As filed with the Securities and Exchange Commission on January 20, 2004
File No. 333-110171
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No._1_
Post-Effective Amendment No. ___
(Check appropriate box or boxes)
PIONEER SERIES TRUST II
(Exact Name of Registrant as Specified in Charter)
(617) 742-7825
(Area Code and Telephone Number)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Dorothy E. Bourassa, Esq.
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
(Name and address of agent for service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f) of the Investment Company Act of
1940, which permits registration of an indefinite number of securities.
Title of Securities Being Registered: Shares of beneficial interest of Pioneer
Series Trust II.
PAPP STOCK FUND, INC.
PAPP AMERICA-ABROAD FUND, INC.
PAPP AMERICA-PACIFIC RIM FUND, INC.
PAPP SMALL & MID-CAP GROWTH FUND, INC.
6225 North 24th Street -- Suite #150
Phoenix, Arizona 85016
NOTICE OF JOINT SPECIAL MEETING OF STOCKHOLDERS
SCHEDULED FOR FEBRUARY 20, 2004
This is the formal agenda for each Fund's stockholder meeting (the
"Meeting"). It tells you what matters will be voted on and the time and place
of the Meeting, in case you want to attend in person.
To the stockholders of Papp Stock Fund, Inc., Papp America-Abroad Fund, Inc.,
Papp America-Pacific Rim Fund, Inc. and Papp Small & Mid-Cap Growth Fund, Inc.
(each, "your Fund" and collectively, the "Funds"):
A joint stockholders meeting for the Funds will be held at the offices of
the Papp Funds, 2201 East Camelback, Suite 124B, Phoenix, Arizona 85016 on
February 20, 2004 at 10 a.m., local time, to consider the following:
1. A proposal to approve an Agreement and Plan of Reorganization between
Papp Stock Fund, Inc. and Pioneer Papp Stock Fund. Under this Agreement,
your Fund will transfer all of its assets to the Pioneer Papp Stock Fund
in exchange for Class A shares of Pioneer Papp Stock Fund, a
newly-created fund with a substantially similar investment objective and
policies as your Fund. Class A shares of Pioneer Papp Stock Fund will be
distributed to your Fund's stockholders in proportion to their share
holdings on the reorganization date. Pioneer Papp Stock Fund also will
assume your Fund's liabilities that are included in the calculation of
your Fund's net assets at the closing and certain liabilities with
respect to your Fund's investment operations that are not required by
generally accepted accounting principles to be included in the
calculation of net asset value. Your Fund will then be dissolved. Your
Fund's current investment adviser will act as subadviser to Pioneer Papp
Stock Fund. Your board of directors recommends that you vote FOR this
proposal.
2. A proposal to approve an Agreement and Plan of Reorganization between
Papp America-Abroad Fund, Inc. and Pioneer Papp American Navigator Fund.
Under this Agreement, your Fund will transfer all of its assets to
Pioneer Papp American Navigator Fund in exchange for Class A shares of
Pioneer Papp American Navigator Fund, a newly-created fund with a
substantially similar investment objective and policies as your Fund.
Class A shares of Pioneer Papp American Navigator Fund will be
distributed to your Fund's stockholders in proportion to their share
holdings on the reorganization date. Pioneer Papp American Navigator
Fund also will assume your Fund's liabilities that are included in the
calculation of your Fund's net assets at the closing and certain
liabilities with respect to your Fund's investment operations that are
not required by generally accepted accounting principles to be included
in the calculation of net asset value. Your Fund will then be dissolved.
Your Fund's current investment adviser will act as subadviser to Pioneer
Papp American Navigator Fund. Your board of directors recommends that
you vote FOR this proposal.
3. A proposal to approve an Agreement and Plan of Reorganization between
Papp America-Pacific Rim Fund, Inc. and Pioneer Papp America-Pacific Rim
Fund. Under this Agreement, your Fund will transfer all of its assets to
Pioneer Papp America-Pacific Rim Fund in exchange for Class A shares of
Pioneer Papp America-Pacific Rim Fund, a newly-created fund with a
substantially similar investment objective and policies as your Fund.
Class A shares of Pioneer Papp America-Pacific Rim Fund will be
distributed to your Fund's stockholders in proportion to their share
holdings on the reorganization date. Pioneer Papp America-Pacific Rim
Fund also will assume your Fund's liabilities that are included in the
calculation of your Fund's net assets at the closing and certain
liabilities with respect to your Fund's investment operations that are
not required by generally accepted accounting principles to be included
in the calculation of net asset value. Your Fund will then be dissolved.
Your Fund's current investment adviser will act as subadviser to Pioneer
Papp America-Pacific Rim Fund. Your board of directors recommends that
you vote FOR this proposal.
4. A proposal to approve an Agreement and Plan of Reorganization between
Papp Small & Mid-Cap Growth Fund, Inc. and Pioneer Papp Small and Mid
Cap Growth Fund ("Pioneer Papp Small and Mid Fund"). Under this
Agreement, your Fund will transfer all of its assets to Pioneer Papp
Small and Mid Fund in exchange for Class A shares of Pioneer Papp Small
and Mid Fund, a newly-created fund with a substantially similar
investment objective and policies as your Fund. Class A shares of
Pioneer Papp Small and Mid Fund will be distributed to your Fund's
stockholders in proportion to their share holdings on the reorganization
date. Pioneer
14596-00-0104
Papp Small and Mid Fund also will assume your Fund's liabilities that
are included in the calculation of your Fund's net assets at the closing
and certain liabilities with respect to your Fund's investment
operations that are not required by generally accepted accounting
principles to be included in the calculation of net asset value. Your
Fund will then be dissolved. Your Fund's current investment adviser will
act as subadviser to Pioneer Papp Small and Mid Fund. Your board of
directors recommends that you vote FOR this proposal.
5. Any other business that may properly come before the Meeting.
Stockholders of record as of the close of business on January 5, 2004 are
entitled to vote at the Meeting and any related follow-up meetings.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. IF STOCKHOLDERS DO NOT RETURN THEIR PROXIES IN
SUFFICIENT NUMBERS, YOUR FUND MAY BE REQUIRED TO MAKE ADDITIONAL SOLICITATIONS.
By order of the board of directors,
Julie A. Hein
Secretary
January 21, 2004
JOINT PROXY STATEMENT OF
PAPP STOCK FUND, INC.
("Papp Stock Fund," a "Papp Fund," or "your Fund")
PAPP AMERICA-ABROAD FUND, INC.
("Papp America-Abroad Fund," a "Papp Fund," or "your Fund")
PAPP AMERICA-PACIFIC RIM FUND, INC.
("Papp America-Pacific Rim Fund," a "Papp Fund," or "your Fund")
PAPP SMALL & MID-CAP GROWTH FUND, INC.
("Papp Small-Mid Fund," a "Papp Fund," or "your Fund")
The address and telephone number of each Papp Fund is 6225 North 24th
Street -- Suite #150, Phoenix, Arizona 85016 and 1-800-421-4004.
PROSPECTUS
FOR CLASS A SHARES OF
PIONEER PAPP STOCK FUND
("Pioneer Papp Stock Fund" or a "Pioneer Fund")
PROSPECTUS
FOR CLASS A SHARES OF
PIONEER PAPP AMERICAN NAVIGATOR FUND
("Pioneer Papp American Navigator Fund" or a "Pioneer Fund")
PROSPECTUS
FOR CLASS A SHARES OF
PIONEER PAPP AMERICA-PACIFIC RIM FUND
("Pioneer Papp America-Pacific Rim Fund" or a "Pioneer Fund")
PROSPECTUS
FOR CLASS A SHARES OF
PIONEER PAPP SMALL AND MID CAP GROWTH FUND
("Pioneer Papp Small and Mid Fund" or a "Pioneer Fund")
(each Pioneer Fund is a series of Pioneer Series Trust II)
The address and telephone number of each Pioneer Fund is 60 State Street,
Boston, Massachusetts 02109 and 1-800-225-6292.
This proxy statement and prospectus contains the information you should
know before voting on the proposed reorganizations. Please read it carefully
and retain it for future reference.
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Acquired Fund Acquiring Fund Stockholders Entitled to Vote
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Proposal 1 Papp Stock Fund Pioneer Papp Stock Fund Papp Stock Fund stockholders
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Proposal 2 Papp America-Abroad Fund Pioneer Papp American Navigator Fund Papp America-Abroad Fund stockholders
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Proposal 3 Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund Papp America-Pacific Rim Fund stockholders
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Proposal 4 Papp Small-Mid Fund Pioneer Papp Small and Mid Fund Papp Small-Mid Fund stockholders
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1
How Each Reorganization Will Work
o Each Papp Fund will transfer all of its assets to the corresponding
Pioneer Fund. Each Pioneer Fund will assume the corresponding Papp Fund's
liabilities that are included in the calculation of such Papp Fund's net
assets at the closing and certain liabilities with respect to the Papp
Fund's investment operations that are not required by generally accepted
accounting principles to be included in the calculation of net asset
value.
o Each Pioneer Fund will issue Class A shares to the corresponding Papp
Fund in amounts equal to the aggregate net asset value attributable to
that Papp Fund's shares. These shares will be distributed to your Fund's
stockholders in proportion to their share holdings on the reorganization
date and Papp Fund shareholders will become shareholders of the
corresponding Pioneer Fund. As of the close of the reorganization, you
will hold the same number and class of shares of the corresponding
Pioneer Fund as you held in your Fund immediately before the
reorganization and the aggregate net asset value of such shares will be
the same as the net asset value of your shares of your Fund on the
reorganization date.
o Each Papp Fund will be dissolved.
o Pioneer Investment Management, Inc. ("Pioneer") will act as investment
adviser to each Pioneer Fund. Your Fund's current investment adviser, L.
Roy Papp & Associates, LLP ("Papp"), will act as subadviser to each
Pioneer Fund. Pioneer has agreed to limit each Pioneer Fund's total
operating expenses (other than extraordinary expenses) for Class A shares
until December 31, 2006 to 1.25% of average daily net assets. Pioneer is
not required to limit the Pioneer Funds' expenses after December 31,
2006.
o The reorganization is intended to result in no income, gain or loss for
federal income tax purposes to any of the Pioneer Funds, the Papp Funds
or the stockholders of the Papp Funds.
An investment in any Pioneer Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
Shares of the Pioneer Funds have not been approved or disapproved by the
Securities and Exchange Commission. The Securities and Exchange Commission has
not passed upon the accuracy or adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
Why Your Fund's Directors are Recommending the Reorganization
The directors of your Fund believe that reorganizing your Fund into a
portfolio with substantially similar investment policies that is part of the
Pioneer family of funds and that are subadvised by Papp offers you potential
benefits. These potential benefits and considerations include:
o The opportunity to be part of a significantly larger family of funds with
additional product offerings and enhanced shareholder servicing options;
o Continuity of portfolio management, since Papp will be the subadviser to
each Pioneer Fund;
o Pioneer's experience and resources in managing mutual funds;
o Pioneer's commitment until December 31, 2006 to limit the total operating
expenses of each Pioneer Fund;
o The exchange privileges offered to shareholders of each of the Pioneer
Funds; and
o That stockholders who own shares in their name as of the closing of the
reorganization (i.e., not in the name of a broker) and maintain their
account may purchase additional Class A shares of the corresponding
Pioneer Fund through such account in the future or may exchange those
shares for Class A shares of another Pioneer Fund without paying any
sales charge.
Therefore, your Funds' directors recommend that you vote FOR the
reorganization.
2
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Where to Get More Information
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Each Papp Fund's combined prospectus dated May 1, 2003. Available to you free of charge by calling 1-800-421-4004.
This prospectus, which is also on file with the Securities and
Exchange Commission ("SEC"), is incorporated by reference
into this proxy statement and prospectus.
Each Papp Fund's annual and semiannual reports to Available to you free of charge by calling 1-800-421-4004.
stockholders. Also on file with the SEC. See "Available Information." These
reports are incorporated by reference into this proxy statement
and prospectus.
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Pioneer Papp Stock Fund's, Pioneer Papp American Navigator Available to you free of charge by calling 1-800-225-6292.
Fund's, Pioneer Papp America-Pacific Rim Fund's and Pioneer These prospectuses are also on file with the SEC.
Papp Small and Mid Fund's prospectuses, each dated
December __, 2003
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A statement of additional information for this joint proxy Available to you free of charge by calling 1-800-225-6292.
statement and prospectus (the "SAI"), dated January 16, 2004. Also on file with the SEC. This SAI is incorporated by
It contains additional information about your Funds and the reference into this proxy statement and prospectus.
Pioneer Funds.
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To ask questions about this proxy statement and prospectus. Call your Fund's toll-free telephone number: 1-800-421-4004.
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The date of this joint proxy statement and prospectus is January 21, 2004.
3
TABLE OF CONTENTS
Page
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Introduction ........................................................................ 4
Proposal 1 -- Papp Stock Fund ....................................................... 5
Summary ............................................................................ 5
Proposal to Approve Agreement and Plan of Reorganization ........................... 13
Capitalization ..................................................................... 16
Boards' Evaluation and Recommendation .............................................. 16
Proposal 2 -- Papp America-Abroad Fund .............................................. 17
Summary ............................................................................ 17
Proposal to Approve Agreement and Plan of Reorganization ........................... 26
Capitalization ..................................................................... 29
Boards' Evaluation and Recommendation .............................................. 29
Proposal 3 -- Papp America-Pacific Rim Fund ......................................... 30
Summary ............................................................................ 30
Proposal to Approve Agreement and Plan of Reorganization ........................... 39
Capitalization ..................................................................... 42
Boards' Evaluation and Recommendation .............................................. 42
Proposal 4 -- Papp Small-Mid Fund ................................................... 43
Summary ............................................................................ 43
Proposal to Approve Agreement and Plan of Reorganization ........................... 51
Capitalization ..................................................................... 54
Boards' Evaluation and Recommendation .............................................. 54
Voting Rights and Required Vote ..................................................... 55
Additional Information About the Pioneer Funds ...................................... 55
Material Provisions of the Management Agreements and the Sub-Advisory Agreements .... 60
Pioneer Funds' Class A Rule 12b-1 Plan .............................................. 63
Comparison of Maryland Corporation and Delaware Statutory Trust ..................... 63
Financial Highlights ................................................................ 65
Information Concerning the Meeting .................................................. 68
Ownership of Shares of the Funds .................................................... 70
Experts ............................................................................. 71
Available Information ............................................................... 71
Exhibit A -- Agreement and Plan of Reorganization ................................... A-1
INTRODUCTION
This proxy statement and prospectus is being used by each Papp Fund's
board of directors to solicit proxies to be voted at a joint special meeting
(the "Meeting") of each of the Papp Fund's stockholders. This Meeting will be
held at the offices of the Papp Funds, 2201 East Camelback, Suite 124B,
Phoenix, Arizona 85016, on February 20, 2004 at 10 a.m., local time. The
purpose of the Meeting is to consider proposals to approve the Agreements and
Plans of Reorganization providing for the reorganization of the Papp Funds into
the corresponding Pioneer Funds. The Pioneer Funds are newly created mutual
funds established to carry on the business of the Papp Funds and are not yet
operational. This proxy statement and prospectus is being mailed to Papp Fund
stockholders on or about January 22, 2004.
Who is Eligible to Vote?
Stockholders of record on January 5, 2004 are entitled to attend and vote
at the Meeting or any adjournment of the Meeting. 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 stockholders' instructions. If you
sign a proxy but do not fill in a vote, your shares will be voted to approve
the Agreement and Plan of Reorganization. If any other business comes before
the Meeting, your shares will be voted at the discretion of the persons named
as proxies.
4
PROPOSAL 1
Approval of Agreement and Plan of Reorganization between
Papp Stock Fund, Inc. (as defined above, "Papp Stock Fund") and
Pioneer Papp Stock Fund (as defined above, "Pioneer Papp Stock Fund")
SUMMARY
The following is a summary of more complete information appearing later in
this proxy statement and prospectus or incorporated herein. You should read
carefully the entire proxy statement, including the Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Papp Stock Fund to Pioneer Papp Stock Fund
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Papp Stock Fund Pioneer Papp Stock Fund
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Business A diversified open-end investment management A newly organized diversified series of Pioneer
company organized as a Maryland corporation. Series Trust II, an open-end investment
management company organized as a
Delaware statutory trust.
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Net assets as of $57.3 million None. The Pioneer Papp Stock Fund is newly
December 31, 2003 organized and does not expect to commence
investment operations until the reorganization
occurs.
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Investment advisers and Investment adviser: Investment adviser
portfolio managers L. Roy Papp & Associates, LLP (as defined Pioneer Investment Management, Inc. (as
above, "Papp") defined above, "Pioneer")
Portfolio Managers: Investment subadviser:
L. Roy Papp, Chairman and Director (since Papp
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer Portfolio Managers:
and Director (since 1989) of Papp. L. Roy Papp, Chairman and Director (since
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer
and
Director (since 1989) of Papp.
Pioneer retains the ultimate responsibility to
oversee the subadviser and may, subject only
to the approval of the board of trustees of the
Pioneer Funds, hire, terminate and replace
the subadviser without shareholder approval.
Pioneer has no current intention to replace Papp
as subadviser for Pioneer Papp Stock Fund.
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Investment objective Each fund seeks long-term capital growth. The investment objective of each fund is fundamental
and cannot be changed without shareholder approval.
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Primary investments Equity securities, with an emphasis on mid and large capitalization issuers traded in the U.S.
However, each fund may invest in companies of any size.
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Under normal market conditions, at least 80% Under normal market conditions, at least 80%
of net assets in common stocks. of assets in common and preferred stocks and
securities convertible into stocks.
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5
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Papp Stock Fund Pioneer Papp Stock Fund
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Investment strategies Each fund uses a "growth" style of management and seeks to invest in issuers with above
average potential for earnings growth. Papp evaluates an issuer's prospects for capital
appreciation by considering, among other factors, growth over extended periods of time,
profitability created through operating efficiency rather than financial leverage, and whether
cash flows confirm the sustainability of growth.
Papp follows a "buy and hold" strategy. Once a security is purchased, the fund ordinarily retains
an investment so long as it continues to believe that the security's prospects for appreciation
continue to be favorable and that the security is not overvalued in the marketplace. Papp does
not attempt to time the market.
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Other investments Papp Stock Fund may invest up to 5% of Pioneer Papp Stock Fund may invest up to
its net assets in securities convertible into 20% of its assets in equity and debt securities
common stocks. of non-U.S. corporate issuers and debt
securities of non-U.S. government issuers.
The fund may invest the balance of its assets
in debt securities of U.S. corporate and
government issuers. The fund generally
acquires debt securities that are rated
investment grade, but may invest up to 5%
of its net assets in below investment grade
debt securities.
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Temporary defensive Papp Stock Fund may hold cash or invest up Pioneer Papp Stock Fund may invest up
strategies to 100% of its assets in high-quality short- to 100% of its assets in securities with
term government or corporate obligations. remaining maturities of less than one year,
cash equivalents or may hold cash.
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Diversification Each fund is diversified for the purpose of the Investment Company Act of 1940 (the
"Investment Company Act"), and each fund is subject to diversification requirements under
the Internal Revenue Code of 1986 (the "Code").
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Industry concentration Each fund may not invest more than 25% of its assets in any one industry.
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Restricted and illiquid Papp Stock Fund may not invest more than Pioneer Papp Stock Fund may not invest more
securities 5% of its assets in securities which are not than 15% of its net assets in securities which
readily marketable. are illiquid and other securities which are not
readily marketable.
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6
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Papp Stock Fund Pioneer Papp Stock Fund
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Borrowing Papp Stock Fund may not borrow money Pioneer Papp Stock Fund may not borrow
except from banks for temporary or emergency money, except on a temporary basis and to
purposes in amounts not exceeding 10% of the extent permitted by applicable law, as
the value of the Fund's assets at the time of amended and interpreted or modified from
borrowing. The Fund may not purchase time to time by any regulatory authority
securities when borrowings exceed 5% of having jurisdiction. Under current regulatory
its assets. requirements, the fund may: (a) borrow
from banks or through reverse repurchase
agreements in an amount up to 33-1/3% of the
fund's total assets (including the amount
borrowed); (b) borrow up to an additional 5%
of the fund's assets for temporary purposes;
(c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on
margin to the extent permitted by applicable
law; and (e) engage in transactions in
mortgage dollar rolls that are accounted for
as financings.
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Lending Papp Stock Fund may not make loans (but Pioneer Papp Stock Fund may lend portfolio
the Fund may invest in debt securities securities with a value that may not exceed
subject to the 5% limitation on investing in 33-1/3% of the value of its assets.
illiquid securities).
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Derivative instruments Papp Stock Fund may not utilize derivative Pioneer Papp Stock Fund may use futures and
instruments, such as options, futures and options on securities, indices and currencies,
options on futures. forward currency exchange contracts and
other 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
stock market prices, interest rates or
currency exchange rates
o As a substitute for purchasing or selling
securities
o To increase the fund's return as a non-
hedging strategy that may be considered
speculative
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Other investment As described above, the funds have substantially similar principal investment strategies and
policies and restrictions policies. Certain of the non-principal investment policies and restrictions are different. For a
more complete discussion of each fund's other investment policies and fundamental and non-
fundamental investment restrictions, see the SAI.
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7
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Papp Stock Fund Pioneer Papp Stock Fund
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Buying, Selling and Exchanging Shares
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Sales charges Shares are offered with no sales charges. The Class A Shares of Pioneer Papp Stock
Fund you receive in the reorganization will not
be subject to any sales charge. Moreover, if
you own shares in your own name as of the
closing of the reorganization (i.e., not in the
name of a broker) and maintain your account,
you may purchase additional Class A Shares
of Pioneer Papp Stock Fund through such
account in the future without paying any
sales charge.
Except as described above, Class A Shares of
Pioneer Papp Stock Fund are subject to a
front-end sales charge of up to 5.75%.
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Management and Papp Stock Fund pays an advisory fee on a Pioneer Papp Stock Fund will pay Pioneer a
other fees monthly basis at an annual rate of 1.00% of management fee equal to 0.75% annually of
the Fund's average daily net assets. In addition, average daily net assets up to $1 billion and
Papp also serves as transfer, dividend 0.70% annually for average daily net assets
disbursing and shareholder servicing agent for in excess of $1 billion. In addition, the fund
the Fund pursuant to a separate agreement. reimburses Pioneer for certain fund
Papp receives from the Fund a monthly fee of accounting and legal expenses incurred
$0.75 for each Fund shareholder account, on behalf of the fund and pays a separate
$0.50 for each dividend paid on a shareholder shareholder servicing/transfer agency fee
account, and $1.00 for each purchase (other to Pioneer Investment Management
than by reinvestment, transfer or redemption) Shareholder Services, Inc. ("PIMSS"), an
of fund shares. affiliate of Pioneer.
Papp has agreed to limit certain of the Fund's Pioneer pays the fee of Papp as the sub-
ordinary operating expenses to 1.25% of its adviser to the Pioneer Papp Stock Fund.
average daily net assets for any fiscal year. For
the fiscal year ended December 31, 2002, the Until December 31, 2006, Pioneer has agreed
Fund's annual operating expenses, without to limit Pioneer Papp Stock Fund's ordinary
giving effect to such limitation, were 1.14% operating expenses per Class A share to
per share and the expense limitation was 1.25% of average daily net assets. For the
not triggered. coming fiscal year, Pioneer estimates that
Pioneer Papp Stock Fund's annual operating
expenses will be 1.52% per share (before
waiver of fees or reimbursement of expenses)
for Class A shares.
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Distribution and service Shares of the Fund are not subject to a Class A Shares are subject to a 12b-1 fee
(12b-1) fee 12b-1 fee. equal to 0.25% annually of average daily
net assets.
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8
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Papp Stock Fund Pioneer Papp Stock Fund
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Buying shares You may buy shares directly through Papp Subject to sales charges except as noted
Stock Fund's transfer agent by writing to the above (see "sales charges"), you may buy
Papp Funds. You may also buy shares through shares from any investment firm that has
other financial intermediaries as described in a sales agreement with Pioneer Funds
the Fund's prospectus. Shares may not be Distributor, Inc., Pioneer Papp Stock Fund's
purchased by telephone or online directly from distributor ("PFD"). Existing shareholders of
the Papp Funds. Papp Stock Fund who own shares in their
own name as of the closing date of the
reorganization and who maintain their
accounts may buy shares of Pioneer Papp
Stock Fund through such accounts in the
future without paying sales charges, but
subject to the Class A 12b-1 fee.
Pioneer Papp Stock Fund also offers several
other classes of shares which are subject to
different sales charges and 12b-1 fees than
Class A shares, as well as a class of shares
for institutional investors without any sales
charges or 12b-1 fees.
If the account is established in the
shareholder's own name, shareholders may
also purchase additional shares of Pioneer
Papp Stock Fund by telephone or online.
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Exchange privilege You may exchange shares of Papp Stock Fund You may exchange shares of Pioneer Papp
without incurring an exchange fee with the Stock Fund without incurring any fee on the
other four Funds in the Papp family of funds. exchange with the more than 20 other Pioneer
Funds. An exchange generally is treated as a
Exchange orders must be sent to the Fund sale and a new purchase of shares for federal
either directly in writing or through a financial income tax purposes.
intermediary. Telephone and online exchange
privileges are not available from the Papp If the account is established in the
Funds directly. shareholder's own name, shareholders may
also exchange shares of Pioneer Papp Stock
Fund for shares of other Pioneer Funds by
telephone or online.
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Selling Shares Your shares will be sold at net asset value per share next calculated after the fund receives your
request in good order.
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You may sell your shares by contacting the Normally, your investment firm will send your
Fund directly in writing or by contacting a request to sell shares to PIMSS. You can also
financial intermediary as described in the sell your shares by contacting the fund directly
fund's prospectus. if your account is registered in your name.
Telephone and online redemption privileges are If the account is established in the
not available from the Papp Funds directly. shareholder's own name, shareholders may
also redeem shares of Pioneer Papp Stock
Fund by telephone or online.
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9
Comparison of Principal Risks of Investing in the Funds
Because each fund has substantially the same portfolio management team and
a substantially similar investment objective, primary investment policies and
strategies, the funds are subject to the same principal risks. You could lose
money on your investment in the fund or not make as much as if you invested
elsewhere if:
o The stock market goes down (this risk may be greater in the short term);
o Growth stocks fall out of favor with investors;
o The fund's investments do not have the growth potential originally
expected; or
o Large capitalization and/or mid-capitalization stocks fall out of favor
with investors.
In addition, the fund may invest in small capitalization companies, as
there is no restriction on the size of the companies in which the fund may
invest. The small capitalization companies in which the fund may invest carry
additional risks because their earnings tend to be less predictable, their
share prices more volatile and their securities less liquid than securities of
larger companies.
The 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.
An investment in Pioneer Papp Stock Fund may, however, involve greater
risk than an investment in Papp Stock Fund because Pioneer Papp Stock Fund has
greater flexibility in its non-principal investment policies to invest in
certain types of securities and instruments which may subject the portfolio to
greater risk of loss. Unlike Papp Stock Fund, Pioneer Papp Stock Fund may
invest up to 20% of its assets in equity and debt securities of non-U.S.
issuers, including up to 5% of its net assets in below investment grade debt
securities. Pioneer Papp Stock Fund may also invest in derivative instruments,
which Papp Stock Fund is not permitted to do. Pioneer Papp Stock Fund may also
invest a greater percentage of its assets in illiquid securities and may lend
portfolio securities representing a greater percentage of its portfolio than
can Papp Stock Fund. Papp, as subadviser to Pioneer Papp Stock Fund, intends to
manage Pioneer Papp Stock Fund in substantially the same manner as Papp Stock
Fund and has no current intention to utilize the greater flexibility afforded
by Pioneer Papp Stock Fund's investment policies.
Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money by investing in either fund.
Other Consequences of the Reorganization
The Papp Stock Fund and Pioneer Papp Stock Fund each pay monthly
management fees equal to the following annual percentages of average daily net
assets:
- -------------------------------------------------------------------------------
Papp Stock Fund Pioneer Papp Stock Fund
Management Fee Management Fee
- -------------------------------------------------------------------------------
1.00% 0.75% -- for average daily net assets up to $1 billion
0.70% -- for average daily net assets over $1 billion
- -------------------------------------------------------------------------------
The annual management fee rate payable by Pioneer Papp Stock Fund (without
giving effect to expense limitations) is less than the rate paid by your Fund.
However, Class A shares of Pioneer Papp Stock Fund are subject to a 12b-1 fee.
At current asset levels, the combined management fee and 12b-1 fee for Class A
shares of Pioneer Papp Stock Fund is equal to Papp Stock Fund's management fee
alone.
In addition to the management fee, your Fund pays a monthly transfer
agent, dividend disbursing and shareholder servicing agent fee to Papp of $0.75
for each Fund shareholder account, $0.50 for each dividend paid on a
shareholder account, and $1.00 for each purchase (other than by reinvestment,
transfer or redemption) of Fund shares. Pioneer will provide certain accounting
and legal services under a separate administration agreement for approximately
0.02% of average daily net assets. PIMSS will provide shareholder servicing and
transfer agency services to Pioneer Papp Stock Fund under a separate
shareholder servicing/transfer agency agreement at an annual fee of $26.60 for
each Class A shareholder account. PIMSS will also be reimbursed for its cash
out-of-pocket expenditures. Pioneer, and not Pioneer Papp Stock Fund, will pay
Papp a subadvisory fee.
For its fiscal year ended December 31, 2002, your Fund's per share
operating expenses were 1.14% of average daily net assets. Papp does not
anticipate that your Fund's per share operating expenses as a percentage of
average daily net assets for the fiscal year ended December 31, 2003 will be
significantly different. Papp has agreed to reimburse the Fund to the extent
the Fund's annual operating expenses
10
(excluding taxes, interest, and extraordinary litigation expenses) during any
fiscal year exceed 1.25% of its average daily net asset value in such year.
This expense reimbursement cannot be changed without stockholder approval.
Similarly, with regard to Pioneer Papp Stock Fund, Pioneer has agreed to
limit, until December 31, 2006, Class A expenses to 1.25% of the average daily
net assets attributable to Class A shares by not imposing all or a portion of
its management fee and, if necessary, limiting other ordinary operating
expenses of the fund. Pioneer may subsequently recover reimbursed expenses
within three years of being incurred from the fund if the expense ratio of the
Class A shares is less than the expense limitation of the Class A shares.
Pioneer estimates that Pioneer Papp Stock Fund's per share annual operating
expenses for the coming fiscal year will be 1.52% (before waiver of fees or
reimbursement of expenses) for Class A shares. Accordingly, the annual expense
ratio for Class A shares of Pioneer Papp Stock Fund will likely be higher than
the annual expense ratio for the shares of your Fund given that Pioneer Papp
Stock Fund's expense limitation of 1.25% of average daily net asset value is
slightly higher than the fund's actual operating expense ratio of 1.14% for the
fiscal year ended December 31, 2002. While it is anticipated that the Pioneer
Papp Stock Fund's annual expense ratio for Class A shares will decrease in
succeeding fiscal years as the assets in the fund grow and fixed expenses are
spread over a larger asset base, there can be no assurance that the annual
expense ratio for Class A shares of Pioneer Papp Stock Fund will ever be lower
than the annual expense ratio for shares of Papp Stock Fund. However, there
also can be no assurance that Papp Stock Fund would continue to be able to
maintain its non-management fee expenses at their current levels.
Performance information for Pioneer Papp Stock Fund is not presented
because the fund has not yet commenced operations. As accounting successor to
your Fund, Pioneer Papp Stock Fund will assume your Fund's historical
performance after the reorganization.
Set forth below is performance information for your Fund. The following
performance information indicates some of the risks of investing in your Fund.
The bar chart shows how your Fund's total return has varied from year to year.
The table shows your Fund's average annual total return (before and after
taxes) over time compared with a broad-based market index. Past performance
before and after taxes does not indicate future results.
Calendar Year Total Returns*
[THE FOLLOWING DATA REPRESENTS A BAR CHART IN THE PRINTED MATERIAL]
'94 -1.46
'95 32.93
'96 21.77
'97 33.12
'98 26.99
'99 14.99
'00 -6.02
'01 -12.69
'02 -23.98
'03 23.97
* During the period shown in the bar chart, your Fund's highest quarterly
return was 23.50% for the quarter ended December 31, 1998 and the lowest
quarterly return was -17.37% for the quarter ended June 30, 2002.
11
Average Annual Total Returns as of December 31, 2003
- ----------------------------------------------------------------------------------------------------------------
Since
1 Year 5 Years 10 Years Inception(1)
- ----------------------------------------------------------------------------------------------------------------
Papp Stock Fund
Return Before Taxes 23.97% -2.32% 9.14% 10.24%
Return After Taxes on Distributions(2) 22.87% -2.94% 8.57% 9.62%
Return After Taxes on Distributions and
Sale of Fund Shares(2) 16.59% -2.03% 7.96% 9.01%
- ----------------------------------------------------------------------------------------------------------------
S&P 500 Index(3)
(reflects no deduction for fees, expenses or taxes) 28.69% -0.57% 11.07% 11.11%
- ----------------------------------------------------------------------------------------------------------------
(1) The Fund commenced operations on November 29, 1989.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those stockholders who hold their shares through tax-deferred
arrangements such as 401(k) plans or IRA accounts, or to investors that are
tax-exempt.
(3) The S&P 500 Index is an unmanaged market-weighted index that includes the
stocks of 500 of the largest U.S. companies.
The Funds' Fees and Expenses
Shareholders of both funds pay various fees and expenses, either directly
or indirectly. The table below discusses the fees and expenses that you would
pay if you were to buy and hold shares of each fund. The expenses in the table
appearing below are based on (i) for your Fund, the expenses of your Fund for
its fiscal year ended December 31, 2002 and (ii) for the Pioneer Papp Stock
Fund, the estimated annual expenses of the Pioneer Papp Stock Fund. The Pioneer
Papp Stock Fund's actual expenses may be greater or less.
Pioneer
Papp Stock
Papp Stock Fund
Fund Class A
Shareholder transaction fees (paid directly from your investment) ------------ -----------
Maximum sales charge (load) when you buy shares as a percentage of offering price ........ none 5.75(1)
Maximum deferred sales charge (load) as a % of purchase price or the amount you receive
when you sell shares, whichever is less .................................................. none none(2)
Annual fund operating expenses (deducted from fund assets) (as a % of average net assets)
Management fee ........................................................................... 1.00% 0.75%
Distribution and service (12b-1) fee ..................................................... none 0.25%
Other expenses ........................................................................... 0.14% 0.52%
Total fund operating expenses ............................................................ 1.14% 1.52%
Expense reduction(3)...................................................................... none (0.27%)
Net fund operating expenses .............................................................. 1.14% 1.25%
- ----------
(1) As described above, this sales charge does not apply to shares received in
the reorganization by stockholders of your Fund who become shareholders of
record of the Pioneer Papp Stock Fund through the reorganization. In
addition, stockholders of your Fund who own shares in their own name (i.e.,
not in the name of a broker or other intermediary) and maintain such account
as of the closing of the reorganization may purchase additional Class A
shares of Pioneer Papp Stock Fund through such account in the future without
paying this sales charge.
(2) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge of 1%.
(3) As described above, Papp has contractually agreed to reimburse Papp Stock
Fund to the extent the Fund's total ordinary operating expenses exceed 1.25%
of the Fund's average daily net asset value in a fiscal year. This
limitation cannot be changed without shareholder approval. Also as described
above, Pioneer has agreed to waive its fees for Pioneer Papp Stock Fund to
the extent certain of the fund's total ordinary operating expenses exceed
1.25% of the fund's average daily net asset value in a fiscal year. This
expense limitation is contractual through December 31, 2006. Pioneer may
subsequently recover reimbursed expenses (within three years of being
incurred) from the fund if the expense ratio of the Class A shares is less
than the expense limitation of the Class A shares. Each class will reimburse
Pioneer no more than the amount by which the class' expenses were reduced.
12
The hypothetical example below helps you compare the cost of investing in
each fund. It assumes that: (a) you invest $10,000 in each fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each fund's gross operating expenses
remain the same and (e) the expense limitations are in effect for one year for
Papp Stock Fund and for three years for Pioneer Papp Stock Fund. The examples
are for comparison purposes only and are not a representation of either fund's
actual expenses or returns, either past or future.
Pioneer
Papp Stock
Papp Stock Fund
Fund Class A Shares
Example ------------ ---------------
Year 1 .......... $ 120 $ 695
Year 3 .......... $ 373 $1,003
Year 5 .......... $ 646 $1,333
Year 10 ......... $1,424 $2,263
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o The reorganization is scheduled to occur as of 5:00 p.m., Eastern time, on
February 20, 2004, unless your Fund and Pioneer Papp Stock Fund agree in
writing to a later date. Your Fund will transfer all of its assets to
Pioneer Papp Stock Fund. Pioneer Papp Stock Fund will assume your Fund's
liabilities that are included in the calculation of your Fund's net assets
at the closing and certain liabilities with respect to your Fund's
investment operations that are not required by generally accepted
accounting principles to be included in the calculation of net asset
value. The net asset value of both funds will be computed as of 4:00 p.m.,
Eastern time, on the reorganization date.
o Pioneer Papp Stock Fund will issue to your Fund Class A shares with an
aggregate net asset value equal to the net assets attributable to your
Fund's shares. These shares will immediately be distributed to your Fund's
stockholders in proportion to their holdings of your Fund's shares on the
reorganization date. As a result, your Fund's stockholders will end up as
Class A shareholders of Pioneer Papp Stock Fund.
o After the distribution of shares, your Fund will be liquidated and
dissolved.
o The reorganization is not intended to result in income, gain or loss for
federal income tax purposes and will not take place unless both funds
receive a satisfactory opinion concerning the tax consequences of the
reorganization from Hale and Dorr LLP, counsel to Pioneer Papp Stock Fund.
Agreement and Plan of Reorganization
The stockholders of your Fund are being asked to approve an Agreement and
Plan of Reorganization, the form of which is attached as Exhibit A. The
description of the Agreement and Plan of Reorganization contained herein is
qualified in its entirety by the attached copy.
Reasons for the Proposed Reorganization
The directors of your Fund believe that the proposed reorganization will
be advantageous to the stockholders of your Fund for several reasons. The
directors considered the following matters, among others, in approving the
proposal.
First, stockholders of your Fund would become part of a significantly
larger family of funds which offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over 20 funds, including domestic and international equity and fixed
income funds and a money market fund, that will be available to your Fund's
stockholders through exchanges. Currently, stockholders of your Fund may
exchange their shares for shares of the other four Papp Funds. In addition,
Pioneer offers shareholders additional options for their accounts, including
the ability to transact and exchange shares over the telephone or online and
the ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or
online.
Second, stockholders of your Fund will enjoy continuity of portfolio
management. Because Pioneer will retain Papp to act as subadviser to Pioneer
Papp Stock Fund, the portfolio management team of your Fund will be the same
portfolio management team as for Pioneer Papp Stock Fund. Pioneer will oversee
Papp as subadviser to Pioneer Papp Stock Fund in accordance with the terms of
the Sub-Advisory Agreement.
13
Third, although Papp will manage the assets of Pioneer Papp Stock Fund as
its subadviser, Pioneer will be responsible for the overall management of
Pioneer Papp Stock Fund's operations, including supervision of compliance with
the investment guidelines and regulatory restrictions. Your Fund will benefit
from Pioneer's experience and resources in managing investment companies. At
September 30, 2003, Pioneer managed over 50 investment companies and accounts
with approximately $28 billion in assets. Pioneer is part of the global asset
management group of UniCredito Italiano S.p.A., one of the largest banking
groups in Italy, providing investment management and financial services to
mutual funds, institutional and other clients. As of September 30, 2003, assets
under management by UniCredito Italiano S.p.A. were approximately $130 billion
worldwide.
Fourth, until December 31, 2006, Pioneer has agreed to limit the expenses
of Class A shares of Pioneer Papp Stock Fund to 1.25% of average daily net
assets, which is the same as the percentage expense limitation currently in
place for your Fund (however, actual expenses for the fiscal year ended
December 31, 2002 were 1.14%). After December 31, 2006, Pioneer is not
obligated to maintain an expense limitation but may voluntarily agree to
continue such arrangement. Because Pioneer estimates that Pioneer Papp Stock
Fund's per share annual operating expenses for the coming fiscal year will be
1.52% (before waiver of fees or reimbursement of expenses) for Class A shares,
it is expected that the expense limitation agreement for Pioneer Papp Stock
Fund will be triggered and that the net expense ratio for Class A shares of
Pioneer Papp Stock Fund will be slightly higher than the net expense ratio for
the shares of your Fund. The directors believe that the benefits associated
with becoming a shareholder of the Pioneer Papp Stock Fund outweigh the slight
increase in the expense ratio which Papp Stock Fund stockholders would bear.
Fifth, Pioneer and its affiliates have greater potential for increasing
the size of the Fund due to Pioneer's experience in distributing mutual funds
through a broader range of distribution channels than currently is available to
your Fund. Over the long-term, if this potential for a larger asset base is
realized, it is expected to increase the portfolio management options available
to the Fund.
Sixth, the Class A shares of Pioneer Papp Stock Fund received in the
reorganization will provide your Fund's stockholders with exposure to
substantially the same investment product as they currently have.
The boards of both funds considered that Pioneer will pay all of the
expenses of the Fund and Pioneer Papp Stock Fund associated with the
preparation, printing and mailing of any stockholder communications, including
this joint proxy statement and prospectus, and any filings with the SEC and
other governmental agencies in connection with the reorganization.
The boards of both funds also considered that Pioneer has agreed with Papp
that for a period of at least three years after the consummation of the
reorganization, Pioneer will use commercially reasonable efforts to assure that
at least 75% of the Pioneer Funds' board of trustees are not "interested
persons" (as defined in the Investment Company Act) of Pioneer or Papp;
however, the nomination and election of the members of the board of trustees of
the Pioneer Funds is determined by the board of trustees of the Pioneer Funds
or their shareholders. Pioneer has also agreed with Papp that for two years
after the consummation of the reorganization, Pioneer will use commercially
reasonable efforts not to impose an unfair burden on Pioneer Papp Stock Fund in
connection with the reorganization.
The boards of both funds considered that each fund's investment adviser,
as well as Pioneer Papp Stock Fund's principal distributor, will benefit from
the reorganization. Because Pioneer Papp Stock Fund will be the accounting
successor to your Fund and will assume your Fund's performance record, Pioneer
expects to be able to increase Pioneer Papp Stock Fund's assets at a faster
rate than would otherwise be possible if it began offering a fund with a
similar objective and no historical performance record. Such a growth in asset
size benefits Pioneer by increasing its management fees and accelerating the
point at which management of the fund is profitable to Pioneer. As subadviser
to Pioneer Papp Stock Fund, Papp would similarly benefit from increased assets
because it would receive greater subadvisory fees. Moreover, as discussed below
under "Certain Agreements between Pioneer and Papp," Papp will receive economic
benefits from Pioneer if the reorganization is completed.
The board of trustees of Pioneer Papp Stock Fund also considered that the
reorganization presents an excellent opportunity for the Pioneer Papp Stock
Fund to acquire substantial investment assets without the obligation to pay
commissions or other transaction costs that a fund normally incurs when
purchasing securities. This opportunity provides an economic benefit to Pioneer
Papp Stock Fund and its stockholders.
Certain Agreements between Pioneer and Papp
In connection with the reorganization, Pioneer and Papp have entered into
an agreement dated as of September 18, 2003 (the "Transfer Agreement"), which
provides, among other things, that (i) Pioneer shall make a payment to Papp
upon the closing of the reorganizations of the funds, (ii) Papp shall enter
into and perform its obligations under a subadvisory agreement with Pioneer
(the "Pioneer Papp Stock Fund Sub-Advisory Agreement," or, the "Sub-Advisory
Agreement") to serve as subadviser of Pioneer Papp Stock Fund, (iii) Pioneer
guarantees a minimum aggregate amount of subadvisory fees received from the
Pioneer Funds during the initial three year period;
14
(iv) Pioneer shall pay Papp a termination fee if within five years of the
closing of the reorganization Pioneer terminates the Sub-Advisory Agreement
with Papp without cause and (v) Papp will be subject to certain non-competition
provisions. The termination fee would not be triggered if the Sub-Advisory
Agreement is terminated by Pioneer Papp Stock Fund or its shareholders with or
without cause. The terms of the Sub-Advisory Agreement with Papp are discussed
under "Material Provisions of the Management Agreements and the Sub-Advisory
Agreements."
Tax Status of the Reorganization
The reorganization is not intended to result in income, gain or loss for
United States federal income tax purposes and will not take place unless both
funds receive a satisfactory opinion from Hale and Dorr LLP, counsel to Pioneer
Papp Stock Fund, substantially to the effect that the reorganization described
above will be a "reorganization" within the meaning of Section 368(a) of the
Code.
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your Fund upon (1) the transfer of
all of its assets to Pioneer Papp Stock Fund as described above or (2)
the distribution by your Fund of Pioneer Papp Stock Fund shares to your
Fund's stockholders;
o No gain or loss will be recognized by Pioneer Papp Stock Fund upon the
receipt of your Fund's assets solely in exchange for the issuance of
Pioneer Papp Stock Fund shares to your Fund and the assumption of your
Fund's liabilities by Pioneer Papp Stock Fund;
o The basis of the assets of your Fund acquired by Pioneer Papp Stock Fund
will be the same as the basis of those assets in the hands of your Fund
immediately before the transfer;
o The tax holding period of the assets of your Fund in the hands of Pioneer
Papp Stock Fund will include your Fund's tax holding period for those
assets;
o You will not recognize gain or loss upon the exchange of your shares of
your Fund solely for Pioneer Papp Stock Fund shares as part of the
reorganization;
o The basis of Pioneer Papp Stock Fund shares received by you in the
reorganization will be the same as the basis of your shares of your Fund
surrendered in exchange; and
o The tax holding period of Pioneer Papp Stock Fund shares you receive will
include the tax holding period of the shares of your Fund surrendered in
the exchange, provided that the shares of your Fund were held as capital
assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of your Fund and Pioneer Papp
Stock Fund.
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with the 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.
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.
Additional Terms of Agreement and Plan of Reorganization
Conditions to Closing the Reorganization. The obligation of your Fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the execution by Papp and Pioneer of investment
subadvisory agreements whereby Papp would serve as subadviser to each Pioneer
Fund, the performance by Pioneer Papp Stock Fund of all its obligations under
the Agreement and Plan of Reorganization and the receipt of all consents,
orders and permits necessary to consummate the reorganization (see Sections 6
and 8 of the Agreement and Plan of Reorganization, attached as Exhibit A).
The obligation of Pioneer Papp Stock Fund to consummate the reorganization
is subject to the satisfaction of certain conditions, including your Fund's
performance of all of its obligations under the Agreement and Plan of
Reorganization, the receipt of certain documents and financial statements from
your Fund and the receipt of all consents, orders and permits necessary to
consummate the reorganization (see Sections 7 and 8 of the Agreement and Plan
of Reorganization, attached as Exhibit A).
The obligations of both funds are subject to the approval of the Agreement
and Plan of Reorganization by the necessary vote of the outstanding shares of
your Fund, in accordance with the provisions of your Fund's charter and
by-laws. The funds' obligations are also
15
subject to the receipt of a favorable opinion of Hale and Dorr LLP as to the
federal income tax consequences of the reorganization (see Section 8 of the
Agreement and Plan of Reorganization, attached as Exhibit A).
Termination of Agreement. The board of either your Fund or Pioneer Papp
Stock Fund may terminate the Agreement and Plan of Reorganization (even if the
stockholders of your Fund have already approved it) at any time before the
reorganization date, if that board believes in good faith that proceeding with
the reorganization would no longer be in the best interests of stockholders.
Expenses of the Reorganization. Pioneer will pay all of the expenses of
your Fund and Pioneer Papp Stock Fund associated with the preparation, printing
and mailing of any stockholder communications, including this joint proxy
statement and prospectus, and any filings with the SEC and other governmental
agencies in connection with the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
December 31, 2003, and the pro forma combined capitalization of both funds as
if the reorganization had occurred on that date. This table reflects the pro
forma ratios of one Class A share of Pioneer Papp Stock Fund being issued for
each share of your Fund. The exchange ratio will remain 1:1 on the closing date
of the reorganization.
December 31, 2003
Pioneer
Pioneer Papp Stock Fund
Papp Stock Fund Papp Stock Fund Pro Forma
----------------- ----------------- ------------------
Net Assets ........................ $57.3 million N/A $57.3 million
Net Asset Value Per Share ......... 28.21 N/A 28.21
Shares Outstanding ................ 2,030,630 N/A 2,030,630
It is impossible to predict how many shares of Pioneer Papp Stock Fund
will actually be received and distributed by your Fund on the reorganization
date. The table should not be relied upon to determine the amount of Pioneer
Papp Stock Fund's shares that will actually be received and distributed.
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the board of directors of your Fund,
including the directors who are not "interested persons" of your Fund or Papp
("independent directors"), approved the reorganization. In particular, the
board of directors determined that the reorganization is in the best interests
of your Fund. Similarly, the board of trustees of Pioneer Papp Stock Fund,
including its independent trustees, approved the reorganization. They also
determined that the reorganization is in the best interests of Pioneer Papp
Stock Fund.
The directors of your Fund recommend that the stockholders of your Fund
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
16
PROPOSAL 2
Approval of Agreement and Plan of Reorganization between
Papp America-Abroad Fund, Inc. (as defined above, "Papp America-Abroad Fund")
and Pioneer Papp American Navigator Fund
(as defined above, "Pioneer Papp American Navigator Fund")
SUMMARY
The following is a summary of more complete information appearing later in
this proxy statement and prospectus or incorporated herein. You should read
carefully the entire proxy statement, including the Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Papp America-Abroad Fund to Pioneer Papp American Navigator Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Papp America-Abroad Fund Pioneer Papp American Navigator Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Business A diversified open-end investment management A newly organized diversified series of Pioneer
company organized as a Maryland corporation. Series Trust II, an open-end investment
management company organized as a
Delaware statutory trust.
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets as of $59 million None. The Pioneer Papp American Navigator
December 31, 2003 Fund is newly organized and does not expect
to commence investment operations until the
reorganization occurs.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser: Investment adviser
portfolio managers L. Roy Papp & Associates, LLP (as defined Pioneer Investment Management, Inc. (as
above, "Papp") defined above, "Pioneer")
Portfolio Managers: Investment subadviser:
L. Roy Papp, Chairman and Director (since Papp
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer Portfolio Managers:
and Director (since 1989) of Papp. L. Roy Papp, Chairman and Director (since
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer
and Director (since 1989) of Papp
Pioneer retains the ultimate responsibility to
oversee the subadviser and may, subject only
to the approval of the board of trustees of the
Pioneer Funds, hire, terminate and replace the
subadviser without shareholder approval.
Pioneer has no current intention to replace
Papp as subadviser for Pioneer Papp
American Navigator Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment objective Each fund seeks long-term capital growth. The investment objective of each fund is fundamental
and cannot be changed without shareholder approval.
- -----------------------------------------------------------------------------------------------------------------------------------
17
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Papp America-Abroad Fund Pioneer Papp American Navigator Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments Equity securities, with an emphasis on U. S. issuers that Papp believes have
substantial international activities. Each fund may invest a portion of its assets in equity
securities of foreign companies which are traded in U.S. markets.
--------------------------------------------------------------------------------------------------------
Under normal market conditions, at least 80% Under normal market conditions, at least
of net assets in common stocks. 80% of assets in equity securities (including
common stocks, convertible debt and other
equity instruments, such as depositary receipts,
warrants, rights and preferred stocks) of U.S.
companies.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment strategies Each fund uses a "growth" style of management and seeks to invest in issuers with above
average potential for earnings growth. Papp evaluates an issuer's prospects for capital
appreciation by considering, among other factors, growth over extended periods of time,
profitability created through operating efficiency rather than financial leverage, and whether
cash flows confirm the sustainability of growth.
Papp follows a "buy and hold" strategy. Once a security is purchased, the fund ordinarily retains
an investment so long as it continues to believe that the security's prospects for appreciation
continue to be favorable and that the security is not overvalued in the marketplace. Papp does
not attempt to time the market.
- -----------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 20% of its assets The fund may invest up to 20% of its assets
in common stocks generally. in debt securities of U.S. corporate and
government issuers. The fund generally
acquires debt securities that are rated
investment grade, but may invest up to 5%
of its net assets in below investment grade
debt securities.
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive Papp America-Abroad Fund may hold cash or Pioneer Papp American Navigator Fund may
strategies invest up to 100% of its assets in high-quality invest up to 100% of its assets in securities
short-term government or corporate with remaining maturities of less than one
obligations. year, cash equivalents or may hold cash.
- -----------------------------------------------------------------------------------------------------------------------------------
Diversification Each fund is diversified for the purpose of the Investment Company Act of 1940 (the
"Investment Company Act"), and each fund is subject to diversification requirements under
the Internal Revenue Code of 1986 (the "Code").
- -----------------------------------------------------------------------------------------------------------------------------------
Industry Concentration Each fund may not invest more than 25% of its assets in any one industry.
- -----------------------------------------------------------------------------------------------------------------------------------
Restricted and Illiquid Papp America-Abroad Fund may not invest Pioneer Papp American Navigator Fund may
Securities more than 5% of its assets in securities which not invest more than 15% of its net assets
are not readily marketable. in securities which are illiquid and other
securities which are not readily marketable.
- -----------------------------------------------------------------------------------------------------------------------------------
18
- -----------------------------------------------------------------------------------------------------------------------------------
Papp America-Abroad Fund Pioneer Papp American Navigator Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Borrowing Papp America-Abroad Fund may not borrow Pioneer Papp American Navigator Fund may
money except from banks for temporary or not borrow money, except on a temporary
emergency purposes in amounts not exceeding basis and to the extent permitted by applicable
10% of the value of the Fund's assets at the law, as amended and interpreted or modified
time of borrowing. The Fund may not purchase from time to time by any regulatory authority
securities when borrowings exceed 5% of having jurisdiction. Under current regulatory
its assets. requirements, the fund may: (a) borrow
from banks or through reverse repurchase
agreements in an amount up to 33-1/3% of the
fund's total assets (including the amount
borrowed); (b) borrow up to an additional 5%
of the fund's assets for temporary purposes;
(c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on
margin to the extent permitted by applicable
law; and (e) engage in transactions in
mortgage dollar rolls that are accounted for
as financings.
- -----------------------------------------------------------------------------------------------------------------------------------
Lending Papp America-Abroad Fund may not make Pioneer Papp American Navigator Fund may
loans (but the Fund may invest in debt lend portfolio securities with a value that may
securities subject to the 5% limitation on not exceed 33-1/3% of the value of its assets.
investing in illiquid securities).
- -----------------------------------------------------------------------------------------------------------------------------------
Derivative instruments Papp America-Abroad Fund may not utilize Pioneer Papp American Navigator Fund may
derivative instruments, such as options, futures use futures and options on securities, indices
and options on futures. and other 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
stock market prices, interest rates or
currency exchange rates
o As a substitute for purchasing or selling
securities
o To increase the fund's return as a non-
hedging strategy that may be considered
speculative
- -----------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the funds have substantially similar principal investment strategies and
policies and restrictions policies. Certain of the non-principal investment policies and restrictions are different. For a
more complete discussion of each fund's other investment policies and fundamental and non-
fundamental investment restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------------
19
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Papp America-Abroad Fund Pioneer Papp American Navigator Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charges Shares are offered with no sales charges. The Class A shares of Pioneer Papp American
Navigator Fund you receive in the
reorganization will not be subject to any sales
charge. Moreover, if you own shares in your
own name as of the closing of the
reorganization (i.e., not in the name of a
broker) and maintain your account, you may
purchase additional Class A shares of Pioneer
Papp American Navigator Fund through such
account in the future without paying any sales
charge.
Except as described above, Class A Shares
of Pioneer Papp American Navigator Fund are
subject to a front-end sales charge of up
to 5.75%.
- -----------------------------------------------------------------------------------------------------------------------------------
Management and Papp America-Abroad Fund pays an advisory Pioneer Papp American Navigator Fund will
other fees fee on a monthly basis at an annual rate of pay Pioneer a management fee equal to
1.00% of the Fund's average daily net assets. 0.75% annually of average daily net assets up
In addition, Papp also serves as transfer, to $1 billion and 0.70% annually for average
dividend disbursing and shareholder servicing daily net assets in excess of $1 billion. In
agent for the Fund pursuant to a separate addition, the fund reimburses Pioneer for
agreement. Papp receives from the Fund a certain fund accounting and legal expenses
monthly fee of $0.75 for each Fund incurred on behalf of the fund and pays a
shareholder account, $0.50 for each dividend separate shareholder servicing/transfer agency
paid on a shareholder account, and $1.00 for fee to Pioneer Investment Management
each purchase (other than by reinvestment, Shareholder Services, Inc. (as defined above,
transfer or redemption) of Fund shares. "PIMSS"), an affiliate of Pioneer.
Papp has agreed to limit certain of the Fund's Pioneer pays the fee of Papp as the sub-
ordinary operating expenses to 1.25% of its adviser to the Pioneer Papp American
average daily net assets for any fiscal year. For Navigator Fund.
the fiscal year ended December 31, 2002, the
Fund's annual operating expenses, without Until December 31, 2006, Pioneer has agreed
giving effect to such limitation, were 1.18% to limit Pioneer Papp American Navigator
per share and the expense limitation was Fund's ordinary operating expenses per Class
not triggered. A share to 1.25% of average daily net assets.
For the coming fiscal year, Pioneer estimates
that Pioneer Papp American Navigator Fund's
annual operating expenses will be 1.49% per
share (before waiver of fees or reimbursement
of expenses) for Class A shares.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and service Shares of the Fund are not subject to a Class A Shares are subject to a 12b-1 fee
(12b-1) fee 12b-1 fee. equal to 0.25% annually of average daily
net assets.
- -----------------------------------------------------------------------------------------------------------------------------------
20
- -----------------------------------------------------------------------------------------------------------------------------------
Papp America-Abroad Fund Pioneer Papp American Navigator Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares directly through Papp Subject to sales charges except as noted
America-Abroad Fund's transfer agent by above (see "sales charges"), you may buy
writing to the Papp Funds. You may also buy shares from any investment firm that has a
shares through other financial intermediaries sales agreement with Pioneer Funds
as described in the Fund's prospectus. Shares Distributor, Inc., Pioneer Papp American
may not be purchased by telephone or online Navigator Fund's distributor (as defined above,
directly from the Papp Funds. "PFD"). Existing shareholders of Papp
America-Abroad Fund who own shares in their
own name as of the closing date of the
reorganization and who maintain their
accounts may buy shares of Pioneer Papp
American Navigator Fund through such
accounts in the future without paying sales
charges, but subject to the Class A 12b-1 fee.
Pioneer Papp American Navigator Fund also
offers several other classes of shares which
are subject to different sales charges and
12b-1 fees than Class A shares, as well as a
class of shares for institutional investors
without any sales charges or 12b-1 fees.
If the account is established in the
shareholder's own name, a shareholder may
also purchase additional shares of Pioneer
Papp American Navigator Fund by telephone
or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege You may exchange shares of Papp America- You may exchange shares of Pioneer Papp
Abroad Fund without incurring an exchange fee American Navigator Fund without incurring
with the other four Funds in the Papp family of any fee on the exchange with the more than
funds. 20 other Pioneer Funds. An exchange
generally is treated as a sale and a new
Exchange orders must be sent to the Fund purchase of shares for federal income tax
either directly in writing or through a financial purposes.
intermediary. Telephone and online exchange
privileges are not available from the Papp If the account is established in the
Funds directly. shareholder's own name, shareholders may
also exchange shares of Pioneer Papp
American Navigator Fund by telephone or
online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling shares Your shares will be sold at net asset value per share next calculated after the fund receives your
request in good order.
-------------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Normally, your investment firm will send your
Fund directly in writing or by contacting a request to sell shares to PIMSS. You can
financial intermediary as described in the also sell your shares by contacting the fund
fund's prospectus. directly if your account is registered in
your name.
Telephone and online redemption privileges are
not available from the Papp Funds directly. If the account is established in the
shareholder's own name, shareholders may
also redeem shares of Pioneer Papp American
Navigator Fund by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
21
Comparison of Principal Risks of Investing in the Funds
Because each fund has substantially the same portfolio management team and
a substantially similar investment objective, policies and strategies, the
funds are subject to the same principal risks. You could lose money on your
investment in the fund or not make as much as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short term);
o Growth stocks fall out of favor with investors;
o The fund's investments do not have the growth potential originally
expected; and
Investing in issuers that have substantial international activities may
involve unique risks. These risks may include:
o Adverse effect of currency exchange rates or controls;
o The issuer may be affected by economic growth rates abroad as well as in
the United States;
o Economic, political or social developments may adversely affect the
issuer's products or services abroad;
o Potential trade disputes or restrictions between the U.S. and the markets
to which the issuer exports its goods or services or
o Possible seizure, nationalization or expropriation of the issuer's assets
abroad.
To the extent the fund invests directly in foreign companies, the fund may
be subject to the following risks which are in addition to the risks described
above for investing in U.S. issuers with substantial international activities:
o There is political, economic or social instability in foreign countries
of companies in which the fund invests.
o Less information about foreign issuers or markets may be available due to
less rigorous disclosure or accounting standards or regulatory practices
o Withholding or foreign taxes may decrease the fund's returns
The 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.
An investment in Pioneer Papp American Navigator Fund may, however,
involve greater risk than an investment in Papp America-Abroad Fund because
Pioneer Papp American Navigator Fund has greater flexibility in its
non-principal investment policies to invest in certain types of securities and
instruments which may subject the portfolio to greater risk of loss. Unlike
Papp America-Abroad Fund, Pioneer Papp American Navigator Fund may invest up to
20% of its assets in debt securities of U.S. issuers, including up to 5% of its
net assets in below investment grade debt securities. Pioneer Papp American
Navigator Fund may also invest in derivative instruments, which Papp
America-Abroad Fund is not permitted to do. Pioneer Papp American Navigator
Fund may also invest a greater percentage of its assets in illiquid securities
and may lend portfolio securities representing a greater percentage of its
portfolio than can Papp America-Abroad Fund. Papp, as subadviser to Pioneer
Papp American Navigator Fund, intends to manage Pioneer Papp American Navigator
Fund in substantially the same manner as Papp America-Abroad Fund and has no
current intention to utilize the greater flexibility afforded by Pioneer Papp
American Navigator Fund's investment policies.
Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money by investing in either fund.
Other Consequences of the Reorganization
The Papp America-Abroad Fund and Pioneer Papp American Navigator Fund each
pay monthly management fees equal to the following annual percentages of
average daily net assets:
- -----------------------------------------------------------------------------------
Papp America-Abroad Fund Pioneer Papp American Navigator Fund
Management Fee Management Fee
- -----------------------------------------------------------------------------------
1.00% 0.75% -- for average daily net assets up to $1 billion
0.70% -- for average daily net assets over $1 billion
- -----------------------------------------------------------------------------------
22
The annual management fee rate payable by Pioneer Papp American Navigator
Fund (without giving effect to expense limitations) is less than the rate paid
by your Fund. However, Class A shares of Pioneer Papp American Navigator Fund
are subject to a 12b-1 fee. At current asset levels, the combined management
fee and 12b-1 fee for Class A shares of Pioneer Papp American Navigator Fund is
equal to Papp America-Abroad Fund's management fee alone.
In addition to the management fee, your Fund pays a monthly transfer
agent, dividend disbursing and shareholder servicing agent fee to Papp of $0.75
for each Fund shareholder account, $0.50 for each dividend paid on a
shareholder account, and $1.00 for each purchase (other than by reinvestment,
transfer or redemption) of Fund shares. Pioneer will provide certain accounting
and legal services under a separate administration agreement for approximately
[0.02]% of average daily net assets. PIMSS will provide shareholder servicing
and transfer agency services to Pioneer Papp American Navigator Fund under a
separate shareholder servicing/transfer agency agreement at an annual fee of
$26.60 for each Class A shareholder account. PIMSS will also be reimbursed for
its cash out-of-pocket expenditures. Pioneer, and not Pioneer Papp American
Navigator Fund, will pay Papp a subadvisory fee.
For its fiscal year ended December 31, 2002, your Fund's per share
operating expenses were 1.18% of average daily net assets. Papp does not
anticipate that your Fund's per share operating expenses as a percentage of
average daily net assets for the fiscal year ended December 31, 2003 will be
significantly different. Papp has agreed to reimburse the Fund to the extent
the Fund's total operating expenses (excluding taxes, interest, and
extraordinary litigation expenses) during any fiscal year exceed 1.25% of its
average daily net asset value in such year. This expense reimbursement cannot
be changed without stockholder approval.
Similarly, with regard to Pioneer Papp American Navigator Fund, Pioneer
has agreed to limit, until December 31, 2006, Class A expenses (other than
extraordinary expenses) to 1.25% of the average daily net assets attributable
to Class A shares by not imposing all or a portion of its management fee and,
if necessary, limiting other ordinary operating expenses of the fund. Pioneer
may subsequently recover reimbursed expenses within three years of being
incurred from the fund if the expense ratio of the Class A shares is less than
the expense limitation of the Class A shares. Pioneer estimates that Pioneer
Papp American Navigator Fund's per share annual operating expenses for the
coming fiscal year will be 1.49% (before waiver of fees or reimbursement of
expenses) for Class A shares. Accordingly, the annual expense ratio for Class A
shares of Pioneer Papp American Navigator Fund will likely be higher than the
annual expense ratio for the shares of your Fund given that Pioneer Papp
American Navigator Fund's expense limitation of 1.25% of average daily net
asset value is slightly higher than the fund's actual operating expense ratio
of 1.18% for the fiscal year ended December 31, 2002. While it is anticipated
that the Pioneer Papp American Navigator Fund's annual expense ratio for Class
A shares will decrease in succeeding fiscal years as the assets in the fund
grow and fixed expenses are spread over a larger asset base, there can be no
assurance that the annual expense ratio for Class A shares of Pioneer Papp
American Navigator Fund will ever be lower than the annual expense ratio for
shares of Papp America-Abroad Fund. However, there also can be no assurance
that Papp America-Abroad Fund would continue to be able to maintain its
non-management fee expenses at their current level.
Performance information for Pioneer Papp American Navigator Fund is not
presented because the fund has not yet commenced operations. As accounting
successor to your Fund, Pioneer Papp American Navigator Fund will assume your
Fund's historical performance after the reorganization.
Set forth below is performance information for your Fund. The following
performance information indicates some of the risks of investing in your Fund.
The bar chart shows how your Fund's total return has varied from year to year.
The table shows your Fund's average annual total return (before and after
taxes) over time compared with a broad-based market index. Past performance
before and after taxes does not indicate future results.
23
Calendar Year Total Returns*
[THE FOLLOWING DATA REPRESENTS A BAR CHART IN THE PRINTED MATERIAL]
'94 7.81
'95 37.05
'96 27.65
'97 29.92
'98 23.83
'99 14.01
'00 -8.62
'01 -15.92
'02 -25.02
'03 23.9
* During the period shown in the bar chart, your Fund's highest quarterly
return was 27.81% for the quarter ended December 31, 1998 and the lowest
quarterly return was -18.02% for the quarter ended June 30, 2002.
Average Annual Total Returns as of December 31, 2003
- ----------------------------------------------------------------------------------------------------------------
Since
1 Year 5 Years 10 Years Inception(1)
- ----------------------------------------------------------------------------------------------------------------
Papp America-Abroad Fund
Return Before Taxes 23.90% -4.04% 9.46% 9.27%
Return After Taxes on Distributions(2) 22.84% -5.05% 8.63% 8.50%
Return After Taxes on Distributions and
Sale of Fund Shares(2) 16.51% -3.42% 8.25% 8.11%
- ----------------------------------------------------------------------------------------------------------------
Morgan Stanley World Index(3)
(reflects no deduction for fees, expenses or taxes) 30.81% -1.85% 6.59% 7.37%
- ----------------------------------------------------------------------------------------------------------------
(1) The Fund commenced operations on December 6, 1991.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Morgan Stanley World Index is an unmanaged, market-weighted index that
includes 50% foreign companies and 50% U.S. companies.
24
The Funds' Fees and Expenses
Shareholders of both funds pay various fees and expenses, either directly
or indirectly. The table below discusses the fees and expenses that you would
pay if you were to buy and hold shares of each fund. The expenses in the table
appearing below are based on (i) for your Fund, the expenses of your Fund for
its fiscal year ended December 31, 2002 and (ii) for Pioneer Papp American
Navigator Fund, the estimated annual expenses of Pioneer Papp American
Navigator Fund. Pioneer Papp American Navigator Fund's actual expenses may be
greater or less.
Pioneer
Papp
Papp American Navigator
America-Abroad Fund
Fund Class A
Shareholder transaction fees (paid directly from your investment) ---------------- -------------------
Maximum sales charge (load) when you buy shares as a percentage of offering price ........ none 5.75%(1)
Maximum deferred sales charge (load) as a % of purchase price or the amount you receive
when you sell shares, whichever is less .................................................. none none(2)
Annual fund operating expenses (deducted from fund assets)
(as a % of average net assets)
Management fee ........................................................................... 1.00% 0.75%
Distribution and service (12b-1) fee ..................................................... none 0.25%
Other expenses ........................................................................... 0.18% 0.49%
Total fund operating expenses ............................................................ 1.18% 1.49%
Expense reduction(3)...................................................................... none (0.24%)
Net fund operating expenses .............................................................. 1.18% 1.25%
- ----------
(1) As described above, this sales charge does not apply to shares received in
the reorganization by stockholders of your Fund who become shareholders of
record of the Pioneer Papp American Navigator Fund through the
reorganization. In addition, stockholders of your Fund who own shares in
their own name as of the closing of the reorganization (i.e., not in the
name of a broker or other intermediary) and maintain such account may
purchase additional Class A shares of Pioneer Papp American Navigator Fund
through such account in the future without paying this sales charge.
(2) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge of 1%.
(3) As described above, Papp has contractually agreed to reimburse Papp
America-Abroad Fund to the extent the Fund's total ordinary operating
expenses exceed 1.25% of the Fund's average daily net asset value in a
fiscal year. This limitation cannot be changed without stockholder approval.
Also as described above, Pioneer has agreed to waive its fees for Pioneer
Papp American Navigator Fund to the extent certain of the fund's ordinary
operating expenses exceed 1.25% of the fund's average daily net asset value
in a fiscal year. This expense limitation is contractual through December
31, 2006. Pioneer may subsequently recover reimbursed expenses (within three
years of being incurred) from the fund if the expense ratio of the Class A
shares is less than the expense limitation of the Class A shares. Each class
will reimburse Pioneer no more than the amount by which the class' expenses
were reduced.
The hypothetical example below helps you compare the cost of investing in
each fund. It assumes that: (a) you invest $10,000 in each fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each fund's gross operating expenses
remain the same, and (e) the expense limitations are in effect for one year for
Papp America-Abroad Fund and for three years for Pioneer Papp American
Navigator Fund. The examples are for comparison purposes only and are not a
representation of either fund's actual expenses or returns, either past or
future.
Pioneer
Papp
Papp American Navigator
America-Abroad Fund
Fund Class A Shares
Example ---------------- -------------------
Year 1 .......... $ 124 $ 695
Year 3 .......... $ 385 $ 996
Year 5 .......... $ 668 $1,319
Year 10 ......... $1,471 $2,231
25
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o The reorganization is scheduled to occur as of 5:00 p.m., Eastern time,
on February 20, 2004, unless your Fund and Pioneer Papp American
Navigator Fund agree in writing to a later date. Your Fund will transfer
all of its assets to Pioneer Papp American Navigator Fund. Pioneer Papp
American Navigator Fund will assume your Fund's liabilities that are
included in the calculation of your Fund's net assets at the closing and
certain liabilities with respect to your Fund's investment operations
that are not required by generally accepted accounting principles to be
included in the calculation of net asset value. The net asset value of
both funds will be computed as of 4:00 p.m., Eastern time, on the
reorganization date.
o Pioneer Papp American Navigator Fund will issue to your Fund Class A
shares with an aggregate net asset value equal to the net assets
attributable to your Fund's shares. These shares will immediately be
distributed to your Fund's stockholders in proportion to their holdings
of your Fund's shares on the reorganization date. As a result, your
Fund's stockholders will end up as Class A shareholders of Pioneer Papp
American Navigator Fund.
o After the distribution of shares, your Fund will be liquidated and
dissolved.
o The reorganization is not intended to result in income, gain or loss for
federal income tax purposes and will not take place unless both funds
receive a satisfactory opinion concerning the tax consequences of the
reorganization from Hale and Dorr LLP, counsel to Pioneer Papp American
Navigator Fund.
Agreement and Plan of Reorganization
The stockholders of your Fund are being asked to approve an Agreement and
Plan of Reorganization, the form of which is attached as Exhibit A. The
description of the Agreement and Plan of Reorganization contained herein is
qualified in its entirety by the attached copy.
Reasons for the Proposed Reorganization
The directors of your Fund believe that the proposed reorganization will
be advantageous to the stockholders of your Fund for several reasons. The
directors considered the following matters, among others, in approving the
proposal.
First, stockholders of your Fund would become part of a significantly
larger family of funds which offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over 20 funds, including domestic and international equity and fixed
income funds and a money market fund, that will be available to your Fund's
stockholders through exchanges. Currently, stockholders of your Fund may
exchange their shares for shares of the other four Papp Funds. In addition,
Pioneer offers shareholders additional options for their accounts, including
the ability to transact and exchange shares over the telephone or online and
the ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or
online.
Second, stockholders of your Fund will enjoy continuity of portfolio
management. Because Pioneer will retain Papp to act as subadviser to Pioneer
Papp American Navigator Fund, the portfolio management team of your Fund will
be the same portfolio management team as for Pioneer Papp American Navigator
Fund. Pioneer will oversee Papp as subadviser to Pioneer Papp American
Navigator Fund in accordance with the terms of the Sub-Advisory Agreement.
Third, although Papp will manage the assets of Pioneer Papp American
Navigator Fund as its subadviser, Pioneer will be responsible for the overall
management of Pioneer Papp American Navigator Fund's operations, including
supervision of compliance with the investment guidelines and regulatory
restrictions. Your Fund will benefit from Pioneer's experience and resources in
managing investment companies. At September 30, 2003, Pioneer managed over 50
investment companies and accounts with approximately $28 billion in assets.
Pioneer is part of the global asset management group of UniCredito Italiano
S.p.A., one of the largest banking groups in Italy, providing investment
management and financial services to mutual funds, institutional and other
clients. As of September 30, 2003, assets under management by UniCredito
Italiano S.p.A. were approximately $130 billion worldwide.
Fourth, until December 31, 2006, Pioneer has agreed to limit the expenses
of Class A shares of Pioneer Papp American Navigator Fund to 1.25% of average
daily net assets, which is the same as the percentage expense limitation
currently in place for your Fund (however, actual expenses for the fiscal year
ended December 31, 2002 were 1.18%). After December 31, 2006, Pioneer is not
obligated to maintain an expense limitation but may voluntarily agree to
continue such arrangement. Because Pioneer estimates that Pioneer Papp American
Navigator Fund's per share annual operating expenses for the coming fiscal year
will be 1.49% (before waiver of fees or reimbursement
26
of expenses) for Class A shares, it is expected that the expense limitation
agreement for Pioneer Papp American Navigator Fund will be triggered and that
the net expense ratio for Class A shares of Pioneer Papp American Navigator
Fund will be slightly higher than the net expense ratio for the shares of your
Fund. The directors believe that the benefits associated with becoming a
shareholder of the Pioneer Papp American Navigator Fund outweigh the slight
increase in the expense ratio which Papp America-Abroad Fund stockholders would
bear.
Fifth, Pioneer and its affiliates have greater potential for increasing
the size of the Fund due to Pioneer's experience in distributing mutual funds
through a broader range of distribution channels than currently available to
your Fund. Over the long-term, if this potential for a larger asset base is
realized, it is expected to increase the portfolio management options available
to the Fund.
Sixth, the Class A shares of Pioneer Papp American Navigator Fund received
in the reorganization will provide your Fund's stockholders with exposure to
substantially the same investment product as they currently have.
The boards of both funds considered that Pioneer will pay all of the
expenses of the Fund and Pioneer Papp American Navigator Fund associated with
the preparation, printing and mailing of any shareholder communications,
including this joint proxy statement and prospectus, and any filings with the
SEC and other governmental agencies in connection with the reorganization.
The boards of both funds also considered that Pioneer has agreed with Papp
that for a period of at least three years after the consummation of the
reorganization, Pioneer will use commercially reasonable efforts to assure that
at least 75% of the Pioneer Funds' board of trustees are not "interested
persons" (as defined in the Investment Company Act) of Pioneer or Papp;
however, the nomination and election of the members of the board of trustees of
the Pioneer Funds is determined by the board of trustees of the Pioneer Funds
or their shareholders. Pioneer has also agreed with Papp that for two years
after the consummation of the reorganization, Pioneer will use commercially
reasonable efforts not to impose an unfair burden on Pioneer Papp American
Navigator Fund in connection with the reorganization.
The boards of both funds considered that each fund's investment adviser,
as well as Pioneer Papp American Navigator Fund's principal distributor, will
benefit from the reorganization. Because Pioneer Papp American Navigator Fund
will be the accounting successor to your Fund and will assume your Fund's
performance record, Pioneer expects to be able to increase Pioneer Papp
American Navigator Fund's assets at a faster rate than would otherwise be
possible if it began offering a fund with a similar objective and no historical
performance record. Such a growth in asset size benefits Pioneer by increasing
its management fees and accelerating the point at which management of the fund
is profitable to Pioneer. As subadviser to Pioneer Papp American Navigator
Fund, Papp would similarly benefit from increased assets because it would
receive greater subadvisory fees. Moreover, as discussed below under "Certain
Agreements between Pioneer and Papp," Papp will receive economic benefits from
Pioneer if the reorganization is completed.
The board of trustees of Pioneer Papp American Navigator Fund also
considered that the reorganization presents an excellent opportunity for the
Pioneer Papp American Navigator Fund to acquire substantial investment assets
without the obligation to pay commissions or other transaction costs that a
fund normally incurs when purchasing securities. This opportunity provides an
economic benefit to Pioneer Papp American Navigator Fund and its shareholders.
Certain Agreements between Pioneer and Papp
In connection with the reorganization, Pioneer and Papp have entered into
an agreement dated as of September 18, 2003 (the "Transfer Agreement"), which
provides, among other things, that (i) Pioneer shall make a payment to Papp
upon the closing of the reorganizations of the funds, (ii) Papp shall enter
into and perform its obligations under a subadvisory agreement with Pioneer
(the "Pioneer Papp American Navigator Fund Sub-Advisory Agreement," or, the
"Sub-Advisory Agreement") to serve as subadviser of Pioneer Papp American
Navigator Fund, (iii) Pioneer guarantees a minimum aggregate amount of
subadvisory fees received from the Pioneer Funds during the initial three year
period, (iv) Pioneer shall pay Papp a termination fee if within five years of
the closing of the reorganization Pioneer terminates the Sub-Advisory Agreement
with Papp without cause and (v) Papp will be subject to certain non-competition
provisions. The termination fee will not be triggered if the Sub-Advisory
Agreement is terminated by Pioneer Papp American Navigator Fund or its
shareholders with or without cause. The terms of the Sub-Advisory Agreement
with Papp are discussed under "Material Provisions of the Management Agreements
and the Sub-Advisory Agreements."
Tax Status of the Reorganization
The reorganization is not intended to result in income, gain or loss for
United States federal income tax purposes and will not take place unless both
funds receive a satisfactory opinion from Hale and Dorr LLP, counsel to Pioneer
Papp American Navigator Fund, substantially to the effect that the
reorganization described above will be a "reorganization" within the meaning of
Section 368(a) of the Code.
27
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your Fund upon (1) the transfer of
all of its assets to Pioneer Papp American Navigator Fund as described
above or (2) the distribution by your Fund of Pioneer Papp American
Navigator Fund shares to your Fund's stockholders;
o No gain or loss will be recognized by Pioneer Papp American Navigator
Fund upon the receipt of your Fund's assets solely in exchange for the
issuance of Pioneer Papp American Navigator Fund shares to your Fund and
the assumption of your Fund's liabilities by Pioneer Papp American
Navigator Fund;
o The basis of the assets of your Fund acquired by Pioneer Papp American
Navigator Fund will be the same as the basis of those assets in the hands
of your Fund immediately before the transfer;
o The tax holding period of the assets of your Fund in the hands of Pioneer
Papp American Navigator Fund will include your Fund's tax holding period
for those assets;
o You will not recognize gain or loss upon the exchange of your shares of
your Fund solely for Pioneer Papp American Navigator Fund shares as part
of the reorganization;
o The basis of Pioneer Papp American Navigator Fund shares received by you
in the reorganization will be the same as the basis of your shares of
your Fund surrendered in exchange; and
o The tax holding period of Pioneer Papp American Navigator Fund shares you
receive will include the tax holding period of the shares of your Fund
surrendered in the exchange, provided that the shares of your Fund were
held as capital assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of your Fund and Pioneer Papp
American Navigator Fund.
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with the 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.
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.
Additional Terms of Agreement and Plan of Reorganization
Conditions to Closing the Reorganization. The obligation of your Fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the execution by Papp and Pioneer of investment
subadvisory agreements whereby Papp would serve as subadviser to each Pioneer
Fund, the performance by Pioneer Papp American Navigator Fund of all its
obligations under the Agreement and Plan of Reorganization and the receipt of
all consents, orders and permits necessary to consummate the reorganization
(see Sections 6 and 8 of the Agreement and Plan of Reorganization, attached as
Exhibit A).
The obligation of Pioneer Papp American Navigator Fund to consummate the
reorganization is subject to the satisfaction of certain conditions, including
your Fund's performance of all of its obligations under the Agreement and Plan
of Reorganization, the receipt of certain documents and financial statements
from your Fund and the receipt of all consents, orders and permits necessary to
consummate the reorganization (see Sections 7 and 8 of the Agreement and Plan
of Reorganization, attached as Exhibit A).
The obligations of both funds are subject to the approval of the Agreement
and Plan of Reorganization by the necessary vote of the outstanding shares of
your Fund, in accordance with the provisions of your Fund's charter and
by-laws. The funds' obligations are also subject to the receipt of a favorable
opinion of Hale and Dorr LLP as to the federal income tax consequences of the
reorganization (see Section 8 of the Agreement and Plan of Reorganization,
attached as Exhibit A).
Termination of Agreement. The board of either your Fund or Pioneer Papp
American Navigator Fund may terminate the Agreement and Plan of Reorganization
(even if the stockholders of your Fund have already approved it) at any time
before the reorganization date, if that board believes in good faith that
proceeding with the reorganization would no longer be in the best interests of
shareholders.
Expenses of the Reorganization. Pioneer will pay all of the expenses of
your Fund and Pioneer Papp American Navigator Fund associated with the
preparation, printing and mailing of any shareholder communications, including
this joint proxy statement and prospectus, and any filings with the SEC and
other governmental agencies in connection with the reorganization.
28
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
December 31, 2003, and the pro forma combined capitalization of both funds as
if the reorganization had occurred on that date. This table reflects the pro
forma ratios of one Class A share of Pioneer Papp American Navigator Fund being
issued for each share of your Fund. The exchange ratio will remain 1:1 on the
closing date of the reorganization.
December 31, 2003
Pioneer
Pioneer Papp
Papp Papp American Navigator
America-Abroad American Navigator Fund
Fund Fund Pro Forma
---------------- -------------------- -------------------
Net Assets ........................ $59 million N/A $59 million
Net Asset Value Per Share ......... 19.85 N/A 19.85
Shares Outstanding ................ 2,972,534 N/A 2,972,534
It is impossible to predict how many shares of Pioneer Papp American
Navigator Fund will actually be received and distributed by your Fund on the
reorganization date. The table should not be relied upon to determine the
amount of Pioneer Papp American Navigator Fund's shares that will actually be
received and distributed.
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the board of directors of your Fund,
including the directors who are not "interested persons" of your Fund or Papp
("independent directors"), approved the reorganization. In particular, the
board of directors determined that the reorganization is in the best interests
of your Fund. Similarly, the board of trustees of Pioneer Papp American
Navigator Fund, including its independent trustees, approved the
reorganization. They also determined that the reorganization is in the best
interests of Pioneer Papp American Navigator Fund.
The directors of your Fund recommend that the stockholders of your Fund
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
29
PROPOSAL 3
Approval of Agreement and Plan of Reorganization between
Papp America-Pacific Rim Fund, Inc. (as defined above, "Papp America-Pacific
Rim Fund") and
Pioneer Papp America-Pacific Rim Fund (as defined above, "Pioneer Papp
America-Pacific Rim Fund")
SUMMARY
The following is a summary of more complete information appearing later in
this proxy statement and prospectus or incorporated herein. You should read
carefully the entire proxy statement, including the Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Papp America-Pacific Rim Fund to the Pioneer Papp America-Pacific
Rim Fund
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Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund
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Business A diversified open-end investment management A newly organized diversified series of Pioneer
company organized as a Maryland corporation. Series Trust II, an open-end investment
management company organized as a
Delaware statutory trust.
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Net assets as of $12.2 million None. The Pioneer Papp America-Pacific Rim
December 31, 2003 Fund is newly organized and does not expect
to commence investment operations until after
reorganization occurs.
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Investment advisers and Investment adviser: Investment adviser
portfolio managers L. Roy Papp & Associates, LLP (as defined Pioneer Investment Management, Inc. (as
above, "Papp") defined above, "Pioneer")
Portfolio Managers: Investment subadviser:
L. Roy Papp, Chairman and Director (since Papp
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer and Portfolio Managers:
Director (since 1989) of Papp. L. Roy Papp, Chairman and Director (since
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer
and Director (since 1989) of Papp.
Pioneer retains the ultimate responsibility to
oversee the subadviser and may, subject only
to the approval of the board of trustees of the
Pioneer Funds, hire, terminate and replace the
subadviser without shareholder approval.
Pioneer has no current intention to replace
Papp as subadviser for Pioneer Papp America-
Pacific Rim Fund.
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Investment objective Each fund seeks long-term capital growth. The investment objective of each fund is fundamental
and cannot be changed without shareholder approval.
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30
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Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Primary investments Equity securities, with an emphasis on issuers that have substantial sales to, or receive
significant income from, countries within the Pacific Rim (i.e., countries bordering the Pacific
Ocean, including the U.S.). Each fund may invest a portion of its assets in equity securities of
foreign companies which are traded in U.S. markets.
--------------------------------------------------------------------------------------------------------
Under normal market conditions, at least 80% Under normal market conditions, at least
of net assets in common stocks. 80% of assets in equity securities (including
common stocks, convertible debt and other
equity instruments, such as depositary
receipts, warrants, rights and preferred stocks)
of issuers which meet one of the following
criteria:
o 50% or more of the issuer's earnings or
sales are attributed to, or assets are situated
in, Pacific Rim countries (including the U.S.
and other countries bordering the Pacific
Ocean, such as China and Indonesia)
o 50% or more of the issuer's earnings or
sales are attributed to, or assets are situated
in, Pacific Rim countries other than the U.S.
- -----------------------------------------------------------------------------------------------------------------------------------
Investment strategies Each fund uses a "growth" style of management and seeks to invest in issuers with above
average potential for earnings growth. Papp evaluates an issuer's prospects for capital
appreciation by considering, among other factors, growth over extended periods of time,
profitability created through operating efficiency rather than financial leverage, and whether cash
flows confirm the sustainability of growth.
Papp follows a "buy and hold" strategy. Once a security is purchased, the fund ordinarily retains
an investment so long as it continues to believe that the security's prospects for appreciation
continue to be favorable and that the security is not overvalued in the marketplace. Papp does
not attempt to time the market.
- -----------------------------------------------------------------------------------------------------------------------------------
Other investments The Fund may invest up to 20% of its assets The fund may invest up to 20% of its assets
in common stocks generally. The Fund may in debt securities of U.S. or non-U.S.
invest in U.S. companies that, in Papp's corporate and government issuers. The fund
opinion, will soon satisfy the Fund's primary generally acquires debt securities that are
investment criteria. rated investment grade, but may invest up to
5% of its net assets in below investment
grade debt securities.
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary defensive Papp America-Pacific Rim Fund may hold Pioneer Papp America-Pacific Rim Fund may
strategies cash or invest up to 100% of its assets in invest up to 100% of its assets in securities
high-quality short-term government or with remaining maturities of less than one
corporate obligations. year, cash equivalents or may hold cash.
- -----------------------------------------------------------------------------------------------------------------------------------
Diversification Each fund is diversified for the purpose of the Investment Company Act of 1940 (the
"Investment Company Act"), and each fund is subject to diversification requirements under the
Internal Revenue Code of 1986 (the "Code").
- -----------------------------------------------------------------------------------------------------------------------------------
Industry concentration Each fund may not invest more than 25% of its assets in any one industry.
- -----------------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid Papp America-Pacific Rim Fund may not invest Pioneer Papp America-Pacific Rim Fund may
securities more than 5% of its assets in securities which not invest more than 15% of its net assets in
are not readily marketable. securities which are illiquid and other
securities which are not readily marketable.
- -----------------------------------------------------------------------------------------------------------------------------------
31
- -----------------------------------------------------------------------------------------------------------------------------------
Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Borrowing Papp America-Pacific Rim Fund may not Pioneer Papp America-Pacific Rim Fund may
borrow money except from banks for not borrow money, except on a temporary
temporary or emergency purposes in amounts basis and to the extent permitted by applicable
not exceeding 10% of the value of the Fund's law, as amended and interpreted or modified
assets at the time of borrowing. The Fund may from time to time by any regulatory authority
not purchase securities when borrowings having jurisdiction. Under current regulatory
exceed 5% of its assets. requirements, the fund may: (a) borrow from
banks or through reverse repurchase
agreements in an amount up to 33-1/3% of the
fund's total assets (including the amount
borrowed); (b) borrow up to an additional 5%
of the fund's assets for temporary purposes;
(c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on
margin to the extent permitted by applicable
law; and (e) engage in transactions in
mortgage dollar rolls that are accounted for
as financings.
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Lending Papp America-Pacific Rim Fund may not make Pioneer Papp America-Pacific Rim Fund may
loans (but the Fund may invest in debt lend portfolio securities with a value that may
securities subject to the 5% limitation on not exceed 33-1/3% of the value of its assets.
purchasing securities when borrowings exceed
5% of assets).
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Derivative instruments Papp America-Pacific Rim Fund may not utilize Pioneer Papp America-Pacific Rim Fund may
derivative instruments, such as options, futures use futures and options on securities, indices
and options on futures. [and currencies,] forward currency exchange
contracts and other 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
stock market prices, interest rates or
currency exchange rates
o As a substitute for purchasing or selling
securities
o To increase the fund's return as a non-
hedging strategy that may be considered
speculative
- -----------------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the funds have substantially similar principal investment strategies and
policies and restrictions policies. Certain of the non-principal investment policies and restrictions are different. For a
more complete discussion of each fund's other investment policies and fundamental and non-
fundamental investment restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------------
32
- -----------------------------------------------------------------------------------------------------------------------------------
Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Sales charges Shares are offered with no sales charges. The Class A Shares of Pioneer Papp
America-Pacific Rim Fund you receive in
the reorganization will not be subject to any
sales charge. Moreover, if you own shares in
your own name as of the closing of the
reorganization (i.e., not in the name of a
broker) and maintain your account, you may
purchase additional Class A shares of Pioneer
Papp America-Pacific Rim Fund through such
account in the future without paying any
sales charge.
Except as described above, Class A shares
of Pioneer Papp America-Pacific Rim Fund are
subject to a front-end sales charge of up
to 5.75%.
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Management and Papp America-Pacific Rim Fund pays an Pioneer Papp America-Pacific Rim Fund will
other fees advisory fee on a monthly basis at an annual pay Pioneer a management fee equal to
rate of 1.00% of the Fund's average daily net 0.75% annually of average daily net assets up
assets. In addition, Papp also serves as to $1 billion and 0.70% annually for average
transfer, dividend disbursing and shareholder daily net assets in excess of $1 billion. In
servicing agent for the Fund pursuant to a addition, the fund reimburses Pioneer for
separate agreement. Papp receives from the certain fund accounting and legal expenses
Fund a monthly fee of $0.75 for each Fund incurred on behalf of the fund and pays a
shareholder account, $0.50 for each dividend separate shareholder servicing/transfer agency
paid on a shareholder account, and $1.00 for fee to Pioneer Investment Management
each purchase (other than by reinvestment, Shareholder Services, Inc. (as defined above
transfer or redemption) of Fund shares. "PIMSS"), an affiliate of Pioneer.
Papp has agreed to limit certain of the Fund's Pioneer pays the fee of Papp as the sub-
ordinary operating expenses to 1.25% of its adviser to the Pioneer Papp America-Pacific
average daily net assets for any fiscal year. For Rim Fund.
the fiscal year ended December 31, 2002, the
Fund's total annual operating expenses, without Until December 31, 2006, Pioneer has agreed
giving effect to such limitation, were 1.52% to limit Pioneer Papp America-Pacific Rim
per share. Fund's ordinary operating expenses per Class
A share to 1.25% of average daily net assets.
For the coming fiscal year, Pioneer estimates
that Pioneer Papp America-Pacific Rim Fund's
annual operating expenses will be 1.40% per
share (before waiver of fees or reimbursement
of expenses) for Class A shares.
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution and service Shares of the Fund are not subject to a Class A Shares are subject to a 12b-1 fee
(12b-1) fee 12b-1 fee. equal to 0.25% annually of average daily
net assets.
- -----------------------------------------------------------------------------------------------------------------------------------
33
- -----------------------------------------------------------------------------------------------------------------------------------
Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares directly through Papp Subject to sales charges except as noted
America-Pacific Rim Fund's transfer agent by above (see "sales charges"), you may buy
writing to the Papp Funds. You may also buy shares from any investment firm that has a
shares through other financial intermediaries sales agreement with Pioneer Funds
as described in the Fund's prospectus. Shares Distributor, Inc., Pioneer Papp America-Pacific
may not be purchased by telephone or online Rim Fund's distributor (as defined above
directly from the Papp Funds. "PFD"). Existing shareholders of Papp
America-Pacific Rim Fund who own shares
in their own name as of the closing date of
the reorganization and who maintain their
accounts may buy shares of Pioneer Papp
America-Pacific Rim Fund through such
accounts in the future without paying sales
charges, but subject to the Class A 12b-1 fee.
Pioneer Papp America-Pacific Rim Fund also
offers several other classes of shares which
are subject to different sales charges and
12b-1 fees than Class A shares, as well as
a class of shares for institutional investors
without any sales charges or 12b-1 fees.
If the account is established in the
shareholder's own name, shareholders may
also purchase additional shares of Pioneer
America-Pacific Rim Fund by telephone
or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange privilege You may exchange shares of Papp America- You may exchange shares of Pioneer Papp
Pacific Rim Fund without incurring an America-Pacific Rim Fund without incurring
exchange fee with the other four Funds in the any fee on the exchange with the more than
Papp family of funds. 20 other Pioneer Funds. An exchange
generally is treated as a sale and a new
Exchange orders must be sent to the Fund purchase of shares for federal income tax
either directly in writing or through a financial purposes.
intermediary. Telephone and online exchange
privileges are not available from the Papp If the account is established in the
Funds directly. shareholder's own name, shareholders may
also exchange shares of Pioneer America-
Pacific Rim Fund by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
Selling Shares Your shares will be sold at net asset value per share next calculated after the fund receives your
request in good order.
-------------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Normally, your investment firm will send your
Fund directly in writing or by contacting a request to sell shares to PIMSS. You can
financial intermediary as described in the also sell your shares by contacting the fund
fund's prospectus. directly if your account is registered in
your name.
Telephone and online redemption privileges are
not available from the Papp Funds directly. If the account is established in the
shareholder's own name, shareholders may
also redeem shares of Pioneer America-Pacific
Rim Fund by telephone or online.
- -----------------------------------------------------------------------------------------------------------------------------------
34
Comparison of Principal Risks of Investing in the Funds
Because each fund has substantially the same portfolio management team and
a substantially similar investment objective, policies and strategies, the
funds are subject to the same principal risks. You could lose money on your
investment in the fund or not make as much as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short term);
o Growth stocks fall out of favor with investors;
o The fund's investments do not have the growth potential originally
expected; or
o Securities of foreign issuers fall out of favor with investors.
Investing in issuers that have substantial international activities may
involve unique risks. These risks may include:
o Adverse effect of currency exchange rates or controls;
o The issuer may be affected by economic growth rates abroad as well as in
the United States;
o Economic, political or social developments may adversely affect the
issuer's products or services abroad;
o Potential trade disputes or restrictions between the U.S. and the markets
to which the issuer exports its goods or services; and
o Possible seizure, nationalization or expropriation of the issuer's assets
abroad.
To the extent the fund invests directly in foreign companies, the fund may
be subject to the following risks which are in addition to the risks described
above for investing in U.S. issuers with substantial international activities:
o There is political, economic or social instability in foreign countries
of companies in which the fund invests;
o Less information about foreign issuers or markets may be available due to
less rigorous disclosure or accounting standards or regulatory practices;
and
o Withholding or foreign taxes may decrease the fund's returns.
The fund's emphasis on issuers with significant earnings, sales or assets
in Pacific Rim countries outside the U.S. makes the fund more vulnerable to
potential adverse economic or market developments affecting that region than
would be the case for a fund investing in companies with broader geographic
diversification of their businesses.
The 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.
An investment in Pioneer Papp America-Pacific Rim Fund may, however,
involve greater risk than an investment in Papp America-Pacific Rim Fund
because Pioneer Papp America-Pacific Rim Fund has greater flexibility in its
non-principal investment policies to invest in certain types of securities and
instruments which may subject the portfolio to greater risk of loss. Unlike
Papp America-Pacific Rim Fund, Pioneer Papp America-Pacific Rim Fund may invest
up to 20% of its assets in debt securities of U.S. and non-U.S. issuers,
including up to 5% of its net assets in below investment grade debt securities.
Pioneer Papp America-Pacific Rim Fund may also invest in derivative
instruments, which Papp America-Pacific Rim Fund is not permitted to do.
Pioneer Papp America-Pacific Rim Fund may also invest a greater percentage of
its assets in illiquid securities and may lend portfolio securities
representing a greater percentage of its portfolio than can Papp
America-Pacific Rim Fund. Papp, as subadviser to Pioneer Papp America-Pacific
Rim Fund, intends to manage Pioneer Papp America Pacific Rim Fund in
substantially the same manner as Papp America-Pacific Rim Fund and has no
current intention to utilize the greater flexibility afforded by Pioneer Papp
America-Pacific Rim Fund's investment policies.
Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money by investing in either fund.
35
Other Consequences of the Reorganization
The Papp America-Pacific Rim Fund and Pioneer Papp America-Pacific Rim
Fund each pay monthly management fees equal to the following annual percentages
of average daily net assets:
- ----------------------------------------------------------------------------------------
Papp America-Pacific Rim Fund Pioneer Papp America-Pacific Rim Fund
Management Fee Management Fee
- ----------------------------------------------------------------------------------------
1.00% 0.75% -- for average daily net assets up to $1 billion
0.70% -- for average daily net assets over $1 billion
- ----------------------------------------------------------------------------------------
The annual management fee rate payable by Pioneer Papp America-Pacific Rim
Fund (without giving effect to expense limitations) is less than the rate paid
by your Fund. However, Class A shares of Pioneer Papp America-Pacific Rim Fund
are subject to a 12b-1 fee. At current asset levels, the combined management
fee and 12b-1 fee for Class A shares of Pioneer Papp America-Pacific Rim Fund
is equal to Papp America-Pacific Rim Fund's management fee alone.
In addition to the management fee, your Fund pays a monthly transfer
agent, dividend disbursing and shareholder servicing agent fee to Papp of $0.75
for each Fund shareholder account, $0.50 for each dividend paid on a
shareholder account, and $1.00 for each purchase (other than by reinvestment,
transfer or redemption) of Fund shares. Pioneer will provide certain accounting
and legal services under a separate administration agreement for approximately
0.02% of average daily net assets. PIMSS will provide shareholder servicing and
transfer agency services to Pioneer Papp America-Pacific Rim Fund under a
separate shareholder servicing/transfer agency agreement at an annual fee of
$26.60 for each Class A shareholder account. PIMSS will also be reimbursed for
its cash out-of-pocket expenditures. Pioneer, and not Pioneer Papp
America-Pacific Rim Fund, will pay Papp a subadvisory fee.
For its fiscal year ended December 31, 2002, your Fund's per share
operating expenses were 1.52% of average daily net assets (before reimbursement
of fees or expenses). Papp does not anticipate that your Fund's per share
operating expenses as a percentage of average daily net assets for the fiscal
year ended December 31, 2003 will be significantly different. Papp has agreed
to reimburse the Fund to the extent the Fund's total operating expenses
(excluding taxes, interest, and extraordinary litigation expenses) during any
fiscal year exceed 1.25% of its average daily net asset value in such year.
This expense reimbursement cannot be changed without stockholder approval.
Similarly, with regard to Pioneer Papp America-Pacific Rim Fund, Pioneer
has agreed to limit, until December 31, 2006, Class A expenses (other than
extraordinary expenses) to 1.25% of the average daily net assets attributable
to Class A shares by not imposing all or a portion of its management fee and,
if necessary, limiting other ordinary operating expenses of the fund. Pioneer
may subsequently recover reimbursed expenses within three years of being
incurred from the fund if the expense ratio of the Class A shares is less than
the expense limitation of the Class A shares. The annual expense ratio for
Class A shares of Pioneer Papp America-Pacific Rim Fund will thus be the same
as the annual expense ratio for the shares of your Fund after taking into
account the expense limitation for each fund and Pioneer Papp America-Pacific
Rim Fund's Class A 12b-1 fees. Pioneer estimates that Pioneer Papp
America-Pacific Rim Fund's per share annual operating expenses for the coming
fiscal year will be 1.40% (before waiver of fees or reimbursement of expenses)
for Class A shares which is lower than the annual operating expense ratio for
Papp America-Pacific Rim Fund of 1.52% (before waiver of fees or reimbursement
of expenses) for the fiscal year ended December 31, 2002.
Performance information for Pioneer Papp America-Pacific Rim Fund is not
presented because the fund has not yet commenced operations. As accounting
successor to your Fund, Pioneer Papp America-Pacific Rim Fund will assume your
Fund's historical performance after the reorganization.
Set forth below is performance information for your Fund. The following
performance information indicates some of the risks of investing in your Fund.
The bar chart shows how your Fund's total return has varied from year to year.
The table shows your Fund's average annual total return (before and after
taxes) over time compared with a broad-based market index. Past performance
before and after taxes does not indicate future results.
36
Calendar Year Total Returns*
[THE FOLLOWING DATA REPRESENTS A BAR CHART IN THE PRINTED MATERIAL]
'98 28.68
'99 24.86
'00 0.9
'01 -13.94
'02 -20.18
'03 28.19
* During the period shown in the bar chart, your Fund's highest quarterly
return was 26.89% for the quarter ended December 31, 1998 and the lowest
quarterly return was -17.54% for the quarter ended September 30, 2002.
Average Annual Total Returns as of December 31, 2003
- -------------------------------------------------------------------------------------------------
Since
1 Year 5 Years Inception(1)
- -------------------------------------------------------------------------------------------------
Papp America-Pacific Rim Fund
Return Before Taxes 28.19% 2.10% 8.39%
Return After Taxes on Distributions(2) 28.19% 1.76% 8.12%
Return After Taxes on Distributions and
Sale of Fund Shares(2) 18.32% 1.77% 7.33%
- -------------------------------------------------------------------------------------------------
Morgan Stanley World Index(3)
(reflects no deduction for fees, expenses or taxes) 30.81% -1.85% 3.79%
- -------------------------------------------------------------------------------------------------
(1) The fund commenced operations on March 14, 1997.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Morgan Stanley World Index is an unmanaged market-weighted index that
includes 50% foreign companies and 50% U.S. companies.
37
The Funds' Fees and Expenses
Shareholders of both funds pay various fees and expenses, either directly
or indirectly. The table below discusses the fees and expenses that you would
pay if you were to buy and hold shares of each fund. The expenses in the table
appearing below are based on (i) for your Fund, the expenses of your Fund for
its fiscal year ended December 31, 2002 and (ii) for the Pioneer Papp
America-Pacific Rim Fund, the estimated annual expenses of the Pioneer Papp
America-Pacific Rim Fund. The Pioneer Papp America-Pacific Rim Fund's actual
expenses may be greater or less.
Pioneer
Papp
Papp America-Pacific
America-Pacific Rim Fund
Rim Fund Class A
Shareholder transaction fees (paid directly from your investment) ----------------- ----------------
Maximum sales charge (load) when you buy shares as a percentage of offering price ........ none 5.75%(1)
Maximum deferred sales charge (load) as a % of purchase price or the amount you receive
when you sell shares, whichever is less .................................................. none none(2)
Annual fund operating expenses (deducted from fund assets)
(as a % of average net assets)
Management fee ........................................................................... 1.00% 0.75%
Distribution and service (12b-1) fee ..................................................... none 0.25%
Other expenses ........................................................................... 0.52% 0.40%
Total fund operating expenses ............................................................ 1.52% 1.40%
Expense reduction(3)...................................................................... (0.27)% (0.15%)
Net fund operating expenses .............................................................. 1.25% 1.25%
- ----------
(1) As described above, this sales charge does not apply to shares received in
the reorganization by stockholders of your Fund who become shareholders of
record of the Pioneer Papp America-Pacific Rim Fund through the
reorganization. In addition, stockholders of your Fund who own shares in
their own name as of the closing of the reorganization (i.e., not in the
name of a broker or other intermediary) and maintain such account may
purchase additional Class A shares of Pioneer Papp America-Pacific Rim Fund
through such account in the future without paying this sales charge.
(2) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge of 1%.
(3) As described above, Papp has contractually agreed to reimburse Papp
America-Pacific Rim Fund to the extent the Fund's total ordinary operating
expenses exceed 1.25% of the Fund's average daily net asset value in a
fiscal year. This limitation cannot be changed without shareholder approval.
Also as described above, Pioneer has agreed to waive its fees for Pioneer
Papp America-Pacific Rim Fund to the extent certain of the fund's total
ordinary operating expenses exceed 1.25% of the fund's average daily net
asset value in a fiscal year. This expense limitation is contractual through
December 31, 2006. Pioneer may subsequently recover reimbursed expenses
(within three years of being incurred) from the fund if the expense ratio of
the Class A shares is less than the expense limitation of the Class A
shares. Each class will reimburse Pioneer no more than the amount by which
the class' expenses were reduced.
The hypothetical example below helps you compare the cost of investing in
each fund. It assumes that: (a) you invest $10,000 in each fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each fund's gross operating expenses
remain the same, and (e) the expense limitations are in effect for one year for
Papp America-Pacific Rim Fund and three years of Pioneer Papp America-Pacific
Rim Fund. The examples are for comparison purposes only and are not a
representation of either fund's actual expenses or returns, either past or
future.
If you sell your shares after holding
them for the number of years indicated
--------------------------------------
Pioneer
Papp
Papp America-Pacific
America-Pacific Rim Fund
Rim Fund Class A Shares
Example ----------------- ----------------
Year 1 .......... $ 131 $ 695
Year 3 .......... $ 408 $ 979
Year 5 .......... $ 706 $1,284
Year 10 ......... $1,553 $2,147
38
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o The reorganization is scheduled to occur as of 5:00 p.m., Eastern time,
on February 20, 2004, unless your Fund and Pioneer Papp America-Pacific
Rim Fund agree in writing to a later date. Your Fund will transfer all of
its assets to Pioneer Papp America-Pacific Rim Fund. Pioneer Papp
America-Pacific Rim Fund will assume your Fund's liabilities that are
included in the calculation of your Fund's net assets at the closing and
certain liabilities with respect to your Fund's investment operations
that are not required by generally accepted accounting principles to be
included in the calculation of net asset value. The net asset value of
both funds will be computed as of 4:00 p.m., Eastern time, on the
reorganization date.
o Pioneer Papp America-Pacific Rim Fund will issue to your Fund Class A
shares with an aggregate net asset value equal to the net assets
attributable to your Fund's shares. These shares will immediately be
distributed to your Fund's stockholders in proportion to their holdings
of your Fund's shares on the reorganization date. As a result, your
Fund's stockholders will end up as Class A shareholders of Pioneer Papp
America-Pacific Rim Fund.
o After the distribution of shares, your Fund will be liquidated and
dissolved.
o The reorganization is not intended to result in income, gain or loss for
federal income tax purposes and will not take place unless both funds
receive a satisfactory opinion concerning the tax consequences of the
reorganization from Hale and Dorr LLP, counsel to Pioneer Papp
America-Pacific Rim Fund.
Agreement and Plan of Reorganization
The stockholders of your Fund are being asked to approve an Agreement and
Plan of Reorganization, the form of which is attached as Exhibit A. The
description of the Agreement and Plan of Reorganization contained herein is
qualified in its entirety by the attached copy.
Reasons for the Proposed Reorganization
The directors of your Fund believe that the proposed reorganization will
be advantageous to the stockholders of your Fund for several reasons. The
directors considered the following matters, among others, in approving the
proposal.
First, stockholders of your Fund would become part of a significantly
larger family of funds which offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over 20 funds, including domestic and international equity and fixed
income funds and a money market fund, that will be available to your Fund's
stockholders through exchanges. Currently, stockholders of your Fund may
exchange their shares for shares of the other four Papp Funds. In addition,
Pioneer offers shareholders additional options for their accounts, including
the ability to transact and exchange shares over the telephone or online and
the ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or
online.
Second, stockholders of your Fund will enjoy continuity of portfolio
management. Because Pioneer will retain Papp to act as subadviser to Pioneer
Papp America-Pacific Rim Fund, the portfolio management team of your Fund will
be the same portfolio management team for Pioneer Papp America-Pacific Rim
Fund. Pioneer will oversee Papp as subadviser to Pioneer Papp America-Pacific
Rim Fund in accordance with the terms of the Sub-Advisory Agreement.
Third, although Papp will manage the assets of Pioneer Papp
America-Pacific Rim Fund as its subadviser, Pioneer will be responsible for the
overall management of Pioneer Papp America-Pacific Rim Fund's operations,
including supervision of compliance with the investment guidelines and
regulatory restrictions. Your Fund will benefit from Pioneer's experience and
resources in managing investment companies. At September 30, 2003, Pioneer
managed over 50 investment companies and accounts with approximately $28
billion in assets. Pioneer is part of the global asset management group of
UniCredito Italiano S.p.A., one of the largest banking groups in Italy,
providing investment management and financial services to mutual funds,
institutional and other clients. As of September 30, 2003, assets under
management by UniCredito Italiano S.p.A. were approximately $130 billion
worldwide.
Fourth, until December 31, 2006, Pioneer has agreed to limit the expenses
of Class A shares of Pioneer Papp America-Pacific Rim Fund to 1.25% of average
daily net assets, which is the same as the percentage expense limitation
currently in place for your Fund. After December 31, 2006, Pioneer is not
obligated to maintain an expense limitation but may voluntarily agree to
continue such arrangement. Because Pioneer estimates that Pioneer Papp
America-Pacific Rim Fund's per share annual operating expenses for the coming
fiscal year will be 1.40% (before waiver of fees or reimbursement of expenses)
for Class A shares, it is expected that the expense limitation agreement
39
for Pioneer Papp America-Pacific Rim Fund will be triggered and that the net
expense ratio for Class A shares of Pioneer Papp America-Pacific Rim Fund will
be the same as the net expense ratio for the shares of your Fund, although the
gross expense ratio for Class A shares of Pioneer Papp America-Pacific Rim Fund
would be lower than the gross expense ratio for Papp America-Pacific Rim Fund
for the fiscal year ended December 31, 2002. The directors believe that the
Papp America Pacific-Rim Fund shareholders would thus be able to experience the
benefits of becoming shareholders of Pioneer Papp American Navigator Fund while
bearing the same net expense ratio.
Fifth, Pioneer and its affiliates have greater potential for increasing
the size of the Fund due to Pioneer's experience in distributing mutual funds
through a broader range of distribution channels than currently available to
your Fund. Over the long-term, if this potential for a larger asset base is
realized, it is expected to increase the portfolio management options available
to the Fund.
Sixth, the Class A shares of Pioneer Papp America-Pacific Rim Fund
received in the reorganization will provide your Fund's stockholders with
exposure to substantially the same investment product as they currently have.
The boards of both funds considered that Pioneer will pay all of the
expenses of the Fund and Pioneer Papp America-Pacific Rim Fund associated with
the preparation, printing and mailing of any shareholder communications,
including this joint proxy statement and prospectus, and any filings with the
SEC and other governmental agencies in connection with the reorganization.
The boards of both funds also considered that Pioneer has agreed with Papp
that for a period of at least three years after the consummation of the
reorganization, Pioneer will use commercially reasonable efforts to assure that
at least 75% of the Pioneer Funds' board of trustees are not "interested
persons" (as defined in the Investment Company Act) of Pioneer or Papp;
however, the nomination and election of the members of the board of trustees of
the Pioneer Funds is determined by the board of trustees of the Pioneer Funds
or their shareholders. Pioneer has also agreed with Papp that for two years
after the consummation of the reorganization, Pioneer will use commercially
reasonable efforts not to impose an unfair burden on Pioneer Papp
America-Pacific Rim Fund in connection with the reorganization.
The boards of both funds considered that each fund's investment adviser,
as well as Pioneer Papp America-Pacific Rim Fund's principal distributor, will
benefit from the reorganization. Because Pioneer Papp America-Pacific Rim Fund
will be the accounting successor to your Fund and will assume your Fund's
performance record, Pioneer expects to be able to increase Pioneer Papp
America-Pacific Rim Fund's assets at a faster rate than would otherwise be
possible if it began offering a fund with a similar objective and no historical
performance record. Such a growth in asset size benefits Pioneer by increasing
its management fees and accelerating the point at which management of the fund
is profitable to Pioneer. As subadviser to Pioneer Papp America-Pacific Rim
Fund, Papp would similarly benefit from increased assets because it would
receive greater subadvisory fees. Moreover, as discussed below under "Certain
Agreements between Pioneer and Papp," Papp will receive economic benefits from
Pioneer if the reorganization is completed.
The board of trustees of Pioneer Papp America-Pacific Rim Fund also
considered that the reorganization presents an excellent opportunity for the
Pioneer Papp America-Pacific Rim Fund to acquire substantial investment assets
without the obligation to pay commissions or other transaction costs that a
fund normally incurs when purchasing securities. This opportunity provides an
economic benefit to Pioneer Papp America-Pacific Rim Fund and its shareholders.
Certain Agreements between Pioneer and Papp
In connection with the reorganization, Pioneer and Papp have entered into
an agreement dated as of September 18, 2003 (the "Transfer Agreement"), which
provides, among other things, that (i) Pioneer shall make a payment to Papp
upon the closing of the reorganizations of the funds, (ii) Papp shall enter
into and perform its obligations under a subadvisory agreement with Pioneer
(the "Pioneer Papp America-Pacific Rim Fund Sub-Advisory Agreement," or, the
"Sub-Advisory Agreement") to serve as subadviser of Pioneer Papp
America-Pacific Rim Fund, (iii) Pioneer guarantees a minimum aggregate amount
of subadvisory fees received from the Pioneer Funds during the initial three
year period; (iv) Pioneer shall pay Papp a termination fee if within five years
of the closing of the reorganization Pioneer terminates the Sub-Advisory
Agreement with Papp without cause and (v) Papp will be subject to certain
non-competition provisions. The termination fee will not be triggered if the
Sub-Advisory Agreement is terminated by Pioneer Papp America-Pacific Rim Fund
or its shareholders with or without cause. The terms of the Sub-Advisory
Agreement with Papp are discussed under "Material Provisions of the Management
Agreements and the Sub-Advisory Agreements."
Tax Status of the Reorganization
The reorganization is not intended to result in income, gain or loss for
United States federal income tax purposes and will not take place unless both
funds receive a satisfactory opinion from Hale and Dorr LLP, counsel to Pioneer
Papp America-Pacific Rim Fund, substantially to the effect that the
reorganization described above will be a "reorganization" within the meaning of
Section 368(a) of the Code.
40
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your Fund upon (1) the transfer of
all of its assets to Pioneer Papp America-Pacific Rim Fund as described
above or (2) the distribution by your Fund of Pioneer Papp
America-Pacific Rim Fund shares to your Fund's stockholders;
o No gain or loss will be recognized by Pioneer Papp America-Pacific Rim
Fund upon the receipt of your Fund's assets solely in exchange for the
issuance of Pioneer Papp America-Pacific Rim Fund shares to your Fund and
the assumption of your Fund's liabilities by Pioneer Papp America-Pacific
Rim Fund;
o The basis of the assets of your Fund acquired by Pioneer Papp
America-Pacific Rim Fund will be the same as the basis of those assets in
the hands of your Fund immediately before the transfer;
o The tax holding period of the assets of your Fund in the hands of Pioneer
Papp America-Pacific Rim Fund will include your Fund's tax holding period
for those assets;
o You will not recognize gain or loss upon the exchange of your shares of
your Fund solely for Pioneer Papp America-Pacific Rim Fund shares as part
of the reorganization;
o The basis of Pioneer Papp America-Pacific Rim Fund shares received by you
in the reorganization will be the same as the basis of your shares of
your Fund surrendered in exchange; and
o The tax holding period of Pioneer Papp America-Pacific Rim Fund shares
you receive will include the tax holding period of the shares of your
Fund surrendered in the exchange, provided that the shares of your Fund
were held as capital assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of your Fund and Pioneer Papp
America-Pacific Rim Fund.
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with the 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.
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.
Additional Terms of Agreement and Plan of Reorganization
Conditions to Closing the Reorganization. The obligation of your Fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the execution by Papp and Pioneer of investment
subadvisory agreements whereby Papp would serve as subadviser to each Pioneer
Fund, the performance by Pioneer Papp America-Pacific Rim Fund of all its
obligations under the Agreement and Plan of Reorganization and the receipt of
all consents, orders and permits necessary to consummate the reorganization
(see Sections 6 and 8 of the Agreement and Plan of Reorganization, attached as
Exhibit A).
The obligation of Pioneer Papp America-Pacific Rim Fund to consummate the
reorganization is subject to the satisfaction of certain conditions, including
your Fund's performance of all of its obligations under the Agreement and Plan
of Reorganization, the receipt of certain documents and financial statements
from your Fund and the receipt of all consents, orders and permits necessary to
consummate the reorganization (see Sections 7 and 8 of the Agreement and Plan
of Reorganization, attached as Exhibit A).
The obligations of both funds are subject to the approval of the Agreement
and Plan of Reorganization by the necessary vote of the outstanding shares of
your Fund, in accordance with the provisions of your Fund's charter and
by-laws. The funds' obligations are also subject to the receipt of a favorable
opinion of Hale and Dorr LLP as to the federal income tax consequences of the
reorganization (see Section 8 of the Agreement and Plan of Reorganization,
attached as Exhibit A).
Termination of Agreement. The board of either your Fund or Pioneer Papp
America-Pacific Rim Fund may terminate the Agreement and Plan of Reorganization
(even if the stockholders of your Fund have already approved it) at any time
before the reorganization date, if that board believes in good faith that
proceeding with the reorganization would no longer be in the best interests of
shareholders.
Expenses of the Reorganization. Pioneer will pay all of the expenses of
your Fund and Pioneer Papp America-Pacific Rim Fund associated with the
preparation, printing and mailing of any shareholder communications, including
this joint proxy statement and prospectus, and any filings with the SEC and
other governmental agencies in connection with the reorganization.
41
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
December 31, 2003, and the pro forma combined capitalization of both funds as
if the reorganization had occurred on that date. This table reflects the pro
forma ratios of one Class A share of Pioneer Papp America-Pacific Rim Fund
being issued for each share of your Fund. The exchange ratio will remain 1:1 on
the closing date of the reorganization.
December 31, 2003
Pioneer
Pioneer Papp
Papp Papp America-Pacific
America-Pacific America-Pacific Rim Fund
Rim Fund Rim Fund Pro Forma
----------------- ----------------- ------------------
Net Assets ........................ $12.2 million N/A $12.2 million
Net Asset Value Per Share ......... 15.87 N/A 15.87
Shares Outstanding ................ 1,221,868 N/A 1,221,868
It is impossible to predict how many shares of Pioneer Papp
America-Pacific Rim Fund will actually be received and distributed by your Fund
on the reorganization date. The table should not be relied upon to determine
the amount of Pioneer Papp America-Pacific Rim Fund's shares that will actually
be received and distributed.
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the board of directors of your Fund,
including the directors who are not "interested persons" of your Fund or Papp
("independent directors"), approved the reorganization. In particular, the
board of directors determined that the reorganization is in the best interests
of your Fund. Similarly, the board of trustees of Pioneer Papp America-Pacific
Rim Fund, including its independent trustees, approved the reorganization. They
also determined that the reorganization is in the best interests of Pioneer
Papp America-Pacific Rim Fund.
The directors of your Fund recommend that the stockholders of your Fund
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
42
PROPOSAL 4
Approval of Agreement and Plan of Reorganization between Papp
Small & Mid-Cap Growth Fund, Inc. (as defined above, "Papp
Small-Mid Fund") and Pioneer Papp Mid Cap Growth Fund (as defined
above, "Pioneer Papp Small and Mid Fund")
SUMMARY
The following is a summary of more complete information appearing later in
this proxy statement and prospectus or incorporated herein. You should read
carefully the entire proxy statement, including the Agreement and Plan of
Reorganization attached as Exhibit A because they contain details that are not
in the summary.
Comparison of Papp Small-Mid Fund to the Pioneer Papp Small and Mid Fund
- ----------------------------------------------------------------------------------------------------------------------------
Papp Small-Mid Fund Pioneer Papp Small and Mid Fund
- ----------------------------------------------------------------------------------------------------------------------------
Business A diversified open-end investment management A newly organized diversified series of Pioneer
company organized as a Maryland corporation. Series Trust II, an open-end investment
management company organized as a
Delaware statutory trust.
- ----------------------------------------------------------------------------------------------------------------------------
Net assets as of $26.2 million None. The Pioneer Papp Small and Mid Fund
December 31, 2003 is newly organized and does not expect to
commence investment operations until after
the reorganization occurs.
- ----------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment adviser: Investment adviser
portfolio managers L. Roy Papp & Associates, LLP (as defined Pioneer Investment Management, Inc. (as
above, "Papp") defined above, "Pioneer")
Portfolio Managers: Investment subadviser:
L. Roy Papp, Chairman and Director (since Papp
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer Portfolio Managers:
and Director (since 1989) of Papp L. Roy Papp, Chairman and Director (since
1989) of Papp; Rosellen C. Papp, Chief
Financial Adviser, Vice President, Treasurer
and Director (since 1989) of Papp.
Pioneer retains the ultimate responsibility to
oversee the subadviser and may, subject only
to the approval of the board of trustees of the
Pioneer Funds, hire, terminate and replace the
subadviser without shareholder approval.
Pioneer has no current intention to replace
Papp as subadviser for Pioneer Papp Small
and Mid Fund.
- ----------------------------------------------------------------------------------------------------------------------------
Investment objective Each fund seeks long-term capital growth. The investment objective of each fund is fundamental
and cannot be changed without shareholder approval.
- ----------------------------------------------------------------------------------------------------------------------------
43
- ----------------------------------------------------------------------------------------------------------------------------
Papp Small-Mid Fund Pioneer Papp Small and Mid Fund
- ----------------------------------------------------------------------------------------------------------------------------
Primary investments Equity securities, with an emphasis on small and mid-capitalization issuers. For purposes
of each fund's policies, small and mid-capitalization companies are those with market
capitalizations which do not exceed the market capitalization of the largest company in
the S&P Mid Cap 400 Index.
- ----------------------------------------------------------------------------------------------------------------------------
Under normal market conditions, at least Under normal market conditions, at least 80%
80% of net assets in common stocks that of assets in equity securities (including
are considered to be small and mid-cap at common stocks, convertible debt and other
the time of purchase. equity instruments, such as depository
receipts, warrants, rights and preferred
stocks) of small and mid-capitalization issuers
(at the time of purchase).
- ----------------------------------------------------------------------------------------------------------------------------
Investment strategies Each fund uses a "growth" style of management and seeks to invest in issuers with above
average potential for earnings growth. Papp evaluates an issuer's prospects for capital
appreciation by considering, among other factors, growth over extended periods of time,
profitability created through operating efficiency rather than financial leverage, and whether
cash flows confirm the sustainability of growth.
Papp follows a "buy and hold" strategy. Once a security is purchased, the fund ordinarily retains
an investment so long as it continues to believe that the security's prospects for appreciation
continue to be favorable and that the security is not overvalued in the marketplace. Papp does
not attempt to time the market.
- ----------------------------------------------------------------------------------------------------------------------------
Other investments Papp Small-Mid Fund may invest a maximum Pioneer Papp Small and Mid Fund may invest
of 20% of its common stock assets in foreign up to 20% of its assets in equity and debt
domiciled companies if they are traded in securities of non-U.S. corporate issuers and
the U.S. debt securities of non-U.S. government
issuers. The fund may invest the balance of
its assets in debt securities of U.S. corporate
and government issuers. The fund generally
acquires debt securities that are rated
investment grade, but may invest up to 5% of
its net assets in below investment grade debt
securities.
- ----------------------------------------------------------------------------------------------------------------------------
Temporary defensive Papp Small-Mid Fund may hold cash or invest Pioneer Papp Small and Mid Fund may invest
strategies up to 100% of its assets in high-quality short- up to 100% of its assets in securities with
term government or corporate obligations. remaining maturities of less than one year,
cash equivalents or may hold cash.
- ----------------------------------------------------------------------------------------------------------------------------
Diversification Each fund is diversified for the purpose of the Investment Company Act of 1940 (the
"Investment Company Act"), and each fund is subject to diversification requirements under
the Internal Revenue Code of 1986 (the "Code").
- ----------------------------------------------------------------------------------------------------------------------------
Industry concentration Each fund may not invest more than 25% of its assets in any one industry.
- ----------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid Papp Small-Mid Fund may not invest more Pioneer Papp Small and Mid Fund may not
securities than 5% of its assets in securities which are invest more than 15% of its net assets in
not readily marketable. securities which are illiquid and other
securities which are not readily marketable.
- ----------------------------------------------------------------------------------------------------------------------------
44
- ----------------------------------------------------------------------------------------------------------------------------
Papp Small-Mid Fund Pioneer Papp Small and Mid Fund
- ----------------------------------------------------------------------------------------------------------------------------
Borrowing Papp Small-Mid Fund may not borrow money Pioneer Papp Small and Mid Fund may not
except from banks for temporary or emergency borrow money, except on a temporary basis
purposes in amounts not exceeding 10% of and to the extent permitted by applicable law,
the value of the Fund's assets at the time of as amended and interpreted or modified from
borrowing. The Fund may not purchase time to time by any regulatory authority
securities when borrowings exceed 5% of having jurisdiction. Under current regulatory
its assets. requirements, the fund may: (a) borrow
from banks or through reverse repurchase
agreements in an amount up to 33-1/3% of the
fund's total assets (including the amount
borrowed); (b) borrow up to an additional 5%
of the fund's assets for temporary purposes;
(c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) purchase securities on
margin to the extent permitted by applicable
law; and (e) engage in transactions in
mortgage dollar rolls that are accounted for as
financings.
- ----------------------------------------------------------------------------------------------------------------------------
Lending Not permitted. Pioneer Papp Small and Mid Fund may lend
portfolio securities with a value that may not
exceed 33-1/3% of the value of its assets.
- ----------------------------------------------------------------------------------------------------------------------------
Derivative instruments Papp Small-Mid Fund may not utilize derivative Pioneer Papp Small and Mid Fund may use
instruments, such as options, futures and futures and options on securities, indices
options on futures. and currencies, forward currency exchange
contracts and other 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
stock market prices, interest rates or
currency exchange rates
o As a substitute for purchasing or selling
securities
o To increase the fund's return as a non-
hedging strategy that may be considered
speculative
- ----------------------------------------------------------------------------------------------------------------------------
Other investment As described above, the funds have substantially similar principal investment strategies and
policies and restrictions policies. Certain of the non-principal investment policies and restrictions are different. For a
more complete discussion of each fund's other investment policies and fundamental and non-
fundamental investment restrictions, see the SAI.
- ----------------------------------------------------------------------------------------------------------------------------
45
- ---------------------------------------------------------------------------------------------------------------------------------
Papp Small-Mid Fund Pioneer Papp Small and Mid Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- ---------------------------------------------------------------------------------------------------------------------------------
Sales charges Shares are offered with no sales charges. The Class A shares of Pioneer Papp Small and
Mid Fund you receive in the reorganization will
not be subject to any sales charge. Moreover,
if you own shares in your own name as of the
closing of the reorganization (i.e., not in the
name of a broker), you may purchase
additional Class A shares of the Pioneer Papp
Small and Mid Fund in the future without
paying any sales charge.
Except as described above, Class A shares of
Pioneer Papp Small and Mid Fund are subject
to a front-end sales charge of up to 5.75%.
- ---------------------------------------------------------------------------------------------------------------------------------
Management and Papp Small-Mid Fund pays an advisory fee on Pioneer Papp Small and Mid Fund will pay
other fees a monthly basis at an annual rate of 1.00% of Pioneer a management fee equal to 0.85%
the Fund's average daily net assets. In addition, annually of average daily net assets up to $1
Papp also serves as transfer, dividend billion and 0.80% annually for average daily
disbursing and shareholder servicing agent for net assets in excess of $1 billion. In addition,
the Fund pursuant to a separate agreement. the fund reimburses Pioneer for certain fund
Papp receives from the Fund a monthly fee of accounting and legal expenses incurred on
$0.75 for each Fund shareholder account, behalf of the fund and pays a separate
$0.50 for each dividend paid on a shareholder shareholder servicing/transfer agency fee to
account, and $1.00 for each purchase (other Pioneer Investment Management Shareholder
than by reinvestment, transfer or redemption) Services, Inc. (as defined above "PIMSS"), an
of Fund shares. affiliate of Pioneer.
Papp has agreed to limit certain of the Fund's Pioneer pays the fee of Papp as the sub-
ordinary operating expenses (not including adviser to the Pioneer Papp Small and
taxes, interest and extraordinary litigation Mid Fund.
expenses) to 1.25% of its average daily net
assets for any fiscal year. For the fiscal year Until December 31, 2004, Pioneer has agreed
ended December 31, 2002, the Fund's total to limit Pioneer Papp Small and Mid Fund's
annual operating expenses, without giving ordinary operating expenses per Class A share
effect to such limitation, were 1.56% per share. to 1.25% of average daily net assets. For the
coming fiscal year, Pioneer estimates that
Pioneer Papp Small and Mid Fund's annual
operating expenses will be 1.57% per share
(before waiver of fees or reimbursement of
expenses) for Class A shares.
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution and service Shares of the Fund are not subject to a Class A shares are subject to a 12b-1 fee
(12b-1) fee 12b-1 fee. equal to 0.25% annually of average daily
net assets.
- ---------------------------------------------------------------------------------------------------------------------------------
46
- ---------------------------------------------------------------------------------------------------------------------------------
Papp Small-Mid Fund Pioneer Papp Small and Mid Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Buying shares You may buy shares directly through Papp Subject to sales charges except as noted
Small-Mid Fund's transfer agent by writing to above (see "sales charges"), you may buy
the Papp Funds. You may also buy shares shares from any investment firm that has
through other financial intermediaries as a sales agreement with Pioneer Funds
described in the Fund's prospectus. Shares Distributor, Inc., Pioneer Papp Small and Mid
may not be purchased by telephone or online Fund's distributor (as defined above "PFD").
directly from the Papp Funds. Existing shareholders of Papp Small-Mid Fund
who own shares in their own name as of the
closing date of the reorganization and who
maintain their accounts may buy shares of
Pioneer Papp Small and Mid Fund through
such accounts in the future without paying
sales charges, but subject to the Class A
12b-1 fee.
Pioneer Papp Small and Mid Fund also offers
several other classes of shares which are
subject to different sales charges and 12b-1
fees than Class A shares, as well as a class of
shares for institutional investors without any
sales charges or 12b-1 fees.
If the account is established in the
shareholder's own name, shareholders may
also purchase additional shares of Pioneer
Papp Small and Mid Fund by telephone
or online.
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange privilege You may exchange shares of Papp Small-Mid You may exchange shares of Pioneer Papp
Fund without incurring an exchange fee with Small and Mid Fund without incurring any fee
the other four Funds in the Papp family of funds. on the exchange with the more than 20 other
Pioneer Funds. An exchange generally is
Exchange orders must be sent to the Fund treated as a sale and a new purchase of
either directly in writing or through a financial shares for federal income tax purposes.
intermediary. Telephone and online exchange
privileges are not available from the Papp If the account is established in the
Funds directly. shareholder's own name, shareholders may
also exchange shares of Pioneer Papp Small
and Mid Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
Selling shares Your shares will be sold at net asset value per share next calculated after the fund receives your
request in good order.
- ---------------------------------------------------------------------------------------------------------------------------------
You may sell your shares by contacting the Normally, your investment firm will send your
Fund directly in writing or by contacting a request to sell shares to PIMSS. You can
financial intermediary as described in the also sell your shares by contacting the fund
fund's prospectus. directly if your account is registered in
your name.
Telephone and online redemption privileges are
not available from the Papp Funds directly. If the account is established in the
shareholder's own name, shareholders may
also redeem shares of Pioneer Papp Small
and Mid Fund by telephone or online.
- ---------------------------------------------------------------------------------------------------------------------------------
47
Comparison of Principal Risks of Investing in the Funds
Because each fund has substantially the same portfolio management team and
a substantially similar investment objective, policies and strategies, the
funds are subject to the same principal risks. You could lose money on your
investment in the fund or not make as much as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short
term)
o Small or mid-cap companies fall out of favor with investors
o The fund's investments do not have the growth potential originally
expected
The fund also has risks associated with investing in small and mid-cap
companies. Compared to large companies, small and mid-cap companies, and the
market for their equity securities, are likely to:
o Be more sensitive to changes in the economy, earnings results and
investor expectations
o Have more limited product lines and capital resources
o Experience sharper swings in market values
o Be harder to sell at the times and prices the subadviser thinks
appropriate
o Offer greater potential for gain and loss
The 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.
An investment in Pioneer Papp Small and Mid Fund may, however, involve
greater risk than an investment in Papp Small-Mid Fund because Pioneer Papp
Small and Mid Fund has greater flexibility in its non-principal investment
policies to invest in certain types of securities and instruments which may
subject the portfolio to greater risk of loss. Unlike Papp Small-Mid Fund,
Pioneer Papp Small and Mid Fund may invest up to 20% of its assets in equity
and debt securities of non-U.S. issuers, including up to 5% of its net assets
in below investment grade debt securities. Pioneer Papp Small and Mid Fund may
also invest in derivative instruments, which Papp Small-Mid Fund is not
permitted to do. Pioneer Papp Small and Mid Fund may also invest a greater
percentage of its assets in illiquid securities and may lend portfolio
securities representing a greater percentage of its portfolio than can Papp
Small-Mid Fund. Papp, as subadviser to Pioneer Papp Small and Mid Fund, intends
to manage Pioneer Papp Small and Mid Fund in substantially the same manner as
Papp Small-Mid Fund and has no current intention to utilize the greater
flexibility afforded by Pioneer Papp Small-Mid Fund's investment policies.
Investments in the funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money by investing in either fund.
Other Consequences of the Reorganization
The Papp Small-Mid Fund and Pioneer Papp Small and Mid Fund each pay
monthly management fees equal to the following annual percentages of average
daily net assets:
- --------------------------------------------------------------------------------
Papp Small-Mid Fund Pioneer Papp Small and Mid Fund
Management Fee Management Fee
- --------------------------------------------------------------------------------
1.00% 0.85% -- for average daily net assets up to $1 billion
0.80% -- for average daily net assets over $1 billion
- --------------------------------------------------------------------------------
The annual management fee rate payable by Pioneer Papp Small and Mid Fund
(without giving effect to expense limitations) is less than the rate paid by
your Fund. However, Class A shares of Pioneer Papp Small and Mid Fund are
subject to a 12b-1 fee. At current asset levels, the combined management fee
and 12b-1 fee for Class A shares of Pioneer Papp Small and Mid Fund of 1.10%
will be higher than Papp Small-Mid Fund's management fee of 1.00% alone.
In addition to the management fee, your Fund pays a monthly transfer
agent, dividend disbursing and shareholder servicing agent fee to Papp of $0.75
for each Fund shareholder account, $0.50 for each dividend paid on a
shareholder account, and $1.00 for each purchase (other than by reinvestment,
transfer or redemption) of Fund shares. Pioneer will provide certain accounting
and legal services under a separate administration agreement for approximately
0.02% of average daily net assets. PIMSS will provide shareholder servicing and
transfer agency services to Pioneer Papp Small and Mid Fund under a separate
shareholder servicing/transfer agency agreement at an
48
annual fee of $26.60 for each Class A shareholder account. PIMSS will also be
reimbursed for its cash out-of-pocket expenditures. Pioneer, and not Pioneer
Papp Small and Mid Fund, will pay Papp a subadvisory fee.
For its fiscal year ended December 31, 2002, your Fund's per share
operating expenses were 1.56% of average daily net assets (before reimbursement
of fees or expenses). Papp does not anticipate that your Fund's per share
operating expenses as a percentage of average daily net assets for the fiscal
year ended December 31, 2003 will be significantly different. Papp has agreed
to reimburse the Fund to the extent the Fund's total operating expenses
(excluding taxes, interest, and extraordinary litigation expenses) during any
fiscal year exceed 1.25% of its average daily net asset value in such year.
This expense reimbursement cannot be changed without stockholder approval.
Similarly, with regard to Pioneer Papp Small and Mid Fund, Pioneer has
agreed to limit, until December 31, 2006, Class A expenses (other than
extraordinary expenses) to 1.25% of the average daily net assets attributable
to Class A shares by not imposing all or a portion of its management fee and,
if necessary, limiting other ordinary operating expenses of the fund. Pioneer
may subsequently recover reimbursed expenses within three years of being
incurred from the fund if the expense ratio of the Class A shares is less than
the expense limitation of the Class A shares. The annual expense ratio for
Class A shares of Pioneer Papp Small and Mid Fund will thus be the same as the
annual expense ratio for the shares of your Fund after taking into account the
expense limitation for each fund and Pioneer Papp Small and Mid Fund's Class A
12b-1 fees. Pioneer estimates that Pioneer Papp Small and Mid Fund's per share
annual operating expenses for the coming fiscal year will be 1.57% (before
waiver of fees or reimbursement of expenses) for Class A shares which is
approximately the same as the annual operating expense ratio for Papp
America-Pacific Rim Fund of 1.56% (before waiver of fees or reimbursement of
expenses) for the fiscal year ended December 31, 2002.
Performance information for Pioneer Papp Small and Mid Fund is not
presented because the fund has not yet commenced operations. As accounting
successor to your Fund, Pioneer Papp Small and Mid Fund will assume your Fund's
historical performance after the reorganization.
Set forth below is performance information for your Fund. The following
performance information indicates some of the risks of investing in your Fund.
The bar chart shows how your Fund's total return has varied from year to year.
The table shows your Fund's average annual total return (before and after
taxes) over time compared with a broad-based market index. Past performance
before and after taxes does not indicate future results.
Calendar Year Total Returns*
[The following table was depicted as a bar chart in the printed material.]
'99 13.04%
'00 31.32%
'01 1.13%
'02 -18.30%
'03 30.18%
* During the period shown in the bar chart, your Fund's highest quarterly
return was 22.90% for the quarter ended December 31, 1999 and the lowest
quarterly return was --17.24% for the quarter ended September 30, 2002.
49
Average Annual Total Returns as of December 31, 2003
- --------------------------------------------------------------------------------------------------
Since
1 Year 5 Years Inception(1)
- --------------------------------------------------------------------------------------------------
Papp Small-Mid Fund
Return Before Taxes 30.18% 9.62% 11.42%
Return After Taxes on Distributions(2) 30.18% 9.62% 11.22%
Return After Taxes on Distributions and
Sale of Fund Shares(2) 19.62% 8.49% 9.92%
- --------------------------------------------------------------------------------------------------
Russell 2000 Stock Index(3)
(reflects no deduction for fees, expenses or taxes) 47.25% 7.13% 8.80%
- --------------------------------------------------------------------------------------------------
(1) The Fund commenced operations on December 15, 1998.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on your situation and may
differ from those shown. Furthermore, the after-tax returns shown are not
relevant to those who hold their shares through tax-deferred arrangements
such as 401(k) plans or IRA accounts, or to investors that are tax-exempt.
(3) The Russell 2000 Stock Index is an unmanaged market-weighted index that
includes the stocks of 2000 U.S. companies, with dividends reinvested.
The Funds' Fees and Expenses
Shareholders of both funds pay various fees and expenses, either directly
or indirectly. The table below discusses the fees and expenses that you would
pay if you were to buy and hold shares of each fund. The expenses in the table
appearing below are based on (i) for your Fund, the expenses of your Fund for
its fiscal year ended December 31, 2002 and (ii) for the Pioneer Papp Small and
Mid Fund, the estimated annual expenses of the Pioneer Papp Small and Mid Fund.
The Pioneer Papp Small and Mid Fund's actual expenses may be greater or less.
Pioneer
Papp
Papp Small and Mid
Small-Mid Fund
Fund Class A
Shareholder transaction fees (paid directly from your investment) ----------- --------------
Maximum sales charge (load) when you buy shares as a percentage of offering price .............. none 5.75%(1)
Maximum deferred sales charge (load) as a % of purchase price or the amount you receive when
you sell shares, whichever is less ............................................................ none none(2)
Annual fund operating expenses (deducted from fund assets)
(as a % of average net assets)
Management fee ................................................................................. 1.00% 0.85%
Distribution and service (12b-1) fee ........................................................... none 0.25%
Other expenses ................................................................................. 0.56% 0.47%
Total fund operating expenses .................................................................. 1.56% 1.57%
Expense reduction(3) ........................................................................... (0.31)% (0.32)%
Net fund operating expenses .................................................................... 1.25% 1.25%
- ----------
(1) As described above, this sales charge does not apply to shares received in
the reorganization by stockholders of your Fund who become shareholders of
record of the Pioneer Papp Small and Mid Fund through the reorganization.
In addition, stockholders of your Fund who own shares in their own name as
of the closing of the reorganization (i.e., not in the name of a broker or
other intermediary) and maintain such account may purchase additional Class
A shares of Pioneer Papp Small and Mid Fund through such account in the
future without paying this sales charge.
(2) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge of 1%.
(3) As described above, Papp has contractually agreed to reimburse Papp
Small-Mid Fund to the extent the Fund's total ordinary operating expenses
exceed 1.25% of the Fund's average daily net asset value in a fiscal year.
This limitation cannot be changed without shareholder approval. Also as
described above, Pioneer has agreed to waive its fees for Pioneer Papp
Small and Mid Fund to the extent certain of
50
the fund's total ordinary operating expenses exceed 1.25% of the fund's
average daily net asset value in a fiscal year. This expense limitation is
contractual through December 31, 2006. Pioneer may subsequently recover
reimbursed expenses (within three years of being incurred) from the fund if
the expense ratio of the Class A shares is less than the expense limitation
of the Class A shares. Each class will reimburse Pioneer no more than the
amount by which the class' expenses were reduced.
The hypothetical example below helps you compare the cost of investing in
each fund. It assumes that: (a) you invest $10,000 in each fund for the time
periods shown, (b) you reinvest all dividends and distributions, (c) your
investment has a 5% return each year, (d) each fund's gross operating expenses
remain the same, and (e) the expense limitations are in effect for year one for
Papp Small-Mid Fund and for three years for Pioneer Papp Small and Mid Fund.
The examples are for comparison purposes only and are not a representation of
either fund's actual expenses or returns, either past or future.
Pioneer
Papp
Papp Small and Mid
Small-Mid Fund
Fund Class A Shares
Example ----------- ---------------
Year 1 .......... $ 131 $ 695
Year 3 .......... $ 408 $1,013
Year 5 .......... $ 706 $1,353
Year 10 ......... $1,553 $2,311
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o The reorganization is scheduled to occur as of 5:00 p.m., Eastern
time, on February 20, 2004, unless your Fund and Pioneer Papp Small
and Mid Fund agree in writing to a later date. Your Fund will transfer
all of its assets to Pioneer Papp Small and Mid Fund. Pioneer Papp
Small and Mid Fund will assume your Fund's liabilities that are
included in the calculation of your Fund's net assets at the closing
and certain liabilities with respect to your Fund's investment
operations that are not required by generally accepted accounting
principles to be included in the calculation of net asset value. The
net asset value of both funds will be computed as of 4:00 p.m.,
Eastern time, on the reorganization date.
o Pioneer Papp Small and Mid Fund will issue to your Fund Class A shares
with an aggregate net asset value equal to the net assets attributable
to your Fund's shares. These shares will immediately be distributed to
your Fund's stockholders in proportion to their holdings of your
Fund's shares on the reorganization date. As a result, your Fund's
stockholders will end up as Class A shareholders of Pioneer Papp Small
and Mid Fund.
o After the distribution of shares, your Fund will be liquidated and
dissolved.
o The reorganization is not intended to result in income, gain or loss
for federal income tax purposes and will not take place unless both
funds receive a satisfactory opinion concerning the tax consequences
of the reorganization from Hale and Dorr LLP, counsel to Pioneer Papp
Small and Mid Fund.
Agreement and Plan of Reorganization
The stockholders of your Fund are being asked to approve an Agreement and
Plan of Reorganization, the form of which is attached as Exhibit A. The
description of the Agreement and Plan of Reorganization contained herein is
qualified in its entirety by the attached copy.
Reasons for the Proposed Reorganization
The directors of your Fund believe that the proposed reorganization will
be advantageous to the stockholders of your Fund for several reasons. The
directors considered the following matters, among others, in approving the
proposal.
First, stockholders of your Fund would become part of a significantly
larger family of funds which offers a more diverse array of investment options
and enhanced shareholder account options. The Pioneer family of mutual funds
offers over 20 funds, including domestic and international equity and fixed
income funds and a money market fund, that will be available to your Fund's
stockholders through exchanges. Currently, stockholders of your Fund may
exchange their shares for shares of the other four Papp Funds. In addition,
Pioneer offers shareholders additional options for their accounts, including
the ability to transact and exchange shares over the telephone or online and
the ability to access account values and transaction history in all of the
shareholder's direct accounts in the Pioneer Funds over the telephone or
online.
51
Second, stockholders of your Fund will enjoy continuity of portfolio
management. Because Pioneer will retain Papp to act as subadviser to Pioneer
Papp Small and Mid Fund, the portfolio management team of your Fund will be the
same portfolio management team for Pioneer Papp Small and Mid Fund. Pioneer
will oversee Papp as subadviser to Pioneer Papp Small and Mid Fund in
accordance with the terms of the Sub-Advisory Agreement.
Third, although Papp will manage the assets of Pioneer Papp Small and Mid
Fund as its subadviser, Pioneer will be responsible for the overall management
of Pioneer Papp Small and Mid Fund's operations, including supervision of
compliance with the investment guidelines and regulatory restrictions. Your
Fund will benefit from Pioneer's experience and resources in managing
investment companies. At September 30, 2003, Pioneer managed over 50 investment
companies and accounts with approximately $28 billion in assets. Pioneer is
part of the global asset management group of UniCredito Italiano S.p.A., one of
the largest banking groups in Italy, providing investment management and
financial services to mutual funds, institutional and other clients. As of
September 30, 2003, assets under management by UniCredito Italiano S.p.A. were
approximately $130 billion worldwide.
Fourth, until December 31, 2006, Pioneer has agreed to limit the expenses
of Class A shares of Pioneer Papp Small and Mid Fund to 1.25% of average daily
net assets, which is the same as the percentage expense limitation currently in
place for your Fund. After December 31, 2006, Pioneer is not obligated to
maintain an expense limitation but may voluntarily agree to continue such
arrangement. Because Pioneer estimates that Pioneer Papp Small and Mid Fund's
per share annual operating expenses for the coming fiscal year will be 1.57%
(before waiver of fees or reimbursement of expenses) for Class A shares, it is
expected that the expense limitation agreement for Pioneer Papp Small and Mid
Fund will be triggered and that the net expense ratio for Class A shares of
Pioneer Papp Small and Mid Fund will be the same as the net expense ratio for
the shares of your Fund. In addition, the gross expense ratio for Class A
shares of Pioneer Papp Small and Mid Fund would be approximately the same as
the gross expense ratio for Papp Small-Mid Fund for the fiscal year ended
December 31, 2002. The directors believe that the Papp Small-Mid
Fund shareholders would thus be able to experience the benefits of becoming
shareholders of Pioneer Papp Small and Mid Fund while bearing the same net
expense ratio.
Fifth, the Class A shares of Pioneer Papp Small and Mid Fund received in
the reorganization will provide your Fund's stockholders with exposure to
substantially the same investment product as they currently have.
Sixth, Pioneer Papp Small and Mid Fund is part of a diverse family of
mutual funds, with over 20 funds that will be available to your Fund's
stockholders through exchanges. Currently, stockholders of your Fund may
exchange their shares for shares of the other three Papp Funds.
The boards of both funds considered that Pioneer will pay all of the
expenses of the fund and Pioneer Papp Small and Mid Fund associated with the
preparation, printing and mailing of any shareholder communications, including
this joint proxy statement and prospectus, and any filings with the SEC and
other governmental agencies in connection with the reorganization.
The boards of both funds also considered that Pioneer has agreed with Papp
that for a period of at least three years after the consummation of the
reorganization, Pioneer will use commercially reasonable efforts to assure that
at least 75% of the Pioneer Funds' board of trustees are not "interested
persons" (as defined in the Investment Company Act) of Pioneer or Papp;
however, the nomination and election of the members of the board of trustees of
the Pioneer Funds is determined by the board of trustees of the Pioneer Funds
or their shareholders. Pioneer has also agreed with Papp that for two years
after the consummation of the reorganization, Pioneer will use commercially
reasonable efforts not to impose an unfair burden on Pioneer Papp Small and Mid
Fund in connection with the reorganization.
The boards of both funds considered that each fund's investment adviser,
as well as Pioneer Papp Small and Mid Fund's principal distributor, will
benefit from the reorganization. Because Pioneer Papp Small and Mid Fund will
be the accounting successor to your Fund and will assume your Fund's
performance record, Pioneer expects to be able to increase Pioneer Papp Small
and Mid Fund's assets at a faster rate than would otherwise be possible if it
began offering a fund with a similar objective and no historical performance
record. Such a growth in asset size benefits Pioneer by increasing its
management fees and accelerating the point at which management of the fund is
profitable to Pioneer. As subadviser to Pioneer Papp Small and Mid Fund, Papp
would similarly benefit from increased assets because it would receive greater
subadvisory fees. Moreover, as discussed below under "Certain Agreements
between Pioneer and Papp," Papp will receive economic benefits from Pioneer if
the reorganization is completed.
The board of trustees of Pioneer Papp Small and Mid Fund also considered
that the reorganization presents an excellent opportunity for the Pioneer Papp
Small and Mid Fund to acquire substantial investment assets without the
obligation to pay commissions or other transaction costs that a fund normally
incurs when purchasing securities. This opportunity provides an economic
benefit to Pioneer Papp Small and Mid Fund and its shareholders.
Certain Agreements between Pioneer and Papp
In connection with the reorganization, Pioneer and Papp have entered into
an agreement dated as of September 18, 2003 (the "Transfer Agreement"), which
provides, among other things, that (i) Pioneer shall make a payment to Papp
upon the closing of the reorganizations
52
of the funds, (ii) Papp shall enter into and perform its obligations under a
subadvisory agreement with Pioneer (the "Pioneer Papp Small and Mid Fund
Sub-Advisory Agreement," or, the "Sub-Advisory Agreement") to serve as
subadviser of Pioneer Papp Small and Mid Fund, (iii) Pioneer guarantees a
minimum aggregate amount of subadvisory fees received from the Pioneer Funds
during the initial three year period; (iv) Pioneer shall pay Papp a termination
fee if within five years of the closing of the reorganization Pioneer
terminates the Sub-Advisory Agreement with Papp without cause and (v) Papp will
be subject to certain non-competition provisions. The termination fee will not
be triggered if the Sub-Advisory Agreement is terminated by Pioneer Papp Small
and Mid Fund or its shareholders with or without cause. The terms of the
Sub-Advisory Agreement with Papp are discussed under "Material Provisions of
the Management Agreements and the Sub-Advisory Agreements."
Tax Status of the Reorganization
The reorganization is not intended to result in income, gain or loss for
United States federal income tax purposes and will not take place unless both
funds receive a satisfactory opinion from Hale and Dorr LLP, counsel to Pioneer
Papp Small and Mid Fund, substantially to the effect that the reorganization
described above will be a "reorganization" within the meaning of Section 368(a)
of the Code.
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your Fund upon (1) the transfer
of all of its assets to Pioneer Papp Small and Mid Fund as described
above or (2) the distribution by your Fund of Pioneer Papp Small and
Mid Fund shares to your Fund's stockholders;
o No gain or loss will be recognized by Pioneer Papp Small and Mid Fund
upon the receipt of your Fund's assets solely in exchange for the
issuance of Pioneer Papp Small and Mid Fund shares to your Fund and
the assumption of your Fund's liabilities by Pioneer Papp Small and
Mid Fund;
o The basis of the assets of your Fund acquired by Pioneer Papp Small
and Mid Fund will be the same as the basis of those assets in the
hands of your Fund immediately before the transfer;
o The tax holding period of the assets of your Fund in the hands of
Pioneer Papp Small and Mid Fund will include your Fund's tax holding
period for those assets;
o You will not recognize gain or loss upon the exchange of your shares
of your Fund solely for Pioneer Papp Small and Mid Fund shares as part
of the reorganization;
o The basis of Pioneer Papp Small and Mid Fund shares received by you in
the reorganization will be the same as the basis of your shares of
your Fund surrendered in exchange; and
o The tax holding period of Pioneer Papp Small and Mid Fund shares you
receive will include the tax holding period of the shares of your Fund
surrendered in the exchange, provided that the shares of your Fund
were held as capital assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of your Fund and Pioneer Papp
Small and Mid Fund.
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with the 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.
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.
Additional Terms of Agreement and Plan of Reorganization
Conditions to Closing the Reorganization. The obligation of your Fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the execution by Papp and Pioneer of investment
subadvisory agreements whereby Papp would serve as subadviser to each Pioneer
Fund, the performance by Pioneer Papp Small and Mid Fund of all its obligations
under the Agreement and Plan of Reorganization and the receipt of all consents,
orders and permits necessary to consummate the reorganization (see Sections 6
and 8 of the Agreement and Plan of Reorganization, attached as Exhibit A).
The obligation of Pioneer Papp Small and Mid Fund to consummate the
reorganization is subject to the satisfaction of certain conditions, including
your Fund's performance of all of its obligations under the Agreement and Plan
of Reorganization, the receipt of certain
53
documents and financial statements from your Fund and the receipt of all
consents, orders and permits necessary to consummate the reorganization (see
Sections 7 and 8 of the Agreement and Plan of Reorganization, attached as
Exhibit A).
The obligations of both funds are subject to the approval of the Agreement
and Plan of Reorganization by the necessary vote of the outstanding shares of
your Fund, in accordance with the provisions of your Fund's charter and
by-laws. The funds' obligations are also subject to the receipt of a favorable
opinion of Hale and Dorr LLP as to the federal income tax consequences of the
reorganization (see Section 8 of the Agreement and Plan of Reorganization,
attached as Exhibit A).
Termination of Agreement. The board of either your Fund or Pioneer Papp
Small and Mid Fund may terminate the Agreement and Plan of Reorganization (even
if the stockholders of your Fund have already approved it) at any time before
the reorganization date, if that board believes in good faith that proceeding
with the reorganization would no longer be in the best interests of
shareholders.
Expenses of the Reorganization. Pioneer will pay all of the expenses of
your Fund and Pioneer Papp Small and Mid Fund associated with the preparation,
printing and mailing of any shareholder communications, including this joint
proxy statement and prospectus, and any filings with the SEC and other
governmental agencies in connection with the reorganization.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
December 31, 2003, and the pro forma combined capitalization of both funds as
if the reorganization had occurred on that date. This table reflects the pro
forma ratios of one Class A share of Pioneer Papp Small and Mid Fund being
issued for each share of your Fund. The exchange ratio will remain 1:1 on the
closing date of the reorganization.
December 31, 2003
Pioneer
Pioneer Papp
Papp Papp Small and Mid
Small-Mid Small and Mid Fund
Fund Fund Pro Forma
------------------ --------------- ------------------
Net Assets ........................ $26.2 million N/A $26.2 million
Net Asset Value Per Share ......... 24.76 N/A 24.76
Shares Outstanding ................ 1,059,854 N/A 1,059,854
It is impossible to predict how many shares of Pioneer Papp Small and Mid
Fund will actually be received and distributed by your Fund on the
reorganization date. The table should not be relied upon to determine the
amount of Pioneer Papp Small and Mid Fund's shares that will actually be
received and distributed.
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the board of directors of your Fund,
including the directors who are not "interested persons" of your Fund or Papp
("independent directors"), approved the reorganization. In particular, the
board of directors determined that the reorganization is in the best interests
of your Fund. Similarly, the board of trustees of Pioneer Papp Small and Mid
Fund, including its independent trustees, approved the reorganization. They
also determined that the reorganization is in the best interests of Pioneer
Papp Small and Mid Fund.
The directors of your Fund recommend that the stockholders of your Fund
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
54
VOTING RIGHTS AND REQUIRED VOTE
Each share of your Fund is entitled to one vote and each fractional share
shall be entitled to a proportionate fractional vote. A quorum is required to
conduct business at the Meeting. With respect to each Fund, the presence in
person or by proxy of a majority of stockholders entitled to cast votes at the
Meeting will constitute a quorum. The favorable vote of a majority of the
shares outstanding of each of Papp Stock Fund, Papp America-Abroad Fund, Papp
America-Pacific Rim Fund, and Papp Small-Mid Fund is required for the approval
of Proposals 1, 2, 3 and 4, respectively.
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Quorum Voting
In General All shares "present" in person or by proxy are Shares "present" in person will be voted in
counted towards a quorum. person at the Meeting. Shares present by
proxy will be voted in accordance with
instructions.
- ---------------------------------------------------------------------------------------------------------------------------------
Broker Non-Vote (where the Considered "present" at Meeting for purposes Broker non-votes do not count as a vote "for"
underlying holder has not of quorum. and effectively result in a vote "against."
voted and the broker does not
have discretionary authority to
vote the shares)
- ---------------------------------------------------------------------------------------------------------------------------------
Proxy with No Voting Considered "present" at Meeting for purposes Voted "for" the proposal.
Instruction (other than Broker of quorum.
Non-Vote)
- ---------------------------------------------------------------------------------------------------------------------------------
Vote to Abstain Considered "present" at Meeting for purposes Abstentions do not constitute a vote "for" and
of quorum. effectively result in a vote "against."
- ---------------------------------------------------------------------------------------------------------------------------------
If the required approval of stockholders is not obtained on all four
Proposals, the Meeting may be adjourned as more fully described in this proxy
statement and prospectus, and the Papp Funds will continue to engage in
business as separate mutual funds and the boards of directors will consider
what further action may be appropriate.
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS
Investment Adviser
Pioneer serves as the investment adviser to each Pioneer Fund. Pioneer is
an indirect, wholly owned subsidiary of UniCredito Italiano S.p.A., one of the
largest banking groups in Italy. Pioneer is part of the global asset management
group providing investment management and financial services to mutual funds,
institutional and other clients. As of September 30, 2003, assets under
management were approximately $130 billion worldwide, including over $28
billion in assets under management by Pioneer. Pioneer's main office is at 60
State Street, Boston, Massachusetts 02109. Pioneer's U.S. mutual fund
investment history includes creating one of the first mutual funds in 1928.
The board of trustees of the Pioneer Funds is responsible for overseeing
the performance of each Pioneer Fund's investment adviser and subadviser and
determining whether to approve and renew the fund's investment management
agreement and the sub-advisory agreements. For a discussion of these contracts,
see "Material Provisions of the Management Agreements and the Sub-Advisory
Agreements" below.
Pioneer has received an order (the "Exemptive Order") from the SEC that
permits Pioneer, subject to the approval of the Pioneer Funds' board of
trustees, to hire and terminate a subadviser or to materially modify an
existing subadvisory agreement for a Pioneer Fund without shareholder approval.
Pioneer retains the ultimate responsibility to oversee and recommend the
hiring, termination and replacement of any subadviser. To the extent that the
SEC adopts a rule that would supersede the Exemptive Order, Pioneer and the
Pioneer Funds intend to rely on such rule to permit Pioneer, subject to the
approval of the Pioneer Funds' board of trustees and any other applicable
conditions of the rule, to hire and terminate a subadviser or to materially
modify an existing subadvisory agreement for a Pioneer Fund without shareholder
approval. This means that Pioneer could remove Papp and replace it without the
approval of Pioneer Fund shareholders. However, Pioneer has no current
intention to replace Papp as subadviser for any of the Pioneer Funds.
Investment Subadviser
Papp will serve as the investment subadviser to each Pioneer Fund. Papp
also serves as investment adviser to individuals, trusts, retirement plans,
endowments and foundations. Papp is located at 6225 North 24th Street, Suite
150, Phoenix, Arizona 85016. Papp is
55
an Arizona limited liability partnership owned and controlled by its ten
partners. L. Roy Papp owns a majority interest in the partnership. Papp,
including its predecessor, has been in the investment management business since
1979. As of December 31, 2003, assets under management were approximately $584
million.
Buying, Exchanging and Selling Shares of the Pioneer Funds
Net Asset Value. Each Pioneer Fund's net asset value is the value of its
portfolio of securities plus any other assets minus its operating expenses and
any other liabilities. Each fund calculates a net asset value for each class of
shares every day the New York Stock Exchange is open when regular trading
closes (normally 4:00 p.m. Eastern time).
Each Pioneer Fund generally values its portfolio securities using closing
market prices or readily available market quotations. When closing market
prices or market quotations are not available or are considered by Pioneer to
be unreliable, a Pioneer Fund may use a security's fair value. Fair value is
the valuation of a security determined on the basis of factors other than
market value in accordance with procedures approved by the Pioneer Funds'
trustees. Each Pioneer Fund also may use the fair value of a security,
including a non-U.S. security, when Pioneer determines that the closing market
price on the primary exchange where the security is traded no longer accurately
reflects the value of the security due to factors affecting one or more
relevant securities markets or the specific issuer. The use of fair value
pricing by a Pioneer Fund may cause the net asset value of its shares to differ
from the net asset value that would be calculated using closing market prices.
International securities markets may be open on days when the U.S. markets are
closed. For this reason, the value of any international securities owned by a
Pioneer Fund could change on a day you cannot buy or sell shares of the fund.
Each Pioneer Fund may use a pricing service or a pricing matrix to value some
of its assets. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, which is a method of determining a security's fair
value.
You buy or sell shares at the share price. When you buy Class A shares,
you pay an initial sales charge unless you qualify for a waiver or reduced
sales charge. The Class A shares of the Pioneer Funds you receive in the
reorganizations will not be subject to any sales charge. Moreover, if you own
shares in your own name as of the closing of the reorganizations (i.e., not in
the name of a broker) and maintain your account, you may purchase additional
Class A shares of the corresponding Pioneer Fund through such account in the
future or may exchange those shares for Class A shares of another Pioneer Fund
without paying any sales charge.
Opening Your Account. If your shares are held in your investment firm's
name, the options and services available to you may be different from those
described herein or in the Pioneer Fund's prospectus. Ask your investment
professional for more information.
If you invest in a Pioneer Fund through investment professionals or other
financial intermediaries, including wrap programs and fund supermarkets,
additional conditions may apply to your investment in a Pioneer Fund, and the
investment professional or intermediary may charge you a transaction-based or
other fee for its services. These conditions and fees are in addition to those
imposed by the Pioneer Fund and its affiliates. You should ask your investment
professional or financial intermediary about its services and any applicable
fees.
Account Options. Use your account application to select options and
privileges for your account. You can change your selections at any time by
sending a completed account options form to the transfer agent. You may be
required to obtain a signature guarantee to make certain changes to an existing
account.
Call or write to the Pioneer Funds' transfer agent for account
applications, account options forms and other account information:
PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Telephone 1-800-225-6292
Telephone Transaction Privileges. If your account is registered in your
name, you can buy, exchange or sell shares of the Pioneer Funds by telephone.
If you do not want your account to have telephone transaction privileges, you
must indicate that choice on your account application or by writing to the
transfer agent.
When you request a telephone transaction the transfer agent will try to
confirm that the request is genuine. The transfer agent records the call,
requires the caller to provide the personal identification number for the
account and sends you a written confirmation. Each Pioneer Fund may implement
other confirmation procedures from time to time. Different procedures may apply
if you have a non-U.S. account or if your account is registered in the name of
an institution, broker-dealer or other third party.
Online Transaction Privileges. If your account is registered in your name,
you may be able to buy, exchange or sell fund shares online. Your investment
firm may also be able to buy, exchange or sell your Fund shares online.
56
To establish online transaction privileges complete an account options
form, write to the transfer agent or complete the online authorization screen
on WWW.PIONEERFUNDS.COM.
To use online transactions, you must read and agree to the terms of an
online transaction agreement available on the Pioneer website. When you or your
investment firm requests an online transaction the transfer agent
electronically records the transaction, requires an authorizing password and
sends a written confirmation. The Pioneer Funds may implement other procedures
from time to time. Different procedures may apply if you have a non-U.S.
account or if your account is registered in the name of an institution,
broker-dealer or other third party. You may not be able to use the online
transaction privilege for certain types of accounts, including most retirement
accounts.
Share Price. If you place an order with your investment firm before the
New York Stock Exchange closes and your investment firm has an agreement with
PFD to accept orders on PFD's behalf, your
share price will be calculated that day. Otherwise, your price per share will
be calculated at the close of the New York Stock Exchange after the distributor
receives your order. Your investment firm is responsible for submitting your
order to the distributor.
Buying Pioneer Fund Shares. You may buy shares of each Pioneer Fund from
any investment firm that has a sales agreement with PFD. If you do not have an
investment firm, please call 1-800-225-6292 for information on how to locate an
investment professional in your area.
You can buy shares of the Pioneer Funds at the offering price. The
distributor may reject any order until it has confirmed the order in writing
and received payment. The fund reserves the right to stop offering any class of
shares.
Minimum Investment Amounts. Your initial investment must be at least
$1,000. Additional investments must be at least $100 for Class A shares and
$500 for Class C shares. You may qualify for lower initial or subsequent
investment minimums if you are opening a retirement plan account, establishing
an automatic investment plan or placing your trade through your investment
firm. The minimum investment amount does not apply for purposes of the
reorganization.
Exchanging Pioneer Fund Shares. You may exchange your shares in a Pioneer
Fund for shares of the same class of another Pioneer mutual fund. Your exchange
request must be for at least $1,000 unless the fund you are exchanging into has
a different minimum. Each Pioneer Fund allows you to exchange your shares at
net asset value without charging you either an initial or contingent deferred
sales charge at the time of the exchange. Shares you acquire as part of an
exchange will continue to be subject to any contingent deferred sales charge
that applies to the shares you originally purchased. When you ultimately sell
your shares, the date of your original purchase will determine your contingent
deferred sales charge.
Selling Pioneer Fund Shares. Your shares will be sold at net asset value
per share next calculated after the Pioneer Fund receives your request in good
order. If the shares you are selling are subject to a deferred sales charge, it
will be deducted from the sale proceeds. Each Pioneer Fund generally will send
your sale proceeds by check, bank wire or electronic funds transfer. Normally
you will be paid within seven days. If you are selling shares from a
non-retirement account or certain IRAs, you may use any of the methods
described below. If you are selling shares from a retirement account other than
an IRA, you must make your request in writing.
You may have to pay federal income taxes on a sale or an exchange.
Good Order means that:
o You have provided adequate instructions
o There are no outstanding claims against your account
o There are no transaction limitations on your account
o If you have any Pioneer Fund share certificates, you submit them and
they are signed by each record owner exactly as the shares are
registered
o Your request includes a signature guarantee if you:
-- Are selling over $100,000 or exchanging over $500,000 worth of
shares
-- Changed your account registration or address within the last 30
days
-- Instruct the transfer agent to mail the check to an address
different from the one on your account
-- Want the check paid to someone other than the account owner(s)
-- Are transferring the sale proceeds to a Pioneer mutual fund
account with a different registration
57
Buying, Exchanging and Selling Pioneer Fund Shares
----------------------------------------------------------------------------------------------------------------
Buying Shares Exchanging Shares
----------------------------------------------------------------------------------------------------------------
Through Normally, your investment firm will send your purchase Normally, your investment firm will send your
your investment request to the Pioneer Funds' transfer agent. Consult exchange request to the Pioneer Funds' transfer
firm your investment professional for more information. Your agent. Consult your investment professional for more
investment firm may receive a commission from the information about exchanging your shares.
distributor for your purchase of fund shares. The
distributor or its affiliates may pay additional
compensation, out of their own assets, to certain
investment firms or their affiliates based on objective
criteria established by the distributor.
By phone You can use the telephone or online purchase privilege After you establish your Pioneer Fund account, You
or online if you have an existing non-retirement account or can exchange fund shares by phone or online if:
certain IRAs. You can purchase additional fund shares by o You are exchanging into an existing account or
phone if: using the exchange to establish a new account,
o You established your bank account of record at least provided the new account has a registration
30 days ago identical to the original account
o Your bank information has not changed for at least 30 o The fund into which you are exchanging offers the
days same class of shares
o You are not purchasing more than $25,000 worth of o You are not exchanging more than $500,000 worth
shares per account per day of shares per account per day
o You can provide the proper account identification o You can provide the proper account identification
information information
When you request a telephone or online purchase, the
transfer agent will electronically debit the amount of
the purchase from your bank account of record. The
transfer agent will purchase Pioneer Fund shares for the
amount of the debit at the offering price determined
after the transfer agent receives your telephone or
online purchase instruction and good funds. It usually
takes three business days for the transfer agent to
receive notification from your bank that good funds are
available in the amount of your investment.
In writing, You can purchase Pioneer Fund shares for an existing You can exchange fund shares by mailing or faxing a
by mail fund account by mailing a check to the transfer agent. letter of instruction to the transfer agent. You can
or by fax Make your check payable to the Pioneer Fund. Neither exchange Pioneer Fund shares directly through the
initial nor subsequent investments should be made by Pioneer Fund only if your account is registered in
third party check. Your check must be in U.S. dollars your name. However, you may not fax an exchange
and drawn on a U.S. bank. Include in your purchase request for more than $500,000. Include in your
request the fund's name, the account number and the name letter:
or names in the account registration. o The name, social security number and signature of
all registered owners
o A signature guarantee for each registered owner
if the amount of the exchange is more than
$500,000
o The name of the fund out of which you are
exchanging and the name of the fund into which
you are exchanging
o The class of shares you are exchanging
o The dollar amount or number of shares you are
exchanging
58
- ------------------------------------------------------------------------------------------------------------------------------------
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. Consult your
investment professional for more information. Each Pioneer Fund For information or to request a telephone transaction between
has authorized PFD to act as its agent in the repurchase of 8:00 a.m. and 7:00 p.m. (Eastern time) by speaking with a
Pioneer Fund shares from qualified investment firms. Each Pioneer shareholder services representative call 1-800-225-6292.
Fund reserves the right to terminate this procedure at any time. To request a transaction using FactFoneSM call 1-800-225-4321.
Telecommunications Device for the Deaf (TDD) 1-800-225-1997.
You may sell up to $100,000 per account per day by phone or
online. You may sell Pioneer Fund shares held in a retirement By Mail
plan account by phone only if your account is an eligible IRA (tax
penalties may apply). You may not sell your shares by phone or Send your written instructions to:
online if you have changed your address (for checks) or your Pioneer Investment Management Shareholder Services, Inc.
bank information (for wires and transfers) in the last 30 days. P.O. Box 55014
Boston, Massachusetts 02205-5014
You may receive your sale proceeds:
o By check, provided the check is made payable exactly as your By fax
account is registered
o By bank wire or by electronic funds transfer, provided the sale Fax your exchange and sale requests to:
proceeds are being sent to your bank address of record 1-800-225-4240
You can sell some or all of your Pioneer Fund shares by writing Exchange Privilege
directly to the Pioneer Fund only if your account is registered in
your name. Include in your request your name, your social You may make up to four exchange redemptions of $25,000 or
security number, the fund's name, your fund account number, the more per account per calendar year out of the fund.
class of shares to be sold, the dollar amount or number of shares
to be sold and any other applicable requirements as described Excessive Trading
below. The transfer agent will send the sale proceeds to your
address of record unless you provide other instructions. Your The fund discourages excessive and/or short-term trading
request must be signed by all registered owners and be in good practices, such as market timing, that may disrupt portfolio
order. The transfer agent will not process your request until it is management strategies and harm fund performance. These
received in good order. You may not sell more than $100,000 per practices consist of:
account per day by fax. o Selling shares purchased within the preceding 90 days;
o Two or more purchases and redemptions in any 90-day period;
and
o Any other series of transactions indicative of a timing
pattern
If we identify an account that engages in such activity, the
fund and the distributor reserve the right to refuse or
restrict any purchase order (including exchanges) for that
account and other accounts under common ownership or control.
Pioneer Fund Shareholder Account Policies
Signature Guarantees and Other Requirements. You are required to obtain a
signature guarantee when you are:
o Requesting certain types of exchanges or sales of Pioneer Fund shares
o Redeeming shares for which you hold a share certificate
o Requesting certain types of changes for your existing account
You can obtain a signature guarantee from most broker-dealers, banks,
credit unions (if authorized under state law) and federal savings and loan
associations. You cannot obtain a signature guarantee from a notary public.
Fiduciaries and corporations are required to submit additional documents to
sell Pioneer Fund shares.
Exchange Limitation. You may make up to four exchanges of $25,000 or more
per account per calendar year out of each Pioneer Fund. Each Pioneer Fund's
exchange limitation is intended to discourage short-term trading in fund
shares. Short-term trading can increase the expenses incurred by the fund and
make portfolio management less efficient. In determining whether the exchange
redemption limit has been reached, Pioneer may aggregate a series of exchanges
(each valued at less than $25,000) and/or fund accounts that appear to be under
common ownership or control. Pioneer may view accounts for which one person
gives instructions or accounts that act on advice provided by a single source
to be under common control.
The exchange limitation does not apply to automatic exchange transactions
or to exchanges made by participants in employer-sponsored retirement plans
qualified under Section 401 of the Code. The exchange limitation also may not
apply to transactions made through an omnibus account for Pioneer Fund shares.
Minimum Account Size. Each Pioneer Fund requires that you maintain a
minimum account value of $500. If you hold less than the minimum in your
account because you have sold or exchanged some of your shares, the Pioneer
Fund will notify you of its intent to sell
59
your shares and close your account. You may avoid this by increasing the value
of your account to at least the minimum within six months of the notice from
the fund.
Telephone Access. You may have difficulty contacting the Pioneer Fund by
telephone during times of market volatility or disruption in telephone service.
If you are unable to reach the Pioneer Fund by telephone, you should
communicate with the fund in writing.
Share Certificates. Normally, your shares will remain on deposit with the
transfer agent and certificates will not be issued. If you are legally required
to obtain a certificate, you may request one for your Class A shares only. A
fee may be charged for this service.
Other Policies. Each Pioneer Fund may suspend transactions in shares when
trading on the New York Stock Exchange is closed or restricted, when an
emergency exists that makes it impracticable for the fund to sell or value its
portfolio securities or with the permission of the Securities and Exchange
Commission.
Each Pioneer Fund or PFD may revise, suspend or terminate the account
options and services available to shareholders at any time.
Each Pioneer Fund reserves the right to redeem in kind by delivering
portfolio securities to a redeeming shareholder, provided that the Pioneer Fund
must pay redemptions in cash if a shareholder's aggregate redemptions in a 90
day period are less than $250,000 or 1% of the fund's net assets.
Dividends and Capital Gains
Each Pioneer Fund generally pays any distributions of net short- and
long-term capital gains in November. Each Pioneer Fund 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 the fund makes a distribution, generally you will
pay a higher price per share and you will pay taxes on the amount of the
distribution whether you reinvest the distribution or receive it as cash.
Taxes
For U.S. federal income tax purposes, distributions from each Pioneer
Fund's net long-term capital gains (if any) are considered long-term capital
gains and may be taxable to you at different maximum rates depending upon their
source and other factors. Dividends and short-term capital gain distributions
are taxable either as ordinary income or, if so designated by the fund, as
"qualified dividend income" taxable to individual shareholders at the maximum
15% tax rate applicable to long-term capital gains.
Dividends and distributions are taxable, whether you take payment in cash
or reinvest them to buy additional Pioneer Fund shares. When you sell or
exchange Pioneer Fund shares you will generally recognize a capital gain or
capital loss in an amount equal to the difference between the net amount of
sale proceeds (or, in the case of an exchange, the fair market value of the
shares) that you receive and your tax basis for the shares that you sell or
exchange. In January of each year each Pioneer Fund will mail to you
information about your dividends, distributions and any shares you sold in the
previous calendar year.
You must provide your social security number or other taxpayer
identification number to the fund along with the certifications required by the
Internal Revenue Service when you open an account. If you do not or if it is
otherwise legally required to do so, the Pioneer Fund will withhold 28% "backup
withholding" tax from your dividends and distributions, sale proceeds and any
other payments to you.
You should ask your tax adviser about any federal and state tax
considerations, including possible additional withholding taxes for non-U.S.
shareholders. You may also consult each Pioneer Fund's statement of additional
information for a more detailed discussion of U.S. federal income tax
considerations that may affect the Pioneer Fund and its shareowners.
MATERIAL PROVISIONS OF THE MANAGEMENT AGREEMENTS AND THE SUB-ADVISORY AGREEMENTS
Management Agreement -- Papp Funds
The following is a summary of the material terms of the Papp Funds'
existing investment advisory agreement with Papp (the "Papp Advisory
Agreement").
Services. Under the terms of the Papp Advisory Agreement, Papp manages the
Funds' investments and business affairs, subject to the supervision of the
board of directors. At its expense, Papp provides office space and all
necessary office facilities, equipment and personnel for managing the
investments of the Funds.
Compensation. As compensation under the Papp Advisory Agreement, each Papp
Fund pays Papp a monthly advisory fee at an annual rate of 1.00% of the Fund's
average daily net assets. In addition, Papp has agreed to reimburse each Papp
Fund to the extent a Fund's
60
total annual expenses, other than taxes, interest and extraordinary litigation
expenses, during any of the Fund's fiscal years, exceed 1.25% of its average
daily net asset value in such year. Brokers' commissions and other charges
relative to the purchase and sale of portfolio securities are not regarded as
expenses.
The table below shows gross advisory fees paid by each Papp Fund and any
expense reimbursements by Papp during the fiscal year ended December 31, 2002:
Papp Stock Fund
- ---------------
Advisory Fee ................ $638,771
Papp America-Abroad Fund
- ------------------------
Advisory Fee ................ $777,766
Papp America-Pacific Rim Fund
- -----------------------------
Advisory Fee ................ $125,287
Reimbursement ............... $ 33,496
Papp Small-Mid Fund
- -------------------
Advisory Fee ................ $130,219
Reimbursement ............... $ 41,393
Term. The Papp Advisory Agreement continues in effect for successive
annual periods, subject to the annual approval of its continuance as described
below under "Termination, Continuance and Amendment."
Limitation of Liability. The Papp Advisory Agreement provides that Papp
shall not be subject to liability to the Funds or to any shareholder of the
Funds for any loss suffered by a Fund or its shareholders from or as a
consequence of any act or omission of Papp, or of any of the partners,
employees or agents of Papp, in connection with or pursuant to the agreement,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of Papp in the performance of its duties or by reason of reckless
disregard by Papp of its obligations and duties under the agreement.
Termination, Continuance and Amendment. The Papp Advisory Agreement
continues from year to year subject to approval of its continuance at least
annually by the vote of (1) a majority of your Fund's independent directors, in
each case cast in person at a meeting called for the purpose of voting on such
approval or (2) a majority of the outstanding voting securities (as that phrase
is defined in Section 2(a)(42) of the Investment Company Act) of each Fund. The
contract may be terminated at any time without penalty on 60 days' written
notice by the directors, by a vote of a majority of the Fund's outstanding
voting securities, or by Papp. The contract terminates automatically in the
event of its assignment.
Management Agreements -- the Pioneer Funds
The following is a summary of the material terms of the Pioneer Funds'
investment management agreement with Pioneer (the "Pioneer Management
Agreement"). Since each Pioneer Management Agreement is substantially identical
they are described collectively below.
Services. Under the Pioneer Management Agreement, Pioneer, subject to the
direction of the trustees, provides the fund with a continuous investment
program for the management of its assets, consistent with the fund's investment
objective and policies. Pioneer provides for such investment program through
the retention of Papp as subadviser. In addition, Pioneer:
o pays the fee of Papp as subadviser and supervises Papp's activities as
subadviser;
o advises the fund in connection with policy decisions to be made by the
trustees;
o provides day-to-day administration; and
o provides required reports and recommendations to the trustees and
maintains the records of the fund.
Under the Pioneer Management Agreement, Pioneer pays all expenses not
specifically assumed by the Pioneer Funds where such expenses are incurred by
Pioneer or the fund in connection with the management of the affairs of, and
the investment and reinvestment of the assets of, the fund. Under the Pioneer
Management Agreement, each fund assumes the following expenses: (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
61
of the independent 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 under the Investment Company 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), Pioneer
Investment Management USA Inc. or PFD; (k) the cost of preparing and printing
share certificates; (l) interest on borrowed money, if any; and (m) expenses
incurred (i) as a result of a change in the law or regulations, (ii) as a
result of a mandate from the board of trustees with associated costs of a
character generally assumed by similarly structured investment companies or
(iii) that is similar to the expenses listed in the existing contract.
Compensation. Each Pioneer Fund, except Pioneer Papp Small and Mid Fund,
pays an investment management fee, accrued daily and paid monthly in arrears,
to Pioneer equal on an annual basis to 0.75% of the average daily net assets of
the fund up to $1 billion and 0.70% of the average daily net assets of the fund
over $1 billion. Pioneer Papp Small and Mid Fund pays an investment management
fee, accrued daily and paid monthly in arrears, to Pioneer equal on an annual
basis to 0.85% of the average daily net assets of the fund up to $1 billion and
0.80% of the average daily net assets of the fund over $1 billion. Because the
Pioneer Funds are not operational and do not expect to be operational until the
consummation of the reorganizations, the funds have not yet paid any management
fees.
As described above, Pioneer has agreed to limit, until December 31, 2006,
Class A expenses (other than extraordinary expenses) of each Pioneer Fund to
1.25% of the average daily net assets attributable to the respective Class A
shares of the Pioneer Fund by not imposing all or a portion of its management
fee and, if necessary, limiting other ordinary operating expenses of the
Pioneer Fund.
Term. The Pioneer Management Agreement will take effect on the closing
date of the reorganization and will remain in effect for two years. Thereafter,
the Pioneer Management Agreement will continue in effect from year to year
subject to the annual approval of its continuance as described below under
"Termination, Continuance and Amendment."
Limitation of Liability. The Pioneer Management Agreement provides that
Pioneer is not liable for any error of judgment or mistake of law or for any
loss sustained by reason of the adoption of any investment policy or the
purchase, sale, or retention of any security on the recommendation of Pioneer,
whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, except a loss resulting from 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
agreement.
Termination, Continuance and Amendment. Except as described above the
Pioneer Management Agreement continues from year to year subject to annual
approval of its continuance by (1) a majority of the independent trustees, cast
in person at a meeting called for the purpose of voting on such approval, or
(2) by a majority of the fund's outstanding voting securities, as defined in
the Investment Company Act. The contract may be terminated at any time without
penalty on 60 days' written notice by the trustees, by a vote of a majority of
the fund's outstanding voting securities, or by Pioneer. The contract
terminates automatically in the event of its assignment.
Sub-Advisory Agreements -- the Pioneer Funds
Papp will serve as subadviser to each Pioneer Fund pursuant to a
sub-advisory agreement among the fund, Pioneer and Papp (as defined previously
above, each a "Sub-Advisory Agreement"). The following is a summary of certain
of the material terms of each Sub-Advisory Agreement. Because each Sub-Advisory
Agreement is substantially identical they are described collectively below.
Services. Under the Sub-Advisory Agreement, Papp will, subject to the
supervision of Pioneer and the board of trustees of the fund, regularly provide
the fund with investment research, advice and supervision and shall furnish
continuously an investment program for the fund, consistent with the investment
objective and policies of the fund. Papp will also provide assistance to
Pioneer with respect to the voting of proxies for the fund as Pioneer may
request. Papp shall maintain certain books and records with respect to the
fund's securities transactions and will cooperate with and provide reasonable
assistance to Pioneer, the fund, and the fund's other agents and
representatives with respect to requests for information and preparation of
regulatory filings and reports. Papp will bear its own costs of providing
services under the Sub-Advisory Agreement.
Compensation. For each Pioneer Fund except Pioneer Papp Small and Mid
Fund, Pioneer will pay Papp a monthly fee equal on an annual basis to 0.40% of
average daily net assets up to $500 million and 0.30% on average daily net
assets over $500 million. For Pioneer
62
Papp Small and Mid Fund, Pioneer will pay Papp a monthly fee equal on an annual
basis to 0.45% of average daily net assets up to $500 million and 0.35% on
average daily net assets over $500 million.
Limitation of Liability. The Sub-Advisory Agreement provides that Papp
shall not be liable to Pioneer or the fund for any losses, claims, damages,
liabilities or litigation incurred or suffered by Pioneer or the fund as a
result of any error of judgment or mistake of law by Papp with respect to the
fund, except that Papp shall be liable for and shall indemnify Pioneer and the
fund from any loss arising out of or based on (i) Papp being in violation of
any applicable federal or state law, rule or regulation or any investment
policy or restriction set forth in the fund's prospectus or statement of
additional information or any written policies, procedures, guidelines or
instructions provided in writing to Papp by the trustees of the fund or
Pioneer, (ii) Papp causing the fund to fail to satisfy the diversification or
source of income requirements of Subchapter M of the Code by reason of an act
or omission of Papp, unless acting at the direction of Pioneer, (iii) Papp's
willful misfeasance, bad faith or gross negligence generally in the performance
of its duties hereunder or its reckless disregard of its obligations and duties
under the Sub-Advisory Agreement, or (iv) the fund being in violation of any
applicable federal or state law, rule or regulation or any written policies,
procedures, guidelines or instructions provided in writing to Papp by the
trustees of the fund or Pioneer by reason of any action or inaction by Papp.
Term and Termination. The Sub-Advisory Agreement shall remain in force
provided its continuance is approved prior to December 31, 2005 by either (1) a
majority vote of the Board or (2) the affirmative vote of a majority of the
outstanding voting securities of the fund, and a majority of the independent
trustees. The Sub-Advisory Agreement may be terminated at any time on not more
than sixty (60) days' nor less than thirty (30) days' written notice without
penalty by (a) Pioneer, (b) the fund's board of trustees, (c) a majority of the
fund's outstanding voting securities, as defined in the Investment Company Act,
or (d) Papp. The Sub-Advisory Agreement shall automatically terminate in the
event of its assignment or upon termination of the Pioneer Management
Agreement.
PIONEER FUNDS' CLASS A RULE 12b-1 PLAN
As described above, the Pioneer Funds have adopted a Rule 12b-1 plan for
its Class A shares (the "Class A Plan" or the "Plan"). Because the 12b-1 fees
payable under each Plan are an ongoing expense, over time they may increase the
cost of your investment and your shares may cost more than shares that are not
subject to a distribution or service fee or sales charge.
Compensation and Services. The Class A Plan is a reimbursement plan, and
distribution expenses of PFD are expected to substantially exceed the
distribution fees paid by the fund in a given year. Pursuant to the Class A
Plan the fund reimburses PFD for its actual expenditures to finance any
activity primarily intended to result in the sale of Class A shares or to
provide services to holders of Class A shares, provided the categories of
expenses for which reimbursement is made are approved by the board of trustees.
The expenses of the fund pursuant to the Class A Plan are accrued daily at a
rate which may not exceed the annual rate of 0.25% of the fund's average daily
net assets attributable to Class A shares.
Trustee Approval and Oversight. The Plan was approved by the board of
trustees of each Pioneer Fund, including a majority of the independent
trustees, by votes cast in person at meetings called for the purpose of voting
on the Plan on October 6, 2003. Pursuant to the Plan, at least quarterly, PFD
will provide each fund with a written report of the amounts expended under the
Plan and the purpose for which these expenditures were made. The trustees
review these reports on a quarterly basis to determine their continued
appropriateness.
Term, Termination and Amendment. Each Plan's adoption, terms, continuance
and termination are governed by Rule 12b-1 under the Investment Company Act.
The board of trustees believes that there is a reasonable likelihood that the
Plans will benefit each fund and its current and future shareholders. The Plans
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein
without approval of the shareholders of the fund affected thereby, and material
amendments of the Plans must also be approved by the trustees as provided in
Rule 12b-1.
COMPARISON OF MARYLAND CORPORATION AND DELAWARE STATUTORY TRUST
Characteristics of the Papp Funds (each, a Maryland Corporation)
o Governance and Management. Each Papp Fund is a Maryland corporation.
The governing instruments of the Papp Funds are its charter and
by-laws. The business of each Fund is managed under the direction of
the Papp Funds' board of directors. The directors, in addition to
viewing the actions of the Funds' investment adviser, decide upon
matters of general policy at their regular meetings. The officers of
the Papp Funds supervise the business operations of each Fund.
o Share Capital and Classes. Each Papp Fund is authorized to issue
shares of capital stock and to increase or decrease the aggregate
number of shares of capital stock or the number of shares of stock of
any class that the Fund has authority to issue. Each share
63
is entitled to one vote on all questions relating to the Fund, and
each share is entitled to participate equally in dividends and capital
gains distributions and in the residual assets of the respective class
in the event of liquidation.
o Meetings. Under Maryland law, the Papp Funds, as registered open-end
investment companies, are not required to hold annual stockholder
meetings. Unless otherwise required by the Investment Company Act, the
Papp Funds have no intention of holding annual meetings of
stockholders. Pursuant to the by-laws of the Papp Funds, special
meetings of stockholders may be called at any time by the Chairman,
President or by the board of directors or by the Secretary upon the
written request of stockholders entitled to cast at least 25% of the
votes entitled to be cast at such meeting, provided that such request
shall state the purposes of such meeting and the matters proposed to
be acted on.
o Liability of Stockholders. Maryland law provides that stockholders of
a Maryland corporation (such as the Papp Funds) are not generally
subject to liability for the debts or obligations of the corporation.
Characteristics of the Pioneer Funds (each a series of a Delaware statutory
trust)
o Governance and Management. Each Pioneer Fund is a series of Pioneer
Series Trust II, a Delaware statutory trust. The governing instrument
of Pioneer Series Trust II is its Agreement and Declaration of Trust
(the "Declaration of Trust"). The Trustees of Pioneer Series Trust II
are responsible for the management and supervision of each Pioneer
Fund
o Share Capital and Classes. The Declaration of Trust of Pioneer Series
Trust II permits the Trustees to issue an unlimited number of full and
fractional shares of beneficial interest of each Pioneer Fund without
par value. As of the date of this prospectus and proxy statement, the
Trustees have authorized shares of each Pioneer Fund and have
authorized the issuance of five classes of shares of each Pioneer
Fund, designated as Class A, Class B, Class C, Class R and Class Y.
The shares of each class of the Pioneer Fund represent an equal
proportionate interest in the aggregate net assets attributable to
that class of the Pioneer Fund. Holders of each class of shares have
certain exclusive voting rights on matters relating to their
respective distribution plans. The different classes of each Pioneer
Fund may bear different expenses relating to the cost of holding
shareholder meetings necessitated by the exclusive voting rights of
any class of shares. In the event of liquidation, shareholders of each
class are entitled to share pro rata in the net assets of their
Pioneer Fund available for distribution to these shareholders. Shares
of each class entitle their holders to one vote per share, are freely
transferable and have no preemptive, subscription or conversion
rights.
o Meetings. Under Delaware law, Pioneer Series Trust II is not required
to hold annual shareholder meetings for any Pioneer Fund. Unless
otherwise required by the Investment Company Act, the Pioneer Funds
have no intention of holding annual meetings of shareholders. Pursuant
to the Declaration of Trust, shareholders have power to vote only on
certain matters, including (a) the election and removal of trustees;
(b) approval of any investment management agreement; (c) termination
of Pioneer Series Trust II; (d) certain amendments to the Declaration
of Trust; and (e) such additional matters relating to the Trust as may
be required by law or as the Trustees may consider desirable.
o Liability of Shareholders. Delaware law affords shareholders of a
Delaware statutory trust the same protections afforded stockholders of
a Delaware corporation, which means shareholders are not generally
subject to liability for the debts or obligations of the statutory
trust unless the entity's declaration of trust provides otherwise. The
Declaration of Trust of Pioneer Series Trust II contains an express
disclaimer of shareholder liability for acts, obligations or affairs
of each Pioneer Fund and provides for indemnification out of the
Pioneer Fund's assets for all losses and expenses of any shareholder
held personally liable for reason of being or having been a
shareholder.
64
FINANCIAL HIGHLIGHTS
This table shows the financial performance for the past five fiscal years
(or the period during which the Fund has been in operation, if less than five
years) and for the most recent semi-annual period ended June 30, 2003 for each
Papp Fund . Certain information reflects financial results for a single Fund
share. "Total return" shows how much your investment in a Papp Fund would have
increased or decreased during each period, assuming you had reinvested all
dividends and distributions. The information presented for the year ended
December 31, 2002 has been audited by Deloitte & Touche LLP, the Funds'
independent auditors, as stated in their reports incorporated by reference in
this registration statement. The information presented for each of the four
years in the period ended December 31, 2001 were audited by other auditors who
have ceased operations. Their report and the Papp Funds' financial statements
are included in their annual and semi-annual reports, which are available upon
request. The information for the semi-annual period ended June 30, 2003 has not
been audited.
Papp Stock Fund
For the Six
Months Ended Years Ended December 31,
June 30, 2003 ------------------------------------------------------------------------
(unaudited) 2002 2001 2000 1999 1998
------------- ----------- ----------- ----------- ------------ -----------
Per share data:
Net asset value, beginning of period ... $ 23.87 $ 31.40 $ 37.09 $ 42.20 $ 37.36 $ 29.78
Income from investment operations:
Net investment (loss)/income .......... -- (0.06) (0.11) (0.13) (0.15) (0.09)
Net realized and unrealized (loss)/gain
on investments ....................... 2.21 (7.47) (4.58) (2.22) 5.75 8.13
----------- ----------- ----------- ----------- ------------ -----------
Total from investment operations ....... 2.21 (7.53) (4.69) (2.35) 5.60 8.04
Less distributions:
Dividend from net investment income ... -- -- -- -- -- --
Dividend from net realized gain ....... -- -- (1.00) (2.76) (0.76) (0.46)
----------- ----------- ----------- ----------- ------------ -----------
Total distributions .................... -- -- (1.00) (2.76) (0.76) (0.46)
----------- ----------- ----------- ----------- ------------ -----------
Net asset value, end of period ......... $ 26.08 $ 23.87 $ 31.40 $ 37.09 $ 42.20 $ 37.36
----------- ----------- ----------- ----------- ------------ -----------
Total Return ........................... 9.26% (23.98)% (12.69)% (6.02)% 14.99% 26.99%
=========== =========== =========== =========== ============ ===========
Ratios/Supplemental Data:
Net assets, end of period .............. $53,563,232 $52,528,226 $75,215,284 $98,472,509 $105,101,464 $98,608,333
Expenses to average net assets ......... 1.25%* 1.14% 1.11% 1.09% 1.09% 1.10%
Investment income to average net assets 1.23%* 1.10% 0.91% 0.71% 0.71% 0.82%
Portfolio turnover rate ................ 2.98% 3.55% 4.92% 13.33% 6.60% 9.74%
- ----------
* Annualized
65
Papp America-Abroad Fund
For the Six
Months Ended Years Ended December 31,
June 30, 2003 --------------------------------------------------------------------------
(unaudited) 2002 2001 2000 1999 1998
----------- ----------- ----------- ------------ ------------ ------------
Per share data:
Net asset value, beginning of period ... $ 16.78 $ 22.38 $ 27.75 $ 35.25 $ 32.13 $ 25.98
Income from investment operations:
Net investment (loss)/income .......... -- (0.19) (0.18) (0.22) (0.23) (0.05)
Net realized and unrealized (loss)/gain
on investments ....................... 1.19 (5.41) (4.19) (2.19) 4.74 6.24
----------- ----------- ----------- ------------ ------------ ------------
Total from investment operations ....... 1.19 (5.60) (4.37) (2.41) 4.51 6.19
Less distributions:
Dividend from net investment income ... -- -- -- -- -- --
Dividend from net realized gain ....... -- -- (1.00) (5.09) (1.39) (0.04)
----------- ----------- ----------- ------------ ------------ ------------
Total distributions .................... -- -- (1.00) (5.09) (1.39) (0.04)
----------- ----------- ----------- ------------ ------------ ------------
Net asset value, end of period ......... $ 17.97 $ 16.78 $ 22.38 $ 27.75 $ 35.25 $ 32.13
----------- ----------- ----------- ------------ ------------ ------------
Total Return ........................... 7.09% (25.02)% (15.92)% (8.62)% 14.01% 23.83%
=========== =========== =========== ============ ============ ============
Ratios/Supplemental Data:
Net assets, end of period .............. $57,386,736 $57,731,971 $99,314,845 $168,616,225 $242,610,345 $342,814,636
Expenses to average net assets(a) ...... 1.25%* 1.18% 1.11% 1.08% 1.07% 1.08%
Investment income to average net assets 1.19%* 0.98% 0.84% 0.57% 0.61% 0.82%
Portfolio turnover rate ................ 1.17% 10.07% 3.76% 10.78% 5.47% 24.97%
- ----------
* Annualized
(a) If the Fund paid all of its expenses and there had been no reimbursement by
Papp, this ratio would have been 1.26% for the period ended June 30, 2003.
Papp America-Pacific Rim Fund
For the Six
Months Ended Years Ended December 31,
June 30, 2003 -----------------------------------------------------------------------
(unaudited) 2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- ----------- -----------
Per share data:
Net asset value, beginning of period ..... $ 12.38 $ 15.51 $ 18.07 $ 19.44 $ 15.57 $ 12.10
Income from investment operations:
Net investment (loss)/income ............ -- (0.08) (0.08) (0.09) (0.12) (0.06)
Net realized and unrealized (loss)/gain
on investments ......................... 1.16 (3.05) (2.44) 0.53 3.99 3.53
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.16 (3.13) (2.52) 0.44 3.87 3.47
Less distributions:
Dividend from net investment income ..... -- -- -- -- -- --
Dividend from net realized gain ......... -- -- (0.04) (1.81) -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ...................... -- -- (0.04) (1.81) -- --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ........... $ 13.54 $ 12.38 $ 15.51 $ 18.07 $ 19.44 $ 15.57
----------- ----------- ----------- ----------- ----------- -----------
Total Return ............................. 9.37% (20.18)% (13.94)% 0.90% 24.86% 28.68%
=========== =========== =========== =========== =========== ===========
Ratios/Supplemental Data:
Net assets, end of period ................ $10,191,195 $11,108,056 $14,651,014 $17,636,602 $16,478,700 $14,705,830
Expenses to average net assets(a) ........ 1.25%* 1.25% 1.25% 1.25% 1.25% 1.25%
Investment income to average net assets(b) 1.05%* 0.88% 0.77% 0.63% 0.58% 0.79%
Portfolio turnover rate .................. 2.28% 7.57% 7.25% 28.33% 17.52% 13.73%
- ----------
* Annualized
(a) If the Fund had paid all of its expenses and there had been no
reimbursement by Papp, this ratio would have been 1.66%, 1.52%, 1.40%,
1.32%, 1.39% and 1.41%, for the period ended June 30, 2003 and for the
years ended December 31, 2002, 2001, 2000, 1999 and 1998, respectively.
(b) Computed giving effect to Papp's expense limitation undertaking.
66
Papp Small-Mid Fund
For the Six
Months Ended Years Ended December 31,
June 30, 2003 -------------------------------------------------------------------
(unaudited) 2002 2001 2000 1999 1998(a)
----------- ----------- ---------- ---------- ---------- ----------
Per share data:
Net asset value, beginning of period ..... $ 19.02 $ 23.28 $ 23.02 $ 18.31 $ 16.20 $ 15.00
Income from investment operations:
Net investment (loss)/income ............ -- (0.01) (0.12) (0.14) (0.14) --
Net realized and unrealized (loss)/gain
on investments ......................... 2.46 (4.25) 0.38 5.89 2.25 1.20
----------- ----------- ---------- ---------- ---------- ----------
Total from investment operations ......... 2.46 (4.26) 0.26 5.75 2.11 1.20
Less distributions:
Dividend from net investment income ..... -- -- -- -- -- --
Dividend from net realized gain ......... -- -- -- (1.04) -- --
----------- ----------- ---------- ---------- ---------- ----------
Total distributions ...................... -- -- -- (1.04) -- --
----------- ----------- ---------- ---------- ---------- ----------
Net asset value, end of period ........... $ 21.48 $ 19.02 $ 23.28 $ 23.02 $ 18.31 $ 16.20
----------- ----------- ---------- ---------- ---------- ----------
Total Return ............................. 12.93% (18.30)% 1.13% 31.32% 13.04% 8.00%
=========== =========== ========== ========== ========== ==========
Ratios/Supplemental Data:
Net assets, end of period ................ $20,188,361 $15,659,223 $9,764,322 $6,762,147 $4,325,499 $1,566,225
Expenses to average net assets(b) ........ 1.25%* 1.25% 1.25% 1.25% 1.25% 1.25%*
Investment income to average net assets(c) 0.42%* 0.37% 0.39% 0.36% 0.32% 1.01%*
Portfolio turnover rate .................. 0.94% 5.49% 10.57% 40.42% 53.07% 0.00%*
- ----------
* Annualized
(a) From December 15, 1998 (date of commencement of operations) through
December 31, 1998
(b) If the Fund had paid all of its expenses and there had been no
reimbursement by Papp, this ratio would have been 1.45%, 1.56%, 1.69%,
1.89%, 1.68% and 1.56% for the years ended December 31, 2002, 2001, 2000,
1999 and 1998, respectively.
(c) Computed giving effect to Papp's expense limitation undertaking.
67
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 directors, officers and
employees of your Fund; by personnel of your Fund's investment adviser, Papp,
by the Pioneer Funds' investment adviser, Pioneer, their transfer agent, PIMSS,
or by broker-dealer firms. Pioneer and its affiliates, together with a third
party solicitation firm, has agreed to provide proxy solicitation services to
the Papp Funds at a cost of approximately $20,000. Pioneer will bear the cost
of such solicitation.
Your Funds 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 stockholders' identities,
to allow stockholders to authorize the voting of their shares in accordance
with their instructions and to confirm that their instructions have been
properly recorded. If these procedures were subject to a successful legal
challenge, such votes would not be counted at the Meeting. Your Funds are
unaware of any such challenge at this time. In the case of telephone voting,
stockholders would be called at the phone number the Funds have in their
records for their accounts and would be asked for their Social Security number
or other identifying information. The stockholders 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, stockholders would be required to provide their identifying
information and will receive a confirmation of their instructions.
Revoking Proxies
A Papp Fund stockholder signing and returning a proxy has the power to
revoke it at any time before it is exercised:
o By filing a written notice of revocation with your Fund's transfer
agent, Papp, at 6225 North 24th Street, Suite 150, Phoenix, Arizona
85016, or
o By returning a duly executed proxy with a later date before the time
of the Meeting, or
o If a stockholder has executed a proxy but is present at the Meeting
and wishes to vote in person, by notifying the secretary of your Fund
(without complying with any formalities) at any time before it is
voted.
Being present at the Meeting alone does not revoke a previously executed
and returned proxy.
Outstanding Shares and Quorum
As of January 5, 2004, 2,029,591,610 shares of beneficial interest of Papp
Stock Fund were outstanding, 2,964,537,176 shares of beneficial interest of
Papp America-Abroad Fund were outstanding, 1,057,507,149 shares of beneficial
interest of Papp America-Pacific Rim Fund were outstanding, and 768,628,437
shares of beneficial interest of Papp Small-Mid Fund were outstanding. Only
stockholders of record on January 5, 2004 (the "record date") are entitled to
notice of and to vote at the Meeting. The presence in person or by proxy by the
majority of stockholders of your Fund entitled to cast votes at the Meeting
will constitute a quorum.
Other Business
Your Fund's board of directors knows of no business to be presented for
consideration at the Meeting other than the four reorganization proposals. 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
If, by the time scheduled for the Meeting, a quorum of stockholders is not
present or if a quorum is present but sufficient votes "for" the proposal have
not been received, the persons named as proxies may propose one or more
adjournments of the Meeting with respect to one or more of the Papp Funds to
another date and time, and the Meeting may be held as adjourned within a
reasonable time after the date set for the original Meeting without further
notice. Any such adjournment will require the affirmative vote of a majority of
the votes cast on the question in person or by proxy at the session of the
Meeting to be adjourned. The persons named as proxies will vote all proxies in
favor of the adjournment that voted in favor of the proposal or that abstained.
They will vote against such adjournment those proxies required to be voted
against the proposal. Broker non-votes will be disregarded in the vote for
adjournment. If the adjournment requires setting a new record date or the
adjournment is for more than 120 days of the original Meeting (in which case
the board of directors of your Fund will set a new record date), your Fund will
give notice of the adjourned meeting to its stockholders.
68
Stockholders' Proposals
Your Fund is not required, and does not intend, to hold meetings of
stockholders each year. Instead, meetings will be held only when and if
required. Any stockholders desiring to present a proposal for consideration at
the next meeting for stockholders must submit the proposal in writing, so that
it is received by your Fund at 6225 North 24th Street, Suite 150, Phoenix,
Arizona 85016 within a reasonable time before any meeting. If the
reorganization is completed, your Fund will not hold another stockholder
meeting.
Appraisal Rights
If the reorganizations are approved at the Meeting, stockholders of your
Funds will not have the right to dissent and obtain payment of the fair value
of their shares because the exercise of appraisal rights is subject to the
forward pricing requirements of Rule 22c-1 under the Investment Company Act,
which supersede state law. Stockholders of your Funds, however, have the right
to redeem their Fund shares at net asset value until the closing date of the
reorganizations. After the reorganizations, stockholders of your Funds will
hold shares of the Pioneer Funds which may also be redeemed at net asset value
subject to deferred sales charges (if any).
69
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of your Fund, as of December 31, 2003, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
each of the Papp Funds. No shares of the Pioneer Funds were outstanding as of
that date.
Papp Stock Fund
- --------------------------------------------------------------------------------
Name and Address % Ownership* Type of Ownership
- --------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
101 Montgomery Street
San Francisco, CA 94104 31.17% Record
- --------------------------------------------------------------------------------
Papp America-Abroad Fund
- --------------------------------------------------------------------------------
Name and Address % Ownership* Type of Ownership
- --------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
101 Montgomery Street
San Francisco, CA 94104 46.34% Record
- --------------------------------------------------------------------------------
National Financial Services
1 World Financial Center
200 Liberty Street
New York, NY 102181 10.72% Record
- --------------------------------------------------------------------------------
Papp America-Pacific Rim Fund
- --------------------------------------------------------------------------------
Name and Address % Ownership* Type of Ownership
- --------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
101 Montgomery Street
San Francisco, CA 94104 32.86% Record
- --------------------------------------------------------------------------------
L. Roy Papp
6225 N. 24th Street, Suite 150
Phoenix, AZ 85016 5.00% Record
- --------------------------------------------------------------------------------
Papp Small-Mid Fund
- --------------------------------------------------------------------------------
Name and Address % Ownership* Type of Ownership
- --------------------------------------------------------------------------------
Charles Schwab & Co. Inc.
101 Montgomery Street
San Francisco, CA 94104 44.39% Record
- --------------------------------------------------------------------------------
National Financial Services
1 World Financial Center
200 Liberty Street
New York, NY 102181 21.21% Record
- --------------------------------------------------------------------------------
* Percentage ownership also represents pro-forma percentage ownership of the
corresponding Pioneer Fund.
As of December 31, 2003, the directors and officers of your Fund, as a
group, owned in the aggregate approximately 2.40% of the 2,030,630 shares of
the Papp Stock Fund outstanding on such date, approximately 1.27% of the
2,972,534 shares of the Papp America-Abroad Fund outstanding on such date,
approximately 9.53% of the 1,221,868 shares of the Papp America-Pacific Rim
Fund outstanding on such date, and approximately 5.75% of the 1,059,854 shares
of the Papp Small-Mid Fund outstanding on such date. The trustees and officers
of the Pioneer Funds, as a group, owned in the aggregate less than 1% of the
outstanding shares of each Pioneer Fund.
70
EXPERTS
The financial statements and the financial highlights of each Papp Fund
for the fiscal year ended December 31, 2002 are incorporated by reference into
this proxy statement and prospectus. The financial statements and financial
highlights for each Papp Fund as of and for the year ended December 31, 2002
have been independently audited by Deloitte & Touche LLP as stated in their
reports appearing in the statement of additional information, which is
available upon request. These financial statements and financial highlights
have been included in reliance on their reports given on their authority as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Papp Funds and the Pioneer Funds are subject to the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company
Act and file reports, proxy statements and other information with the
Securities and Exchange Commission. These reports, proxy statements and other
information filed by the Funds can be inspected and copied (for a duplication
fee) at the public reference facilities of the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, D.C. Copies of these
materials can also be obtained by mail from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, copies of these documents may be
viewed on-screen or downloaded from the SEC's Internet site at
http://www.sec.gov.
71
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this __ day
of January, 2004, by and between Pioneer Series Trust II, a Delaware statutory
trust (the "Acquiring Trust"), on behalf of its series [Insert name of
appropriate Pioneer Fund] (the "Acquiring Fund"), with its principal place of
business at 60 State Street, Boston, Massachusetts 02109, and [Insert name of
PAPP fund], a Maryland corporation (the "Acquired Fund"), with its executive
offices at 6225 North 24th Street, Suite 150 Phoenix, Arizona 85016. The
Acquiring Fund and the Acquired Fund are sometimes referred to collectively
herein as the "Funds" and individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of "reorganization" as
such term is used in Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "Code"). The reorganization (the "Reorganization") will
consist of (1) the transfer of all of the assets of the Acquired Fund to the
Acquiring Fund in exchange solely for (A) the issuance of Class A 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 (i) the liabilities of the Acquired Fund
that are included in the calculation of net asset value ("NAV") on the Closing
Date set forth below (the "Closing Date") and (ii) the liabilities of the
Acquired Fund on the Closing Date with respect to its investment operations (but
not administrative or other non-investment affairs) that are both (a) not
required by generally accepted accounting principles ("GAAP") to be included in
the calculation of NAV and (b) are consistent with liabilities incurred by
registered management investment companies in the ordinary course of their
investment operations (i.e., not including any extraordinary obligations,
including, but not limited to legal proceedings, stockholder claims and
distribution payments) (collectively, the "Assumed Liabilities"), and (2) the
distribution by the Acquired Fund, on the Closing Date or as soon thereafter as
practicable, of the Acquiring Fund Shares to the stockholders of the Acquired
Fund in liquidation and termination of the Acquired Fund, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, Acquiring Fund and the Acquired Fund are each registered investment
companies classified as management companies of the open-end type, and the
Acquired Fund owns securities that are generally assets of the character in
which the Acquiring Fund is permitted to invest.
WHEREAS, the Acquiring Trust is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Directors of the Acquired Fund has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares,
and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquired Fund stockholders.
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 DISSOLUTION OF
THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund will transfer
all of its assets as set forth in Paragraph 1.2 (the "Acquired Assets") to the
Acquiring Fund free and clear of all liens and encumbrances (other than those
arising under the Securities Act of 1933, as amended (the "Securities Act"),
liens for taxes not yet due and contractual restrictions on the transfer of the
Acquired Assets) and the Acquiring Fund agrees in exchange therefor: (i) to
issue to the Acquired Fund the number of Acquiring Fund Shares, including
fractional Acquiring Fund Shares, determined in the manner set forth in
Paragraph 2.2; and (ii) to assume the Assumed Liabilities, as set forth in
Paragraph 1.3. Such transactions shall take place at the Closing (as defined in
Paragraph 3.1 below).
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights of the Acquired Fund, all other intangible property owned by the Acquired
Fund, originals or copies of all books and records of the Acquired Fund, and all
other assets of the Acquired Fund on the Closing Date. The Acquiring Fund shall
also be entitled to receive (or to the extent agreed upon between the Acquired
Fund and the Acquiring Fund, be provided access to) copies of all records that
the Acquired Fund is required to maintain under the Investment Company Act of
1940, as amended (the "Investment Company Act") and the rules of the Securities
and Exchange Commission (the "Commission") thereunder to the extent such records
pertain to the Acquired Fund.
(b) The Acquired Fund has provided the Acquiring Fund with a list of all of the
Acquired Fund's securities and other assets as of the date of execution of this
Agreement, and the Acquiring Fund has provided the Acquired Fund with a copy of
the current fundamental investment policies and restrictions and fair value
procedures applicable to the Acquiring Fund. The Acquired Fund reserves the
right to sell any of such securities or other assets before the Closing Date
(except to the extent sales may be limited by representations of the Acquired
Fund contained herein and made in connection with the issuance of the tax
opinion provided for in Paragraph 8.5 hereof), but will not, without the prior
approval of the Acquiring Fund, acquire any additional securities of the type in
which the Acquiring Fund is not permitted to invest in accordance with its
fundamental investment policies and restrictions. The Acquired Fund will notify
the Acquiring Fund on the fifth day prior to the Closing Date if the Acquired
Fund has purchased since the date of this Agreement any securities that are
valued at "fair value" under the valuation procedures of the Acquired Fund and
will promptly notify the Acquiring Fund if between said fifth day prior to the
Closing Date and the Closing Date if the Acquired Fund purchases any securities
that are valued at "fair value".
1.3 The Acquired Fund will use commercially reasonable efforts to discharge all
the Acquired Fund's known liabilities and obligations that are or will become
due prior to the Closing. The Acquiring Fund shall assume all of the Assumed
Liabilities at Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Acquired Fund shall liquidate and distribute pro rata
to its stockholders of record (the "Acquired Fund Stockholders"), determined as
of the close of regular trading on the New York Stock Exchange on the Closing
Date, the Acquiring Fund Shares received by the Acquired Fund pursuant to
Paragraph 1.1 hereof. Such liquidation and distribution will be accomplished by
the Acquired Fund transferring 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 Stockholders
and representing the respective pro rata number of the Acquiring Fund Shares due
such Acquired Fund Stockholders. The Acquired Fund shall promptly provide the
Acquiring Fund with evidence of such liquidation and distribution. All issued
and outstanding shares of the Acquired Fund will simultaneously be cancelled on
the books of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent for its Class A shares. The Acquired Fund
Stockholders holding certificates representing their ownership of common shares
of the Acquired Fund shall surrender such certificates or deliver an affidavit
with respect to lost certificates in such form and accompanied by such surety
bonds as the Acquired Fund may reasonably require (collectively, an
"Affidavit"), to Pioneer Investment Management Stockholder Services, Inc. prior
to the Closing Date. Any Acquired Fund share certificate which remains
outstanding on the Closing Date shall be deemed to be cancelled, shall no longer
evidence ownership of stock of the Acquired Fund, but shall evidence ownership
of Acquiring Fund Shares as determined in accordance with Paragraph 1.1. Unless
and until any such certificate shall be so surrendered or an Affidavit relating
thereto shall be delivered by an Acquired Fund Stockholder, dividends and other
distributions payable by the Acquiring Fund subsequent to the Liquidation Date
with respect to Acquiring Fund Shares shall be paid to such Acquired Fund
Stockholder, but such Acquired Fund Stockholder may not redeem or transfer
Acquiring Fund Shares received in the Reorganization. The Acquiring Fund will
not issue share certificates in the Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a name
other than the registered holder of the Acquired Fund Shares on the books of the
Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.7 The Acquired Fund shall effect, following the Closing Date, the transfer of
the Acquired Assets by the Acquired Fund to the Acquiring Fund, the assumption
of the Assumed Liabilities by the Acquiring Fund, and the distribution of the
Acquiring Fund Shares by the Acquired Fund to the Acquired Fund Stockholders
pursuant to Paragraph 1.4, and, as soon as reasonably possible thereafter, the
Acquired Fund shall be dissolved under the laws of the State of Maryland and in
accordance with the Acquired Fund's Charter and By-Laws.
1.8 Any reporting responsibility of the Acquired Fund for taxable periods ending
on or before the dissolution of the Acquired Fund, including, but not limited
to, the responsibility for filing of regulatory reports, Tax Returns (as defined
in Paragraph 4.1), or other documents with the Commission, any state securities
commissions, and any federal, state or local tax authorities or any other
relevant regulatory authority, is and shall remain the responsibility of the
Acquired Fund.
2. VALUATION
2.1 The NAV of the Acquiring Fund Shares and the NAV of the Acquired Assets
shall, in each case, be determined as of the close of business (4:00 p.m.,
Boston time) on the Closing Date (the "Valuation Time"). The NAV of each
Acquiring Fund Share shall be computed by Pioneer Investment Management, Inc.
(the "Acquiring Fund Adviser") in the manner set forth in the
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Acquiring Fund's Declaration of Trust (the "Declaration"), or By-Laws, and the
Acquiring Fund's then-current prospectus and statement of additional
information; provided, however, if the Acquiring Fund has no assets as of the
Closing Date (other than a nominal amount of assets represented by shares issued
to the Acquiring Fund Adviser, or its affiliate, as the initial stockholder of
the Acquiring Fund), the NAV of each Acquiring Fund Share shall be the same as
the NAV of each share of common stock of the Acquired Fund. The NAV of the
Acquired Assets shall be computed by Compass Bank (the "Acquired Fund
Custodian") by calculating the value of the Acquired Assets and by subtracting
therefrom the amount of the liabilities of the Acquired Fund on the Closing Date
included on the face of the Statement of Assets and Liabilities of the Acquired
Fund delivered pursuant to Section 5.7 (the "Statement of Assets and
Liabilities"), said assets and liabilities to be valued in the manner set forth
in the Acquired Fund's then current prospectus and statement of additional
information. The Acquiring Fund Adviser shall confirm the NAV of the Acquired
Assets.
2.2 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Assets and the assumption of the
Assumed Liabilities shall be determined by the Acquiring Fund Adviser by
dividing the NAV of the Acquired Assets, as determined in accordance with
Paragraph 2.1, by the NAV of each Acquiring Fund Share, as determined in
accordance with Paragraph 2.1.
2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring Fund
Adviser and the Acquired Fund, respectively, to deliver a copy of its valuation
report, reviewed by its independent accountants, to the other party at Closing.
All computations of value shall be made by the Acquiring Fund Adviser and the
Acquired Fund Custodian in accordance with its regular practice as custodian and
pricing agent for the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be February 20, 2004 or such later date as the
parties may agree to in writing. All acts taking place at 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"). The Closing shall be
held at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, or at such other place as the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name of the
Acquired Fund Custodian as record holder for the Acquired Fund shall be
presented by the Acquired Fund to Brown Brothers Harriman & Co. (the "Acquiring
Fund Custodian") for examination no later than three business days preceding the
Closing Date. Portfolio securities which are not held in book-entry form shall
be delivered by the Acquired Fund to the Acquiring Fund Custodian for the
account of the Acquiring Fund on the Closing Date, duly endorsed in proper form
for transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate purchase
price thereof. Portfolio securities held of record by the Acquired Fund
Custodian in book-entry form on behalf of the Acquired Fund shall be delivered
to the Acquiring Fund by the Acquired Fund Custodian by recording the transfer
of beneficial ownership thereof on the Acquired Fund Custodian's records.
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
shall have been made in conjunction with the delivery of portfolio securities as
part of the Acquired Assets. Any cash delivered shall be in the form of currency
or by the Acquired Fund Custodian crediting the Acquiring Fund's account
maintained with the Acquiring Fund Custodian with immediately available funds by
wire transfer pursuant to instruction delivered prior to Closing.
3.4 In the event that on the Closing Date (a) the New York Stock Exchange is
closed to trading or trading thereon shall be restricted, or (b) trading or the
reporting of trading on such exchange or elsewhere is disrupted so that accurate
appraisal of the NAV of the Acquiring Fund Shares or the Acquired Assets
pursuant to Paragraph 2.1 is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.5 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status and certificates of the Acquired Fund
Stockholders and the number and percentage ownership of outstanding shares of
beneficial interest of the Acquired Fund owned by each such Acquired Fund
Stockholder as of the Valuation Time, certified by the President or a Secretary
of the Acquired Fund and its Treasurer, Secretary or other authorized officer
(the "Stockholder List") as being an accurate record of the information (a)
provided by the Acquired Fund Stockholders, (b) provided by the Acquired Fund
Custodian, or (c) derived from the Acquired Fund's records by such officers or
one of the Acquired Fund'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
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Acquiring Fund. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on Schedule 4.1 hereto, the Acquired Fund represents,
warrants and covenants to the Acquiring Fund, which representations, warranties
and covenants will be true and correct on the date hereof and on the Closing
Date as though made on and as of the Closing Date, as follows:
(a) The Acquired Fund is a corporation validly existing and in good standing
under the laws of the State of Maryland and has the power to own all of
its properties and assets and, subject to approval by the Acquired Fund
Stockholders, 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 Fund 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. The Acquired Fund is a diversified investment
company under the Investment Company Act;
(c) The Acquired Fund is not in violation of, and the execution, delivery and
performance of its obligations under this Agreement in respect of the
Acquired Fund will not result in a violation of, any provision of its
Charter or By-Laws or any material agreement, indenture, instrument,
contract, lease or other undertaking with respect to the Acquired Fund to
which the Acquired Fund is a party or by which the Acquired Fund or its
assets are bound;
(d) No litigation or administrative proceeding or investigation of or before
any court or governmental body is currently pending or to its knowledge
threatened against the Acquired Fund or any of the Acquired Fund's
properties or assets. The Acquired Fund knows of no facts which might form
a reasonable basis for the institution of such proceedings. The Acquired
Fund is not 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 herein contemplated. Schedule 4.1 lists any order, decree or
judgment of any court or governmental body which will be binding upon the
Acquiring Fund as the successor to the Acquired Fund and which can be
reasonably expected to have an adverse effect on the Acquired Fund;
(e) The Acquired Fund has no material contracts or other commitments (other
than this Agreement or agreements for the purchase and sale of securities
entered into in the ordinary course of business and consistent with its
obligations under this Agreement) which will not be terminated at or prior
to the Closing Date and no such termination will result in liability to
the Acquired Fund (or the Acquiring Fund);
(f) The statement of assets and liabilities of the Acquired Fund, and the
related statements of income and changes in net asset value as of and for
the period ended December 31, 2002 has been audited by Deloitte & Touche
LLP, independent certified public accountants, and are in accordance with
GAAP consistently applied and fairly reflect, in all material respects,
the financial condition of the Acquired Fund as of such dates and the
results of its operations for the periods then ended, and all known
liabilities, whether actual or contingent, of the Acquired Fund as of the
respective dates thereof are disclosed therein. The Statement of Assets
and Liabilities of the Acquired Fund to be delivered as of the Closing
Date pursuant to Paragraph 5.7 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-SAR or Form N-CSR to enable the chief executive officer and chief
financial officer or other officers of the Acquired Fund to make the
certifications required by the Sarbanes-Oxley Act, and no deficiency,
weakness, fraud, change, event or other factor exists that is required to
be disclosed in the Acquiring Fund's Form N-CSR after the Closing Date;
(g) Since December 31, 2002, except as specifically disclosed in the Acquired
Fund's prospectus, statement of additional information as in effect on the
date of this Agreement, or in the Acquired Fund's semi-annual report for
the period ended June 30, 2003, 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
change in NAV per share of the Acquired Fund arising out of its normal
investment operations or a change in market values of securities in the
Acquired
4
Fund's portfolio or a change in net assets of the Acquired Fund as a
result of stock issuances or redemptions shall not constitute a material
adverse change;
(h) (A) For each taxable year of its operation since its inception
(including the current taxable year), the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and has elected to be treated as such
and will qualify as such as of the Closing Date and will satisfy the
diversification requirements of Section 851(b)(3) of the Code without
regard to the last sentence of Section 851(d) of the Code. The Acquired
Fund has not taken any action, caused any action to be taken or caused any
action to fail to be taken which action or failure could cause the
Acquired Fund to fail to qualify as a regulated investment company under
the Code;
(B) Within the times and in the manner prescribed by law, the
Acquired Fund has properly filed on a timely basis all Tax Returns that it
was required to file, and all such Tax Returns were complete and accurate
in all respects. The Acquired Fund has not been informed by any
jurisdiction that the jurisdiction believes that the Acquired Fund was
required to file any Tax Return that was not filed; and the Acquired Fund
does not know of any basis upon which a jurisdiction could assert such a
position;
(C) The Acquired Fund has timely paid, in the manner prescribed by
law, all Taxes (as defined below), which were due and payable or which
were claimed to be due;
(D) All Tax Returns filed by the Acquired Fund constitute complete
and accurate reports of the respective Tax liabilities and all attributes
of the Acquired Fund or, in the case of information returns and payee
statements, the amounts required to be reported, and accurately set forth
all items required to be included or reflected in such returns;
(E) Except as set forth on a Disclosure Schedule to this Agreement,
the Acquired Fund has not waived or extended any applicable statute of
limitations relating to the assessment or collection of Taxes;
(F) The Acquired Fund has not been notified that any examinations of
the Tax Returns of the Acquired Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against the
Acquired Fund as a result of any audit by the Internal Revenue Service or
any state, local or foreign taxing authority, and no such deficiency has
been proposed or threatened;
(G) The Acquired Fund has no actual or potential liability for any
Tax obligation of any taxpayer other than itself. Acquired Fund is not and
has never been a member of a group of corporations with which it has filed
(or been required to file) consolidated, combined or unitary Tax Returns.
The Acquired Fund is not a party to any Tax allocation, sharing, or
indemnification agreement;
(H) The unpaid Taxes of the Acquired Fund for tax periods through
the Closing Date do not exceed the accruals and reserves for Taxes
(excluding accruals and reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the Statement
of Assets and Liabilities, other than as described in any notes thereto
(the "Tax Reserves"). All Taxes that the Acquired Fund is or was required
by law to withhold or collect have been duly withheld or collected and, to
the extent required, have been timely paid to the proper governmental
agency;
(I) The Acquired Fund has delivered to the Acquiring Fund or made
available to the Acquiring Fund complete and accurate copies of all Tax
Returns of the Acquired Fund, together with all related examination
reports and statements of deficiency for all periods not closed under the
applicable statutes of limitations and complete and correct copies of all
private letter rulings, revenue agent reports, information document
requests, notices of proposed deficiencies, deficiency notices, protests,
petitions, closing agreements, settlement agreements, pending ruling
requests and any similar documents submitted by, received by or agreed to
by or on behalf of the Acquired Fund. The Acquired Fund has disclosed on
its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code;
(J) The Acquired Fund has not undergone, has not agreed to undergo,
and is not required to undergo (nor will it be required as a result of the
transactions contemplated in this Agreement to undergo) a change in its
method of accounting resulting in an adjustment to its taxable income
pursuant to Section 481 of the Code. The Acquired Fund will not be
required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) change in method of
accounting for a taxable period ending on or prior to the Closing Date
under Section 481(c) of the Code (or any corresponding or similar
provision of state, local or foreign income Tax law); (ii) "closing
agreement" as described in Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign income Tax law) executed
on or prior to the Closing Date; (iii) installment sale or open
transaction disposition made on or prior to the Closing Date; or (iv)
prepaid amount received on or prior to the Closing Date;
5
(K) The Acquired Fund has not taken or agreed to take any action
that would prevent the Reorganization from constituting a reorganization
qualifying under Section 368(a)(1)(F) of the Code. The Acquired Fund is
not aware of any agreement, plan or other circumstance that would prevent
the Reorganization from qualifying as a reorganization under Section
368(a)(1)(F) of the Code;
(L) There are (and as of immediately following the Closing there
will be) no liens on the assets of the Acquired Fund relating to or
attributable to Taxes, except for Taxes not yet due and payable;
(M) The Tax bases of the assets of the Acquired Fund are accurately
reflected on the Acquired Fund's Tax books and records;
(N) The Acquired Fund has not incurred (or been allocated) an
"overall foreign loss" as defined in Section 904(f)(2) of the Code which
has not been previously recaptured in full as provided in Sections
904(f)(2) and/or 904(f)(3) of the Code;
(O) The Acquired Fund is not a party to a gain recognition agreement
under Section 367 of the Code;
(P) The Acquired Fund does not own any interest in an entity that is
characterized as a partnership for income tax purposes;
(Q) The Acquired Fund's Tax attributes are not limited, and will not
be limited as a result of the Reorganization, under the Code (including
but not limited to any capital loss carry forward limitations under
Sections 382 or 383 of the Code and the Treasury Regulations thereunder)
or comparable provisions of state law; and
(R) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other similar assessments or liabilities,
including without limitation income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment, insurance, social
security, business license, business organization, environmental, workers
compensation, payroll, profits, license, lease, service, service use,
severance, stamp, occupation, windfall profits, customs, duties, franchise
and other taxes imposed by the United States of America or any state,
local or foreign government, or any agency thereof, or other political
subdivision of the United States or any such government, and any interest,
fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or
dispute thereof; and "Tax Returns" shall mean all reports, returns,
declarations, statements or other information required to be supplied to a
governmental or regulatory authority or agency, or to any other person, in
connection with Taxes and any associated schedules or work papers produced
in connection with such items.
(i) The authorized capital of the Acquired Fund consists of ______ shares of
common stock, $0.01 par value per share. All issued and outstanding shares
of common stock of the Acquired Fund are, and at the Closing Date will be,
duly and validly issued and outstanding, fully paid and nonassessable by
the Acquired Fund. All of the issued and outstanding shares of common
stock of the Acquired Fund will, at the time of Closing, be held of record
by the persons and in the amounts set forth in the Stockholder List
submitted to the Acquiring Fund pursuant to Paragraph 3.5 hereof. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares of common stock, nor
is there outstanding any security convertible into any of its shares of
common stock of the Acquired Fund;
(j) At the Closing Date, the Acquired Fund will have good and marketable title
to the Acquired Assets, and full right, power and authority to sell,
assign, transfer and deliver the Acquired Assets to the Acquiring Fund,
and, upon delivery and payment for the Acquired Assets, the Acquiring Fund
will acquire good and marketable title thereto, subject to no restrictions
on the full transfer thereof, except such restrictions as might arise
under the Securities Act;
(k) The Acquired Fund has the power and authority to enter into and perform
its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action on the part of the Acquired Fund's Board of Directors, and, subject
to the approval of the Acquired Fund Stockholders, assuming due
authorization, execution and delivery by the Acquiring Fund, this
Agreement will constitute a valid and binding obligation of the Acquired
Fund, enforceable in accordance with its terms, subject as to enforcement,
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(l) The information to be furnished by the Acquired Fund to the Acquiring Fund
for use in applications for orders, registration statements, proxy
materials and other documents which may be necessary in connection with
the transactions contemplated hereby and any information necessary to
compute the total return of the Acquired Fund shall be accurate and
complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations thereunder
applicable thereto;
6
(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 by the Acquired Fund to the Acquiring Trust for
inclusion in the Registration Statement, on the effective date of that
Registration Statement and on the Closing Date, will conform in all
material respects to the applicable requirements of the Securities Act,
the Securities Exchange Act of 1934 as amended (the "Exchange Act"), and
the Investment Company Act and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(n) Upon the effectiveness of the Registration Statement, no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by the Acquired Fund of the transactions
contemplated by this Agreement;
(o) To the Acquired Fund's knowledge, all of the issued and outstanding shares
of common stock of the Acquired Fund have been offered for sale and sold
in conformity with all applicable federal and state securities laws,
except as may have been previously disclosed in writing to the Acquiring
Fund;
(p) The prospectus and statement of additional information of the Acquired
Fund, each dated May 1, 2003 (collectively, the "Acquired Fund
Prospectus"), and any amendments or supplements thereto, furnished to the
Acquiring Fund, did not as of their dates or the dates of their
distribution to the public contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which such statements were made, not misleading;
(q) The Acquired Fund currently complies in all material respects with and
since its organization has complied in all material respects with the
requirements of, and the rules and regulations under, the Investment
Company Act, the Securities Act, the Exchange Act, state "Blue Sky" laws
and all other applicable federal and state laws or regulations. The
Acquired Fund currently complies in all material respects with, and since
its organization has complied in all material respects with, all
investment objectives, policies, guidelines and restrictions and any
compliance procedures established by the Acquired Fund. All advertising
and sales material used by the Acquired Fund complies in all material
respects with and has complied in all material respects with the
applicable requirements of the Securities Act, the Investment Company Act,
the rules and regulations of the Commission, and, to the extent
applicable, the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD") and any applicable state regulatory authority.
All registration statements, prospectuses, reports, proxy materials or
other filings required to be made or filed with the Commission, the NASD
or any state securities authorities by the Acquired Fund have been duly
filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration
statements, prospectuses, reports, proxy materials and other filings under
the Securities Act, the Exchange Act and the Investment Company Act (i)
are or were in compliance in all material respects with the requirements
of all applicable statutes and the rules and regulations thereunder and
(ii) do not or did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which
they were made, not false or misleading;
(r) The Acquired Fund has previously provided to the Acquiring Fund (and at
the Closing will provide an update through the Closing Date of such
information) data which supports a calculation of the Acquired Fund's
total return for all periods since the organization of the Acquired Fund.
Such data has been prepared in accordance in all material respects with
the requirements of the Investment Company Act and the regulation
thereunder and the rules of the NASD;
(s) Neither the Acquired Fund nor, to the knowledge of the Acquired Fund, any
"affiliated person" of the Acquired Fund has been convicted of any felony
or misdemeanor, described in Section 9(a)(1) of the Investment Company
Act, nor, to the knowledge of the Acquired Fund, has any affiliated person
of the Acquired Fund been the subject, or presently is the subject, of any
proceeding or investigation with respect to any disqualification that
would be a basis for denial, suspension or revocation of registration as
an investment adviser under Section 203(e) of the Investment Advisers Act
of 1940, as amended (the "Investment Advisers Act") or Rule 206(4)-4(b)
thereunder or of a broker-dealer under Section 15 of the Exchange Act, or
for disqualification as an investment adviser, employee, officer or
director of an investment company under Section 9 of the Investment
Company Act; and
(t) The Acquired Fund Tax Representation Certificate to be delivered by the
Acquired Fund to the Acquiring Fund and Hale and Dorr LLP at the Closing
pursuant to Paragraph 7.4 (the "Acquired Fund Tax Representation
Certificate") will not on the Closing Date contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein not misleading.
4.2 Except as set forth on Schedule 4.2 hereto, the Acquiring Trust on behalf of
the Acquiring Fund represents, warrants and covenants to the Acquired Fund,
which representations, warranties and covenants will be true and correct on the
date hereof and on the Closing Date as though made on and as of the Closing
Date, as follows:
7
(a) 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 Fund is a duly established and designated series of the
Acquiring Trust and has the power to own all of its properties and assets
and to perform the obligations under this Agreement. The Acquiring Fund is
not required to qualify to do business in any jurisdiction in which it is
not so qualified or where failure to qualify would subject it to any
material liability or disability. 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. The Acquiring
Fund will have no issued or outstanding shares prior to the Closing Date
other than those issued to Pioneer Investment Management, Inc. (or one of
its affiliates) and will have had no investment operations prior to the
Closing Date;
(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 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 its date and will not as of the
Closing Date contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading;
(d) The Registration Statement, the Proxy Statement and statement of
additional information with respect to the Acquiring Fund, each dated
January 16, 2004, and any amendments or supplements thereto 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) includes any untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(e) The Acquiring Fund is not in violation of, and the execution and delivery
of this Agreement and performance of its obligations under this Agreement
will not result in a violation of, any provisions of the Declaration of
Trust or by-laws of the Acquiring Fund or any material agreement,
indenture, instrument, contract, lease or other undertaking with respect
to which the Acquiring Fund is a party or by which the Acquiring Fund or
any of its assets is bound;
(f) No litigation or administrative proceeding or investigation of or before
any court or governmental body is currently pending or threatened against
the Acquiring Fund or any of the Acquiring Fund's properties or assets.
The Acquiring Fund knows of no facts which might form a reasonable basis
for the institution of such proceedings. The Acquiring Fund is not 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 intends to elect to qualify as a regulated investment
company under Section 851 of the Code and will meet on the Closing Date
the requirements of subchapter M of the Code for qualification and
treatment as a regulated investment company. The Acquiring Fund currently
complies in all material respects with and since its organization has
complied in all material respects with the requirements of, and the rules
and regulations under, the Investment Company Act, the Securities Act, the
Exchange Act, state "Blue Sky" laws and all other applicable federal and
state laws or regulations. The Acquiring Fund currently complies in all
material respects with, and since its organization has complied in all
material respects with, all investment objectives, policies, guidelines
and restrictions and any compliance procedures established by the
Acquiring Fund with respect to the Acquiring Fund. All advertising and
sales material used by the Acquired Fund complies in all material respects
with and has complied in all material respects with the applicable
requirements of the Securities Act, the Investment Company Act, the rules
and regulations of the Commission, and, to the extent applicable, the
Conduct Rules of the NASD and any applicable state regulatory authority.
All registration statements, prospectuses, reports, proxy materials or
other filings required to be made or filed with the Commission, the NASD
or any state securities authorities by the Acquiring Fund have been duly
filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration
statements, prospectuses, reports, proxy materials and other filings under
the Securities Act, the Exchange Act and the Investment Company Act (i)
are or were in compliance in all material respects with the requirements
of all applicable statutes and the rules and regulations thereunder and
(ii) do not or did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which
they were made, not false or misleading;
(h) The authorized capital of the Acquiring Fund consists of an unlimited
number of shares of beneficial
8
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 shares of which will be
divided into Class A, B, C, Y and R shares, each having the
characteristics described in the Acquiring Fund prospectuses. The
Acquiring Fund Shares to be issued and delivered to the Acquired Fund for
the account of the Acquired Fund Stockholders pursuant to the terms of
this Agreement, will have been duly authorized on the Closing Date and,
when so issued and delivered, will be duly and validly issued, fully paid
and non-assessable. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any
Acquiring Fund Shares, nor is there outstanding any security convertible
into any of the Acquiring Fund Shares;
(i) The Acquiring Fund has the trust power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Acquiring Fund has been duly
authorized by all necessary action on the part of the Acquiring Fund and
its Board of Trustees and the sole initial shareholder, and, assuming due
authorization, execution and delivery by the Acquired Fund, this Agreement
will constitute a valid and binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(j) The information to be furnished by the Acquiring Fund or the Acquiring
Fund Adviser for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection
with the transactions contemplated hereby shall be accurate and complete
in all material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto or
the requirements of any form for which its use is intended, and shall not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the information provided not misleading;
(k) 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;
(l) The Acquiring Fund has not taken or agreed to take any action that would
prevent the Reorganization from constituting a reorganization qualifying
under Section 368(a)(1)(F) of the Code. The Acquiring Fund is not aware of
any agreement, plan or other circumstance that would prevent the
Reorganization from qualifying as a reorganization under Section
368(a)(1)(F) of the Code.
(m) Neither the Acquiring Fund nor, to the knowledge of the Acquiring Fund,
any "affiliated person" of the Acquiring Fund has been convicted of any
felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Fund, has any
affiliated person of the Acquiring Fund been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or
revocation of registration as an investment adviser under Section 203(e)
of the Investment Advisers Act of 1940 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
(n) The Acquiring Fund Tax Representation Certificate to be delivered by the
Acquiring Fund to the Acquired Fund and Hale and Dorr LLP at Closing
pursuant to Section 6.3 (the "Acquiring Fund Tax Representation
Certificate") will not on the Closing Date contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein not misleading.
5. COVENANTS OF EACH OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquired Fund will operate the Acquired Fund's business in the ordinary
course 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 distributions and any other dividends and distributions
necessary or advisable (except to the extent dividends or 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 Fund will call a special meeting of Acquired Fund Stockholders
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 on Form N-14 relating to the Reorganization. The Acquired
Fund will provide the Acquiring Fund with information reasonably necessary for
the preparation of the Registration Statement in compliance with the Securities
Act, the Exchange Act, and the Investment Company Act.
9
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's shares of common stock.
5.6 Subject to the provisions of this Agreement, each of the Acquired Fund and
the Acquiring Fund will take, or cause to be taken, all actions, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
the transactions contemplated by this Agreement.
5.7 The Acquired Fund shall furnish to the Acquiring Fund on the Closing Date
the Statement of Assets and Liabilities of the Acquired Fund as of the Closing
Date setting forth the NAV of the Acquired Assets as of the Valuation Time,
which statement shall be prepared in accordance with GAAP consistently applied
and certified by the Acquired Fund's Treasurer or Assistant Treasurer. As
promptly as practicable, but in any case within 30 days after the Closing Date,
the Acquired Fund 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, and which statement will be certified by the Treasurer of the
Acquired Fund.
5.8 Neither the Acquired Fund nor the Acquiring Fund shall take any action that
is inconsistent with the representations set forth in, with respect to the
Acquired Fund, the Acquired Fund Tax Representation Certificate, and with
respect to the Acquiring Fund, the Acquiring Fund Tax Representation
Certificate.
5.9 The Acquired Fund shall maintain errors and omissions insurance covering
management to the Acquired Fund prior to and including the Closing Date.
5.10 From and after the date of this Agreement and until the Closing Date, each
of the Funds shall use its commercially reasonable efforts to cause the
Reorganization to qualify, and will not knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken which action or failure to act could prevent the Reorganization from
qualifying as a reorganization under the provisions of Section 368(a) of the
Code. The parties hereby adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the income tax
regulations promulgated under the Code. Unless otherwise required pursuant to a
"determination" within the meaning of Section 1313(a) of the Code, the parties
hereto shall treat and report the transactions contemplated hereby as a
reorganization within the meaning of Section 368(a)(1)(F) of the Code, and shall
not take any position inconsistent with such treatment.
5.11 From and after the date of this Agreement and through the time of the
Closing on the Closing Date, the Acquired Fund shall use its commercially
reasonable efforts to cause the Acquired Fund to qualify, and will not knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken which action or failure to act could prevent the
Acquired Fund from qualifying as a regulated investment company under the
provisions of Subchapter M of the Code.
5.12 From and after the Closing Date, the Acquiring Fund shall use its
commercially reasonable efforts to cause the Acquiring Fund to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken which action or failure to act
could prevent the Acquiring Fund from qualifying as a regulated investment
company under the provisions of Subchapter M of the Code.
5.13 The Acquired Fund shall prepare, or cause to be prepared all Tax Returns of
the Acquired Fund for taxable periods that end before the Closing Date and shall
timely file, or cause to be timely filed, all such Tax Returns. Acquired Fund
shall make any payments of Taxes required to be made 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 Fund shall have delivered to the Acquired Fund a certificate
executed in its name by the Acquiring Trust's President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquired Fund and
10
dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Trust on behalf of the Acquiring Fund contained in
this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement, that
each of the conditions to closing in this Paragraph 6 have been met, and as to
such other matters as the Acquired Fund shall reasonably request;
6.3 The Acquiring Fund shall have delivered to the Acquired Fund and Hale and
Dorr LLP an Acquiring Fund Tax Representation Certificate, satisfactory to the
Acquired Fund and Hale and Dorr LLP, substantially in the form attached to this
Agreement as Annex A, concerning certain tax-related matters with respect to the
Acquiring Fund; and
6.4 The Acquired Fund shall have received at the Closing a favorable opinion of
counsel, who may be an employee or officer of Pioneer Investment Management,
Inc. (based upon or subject to such representations, assumptions and limitations
as such counsel may deem appropriate or necessary), dated as of the Closing
Date, in a form reasonably satisfactory to Acquired Fund.
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 Fund contained in this
Agreement by the Acquired Fund 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 Fund shall have delivered to the Acquiring Fund the Statement
of Assets and Liabilities of the Acquired Fund pursuant to Paragraph 5.7,
together with a list of its portfolio securities showing the federal income tax
bases and holding periods of such securities, as of the Closing Date, certified
by the Acquired Fund's Treasurer or Assistant Treasurer;
7.3 The Acquired Fund, shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in the name of Acquired Fund by its President or
Secretary and a Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to the Acquiring Fund and dated as of the Closing Date,
to the effect that the representations and warranties of the Acquired Fund
contained in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, that each of the conditions to closing in this Section 7 have been
met, and as to such other matters as the Acquiring Fund shall reasonably
request;
7.4 The Acquired Fund shall have delivered to the Acquiring Fund and Hale and
Dorr LLP an Acquired Fund Tax Representation Certificate, satisfactory to the
Acquiring Fund and Hale and Dorr LLP, substantially in the form attached to this
Agreement as Annex B, concerning certain tax-related matters with respect to the
Acquired Fund;
7.5 The Acquiring Fund shall have received at the Closing a favorable opinion of
counsel, dated as of the Closing Date, in a form reasonably satisfactory to
Acquiring Fund; and
7.6 With respect to the Acquired Fund, the Board of Directors of the Acquired
Fund shall have determined that the Reorganization is in the best interests of
the Acquired Fund and that the interests of the existing the Acquired Fund
Stockholders would not be diluted as a result of the Reorganization.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to either party hereto, the other party to this Agreement
shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Acquired Fund Stockholders in accordance
with the provisions of the Acquired Fund's Charter and By-Laws, and certified
copies of the resolutions evidencing such approval by the Acquired Fund's
stockholders 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;
11
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 Each of the Acquiring Trust's Registration Statement on Form N-14 and the
Registration Statement on Form N-1A (and reflecting the Acquiring Fund as the
accounting successor of the Acquired Fund and including the performance of the
Acquired Fund's sole existing class of stock as the historical performance of
the Acquiring Fund's Class A, Class B, Class C, Class R and Class Y shares)
shall have become effective under the Securities Act and no stop orders
suspending the effectiveness of either of such Registration Statements shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the Securities Act;
8.5 The parties shall have received an opinion of Hale and Dorr LLP,
satisfactory to the Acquiring Fund and the Acquiring Fund and subject to
customary assumptions and qualifications, substantially to the effect that for
federal income tax purposes the acquisition by the Acquiring Fund of the
Acquired Assets solely in exchange for the issuance of Acquiring Fund Shares to
the Acquired Fund and the assumption of the Assumed Liabilities by the Acquiring
Fund, followed by the distribution by the Acquired Fund, in liquidation of the
Acquired Fund, of Acquiring Fund Shares to the Acquired Fund Stockholders in
exchange for their shares of beneficial interest of the Acquired Fund and the
termination of the Acquired Fund, will constitute a "reorganization" within the
meaning of Section 368(a) of the Code.
9. BROKERAGE FEES AND EXPENSES
9.1 Each party hereto represents and warrants to the other party hereto that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
9.2 The parties have been informed by Pioneer Investment Management, Inc. that
it will pay certain expenses of the Acquired Fund incurred in connection with
the Reorganization (including, but not limited to, the preparation, printing and
mailing of any and all shareholder notices, communications, proxy statements,
and necessary filings with the SEC or any other governmental authority in
connection with the Reorganization). Except for the foregoing, the Acquiring
Fund and the Acquired Fund shall each bear its own expenses in connection with
the transactions contemplated by this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund each agree that neither party has
made any representation, warranty or covenant not set forth herein or referred
to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes the
entire agreement between the parties.
10.2 The representations, warranties and 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 under Sections 1.1,
1.3, 1.4, 1.7, 9, 10, 13 and 14.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring
Fund and the Acquired Fund. In addition, either party may at its option
terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation, warranty,
covenant or agreement contained herein to be performed at or prior to the
Closing Date;
(b) because of a condition herein expressed to be precedent to the obligations
of the terminating party which has not been met and which reasonably
appears will not or cannot be met;
(c) by resolution of the Acquiring Fund's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquiring
Fund's stockholders;
(d) by resolution of the Acquired Fund's Board of Directors 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 Stockholders;
12
(e) if the transactions contemplated by this Agreement shall not have occurred
on or prior to May 30, 2004 or such other date as the parties may mutually
agree upon in writing; or
(f) if the Subadvisory Agreement by and between Pioneer Investment Management,
Inc., and L. Roy Papp & Associates, LLP, has not been approved in
accordance with Section 15 of the Investment Company Act or has not been
otherwise executed at the Closing Date.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Fund or the Acquired Fund, or the
Directors, Trustees or officers of the Acquiring Trust or the Acquired Fund,
but, subject to Paragraph 9.2, each party shall bear the expenses incurred by it
incidental to the preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Acquired Fund
and the Acquiring Trust; provided, however, that following the meeting of the
Acquired Fund Stockholders called 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 Stockholders under this Agreement to the detriment of the Acquired
Fund Stockholders without their further approval; provided that nothing
contained in this Section 12 shall be construed to prohibit the parties from
amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquired Fund, c/o L. Roy Papp &
Associates, LLP, 6225 North 24th Street, Suite 150, Phoenix, Arizona 85016,
Attention: Julie A. Hein, with copies to Bell, Boyd & Lloyd LLC, 1615 L Street,
N.W. Washington, D. C. 20036, Attention: Stacy H. Winick, Esq., and the
Acquiring Fund c/o Pioneer Investment Management, Inc., 60 State Street, Boston,
Massachusetts 02109, Attention: Dorothy E. Bourassa, Esq., with copies to Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, Attention: David C.
Phelan, 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
laws of the State of Delaware.
14.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by either party
without the prior written consent of the other party hereto. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, or other entity, other than the parties hereto
and their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Acquiring Fund and the
Acquired Trust shall not be binding upon any of their respective Directors,
Trustees, stockholders, nominees, officers, agents or employees personally, but
bind only to the trust property of the Acquiring Fund or the Acquired Fund, as
the case may be, as provided in the trust instruments of the Acquiring Fund and
Articles of Organization of the Acquired Fund, respectively. The execution and
delivery of this Agreement have been authorized by the Trustees of the Acquiring
Trust and the Board of Directors of the Acquired Fund and this Agreement has
been executed by authorized officers of the Acquiring Trust and the Acquired
Fund, acting as such, and neither such authorization by such Trustees or
Directors nor such execution and delivery by such officers shall be deemed to
have been made by any of them individually or to imposed any liability on any of
them personally, but shall bind only the trust property of the Acquiring Fund
and the Acquired Fund, as the case may be, as provided in the trust instruments
of the Acquiring Trust or the Charter of the Acquired Fund, respectively.
14.6 The Acquired Fund shall indemnify and hold harmless the Acquiring Fund and
all its respective affiliates, directors, trustees, officers, employees and
agents (collectively, the "Acquiring Group") from and against any and all
claims, losses, judgments, liabilities, settlements, fines, penalties, interest
costs and expenses (including all reasonable attorneys' fees and disbursements
whether incurred in resolving indemnification issues between or among parties to
this Agreement or in defending third-party claims, and collectively with such
claims, etc., "Losses") that result from, arise out of or are connected with any
breach or alleged
13
breach of any representation, warranty or covenant of the Acquired Fund
contained in this Agreement. Any member of the Acquiring Group with an
indemnification claim for Losses hereunder shall notify the Acquired Fund in
writing of those Losses, together with a reasonably detailed description, within
30 calendar days after having formed a reasonable basis for those Losses,
provided that the failure to so notify shall not affect the right to
indemnification hereunder except to the extent such failure resulted in a
greater Loss.
14.7 The Acquiring Fund shall indemnify and hold harmless the Acquired Fund and
all of the Acquired Fund's respective affiliates, directors, trustees, officers,
employees and agents (collectively, the "Acquired Group") from and against any
and all Losses that result from, arise out of or are connected with any breach
or alleged breach of any representation, warranty or covenant of the Acquiring
Fund contained in this Agreement. Any member of the Acquired Group with an
indemnification claim for Losses hereunder shall notify the Acquiring Fund in
writing of those Losses, together with a reasonably detailed description, within
30 calendar days after having formed a reasonable basis for those Losses,
provided that the failure to so notify shall not affect the right to
indemnification hereunder except to the extent such failure resulted in a
greater Loss.
14
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and attested by its Secretary or Assistant Secretary.
Attest: [INSERT NAME OF APPROPRIATE PAPP FUND]
By:_________________________ By:_________________________________________
Name: Name:
Title: Title:
Attest: PIONEER SERIES TRUST II ON BEHALF OF ITS SERIES,
[INSERT NAME OF APPROPRIATE PIONEER FUND]
By:_________________________ By:_________________________________________
Name: Name:
Title: Title:
Draft of 10/17/03
Annex A
TAX REPRESENTATION CERTIFICATE OF
[INSERT NAME OF APPROPRIATE PIONEER/ACQUIRING FUND]
This certificate is being delivered in connection with the transaction to be
effected pursuant to the Agreement and Plan of Reorganization made as of
________, 2004 between Pioneer Series Trust II, a Delaware statutory trust, on
behalf of its series, [Insert Name of Appropriate Pioneer Fund] ("Acquiring
Fund") and [insert name of Papp Fund] (the "Acquired Fund") (the "Agreement").
Pursuant to the Agreement, Acquiring Fund will acquire all of the assets of
Acquired Fund in exchange solely for (i) the assumption by Acquiring Fund of the
liabilities of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the
issuance of shares of beneficial interest of Acquiring Fund (the "Acquiring Fund
Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in
liquidation of Acquired Fund, of the Acquiring Fund Shares to the stockholders
of Acquired Fund and the termination of Acquired Fund (the foregoing together
constituting the "transaction").
The undersigned officer of Acquiring Fund, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations on behalf of Acquiring Fund, hereby certifies
and represents that the following statements are true, complete and correct and
will be true, complete and correct on the date of the transaction and thereafter
as relevant. Unless otherwise indicated, all capitalized terms used but not
defined herein shall have the meaning ascribed to them in the Agreement.
1. Acquiring Fund is a statutory trust established under the laws of the
State of Delaware, and Acquiring Fund is, and has been at all times, treated as
a separate corporation for federal income tax purposes. Acquiring Fund was newly
organized solely for the purpose of effecting the transaction and continuing
thereafter to operate as a regulated investment company. Prior to the
transaction, Acquiring Fund did not and will not engage in any business
activities. There shall be no issued and outstanding shares of Acquiring Fund
prior to the Closing Date other than those issued to Pioneer Investment
Management, Inc. or one of its affiliates in connection with the creation of
Acquiring Fund.
2. Neither Acquiring Fund nor any person treated as related to Acquiring
Fund under Treasury Regulation Section 1.368-1(e)(3) nor any partnership of
which Acquiring Fund or any such related person is a partner has any plan or
intention to redeem or otherwise acquire any of the Acquiring Fund Shares
received by stockholders of Acquired Fund in the transaction except in the
ordinary course of Acquiring Fund's business in connection with its legal
obligation under Section 22(e) of the Investment Company Act of 1940, as amended
(the "1940 Act"), as a registered open-end investment company to redeem its own
shares.
3. After the transaction, Acquiring Fund will continue the historic
business of Acquired Fund or will use a significant portion of the historic
business assets acquired from Acquired Fund in the ordinary course of a
business.
4. Acquiring Fund has no plan or intention to sell or otherwise dispose of
any assets of Acquired Fund acquired in the transaction, except for dispositions
made in the ordinary course of its business or to maintain its qualification as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended ("the "Code").
5. Any expenses of Acquired Fund incurred in connection with the
transaction which are paid or assumed by Acquiring Fund will be expenses of
Acquired Fund solely and directly related to the transaction in accordance with
Rev. Rul. 73-54, 1973-1 C.B. 187. Acquiring Fund will not pay or assume
expenses, if any, incurred by any Acquired Fund stockholders in connection with
the transaction.
6. There is no, and never has been any, indebtedness between Acquiring
Fund and Acquired Fund.
7. Acquiring Fund will properly elect to be treated as a regulated
investment company under Subchapter M of the Code and will qualify for the
special tax treatment afforded regulated investment companies under Subchapter M
of the Code for all taxable years ending after the date of the transaction.
8. Acquiring Fund meets the requirements of an investment company as
defined in Section 368(a)(2)(F) of the Code.
9. Acquiring Fund is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Fund does not now own and has never owned, directly or
indirectly, any shares of Acquired Fund.
11. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund will be approximately equal to the fair market value of the assets
of Acquired Fund received by Acquiring Fund, minus the Acquired Fund Liabilities
assumed by Acquiring Fund. Acquiring Fund will not furnish any consideration in
connection with the acquisition of Acquired Fund's assets other than the
assumption of such Acquired Fund Liabilities and the issuance of such Acquiring
Fund Shares.
12. Immediately following the transaction, Acquired Fund stockholders will
own all of the outstanding Acquiring Fund Shares and will own such shares solely
by reason of their ownership of the Acquired Fund Shares immediately prior to
the transaction. Acquiring Fund has no plan or intention to issue as part of the
transaction any shares of Acquiring Fund other than the Acquiring Fund Shares
issued in exchange for Acquired Fund assets.
13. The transaction is being undertaken for valid and substantive business
purposes, including facilitating the Acquired Fund becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
14. No Acquired Fund stockholder is acting as agent for Acquiring Fund in
connection with the transaction or approval thereof. Acquiring Fund will not
reimburse any Acquired Fund stockholder for Acquired Fund shares such
stockholder may have purchased or for other obligations such stockholder may
have incurred.
15. Acquiring Fund has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in the Acquiring Fund.
* * * * *
A-2
The undersigned officer of Acquiring Fund is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquiring Fund. The undersigned recognizes that
Hale and Dorr LLP will rely upon the foregoing representations in evaluating the
United States federal income tax consequences of the transaction and rendering
its opinion pursuant to Section 8.5 of the Agreement. If, prior to the date of
the transaction, any of the representations set forth herein ceases to be
accurate, the undersigned agrees to deliver to Hale and Dorr LLP immediately a
written notice to that effect.
PIONEER SERIES TRUST II ON BEHALF OF ITS SERIES,
[INSERT NAME OF APPROPRIATE PIONEER FUND]
By:____________________________________
Name: _____________________________
Title: _____________________________
Dated: ______________, 2004
A-3
Draft of 10/17/03
Annex B
TAX REPRESENTATION CERTIFICATE OF
[INSERT NAME OF APPROPRIATE PAPP FUND]
This certificate is being delivered in connection with the transaction to
be effected pursuant to the Agreement and Plan of Reorganization made as of
____________, 2004 between Pioneer Series Trust II, a Delaware statutory trust,
on behalf of its series, [Insert Name of Appropriate Pioneer Fund] ("Acquiring
Fund") and [insert name of Papp Fund] (the "Acquired Fund") (the "Agreement").
Pursuant to the Agreement, Acquiring Fund will acquire all of the assets of
Acquired Fund in exchange solely for (i) the assumption by Acquiring Fund of the
liabilities of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the
issuance of shares of beneficial interest of Acquiring Fund (the "Acquiring Fund
Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in
liquidation of Acquired Fund, of the Acquiring Fund Shares to the stockholders
of Acquired Fund and the dissolution of Acquired Fund (the foregoing together
constituting the "transaction").
The undersigned officer of Acquired Fund, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations, on behalf of Acquired Fund, hereby certifies
and represents that the following statements are true, complete and correct and
will be true, complete and correct on the date of the transaction and thereafter
as relevant. Unless otherwise indicated, all capitalized terms used but not
defined herein shall have the meaning ascribed to them in the Agreement.
1. Acquired Fund is corporation organized under the laws of the State of
Maryland, and Acquired Fund is, and has been at all times, treated as a separate
corporation for federal income tax purposes.
2. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares received by each stockholder that holds shares of Acquired
Fund (the "Acquired Fund Shares") will be approximately equal to the fair market
value of the Acquired Fund Shares with respect to which such Acquiring Fund
Shares are received, and the aggregate consideration received by Acquired Fund
stockholders in exchange for their Acquired Fund Shares will be approximately
equal to the fair market value of all of the outstanding Acquired Fund Shares
immediately prior to the transaction. No property other than Acquiring Fund
Shares will be distributed to stockholders of Acquired Fund in exchange for
their Acquired Fund Shares, nor will any such stockholder receive cash or other
property as part of the transaction.
3. Neither Acquired Fund nor any person "related" to Acquired Fund (as
defined in Treasury Regulation Section 1.368-1(e)(3)) nor any partnership in
which the Acquired Fund or any such related person is a partner has redeemed,
acquired or otherwise made any distributions with respect to any shares of the
Acquired Fund as part of the transaction, or otherwise pursuant to a plan of
which the transaction is a part, other than redemptions and distributions made
in the ordinary course of Acquired Fund's business as an open-end investment
company. There is no plan or intention on the part of any stockholder of
Acquired Fund that owns beneficially 5% or more of the Acquired Fund Shares and,
to the best knowledge of management of Acquired Fund, there is no plan or
intention on the part of the remaining stockholders of Acquired Fund, in
connection with the transaction, to engage in any transaction with the Acquired
Fund, the Acquiring Fund, or any person treated as related to Acquired Fund or
Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) or any
partnership in which Acquired Fund, Acquiring Fund, or any person treated as
related to Acquired Fund or Acquiring Fund under Treasury Regulation Section
1.368-1(e)(3) is a partner involving the sale, redemption or exchange of any of
the Acquired Fund Shares or any of the Acquiring Fund Shares to be received in
the transaction, as the case may be.
4. In the transaction, Acquired Fund will transfer its assets and
liabilities to Acquiring Fund such that immediately following the transfer,
Acquiring Fund will possess all of the same assets and liabilities as were
possessed by Acquired Fund immediately prior to the transaction, except for
assets used to pay expenses incurred in connection with the transaction, assets
distributed to stockholders in redemption of their shares immediately preceding,
or in contemplation of, the transaction (other than redemptions and
distributions made in the ordinary course of Acquired Fund's business as an
open-end investment company) which, together with transaction expenses,
constitute less than 1% of the assets of Acquired Fund, and any liabilities not
assumed pursuant to the Agreement.
5. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund will be approximately equal to the fair market value of the assets
of Acquired Fund received by Acquiring Fund, minus the Acquired Fund Liabilities
assumed by Acquiring Fund. Acquired Fund will not receive
any consideration from Acquiring Fund in connection with the acquisition of
Acquired Fund's assets other than the assumption of such Acquired Fund
Liabilities and the issuance of such Acquiring Fund Shares.
6. The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Fund in the ordinary course of its business. Acquired Fund does not
have any liabilities of any kind other than the Acquired Fund Liabilities
assumed by the Acquiring Fund.
7. As or the Closing Date, the adjusted basis and the fair market value of
the Acquired Fund assets transferred to Acquiring Fund will equal or exceed the
sum of the Acquired Fund Liabilities assumed by Acquiring Fund within the
meaning of Section 357(d) of the Internal Revenue Code of 1986, as amended (the
"Code").
8. Acquired Fund currently conducts its historic business within the
meaning of Treasury Regulation section 1.368-1(d), which provides that, in
general, a corporation's historic business is the business it has conducted most
recently, but does not include a business that the corporation enters into as
part of a plan or reorganization. The Acquired Fund assets transferred to
Acquiring Fund will be a significant portion of Acquired Fund's historic
business assets within the meaning of Treasury Regulation section 1.368-1(d),
which provides that a corporation's historic business assets are the assets used
in its historic business.
9. Acquired Fund will distribute to its stockholders the Acquiring Fund
Shares it receives, and its other properties, if any, pursuant to the
transaction and will be liquidated promptly thereafter.
10. The expenses of Acquired Fund incurred by it in connection with the
transaction which are to be assumed by Acquiring Fund, if any, will be only such
expenses that are solely and directly related to the transaction in accordance
with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquired Fund will not pay any expenses
incurred by its stockholders in connection with the transaction.
11. There is no, and never has been any, indebtedness between Acquiring
Fund and Acquired Fund.
12. Acquired Fund has properly elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified for the special
tax treatment afforded regulated investment companies under Subchapter M of the
Code for each taxable year since inception, and qualifies as such as of the time
of the Closing on the Closing Date.
13. Acquired Fund meets the requirements of an investment company as
defined in Section 368(a)(2)(F) of the Code.
14. Acquired Fund is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. Acquired Fund does not pay compensation to any stockholder-employee.
16. Immediately following the transaction, Acquired Fund stockholders will
own all of the outstanding Acquiring Fund Shares issued to Acquired Fund
pursuant to the transaction and will own such shares solely by reason of their
ownership of the Acquired Fund Shares immediately prior to the transaction.
17. Acquired Fund stockholders will not have dissenters' or appraisal
rights in the transaction.
18. The transaction is being undertaken for valid and substantial business
purposes, including facilitating the Acquired Fund becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
19. Acquired Fund has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in the Acquired Fund.
* * * * *
B-2
The undersigned officer of Acquired Fund is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquired Fund. The undersigned recognizes that
Hale and Dorr LLP will rely upon the foregoing representations in evaluating the
United States federal income tax consequences of the transaction and rendering
its opinion pursuant to Section 8.5 of the Agreement. If, prior to the date of
the transaction, any of the representations set forth herein ceases to be
accurate, the undersigned agrees to deliver to Hale and Dorr LLP immediately a
written notice to that effect.
[Insert Name of Appropriate PAPP Fund]
By:____________________________________
Name: _____________________________
Title: _____________________________
Dated: ______________, 2004
B-3
B-3
PIONEER PAPP STOCK FUND
PIONEER PAPP AMERICAN NAVIGATOR FUND
PIONEER PAPP AMERICA-PACIFIC RIM FUND
PIONEER PAPP SMALL AND MID CAP GROWTH FUND
(the "Pioneer Funds")
STATEMENT OF ADDITIONAL INFORMATION
January 16, 2004
This Statement of Additional Information is not a Prospectus. It should be read
in conjunction with the related Prospectus (also dated January 16, 2004) which
covers (i) Class A shares of beneficial interest of Pioneer Papp Stock Fund to
be issued in exchange for shares of common stock of Papp Stock Fund, (ii) Class
A shares of beneficial interest of Pioneer Papp American Navigator Fund to be
issued in exchange for shares of common stock of Papp America-Abroad Fund, (iii)
Class A shares of beneficial interest of Pioneer Papp America-Pacific Rim Fund
to be issued in exchange for shares of common stock of Papp America-Pacific Rim
Fund and (iv) Class A shares of beneficial interest of Pioneer Papp Small and
Mid Cap Growth Fund to be issued in exchange for shares of common stock of Papp
Small & Mid-Cap Growth Fund. Please retain this Statement of Additional
Information for further reference.
The Prospectus is available to you free of charge (please call 1-800-407-7298).
EXHIBITS...............................................................1
INTRODUCTION
INCORPORATION BY REFERENCE.............................................1
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS.........................1
FUND HISTORIES................................................2
DESCRIPTION OF THE FUNDS AND ITS INVESTMENT RISKS.............2
MANAGEMENT OF THE FUNDS.......................................3
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........3
INVESTMENT ADVISORY AND OTHER SERVICES........................3
BROKERAGE ALLOCATION AND OTHER PRACTICES......................3
CAPITAL STOCK AND OTHER SECURITIES............................3
PURCHASE, REDEMPTION AND PRICING OF SHARES....................3
TAXATION OF THE FUNDS.........................................3
UNDERWRITERS..................................................3
CALCULATION OF PERFORMANCE DATA...............................3
FINANCIAL STATEMENTS..........................................3
EXHIBITS
The following documents are attached as exhibits to this Statement of
Additional Information ("SAI"):
Exhibit A - Preliminary statement of additional information, dated December __ ,
2003 of Pioneer Papp Stock, Pioneer Papp America-Abroad Fund, Pioneer Papp
America-Pacific Rim Fund and Pioneer Papp Small and Mid Cap Growth Fund, each a
series of Pioneer Series Trust II (the "Pioneer Funds").
Exhibit B - Annual Report, for period ended December 31, 2002, and Semi-Annual
Report, for period ended June 30, 2003, of Papp Stock Fund, Papp America-Abroad
Fund, Papp America-Pacific Rim Fund and Papp Small & Mid-Cap Growth Fund (the
"Papp Funds").
Pro forma financial statements are not included since the Papp Funds are being
combined with the Pioneer Funds, which are newly created and do not have
material assets or liabilities.
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement and Prospectus dated January 16, 2004
(the "Proxy Statement and Prospectus") relating to the proposed reorganizations
of (i) Papp Stock Fund into Pioneer Papp Stock Fund, (ii) Papp America-Abroad
Fund into Pioneer Papp American Navigator Fund, (iii) Papp America-Pacific Rim
Fund into Pioneer Papp America-Pacific Rim Fund and (iv) Papp Small & Mid-Cap
Growth Fund into Pioneer Papp Small and Mid Cap Growth Fund and in connection
with the solicitation by the management of the Papp Funds of proxies to be voted
at the Meeting of Shareholders of the Papp Funds to be held on February 20,
2004.
INCORPORATION BY REFERENCE
The following documents are incorporated by reference into this SAI:
o Annual Reports for the period ended December 31, 2002 of the Papp Funds,
filed with the Securities and Exchange Commission on February 20, 2003:
o Papp Stock Fund (file no. 811-05922; accession number: 0000891804-03-000377)
o Papp America-Abroad Fund (file no. 811-06402; accession number:
0000891804-03-000381)
o Papp America-Pacific Rim Fund (file no. 811-08005; accession number:
0000891804-03-000378)
o Papp Small & Mid-Cap Growth Fund (file no. 811-09055; accession number:
0000891804-03-000379)
o Semi-Annual Reports for the period ended June 30, 2003 of the Papp Funds,
filed with the Securities and Exchange Commission on August 12, 2003:
o Papp Stock Fund (file no. 811-05922; accession number: 0000891804-03-001758)
o Papp America-Abroad Fund (file no. 811-06402; accession number:
0000891804-03-001754)
o Papp America-Pacific Rim Fund (file no. 811-08005; accession number:
0000891804-03-001757)
o Papp Small & Mid-Cap Growth Fund (file no. 811-09055; accession number:
0000891804-03-001756)
o The Pioneer Funds' SAIs (file no. 333-110037), filed with the Securities
and Exchange Commission on October 28, 2003 (accession number:
0001265389-03-000007)
ADDITIONAL INFORMATION ABOUT
THE PIONEER FUNDS
FUND HISTORY
For additional information about the Pioneer Funds generally and its
histories, see "Fund History" in each Pioneer Fund's SAI.
DESCRIPTION OF THE FUNDS AND ITS INVESTMENT RISKS
For additional information about each Pioneer Fund's investment objective,
policies, risks and restrictions, see "Investment Policies, Risks and
Restrictions" in each Pioneer Fund's SAI.
MANAGEMENT OF THE FUNDS
For additional information about the Pioneer Funds' Board of Trustees and
officers of the Trust, see "Trustees and Officers" in each Pioneer Fund's SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Not Applicable.
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information, see "Investment Adviser", "Shareholder
Servicing/Transfer Agent", "Custodian" and "Independent Auditors" in each
Pioneer Fund's SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about the Pioneer Funds' brokerage allocation
practices, see "Portfolio Transactions" in each Pioneer Fund's SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other
characteristics of shares of beneficial interest of the Pioneer Funds, see
"Description of Shares" in each Pioneer Fund's SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For additional information about purchase, redemption and pricing, see
"Sales Charges", "Redeeming Shares", "Telephone and Online Transactions" and
"Pricing of Shares" in each Pioneer Fund's SAI.
TAXATION OF THE FUNDS
For additional information about tax matters, see "Tax Status" in each
Pioneer Fund's SAI.
UNDERWRITERS
For additional information about the Pioneer Funds' principal underwriter
and distribution plans, see "Principal Underwriter and Distribution Plans" and
"Sales Charges" in each Pioneer Fund's SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of the Pioneer
Funds, see "Investment Results" in each Pioneer Fund's SAI.
FINANCIAL STATEMENTS
For additional information, see "Financial Statements" in each Pioneer
Fund's SAI.
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the Initial Registration
Statement of Pioneer Series Trust II (the "Registrant") on Form N-1A under the
Securities Act of 1933 and the Investment company Act of 1940 (File Nos.
333-110037 and 811-21460) which information is incorporated herein by reference.
ITEM 16. EXHIBITS
(1) Agreement and Declaration of Trust Previously Filed (1)
(2) By-Laws Previously Filed (1)
(3) Not applicable
(4) Form of Agreement and Plan of Filed herewith as Exhibit A to the Proxy
Reorganization Statement and Prospectus included as Part
A of this Registration Statement
(5) Not applicable
(6)(a) Form of Management Contract between Previously Filed (1)
Pioneer Papp Stock Fund and Pioneer
Investment Management, Inc.
(6)(b) Form of Sub-Advisory Agreement Previously Filed (1)
between Pioneer Investment
Management, Inc. and L. Roy Papp &
Associates, LLP relating to Pioneer
Papp Stock Fund.
(6)(c) Form of Expense Limitation and Previously Filed (1)
Reimbursement Agreement between
Pioneer Papp Stock Fund and Pioneer
Investment Management, Inc.
(6)(d) Form of Management Contract between Previously Filed (1)
Pioneer Papp American Navigator Fund
(f/n/a Pioneer Papp America Abroad Fund)
and Pioneer Investment Management, Inc.
(6)(e) Form of Sub-Advisory Agreement Previously Filed (1)
between Pioneer Investment
Management, Inc. and L. Roy Papp &
Associates, LLP relating to Pioneer
Papp American Navigator Fund
(f/n/a Pioneer Papp America Abroad Fund)
(6)(f) Form of Expense Limitation and Previously Filed (1)
Reimbursement Agreement between
Pioneer Papp American Navigator Fund
(f/n/a Pioneer Papp America Abroad Fund)
and Pioneer Investment Management, Inc.
(6)(g) Form of Management Contract between Previously Filed (1)
Pioneer Papp America-Pacific Rim Fund
and Pioneer Investment Management,
Inc.
(6)(h) Form of Sub-Advisory Agreement Previously Filed (1)
between Pioneer Investment
Management, Inc. and L. Roy Papp &
Associates, LLP relating to Pioneer
Papp America-Pacific Rim Fund.
(6)(i) Form of Expense Limitation and Previously Filed (1)
Reimbursement Agreement between
Pioneer Papp America-Pacific Rim Fund
and Pioneer Investment Management,
Inc.
(6)(j) Form of Management Contract between Previously Filed (1)
Pioneer Papp Small and Mid Cap Growth
Fund and Pioneer Investment
Management, Inc.
(6)(k) Form of Sub-Advisory Agreement Previously Filed (1)
between Pioneer Investment
Management, Inc. and L. Roy Papp &
Associates, LLP relating to Pioneer
Papp Small and Mid Cap Growth Fund.
(6)(l) Form of Expense Limitation and Previously Filed (1)
Reimbursement Agreement between
Pioneer Papp Small and Mid Cap Growth
Fund and Pioneer Investment
Management, Inc.
(7) Form of Underwriting Agreement with Previously Filed (1)
Pioneer Funds Distributor, Inc.
(8) Not applicable
(9) Custodian Agreement with Brown Previously Filed (1)
Brothers Harriman & Co.
(10)(a) Form of Class A 12b-1 Distribution Previously Filed (1)
Plan for Pioneer Papp Stock Fund
(10)(b) Form of Class A 12b-1 Distribution Previously Filed (1)
Plan for Pioneer Papp American
Navigator Fund (f/n/a Pioneer Papp
America Abroad Fund)
(10)(c) Form of Class A 12b-1 Distribution Previously Filed (1)
Plan for Pioneer Papp America-Pacific
Rim Fund
(10)(d) Form of Class A 12b-1 Distribution Previously Filed (1)
Plan for Pioneer Papp Small and Mid
Cap Growth Fund
(10)(e) Form of Dealer Sales Agreement Previously Filed (1)
(10)(f) Form of Multiple Class Plan Pursuant Previously Filed (1)
to Rule 18f-3 for Pioneer Papp Stock
Fund
(10)(g) Form of Multiple Class Plan Pursuant Previously Filed (1)
to Rule 18f-3 for Pioneer Papp
American Navigator Fund
(f/n/a Pioneer Papp America Abroad Fund)
(10)(h) Form of Multiple Class Plan Pursuant Previously Filed (1)
to Rule 18f-3 for Pioneer Papp
America-Pacific Rim Fund
(10)(i) Form of Multiple Class Plan Pursuant Previously Filed (1)
to Rule 18f-3 for Pioneer Papp Small
and Mid Cap Growth Fund
(11) Opinion of Counsel (legality of Previously Filed (1)
securities being offered)
(12) Form of opinion as to tax matters and Previously Filed (1)
consent
(13)(a) Investment Company Service Agreement Previously Filed (1)
with Pioneering Services Corporation
(13)(b) Administration Agreement with Pioneer Previously Filed (1)
Investment Management, Inc.
(14) Consent of Independent Public Filed herewith as Exhibit (14)
Accountants
(15) Not applicable
(16) Powers of Attorney Previously Filed (2)
(17)(a) Code of Ethics Previously Filed (1)
(17)(b) Papp Code of Ethics Filed herewith as Exhibit (17)(b)
(17)(c) Form of Proxy Card Filed herewith as Exhibit (17)(c)
(17)(d) Financial statements contained in the Filed herewith as Exhibit (17)(d)
December 31, 2002 annual report of
Papp Stock Fund, Papp America-Abroad
Fund, Papp America-Pacific Rim Fund
and Papp Small & Mid-Cap Growth Fund
(17)(e) Financial statements contained in the Filed herewith as Exhibit (17)(e)
June 30, 2003 semi-annual report of
Papp Stock Fund, Papp America-Abroad
Fund, Papp America-Pacific Rim Fund
and Papp Small & Mid-Cap Growth Fund
(17)(f) Preliminary statements of additional Filed herewith as Exhibit (17)(f)
information for Pioneer Papp Stock,
Pioneer Papp American Navigator Fund
(k/n/a Pioneer Papp America Abroad Fund,
Pioneer Papp America-Pacific Rim Fund
and Pioneer Papp Small and Mid Cap
Growth Fund, each dated December __,
2003
<FN>
(1) Filed as an Exhibit to the Registrant's Initial Registration Statement on
Form N-14 (File No. 333-110171), as filed with the Securities and Exchange
Commission on October 31, 2003 (accession no. 0001265389-03-000010).
(2) Filed as an Exhibit to the Registrant's Initial Registration Statement on
Form N-1A (File Nos. 333-110037 and 811-21460), as filed with the Securities and
Exchange Commission on October 28, 2003 (accession no. 0001265389-03-000007).
</FN>
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
registration statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for the reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that it shall file an executed version of
the legal opinion as to tax matters and consent, a form of which was previously
filed herewith, as part of the next post-effective amendment to the registration
statement filed with the Securities and Exchange Commission following the
effective date of the reorganizations contemplated therein.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-14 has been signed on behalf of the
Registrant, in the City of Boston and the Commonwealth of Massachusetts, on the
16th day of January, 2004.
Pioneer Series Trust II
By:/s/ Osbert M. Hood
------------------------------------
Osbert M. Hood
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
* Chairman of the Board, Trustee, January 16, 2004
John F. Cogan, Jr. and President
* Chief Financial Officer and January 16, 2004
Vincent Nave Treasurer
* Trustee
Mary K. Bush
* Trustee
Richard H. Egdahl
* Trustee
Margaret B.W. Graham
/s/ Osbert M. Hood Trustee
Osbert M. Hood
* Trustee
Marguerite A. Piret
* Trustee
Steven K. West
* Trustee
John Winthrop
* By: January 16, 2004
/s/ Osbert M. Hood
Osbert M. Hood, Attorney-in-Fact,
under Powers of Attorney dated
June 2, 2003.
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
14 Consent of Deloitte & Touche LLP regarding the audited financial
statements and highlights of Papp Stock Fund, Papp America Abroad Fund,
Papp America-Pacific Rim Fund and Papp Small & Mid-Cap Growth Fund
17(b) Papp Code of Ethics
17(c) Form of Proxy Card
17(d) Financial statements contained in the December 31, 2002 annual report of
Papp Stock Fund, Papp America-Abroad Fund, Papp America-Pacific Rim Fund
and Papp Small & Mid-Cap Growth Fund
17(e) Financial statements contained in the June 30, 2003 semi-annual report
of Papp Stock Fund, Papp America-Abroad Fund, Papp America-Pacific Rim
Fund and Papp Small & Mid-Cap Growth Fund
17(f) Preliminary statements of additional information for Pioneer Papp Stock
Fund, Pioneer Papp American Navigator Fund (k/n/a Pioneer Papp America
Abroad Fund, Pioneer Papp America-Pacific Rim Fund and Pioneer Papp Small
and Mid Cap Growth Fund, each dated December __, 2003