determined by Pioneer.
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 fundamental research and 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, or the credit quality deteriorates, 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 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 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).
57
Investments in CDOs may be characterized by the fund as illiquid securities,
which may be difficult to sell at an advantageous time or price. Although
certain CDOs may receive credit enhancement in the form of a senior-subordinate
structure, over-collateralization or bond insurance, such enhancement may not
always be present, and may fail to protect a fund against the risk of loss on
default of the collateral.
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.
With respect to the investment strategies and practices enumerated above,
to the extent that a percentage limitation is not specified, there is no
specific limit on the fund's ability to engage in such strategy or practice.
Investment Policies
Equity Investments and Related Investments (Pioneer Select Mid Cap Growth Fund
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 prices 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.
Preferred stocks may differ in many of their provisions. Among the
features that differentiate preferred stocks from one another are the dividend
rights, which may be cumulative or noncumulative and participating or
non-participating, redemption provisions, and voting rights. Such features will
establish the income return and may affect the prospects for capital
appreciation or risks of capital loss.
The market prices of preferred stocks are subject to changes in interest
rates and are more sensitive to changes in an issuer's creditworthiness than
are the prices of debt securities. Shareholders of preferred stock may suffer a
loss of value if dividends are not paid. Under ordinary circumstances,
preferred stock does not carry voting rights.
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.
58
Non-U.S. Investments (Pioneer Select Mid Cap Growth Fund 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, 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
59
non-U.S. securities are generally less liquid and subject to greater price
volatility than the markets for comparable securities in the U.S. The markets
for securities in certain emerging markets are in the earliest stages of their
development. Even the markets for relatively widely traded securities in
certain non-U.S. markets, including emerging market countries, may not be able
to absorb, without price disruptions, a significant increase in trading volume
or trades of a size customarily undertaken by institutional investors in the
U.S.
Additionally, market making and arbitrage activities are generally less
extensive in such markets, which may contribute to increased volatility and
reduced liquidity. The less liquid a market, the more difficult it may be for
the fund to accurately price its portfolio securities or to dispose of such
securities at the times determined by Pioneer to be appropriate. The risks
associated with reduced liquidity may be particularly acute in situations in
which the fund's operations require cash, such as in order to meet redemptions
and to pay its expenses.
Economic, Political and Social Factors. Certain countries, including
emerging markets, may be subject to a greater degree of economic, political and
social instability than 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.
60
Withholding and Other Taxes. The fund will be subject to taxes, including
withholding taxes, on income (possibly including, in some cases, capital gains)
that are or may be imposed by certain countries with respect to the fund's
investments in such countries. These taxes will reduce the return achieved by
the fund. Treaties between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.
Investments in Depositary Receipts
The fund may hold securities of non-U.S. issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and other similar instruments. Generally, ADRs in
registered form are designed for use in U.S. securities markets, and EDRs and
GDRs and other similar global instruments in bearer form are designed for use
in non-U.S. securities markets.
ADRs are denominated in U.S. dollars and represent an interest in the
right to receive securities of non-U.S. issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the fund will avoid currency
risks during the settlement period for either purchases or sales. EDRs and GDRs
are not necessarily denominated in the same currency as the underlying
securities which they represent.
For purposes of the fund's investment policies, investments in ADRs, 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.
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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 currency market
movements is not possible, and short-term hedging provides a means of fixing
the U.S. dollar value of only a portion of the fund's foreign assets.
While the fund will enter into forward contracts to reduce currency
exchange rate risks, transactions in such contracts involve certain other
risks. While the fund may benefit from such transactions, unanticipated changes
in currency prices may result in a poorer overall performance for the fund than
if it had not engaged in any such transactions. Moreover, there may be
imperfect correlation between the fund's portfolio holdings of securities
quoted or denominated in a particular currency and forward contracts entered
into by the fund. Such imperfect correlation may cause the fund to sustain
losses which will prevent the fund from achieving a complete hedge or expose
the fund to risk of foreign exchange loss.
Over-the-counter markets for trading foreign forward currency contracts
offer less protection against defaults than is available when trading in
currency instruments on an exchange. Since a forward foreign currency exchange
contract is not guaranteed by an exchange or clearinghouse, a default on the
contract would deprive the fund of unrealized profits or force the fund to
cover its commitments for purchase or resale, if any, at the current market
price.
If the fund enters into a forward contract to purchase foreign currency,
the custodian or Pioneer will segregate liquid assets. See "Asset Segregation."
Options on Foreign Currencies
The fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are quoted or denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In an
attempt to protect against such decreases in the value of portfolio securities,
the fund may purchase put options on the foreign currency. If the value of the
currency declines, the fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative
effect of currency depreciation on the value of the fund's securities quoted or
denominated in that currency.
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.
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A call option written on foreign currency by the fund is "covered" if the
fund owns the underlying foreign currency subject to the call, or if it has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration. A call option is also covered if the fund holds
a call on the same foreign currency for the same principal amount as the call
written where the exercise price of the call held is (a) equal to or less than
the exercise price of the call written or (b) greater than the exercise price
of the call written if the amount of the difference is maintained by the fund
in cash or liquid securities. See "Asset Segregation."
The fund may close out its position in a currency option by either selling
the option it has purchased or entering into an offsetting option. An
exchange-traded options position may be closed out only on an options exchange
which provides a secondary market for an option of the same series. Although
the fund will generally purchase or write only those options for which there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular option, or at any
particular time. For some options no secondary market on an exchange may exist.
In such event, it might not be possible to effect closing transactions in
particular options, with the result that the fund would have to exercise its
options in order to realize any profit and would incur transaction costs upon
the sale of underlying currencies pursuant to the exercise of put options. If
the fund as a covered call option writer is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
currency (or security quoted or denominated in that currency) until the option
expires or it delivers the underlying currency upon exercise.
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. Investing in other investment companies subjects the fund to the risks
of investing in the underlying securities held by those investment companies.
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
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. Many ETF's have received
exemptive orders issued by the SEC that would permit the fund to invest in
those ETF's beyond the limitations applicable to other investment companies.
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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
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
may 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
64
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.
Index options are subject to the timing risk inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. If
a fund has purchased an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall "out-of-the-money", the fund will be required to pay cash in an
amount of the difference between the closing index value and the exercise price
of the option.
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 it is anticipated that 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.
65
Transactions by the fund in options on securities and indices will be
subject to limitations established by each of the exchanges, boards of trade or
other trading facilities governing the maximum number of options in each class
which may be written or purchased by a single investor or group of investors
acting in concert. Thus, the number of options which the fund may write or
purchase may be affected by options written or purchased by other investment
advisory clients of Pioneer. An exchange, board of trade or other trading
facility may order the liquidations of positions found to be in excess of these
limits, and it may impose certain other sanctions.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of protective
puts for hedging purposes depends in part on the ability of Pioneer to predict
future price fluctuations and the degree of correlation between the options and
securities markets.
The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the options markets
close before the markets for the underlying securities, significant price
movements can take place in the underlying markets that cannot be reflected in
the options markets.
In addition to the risks of imperfect correlation between the fund's
portfolio and the index underlying the option, the purchase of securities index
options involves the risk that the premium and transaction costs paid by the
fund in purchasing an option will be lost. This could occur as a result of
unanticipated movements in the price of the securities comprising the
securities index on which the option is based.
Futures Contracts and Options on Futures Contracts
To hedge against changes in securities prices or currency exchange rates
or to seek to increase total return, the fund may purchase and sell various
kinds of futures contracts, and purchase and write (sell) call and put options
on any of such futures contracts. The fund may also enter into closing purchase
and sale transactions with respect to any of such contracts and options. The
futures contracts may be based on various securities (such as U.S. government
securities), securities indices, foreign currencies and other financial
instruments and indices. The fund will engage in futures and related options
transactions for bona fide hedging and non-hedging purposes as described below.
All futures contracts entered into by the fund are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the Commodity Futures
Trading Commission (the "CFTC") or on non-U.S. exchanges.
Futures Contracts. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the fund
can seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling 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
66
prices of securities in the fund's portfolio may be more or less volatile than
prices of such futures contracts, Pioneer will attempt to estimate the extent
of this volatility difference based on historical patterns and compensate for
any such differential by having the fund enter into a greater or lesser number
of futures contracts or by attempting to achieve only a partial hedge against
price changes affecting the fund's portfolio securities. When hedging of this
character is successful, any depreciation in the value of portfolio securities
will be substantially offset by appreciation in the value of the futures
position. On the other hand, any unanticipated appreciation in the value of the
fund's portfolio securities would be substantially offset by a decline in the
value of the futures position.
On other occasions, the fund may take a "long" position by purchasing
futures contracts. This may be done, for example, when the fund anticipates the
subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.
Options on Futures Contracts. The acquisition of put and call options on
futures contracts will give the fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event
of an unfavorable price movement to the loss of the premium and transaction
costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the fund's assets. By
writing a call option, the fund becomes obligated, in exchange for the premium,
to sell a futures contract (if the option is exercised), which may have a value
higher than the exercise price. Conversely, the writing of a put option on a
futures contract generates a premium which may partially offset an increase in
the price of securities that the fund intends to purchase. However, the fund
becomes obligated to purchase a futures contract (if the option is exercised)
which may have a value lower than the exercise price. Thus, the loss incurred
by the fund in writing options on futures is potentially unlimited and may
exceed the amount of the premium received. The fund will incur transaction
costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The
fund's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.
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
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.
If the fund were unable to liquidate a futures contract or an option on a
futures position due to the absence of a liquid secondary market, the
imposition of price limits or otherwise, it could incur substantial losses. The
fund would continue to be subject to market risk with respect to the position.
In addition, except in the case of purchased options, the fund would continue
to be required to make daily variation margin payments and might be required to
maintain the position being hedged by the future or option or to maintain cash
or securities in a segregated account.
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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 Information
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.
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. The current economic
downturn is severely affecting the ability of many 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 or to
take other steps to protect its investment in an issuer.
The secondary market for high yield securities is not usually 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, such as those currently prevailing, 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 and other 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. There can be no assurances that these attempts will be
successful.
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.
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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. Although the U.S. government has recently provided financial
support to FNMA and FHLMC, no assurance can be given that the U.S. government
will provide financial support in the future to these or other 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; (ii)
participations in loans made to non-U.S. governments or other entities that are
so guaranteed; and (iii) as a result of initiatives introduced in response to
the ongoing financial market difficulties, securities of commercial issuers or
financial institutions that qualify for guarantees by U.S. government agencies
like the Federal Deposit Insurance Corporation. The secondary market for
certain loan participations described above is limited and, therefore, the
participants 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 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. In addition, if the proceeds from
private activity bonds are used for the construction, repair or improvement of
privately operated industrial or commercial facilities, the interest paid on
such bonds may be excluded from gross income for U.S. federal income tax
purposes, although current federal tax laws place substantial limitations on
the size of these issues. The fund's distributions of any interest it earns on
municipal obligations will be taxable to shareholders as ordinary income.
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.
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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.
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
70
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.
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
71
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.
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.
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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.
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 Select Mid Cap Growth Fund 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
73
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 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. A
repurchase agreement may be considered a loan by the fund collateralized by
securities. 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. 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.
There is no specific limit on the fund's ability enter into repurchase
agreements.
Reverse Repurchase Agreements
Reverse repurchase agreements involve the sale of securities to a bank or
other institution 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
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. Reverse repurchase agreements may be
considered to be a type of borrowing. The 1940 Act permits a fund to borrow
money in amounts of up to one-third of the fund's total assets from banks for
any purpose and up to 5% of the fund's total assets from banks and other
lenders for temporary purposes. The fund will segregate assets in an amount at
least equal to the repurchase price of the securities.
Short Sales Against the Box (Pioneer Select Mid Cap Growth Fund 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
74
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 or a reverse repurchase agreement, 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.
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, where the collateral received is cash, the fund may pay a portion
of the income earned on the investment of collateral to the borrower, lending
agent or other intermediary. If the income earned on the investment of the cash
collateral is insufficient to pay these amounts or if the value of the cash
collateral declines, the fund may take a loss on the loan. Where the fund
receives securities as collateral, the fund will earn no income on the
collateral, but will earn a fee from the borrower. The fund may not exercise
voting rights on loaned securities, but reserves the right to recall loaned
securities so that they may be voted according to the fund's Proxy Voting
Policies and Procedures.
The risk in lending portfolio securities, as with other extensions of
credit, consists of the possibility of loss to the fund due to (i) the
inability of the borrower to return the securities, (ii) a delay in receiving
additional collateral to adequately cover any fluctuations in the value of
securities on loan, (iii) a delay in recovery of the securities, or (iv) the
loss of rights in the collateral should the borrower fail financially. Where
the collateral delivered by the borrower is cash, the fund will also have the
risk of loss of principal and interest in connection with its investment of
collateral.
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. However, this monitoring may not protect
the fund from loss. 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. When the fund enters into when-issued and delayed delivery
transactions, it will segregate liquid assets with a value equal to the fund's
obligations. See "Asset Segregation."
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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
another Pioneer managed fund, and therefore portfolio holdings that may be
substantially similar, and in some cases nearly identical, to such fund, these
policies and procedures only relate to the disclosure of portfolio information
of the Pioneer managed funds that are registered management companies. Separate
account and unregistered product clients are not subject to these policies and
procedures. Separate account and unregistered product clients of Pioneer have
access to their portfolio holdings, and prospective clients have access to
representative holdings.
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). 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.
Currently, Pioneer, on behalf of the Pioneer managed funds, has ongoing
arrangements whereby the following entities may receive a fund's full portfolio
holdings or other information prior to the date such information is made
public: Metropolitan Life Insurance Company (within thirty (30) days after
month end for board materials and advance preparation of marketing materials);
Roszel Advisors (within thirty (30) days after month end for due diligence and
review of certain Pioneer managed funds included in fund programs); Oppenheimer
& Co. (within thirty (30) days after month end for due diligence and review of
certain Pioneer managed funds included in fund programs); UBS (within fifteen
(15) days after month end for due diligence and review of certain Pioneer
managed funds included in fund programs); Ibbotson Associates Advisors LLC (as
needed to select Pioneer managed funds for the Pioneer-Ibbotson fund of funds
products); Beacon Pointe Advisors (as needed for quarterly review of certain
Pioneer managed funds); and Commonwealth Financial Network (within thirty (30)
days after month end for internal risk analysis).
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
76
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 Policies
Each fund has adopted certain fundamental investment policies 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.
For this purpose, a majority of the outstanding shares of a fund means the vote
of the lesser of:
1. 67% or more of the shares represented at a meeting, if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
2. more than 50% of the outstanding shares of the fund.
Each fund's fundamental policies are as follows:
(1) The 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) The 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) The 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) The 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.
(5) The 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) The 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, the fund may
not make any investment if, as a result, the fund's investments will be
concentrated in any one industry.
With respect to Pioneer Intermediate Tax Free Income Fund only:
(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.
With respect to the fundamental policy relating to borrowing money set
forth in (1) above, the 1940 Act permits a fund to borrow money in amounts of
up to one-third of the fund's total assets from banks for any purpose, and to
borrow up to 5% of the fund's total assets from banks or other lenders for
temporary purposes. To limit the risks attendant to borrowing, the 1940 Act
requires the fund to maintain at all times an "asset coverage" of at least 300%
of the amount of its borrowings. Asset coverage means the ratio that the value
of the fund's total assets, minus liabilities other than borrowings, bears to
the aggregate amount of all borrowings. Borrowing money to
77
increase a fund's investment portfolio is known as "leveraging." Borrowing,
especially when used for leverage, may cause the value of a fund's shares to be
more volatile than if the fund did not borrow. This is because borrowing tends
to magnify the effect of any increase or decrease in the value of the fund's
portfolio holdings. Borrowed money thus creates an opportunity for greater
gains, but also greater losses. To repay borrowings, the fund may have to sell
securities at a time and at a price that is unfavorable to the fund. There also
are costs associated with borrowing money, and these costs would offset and
could eliminate a fund's net investment income in any given period. Currently,
none of the funds contemplates borrowing money for leverage, but if a fund does
so, it will not likely do so to a substantial degree. The policy in (1) above
will be interpreted to permit each fund to engage in trading practices and
investments that may be considered to be borrowing to the extent permitted by
the 1940 Act. Reverse repurchase agreements may be considered to be a type of
borrowing. Short-term credits necessary for the settlement of securities
transactions and arrangements with respect to securities lending will not be
considered to be borrowings under the policy. Practices and investments that
may involve leverage but are not considered to be borrowings are not subject to
the policy. Such trading practices may include futures, options on futures,
forward contracts and other derivative investments.
With respect to the fundamental policy relating to underwriting set forth
in (2) above, the 1940 Act does not prohibit a fund from engaging in the
underwriting business or from underwriting the securities of other issuers; in
fact, the 1940 Act permits a fund to have underwriting commitments of up to 25%
of its assets under certain circumstances. Those circumstances currently are
that the amount of the fund's underwriting commitments, when added to the value
of the fund's investments in issuers where the fund owns more than 10% of the
outstanding voting securities of those issuers, cannot exceed the 25% cap. A
fund engaging in transactions involving the acquisition or disposition of
portfolio securities may be considered to be an underwriter under the
Securities Act of 1933, as amended (the "1933 Act"). Under the 1933 Act, an
underwriter may be liable for material omissions or misstatements in an
issuer's registration statement or prospectus. Securities purchased from an
issuer and not registered for sale under the 1933 Act are considered restricted
securities. There may be a limited market for these securities. If these
securities are registered under the 1933 Act, they may then be eligible for
sale but participating in the sale may subject the seller to underwriter
liability. These risks could apply to a fund investing in restricted
securities. Although it is not believed that the application of the 1933 Act
provisions described above would cause a fund to be engaged in the business of
underwriting, the policy in (2) above will be interpreted not to prevent a fund
from engaging in transactions involving the acquisition or disposition of
portfolio securities, regardless of whether the fund may be considered to be an
underwriter under the 1933 Act.
With respect to the fundamental policy relating to lending set forth in
(3) above, the 1940 Act does not prohibit a fund from making loans; however,
SEC staff interpretations currently prohibit funds from lending more than
one-third of their total assets, except through the purchase of debt
obligations or the use of repurchase agreements. (A repurchase agreement is an
agreement to purchase a security, coupled with an agreement to sell that
security back to the original seller on an agreed-upon date at a price that
reflects current interest rates. The SEC frequently treats repurchase
agreements as loans.) While lending securities may be a source of income to a
fund, as with other extensions of credit, there are risks of delay in recovery
or even loss of rights in the underlying securities should the borrower fail
financially. However, loans would be made only when the fund's manager or a
subadviser believes the income justifies the attendant risks. Each fund also
will be permitted by this policy to make loans of money, including to other
funds. Each fund has obtained exemptive relief from the SEC to make loans to
other Pioneer funds through a credit facility. The policy in (3) above will be
interpreted not to prevent a fund from purchasing or investing in debt
obligations and loans. In addition, collateral arrangements with respect to
options, forward currency and futures transactions and other derivative
instruments, as well as delays in the settlement of securities transactions,
will not be considered loans.
With respect to the fundamental policy relating to issuing senior
securities set forth in (4) above, "senior securities" are defined as fund
obligations that have a priority over the fund's shares with respect to the
payment of dividends or the distribution of fund assets. The 1940 Act prohibits
a fund from issuing senior securities except that the fund may borrow money in
amounts of up to one-third of the fund's total assets from banks for any
purpose. A fund also may borrow up to 5% of the fund's total assets from banks
or other lenders for temporary purposes, and these borrowings are not
considered senior securities. The issuance of senior securities by a fund can
increase the speculative character of the fund's outstanding shares through
leveraging. Leveraging of a fund's portfolio through the issuance of senior
securities magnifies the potential for gain or loss on monies, because even
though the fund's net assets remain the same, the total risk to investors is
increased. Certain widely used investment practices that involve a commitment
by a fund to deliver money or securities in the future are not considered by
the SEC to be senior securities, provided that a fund segregates cash or liquid
securities in an amount necessary to pay the obligation or the fund holds an
offsetting commitment from another party. These investment practices include
repurchase and reverse repurchase agreements, swaps, dollar rolls, options,
futures and forward contracts. The policy in (4) above will be interpreted not
to prevent collateral arrangements with respect to swaps, options, forward or
futures contracts or other derivatives, or the posting of initial or variation
margin.
78
With respect to the fundamental policy relating to real estate set forth
in (5) above, the 1940 Act does not prohibit a fund from owning real estate;
however, a fund is limited in the amount of illiquid assets it may purchase.
Investing in real estate may involve risks, including that real estate is
generally considered illiquid and may be difficult to value and sell. Owners of
real estate may be subject to various liabilities, including environmental
liabilities. To the extent that investments in real estate are considered
illiquid, the current SEC staff position generally limits a fund's purchases of
illiquid securities to 15% of net assets. The policy in (5) above will be
interpreted not to prevent a fund from investing in real estate-related
companies, companies whose businesses consist in whole or in part of investing
in real estate, instruments (like mortgages) that are secured by real estate or
interests therein, or real estate investment trust securities.
With respect to the fundamental policy relating to commodities set forth
in (6) above, the 1940 Act does not prohibit a fund from owning commodities,
whether physical commodities and contracts related to physical commodities
(such as oil or grains and related futures contracts), or financial commodities
and contracts related to financial commodities (such as currencies and,
possibly, currency futures). However, a fund is limited in the amount of
illiquid assets it may purchase. To the extent that investments in commodities
are considered illiquid, the current SEC staff position generally limits a
fund's purchases of illiquid securities to 15% of net assets (10% of net assets
for money market funds). If a fund were to invest in a physical commodity or a
physical commodity-related instrument, the fund would be subject to the
additional risks of the particular physical commodity and its related market.
The value of commodities and commodity-related instruments may be extremely
volatile and may be affected either directly or indirectly by a variety of
factors. There also may be storage charges and risks of loss associated with
physical commodities. The policy in (6) above will be interpreted to permit
investments in exchange traded funds that invest in physical and/or financial
commodities.
With respect to the fundamental policy relating to concentration set forth
in (7) above, the 1940 Act does not define what constitutes "concentration" in
an industry. The SEC staff has taken the position that investment of 25% or
more of a fund's total assets in one or more issuers conducting their principal
activities in the same industry or group of industries constitutes
concentration. It is possible that interpretations of concentration could
change in the future. A fund that invests a significant percentage of its total
assets in a single industry may be particularly susceptible to adverse events
affecting that industry and may be more risky than a fund that does not
concentrate in an industry. The policy in (7) above will be interpreted to
refer to concentration as that term may be interpreted from time to time. The
policy also will be interpreted to permit investment without limit in the
following: securities of the U.S. government and its agencies or
instrumentalities; with respect to tax-exempt funds that invest 80% of their
assets in tax-exempt securities, securities of state, territory, possession or
municipal governments and their authorities, agencies, instrumentalities or
political subdivisions; and repurchase agreements collateralized by any such
obligations. Accordingly, issuers of the foregoing securities will not be
considered to be members of any industry. The policy also will be interpreted
to give broad authority to each fund as to how to classify issuers within or
among industries. When identifying industries or sectors for purposes of its
concentration policy, a fund may rely upon available industry classifications.
As of the date of this Statement of Additional Information, each fund relies on
the MSCI Global Industry Classification Standard (GICS) classifications.
Each fund's fundamental policies are written and will be interpreted
broadly. For example, the policies will be interpreted to refer to the 1940 Act
and the related rules as they are in effect from time to time, and to
interpretations and modifications of or relating to the 1940 Act by the SEC and
others as they are given from time to time. When a policy provides that an
investment practice may be conducted as permitted by the 1940 Act, the policy
will be interpreted to mean either that the 1940 Act expressly permits the
practice or that the 1940 Act does not prohibit the practice.
Non-Fundamental Investment Policies
In addition, as a matter of non-fundamental investment policy, each fund
has agreed as follows. Statements in italics are not part of the restrictions.
Pioneer Select Mid Cap Growth Fund
(1) The fund will not purchase securities during the current fiscal year at
any time that outstanding borrowings exceed 5% of the fund's total assets.
(2) The fund may not engage in short sales, except short sales against the
box.
(3) The fund may not invest in any investment company in reliance on
Section 12(d)(1)(F) of the 1940 Act, which would allow the fund to invest in
other investment companies, or in reliance on Section 12(d)(1)(G) of the 1940
Act, which would allow the fund to invest in other Pioneer funds, in each case
without being subject to the limitations discussed above under "Other Investment
Companies" so long as another investment company invests in the fund in reliance
on Section 12(d)(1)(G). The fund has adopted this non-fundamental policy in
order that the fund may be a permitted investment to the series of Pioneer
Ibbotson Asset Allocation Series, which invest all
79
of their assets in other investment companies. If the series of Pioneer
Ibbotson Asset Allocation Series do not invest in the fund, then this
non-fundamental restriction will not apply.
(4) The fund does not invest in companies for the purposes of exercising
control or management.
(5) The fund will not engage in mortgaging, hypothecating or pledging of
its assets except in connection with any borrowing permitted under investment
restriction (1); thus, the fund's borrowings involving mortgaging, hypothecating
or pledging of its assets will not exceed 33 1/3% of its total assets (including
the amount borrowed), notwithstanding any temporary borrowings not in excess of
5% of its total assets.
(6) The fund will not purchase securities on margin.
Pioneer Growth Fund
(1) The fund may not purchase securities while borrowings are in excess of
5% of total assets.
(2) The fund may not purchase securities on margin, but it may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities. The payment of margin for purposes of entering into or
maintaining a futures contract or option thereon shall not constitute a purchase
of securities on margin.
(3) The fund will not invest in any investment company in reliance on
Section 12(d)(1)(F) of the 1940 Act, which would allow the fund to invest in
other investment companies, or in reliance on Section 12(d)(1)(G) of the 1940
Act, which would allow the fund to invest in other Pioneer funds, in each case
without being subject to the limitations discussed above under "Other Investment
Companies" so long as another investment company invests in the fund in reliance
on Section 12(d)(1)(G), such as one of the series of Pioneer Ibbotson Asset
Allocation Series.
Pioneer Intermediate Tax Free Income Fund
(1) The fund will not concentrate its assets in the securities of issuers
in any one industry except that the fund may invest 25% or more of its assets in
issuers in any one or more states or securities the payments on which are
derived from gas, electric, telephone, sewer and water segments of the municipal
bond market.
(2) The fund will not issue senior securities, except as permitted by the
1940 Act and the rules and interpretive positions of the SEC thereunder. Senior
securities that the fund may issue in accordance with the 1940 Act include
borrowing, futures, when-issued and delayed delivery securities and forward
foreign currency exchange transactions.
(3) The fund will not purchase securities during the current fiscal year at
any time that outstanding borrowings exceed 5% of the fund's total assets.
(4) Invest in any investment company in reliance on Section 12(d)(1)(F) of
the 1940 Act, which would allow the fund to invest in other investment
companies, or in reliance on Section 12(d)(1)(G) of the 1940 Act, which would
allow the fund to invest in other Pioneer funds, in each case without being
subject to the limitations discussed above under "Other Investment Companies" so
long as another investment company invests in the fund in reliance on Section
12(d)(1)(G), such as one of the series of Pioneer Asset Allocation Series.
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 serves as a trustee of each of the 76 U.S. registered investment
portfolios for which Pioneer serves as investment adviser (the "Pioneer managed
funds"). The address for all Trustees and all officers of the funds is 60 State
Street, Boston, Massachusetts 02109.
80
- --------------------------------------------------------------------------------
Position Held with Term of Office and
Name, Age and Address the Fund Length of Service
Interested Trustees:
John F. Cogan, Jr.* Chairman of the Trustee since
(82) Board, Trustee 1982. Serves
and President until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Daniel K. Trustee and Trustee since
Kingsbury* Executive Vice 2008. Serves
(50) President until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Independent Trustees:
David R. Bock Trustee Trustee since
(65) 2005. Serves
until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Other Directorships
Name, Age and Address Principal Occupation During Past Five Years Held by this Trustee
Interested Trustees:
John F. Cogan, Jr.* Deputy Chairman and a Director of Pioneer Global None
(82) Asset Management S.p.A. ("PGAM"); Non-Executive
Chairman and a Director of Pioneer Investment
Management USA Inc. ("PIM-USA"); Chairman and
a Director of Pioneer; Chairman and Director of
Pioneer Institutional Asset Management, Inc. (since
2006); Director of Pioneer Alternative Investment
Management Limited (Dublin); President and a
Director of Pioneer Alternative Investment
Management (Bermuda) Limited and affiliated
funds; Director of PIOGLOBAL Real Estate
Investment Fund (Russia) (until June 2006);
Director of Nano-C, Inc. (since 2003); Director of
Cole Management Inc. (since 2004); Director of
Fiduciary Counseling, Inc.; President and Director
of Pioneer Funds Distributor, Inc. ("PFD") (until
May 2006); President of all of the Pioneer managed
funds; and Of Counsel, Wilmer Cutler Pickering
Hale and Dorr LLP
- -----------------------------------------------------------------------------------------------------
Daniel K. Director, CEO and President of PIM-USA (since None
Kingsbury* February 2007); Director and President of Pioneer
(50) Investment Management, Inc. and Pioneer
Institutional Asset Management, Inc. (since
February 2007); Executive Vice 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 Executive Vice President and Chief Financial Officer, Director of
(65) I-trax, Inc. (publicly traded health care services Enterprise
company) (2004 to 2007); Partner, Federal City Community
Capital Advisors (boutique merchant bank) (1997 to Investment, Inc.
2004 and 2008 to present); and Executive Vice (privately-held
President and Chief Financial Officer, Pedestal Inc. affordable housing
(internet-based mortgage trading company) (2000 finance company);
to 2002) and Director of
New York Mortgage
Trust (publicly
traded mortgage
REIT)
- -----------------------------------------------------------------------------------------------------
81
- --------------------------------------------------------------------------------
Position Held with Term of Office and
Name, Age and Address the Fund Length of Service
Mary K. Bush Trustee Trustee since
(60) 1997. Serves
until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Benjamin M. Trustee Trustee since
Friedman 2008. Serves
(64) until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Margaret B.W. Trustee Trustee since
Graham 1990. Serves
(61) until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Thomas J. Perna Trustee Trustee since
(58) 2006. Serves
until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Other Directorships
Name, Age and Address Principal Occupation During Past Five Years Held by this Trustee
- -----------------------------------------------------------------------------------------------------
Mary K. Bush President, Bush International, LLC (international Director of Marriott
(60) financial advisory firm) International, Inc;
Director Discover
Financial Services
(credit card issuer
and electronic
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. Professor, Harvard University Trustee, Mellon
Friedman Institutional Funds
(64) Investment Trust
and Mellon
Institutional Funds
Master Portfolio
(oversees 17
portfolios in fund
complex)
- -----------------------------------------------------------------------------------------------------
Margaret B.W. Founding Director, Vice-President and Corporate None
Graham Secretary, The Winthrop Group, Inc. (consulting
(61) firm); and Desautels Faculty of Management, McGill
University
- -----------------------------------------------------------------------------------------------------
Thomas J. Perna Chief Executive Officer, Quadriserv, Inc. (2008 to Director of
(58) present) (technology products for securities lending Quadriserv Inc.
industry); Private investor (2004 to present); and (technology
Senior Executive Vice President, The Bank of New products for
York (financial and securities services) (1986 to securities lending
2004) industry)
- -----------------------------------------------------------------------------------------------------
82
- --------------------------------------------------------------------------------
Position Held with Term of Office and
Name, Age and Address the Fund Length of Service
- --------------------------------------------------------------------------------
Marguerite A. Piret Trustee Trustee since
(60) 1982. Serves
until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Stephen K. West Trustee Trustee since
(80) 2008. Serves
until a successor
trustee is elected
or earlier
retirement or
removal.
- --------------------------------------------------------------------------------
Fund Officers:
- --------------------------------------------------------------------------------
Dorothy E. Bourassa Secretary Since 2003.
(61) Serves at the
discretion of the
board
- --------------------------------------------------------------------------------
Christopher J. Assistant Since 2003.
Kelley Secretary Serves at the
(44) discretion of the
board
- --------------------------------------------------------------------------------
Mark E. Bradley Treasurer Since 2008.
(49) Serves at the
discretion of the
board
- --------------------------------------------------------------------------------
Luis I. Presutti Assistant Since 2000.
(43) Treasurer Serves at the
discretion of the
board
- --------------------------------------------------------------------------------
Gary Sullivan Assistant Since 2002.
(50) Treasurer Serves at the
discretion of the
board
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Other Directorships
Name, Age and Address Principal Occupation During Past Five Years Held by this Trustee
- ----------------------------------------------------------------------------------------------------
Marguerite A. Piret President and Chief Executive Officer, Newbury, Director of New
(60) Piret & Company, Inc. (investment banking firm) America High
Income Fund, Inc.
(closed-end
investment
company)
- ----------------------------------------------------------------------------------------------------
Stephen K. West Senior Counsel, Sullivan & Cromwell LLP (law firm) Director, The Swiss
(80) Helvetia Fund, Inc.
(closed-end
investment
company)
- ----------------------------------------------------------------------------------------------------
Fund Officers:
- ----------------------------------------------------------------------------------------------------
Dorothy E. Bourassa Secretary of PIM-USA; Senior Vice President- Legal None
(61) of Pioneer; Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of the Pioneer
managed funds since September 2003 (Assistant
Secretary from November 2000 to September 2003)
- ----------------------------------------------------------------------------------------------------
Christopher J. Associate General Counsel of Pioneer since January None
Kelley 2008 and Assistant Secretary of all of the Pioneer
(44) managed funds since September 2003; Vice
President and Senior Counsel of Pioneer from July
2002 to December 2007
- ----------------------------------------------------------------------------------------------------
Mark E. Bradley Vice President-Fund Accounting, Administration and None
(49) Controllership Services of Pioneer; and Treasurer of
all of the Pioneer managed funds since March
2008; Deputy Treasurer of Pioneer from November
2004 to February 2008; Assistant Treasurer of all of
the Pioneer managed funds from March 2004 to
February 2008; and Treasurer and Senior Vice
President, CDC IXIS Asset Management Services
from 2002 to 2003
- ----------------------------------------------------------------------------------------------------
Luis I. Presutti Assistant Vice President- Fund Accounting, None
(43) Administration and Controllership Services of
Pioneer; and Assistant Treasurer of all of the
Pioneer managed funds
- ----------------------------------------------------------------------------------------------------
Gary Sullivan Fund Accounting Manager-Fund Accounting, None
(50) Administration and Controllership Services of
Pioneer; and Assistant Treasurer of all of the
Pioneer managed funds
- ----------------------------------------------------------------------------------------------------
83
- --------------------------------------------------------------------------------
Position Held with Term of Office and
Name, Age and Address the Fund Length of Service
David F. Johnson Assistant Since 2009.
(29) Treasurer Serves at the
discretion of the
board
- --------------------------------------------------------------------------------
Teri W. Anderholm Chief Since 2007.
(49) Compliance Serves at the
Officer discretion of the
board
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Other Directorships
Name, Age and Address Principal Occupation During Past Five Years Held by this Trustee
- ----------------------------------------------------------------------------------------------------
David F. Johnson Fund Administration Manager-Fund Accounting, None
(29) Administration and Controllership Services since
November 2008 and Assistant Treasurer of all of
the Pioneer managed funds since January 2009;
Client Service Manager-Institutional Investor
Services at State Street Bank from March 2003 to
March 2007
- ----------------------------------------------------------------------------------------------------
Teri W. Anderholm Chief Compliance Officer of Pioneer since None
(49) December 2006 and of all the Pioneer managed
funds since January 2007; Vice President and
Compliance Officer, MFS Investment Management
(August 2005 to December 2006); Consultant,
Fidelity Investments (February 2005 to July 2005);
Independent Consultant (July 1997 to February 2005)
- ----------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are
officers or directors of the funds' 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
During the most recent fiscal year, the board held 10 meetings. Each
Trustee attended at least 75% of such meetings.
The board has an Audit Committee, a Governance Committee (formerly, the
Independent Trustees Committee), a Nominating Committee, a Valuation Committee
and a Policy Administration Committee. Committee members are as follows:
Audit
David R. Bock (Chair), Benjamin M. Friedman and Marguerite A. Piret
Governance
David R. Bock, Mary K. Bush, Benjamin M. Friedman, Margaret B.W. Graham,
Thomas J. Perna, Marguerite A. Piret and Stephen K. West (Chair)
Nominating
Mary K. Bush (Chair), Benjamin M. Friedman, Margaret B.W. Graham and
Marguerite A. Piret
Valuation
David R. Bock, Benjamin M. Friedman and Marguerite A. Piret (Chair)
Policy Administration
Mary K. Bush, Thomas J. Perna (Chair), Margaret B.W. Graham and Stephen K.
West
During the most recent fiscal year, the Audit, Governance (formerly,
Independent Trustees), Nominating, Valuation and Policy Administration
Committees held 6, 8, 0, 4 and 5 meetings, respectively.
The board has adopted a charter for the Audit Committee. In accordance
with its charter, the purposes of the Audit Committee are to, among other
things:
84
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;
and
o ensure that the funds' independent registered public accounting firm
submits on a periodic basis to the Committee a formal written
statement delineating all relationships between the independent
registered public accounting firm and Pioneer and its affiliates;
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 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 Governance 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 provides that
no Trustee, officer or employee of the funds shall be liable to the funds 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 Amended and Restated Agreement and Declaration of Trust 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 willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties of office. The
Amended and Restated Agreement and Declaration of Trust 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."
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.
85
Other Information
Mr. West, an Independent Trustee, is Senior Counsel to Sullivan & Cromwell
LLP, which acts as counsel to the Independent Trustees and the Independent
Trustees of the other Pioneer managed funds. The aggregate compensation paid to
Sullivan & Cromwell by the fund and the other Pioneer managed funds was
approximately $406,261 and $450,898 in each of 2007 and 2008.
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 entered into an amended and restated management agreement
(hereinafter, the "management contract") with Pioneer, effective, July 1, 2008,
pursuant to which Pioneer continued to act as the funds' 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
the management contract are governed by the 1940 Act. Pursuant to each
management contract, Pioneer assumes no responsibility other than to render the
services called for under the management contract, 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 contract. The
management contract requires Pioneer to furnish all necessary services,
facilities and personnel in connection with the performance of its services
under the management contract, and except as specifically stated therein,
Pioneer is not responsible for any of the relevant fund's ordinary and
extraordinary expenses.
Advisory Fees
As compensation for its management services and expenses incurred, Pioneer
Select Mid Cap Growth Fund 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.
86
Expense Limit
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce expenses of the combined Pioneer Select Mid Cap
Growth Fund 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.
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce expenses of Pioneer Growth Fund 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 June 1, 2012 for Class A shares and 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 expenses of
the combined Pioneer Growth Fund 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.
Pioneer has contractually agreed to limit ordinary operating expenses to
the extent required to reduce expenses of Pioneer Intermediate Tax Free Income
Fund 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 June 1, 2012 for Class A shares and June 1, 2010 for Class Y
shares. In addition, Pioneer has contractually agreed to limit ordinary
operating expenses to the extent required to reduce expenses of the combined
Pioneer Intermediate Tax Free Income Fund 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.
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 amended and restated administration
agreement with Pioneer, effective July 1, 2008, pursuant to which Pioneer
continues to act as the fund's administrator, performing certain accounting,
administration and legal services for the fund. Pioneer is reimbursed for its
costs of providing such services. The cost of providing these services is based
on direct costs and costs of overhead, subject to review by the board. See
"Annual Fee, Expense and Other Information" for fees each fund paid to Pioneer
for administration and related services.
Under the terms of the amended and restated 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 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.
87
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.
88
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.
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 that has adopted the Distribution Plan, 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.
89
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 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 fund may participate in joint distribution activities with other Pioneer
managed funds. The costs associated with such joint distribution activities are
allocated to a fund based on the number of shares sold.
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
For Class C shares, 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 $24.75 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.
90
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 services, and assistance and consultation with
respect to filings with the SEC.
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 January 31, 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 Select Mid Cap Growth Ken Winston Other 1 $232,833,000 1 $232,833,000
Fund Registered
Investment
Companies
-------------------------------------------------------------------------
Other Pooled 0 $ 0 0 $ 0
Investment
Vehicles
-------------------------------------------------------------------------
Other 0 $ 0 0 $ 0
Accounts
- -----------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Fund Timothy Mulrenan Other 3 $282,718,000 1 $232,833,000
Registered
Investment
Companies
-------------------------------------------------------------------------
Other Pooled 0 $ 0 0 $ 0
Investment
Vehicles
-------------------------------------------------------------------------
Other 10 $226,387,000 0 $ 0
Accounts
- -----------------------------------------------------------------------------------------------------------------------------
91
- -----------------------------------------------------------------------------------------------------------------------------
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 Intermediate Tax Fee David Eurkus Other 6 $1,261,897,000 0 $0
Income Fund Registered
Investment
Companies
--------------------------------------------------------------------------
Other Pooled 0 $ 0 0 $0
Investment
Vehicles
--------------------------------------------------------------------------
Other 1 $ 10,460,000 0 $0
Accounts
- -----------------------------------------------------------------------------------------------------------------------------
Timothy Pynchon Other 4 $ 752,734,000 0 $0
Registered
Investment
Companies
--------------------------------------------------------------------------
Other Pooled 0 $ 0 0 $0
Investment
Vehicles
--------------------------------------------------------------------------
Other 0 $ 0 0 $0
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 that was expected to appreciate in value
significantly shortly after the offering was allocated to a single
account, that account may be expected to have better investment
performance than other accounts that did not receive an allocation of
the initial public offering. Generally, investments for which there is
limited availability are allocated based upon a range of factors
including available cash and consistency with the accounts' investment
objectives and policies. This allocation methodology necessarily
involves some subjective elements but is intended over time to treat
each client in an equitable and fair manner. Generally, the investment
opportunity is allocated among participating accounts on a pro rata
basis. Although Pioneer believes that its practices are reasonably
designed to treat each client in an equitable and fair manner, there
may be instances where a fund may not participate, or may participate
to a lesser degree than other clients, in the allocation of an
investment opportunity.
o 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
92
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.
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 Select Mid Cap Growth Fund, is the Russell Midcap
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.
93
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.
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 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.
94
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.
DESCRIPTION OF SHARES
Each of the funds currently issues Class A, Class C 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.
Each fund is a series of the trust, a Delaware statutory trust. The
Trustees have authorized the issuance of the following classes of shares of
each fund, designated as Class A Shares, Class B Shares, Class C Shares, Class
R Shares, Class Y Shares and Class Z Shares. Class B, Class R and Class Z
shares have not been issued as of the date of this statement of additional
information. Each share of a class of each fund represents an equal
proportionate interest in the assets of the fund allocable to that class. Upon
liquidation of a fund, shareholders of each class of the fund are entitled to
share pro rata in the fund's net assets allocable to such class available for
distribution to shareholders. The trust reserves the right to create and issue
additional series or classes of shares, in which case the shares of each class
of a series would participate equally in the earnings, dividends and assets
allocable to that class of the particular series.
The shares of each class 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
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 June 16, 1994,
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
95
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.
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
96
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 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: Class A,
Class C 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 Select Mid Cap Growth Fund 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 or more ........................ -0- -0- See below
97
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 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 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
$500,000 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 12 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
0.50% Up to $50 million
0.25% Over $50 million
These commissions shall not be payable if the purchaser is affiliated with
the broker-dealer or if the purchase represents the reinvestment of a
redemption made during the previous 12 calendar months. Broker-dealers who
receive a commission in connection with Class A share purchases at net asset
value by employer-sponsored retirement plans with at least $500,000 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 12
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.
98
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.
Class C Shares
You may buy Class C shares of each 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 Financial Intermediaries
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
99
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 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:
A.G. Edwards & Sons Inc.
AIG VALIC
Ameriprise Financial Services, Inc.
100
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.
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
101
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 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.
102
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
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
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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 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 prices used for these securities may differ from the
amounts received by a fund upon sale of the securities, and these differences
may be substantial.
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
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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 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.
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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
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.
106
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 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
107
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 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
108
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 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
109
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 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 Select Mid Cap
Growth Fund, 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.
110
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. ........... Over $100,000
Daniel K. Kingsbury .......... Over $100,000
Independent Trustees:
David R. Bock ................ Over $100,000
Mary K. Bush ................. Over $100,000
Benjamin M. Friedman ......... $10,001-$50,000
Margaret B.W. Graham ......... $50,001-$100,000
Thomas J. Perna .............. Over $100,000
Marguerite A. Piret .......... Over $100,000
Stephen K. West .............. Over $100,000
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 Select Compensation from Pioneer Benefits Accrued from the Fund and
Mid Cap Growth from Pioneer Intermediate Tax as Part of Fund Other Pioneer
Name of Trustee Fund* Growth Fund* Free Income Fund* Expenses* Managed Funds*+
- ------------------------------------------------------------------------------------------------------------------------------
Interested Trustees:
John F. Cogan, Jr. ........... $500 $500 $250 N/A $ 30,000
Daniel K. Kingsbury .......... $ 0 $ 0 $ 0 N/A $ 0
Independent Trustees:
David R. Bock ................ $500 $500 $500 N/A $140,300
Mary K. Bush ................. $500 $500 $500 N/A $121,400
Benjamin M. Friedman ......... $500 $500 $500 N/A $122,900
Margaret B.W. Graham ......... $500 $500 $500 N/A $132,900
Thomas J. Perna .............. $500 $500 $500 N/A $134,850
Marguerite A. Piret .......... $500 $500 $500 N/A $127,850
Stephen K. West .............. $500 $500 $500 N/A $126,350
- ----------
* 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 76 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.
111
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.
112
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 N-PX
The Proxy Coordinator and the Regulatory Compliance Manager are
responsible for ensuring that Form N-PX 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
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 Firms (***)
(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 (**)
(17)(i) The Semi-Annual Report of the Registrant for the period ended December 31, 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.
(**) Previously filed. Incorporated herein by reference from the exhibits filed
with the Registrant's Initial Registration Statement on Form N-14 (File No.
333-157342) as filed with the SEC on February 13, 2009 (Accession No.
0001145443-09-000152).
(***) 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 30th day of March, 2009.
PIONEER BOND FUND
By: /s/ Mark E. Bradley
Name: Mark E. Bradley
Title: Chief Financial and Accounting Officer and Treasurer
(Principal Financial and Accounting Officer)
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 March 30, 2009
- -------------------------- President
John F. Cogan, Jr.
/s/ Mark E. Bradley Chief Financial and Accounting Officer March 30, 2009
- -------------------------- and Treasurer (Principal Financial and
Mark E. Bradley Accounting Officer)
/s/ Daniel K. Kingsbury* Trustee and Executive Vice President March 30, 2009
- --------------------------
Daniel K. Kingsbury
/s/ David R. Bock* Trustee March 30, 2009
- --------------------------
David R. Bock
/s/ Mary K. Bush* Trustee March 30, 2009
- --------------------------
Mary K. Bush
/s/ Benjamin M. Friedman* Trustee March 30, 2009
- --------------------------
Benjamin M. Friedman
/s/ Margaret B.W. Graham* Trustee March 30, 2009
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Margaret B.W. Graham
/s/ Thomas J. Perna* Trustee March 30, 2009
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Thomas J. Perna
/s/ Marguerite A. Piret* Trustee March 30, 2009
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Marguerite A. Piret
/s/ Stephen K. West* Trustee March 30, 2009
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Stephen K. West
* By: /s/ Mark E. Bradley
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Mark E. Bradley, Attorney-in-Fact
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(11) Opinion of counsel as to the legality of the securities
(14) Consents of Independent Registered Public Accounting Firms
(17)(i) The Semi-Annual Report of the Registrant for the period ended December 31, 2008