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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06151
Pioneer Europe Select Equity Fund
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: August 31
Date of reporting period: September 1, 2005 through August 31, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-------
EUROPE
SELECT EQUITY
FUND
Annual
Report
8/31/06
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 9
Prices and Distributions 10
Performance Update 11
Comparing Ongoing Fund Expenses 16
Schedule of Investments 18
Financial Statements 22
Notes to Financial Statements 31
Report of Independent Registered Public Accounting Firm 41
Trustees, Officers and Service Providers 42
President's
Dear Shareowner,
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We know from the history of the capital markets that sudden shifts in investor
sentiment can occur with little warning, based on an assortment of events. We
believe such a shift in sentiment is occurring in reaction to the possibility
that U.S. economic growth may slow in the second half of 2006.
The U.S. stock market trended upward through the first week of May, then turned
rather sharply downward, reaching lows around the middle of June as well as the
middle of July. Since mid-July, the market has staged a rally, and through
August 31, 2006, the S&P 500 Index was up 5.8% for the calendar year-to-date on
a total return basis.
According to the International Monetary Fund, international economic growth in
2004-2005 was the fastest of any two-year period in more than 30 years, and
2006 growth is projected to match the healthy growth of 2005. This growth has
been broad-based, with Europe, Japan, and emerging market economies all showing
strength. The result has been rising prices across a broad range of
commodities, increasing corporate profits, and higher interest rates.
The U.S. bond markets' concern has been that strong economic growth would spark
inflation - we have already seen commodity prices rise, and U.S. labor costs
are also increasing, since we are close to full employment. This may also be a
reason why public sentiment is becoming uneasy.
Despite strong first quarter economic growth, the U.S. economy for the second
half of the year may slow in reaction to past increases in interest rates and
energy costs. Thus far, the only sign of such a slowdown has been a cooling
housing market. Yet, many observers believe a slower growing economy could be
welcomed by the markets.
The U.S. Federal Reserve has continued its program of measured short-term
interest rate increases. However, the Fed Chairman, Ben Bernanke, indicated
that inflation may moderate, which would permit the Fed to stop raising
interest rates. Such action could have positive effect for both consumers and
investors over the intermediate-to-longer term. By restraining inflation, the
Fed may also limit upward pressure on longer-maturity bond yields and downward
pressure on stocks' price/earnings ratios.
2
Letter
In summary, we think security market valuations remain reasonable; yet there
are no guarantees in investing. The unpredictability reinforces the importance
of Pioneer's message that investors should remain diversified, take a long-term
view, and base investment decisions on economic and market fundamentals, rather
than on emotion. Our investment philosophy and approach continue to be based on
the use of fundamental research to identify a range of opportunities that offer
an attractive balance of risk and reward to help Fund shareowners work toward
their long-term goals.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
3
Pioneer Europe Select Equity Fund
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PORTFOLIO MANAGEMENT DISCUSSION 8/31/06
- --------------------------------------------------------------------------------
European stock markets produced healthy returns during the 12 months ended
August 31, 2006. Investors were attracted to European equities by persistently
rising corporate earnings, reasonable valuations and attractive dividend yields
at a time when the historically sluggish European economy began to show signs
of improvement. In the following interview, portfolio manager Andrew Arbuthnott
discusses the events and factors that affected the Fund's performance during
the 12 months. Mr. Arbuthnott is responsible for the Fund's day-to-day
management.
Q: How did the Europe Select Equity Fund perform during the 12-month period
ended August 31, 2006?
A: The Fund's Class A shares had a total return of 20.83% at net asset value
for the 12 months. During the same period, the MSCI Europe Index returned
24.80%, while the average return of the 96 funds in Lipper's European
Funds category was 23.00%. The performance of the MSCI index does not
reflect any management fees or transaction expenses.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most
recent month-end performance results. Current performance may be lower or
higher than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What were the principal factors that affected performance during the
period?
A: The fiscal year marked a good time to be invested in the European stock
markets. U.S.-based investors, in particular, benefited as the euro rose
in value by almost 4% relative to the U.S. dollar, adding to realized
returns. European-based corporations continued to show good profit gains,
even though 2006 earnings growth grew at a slower pace than did earnings
in 2005. The favorable profit picture came against a backdrop in which
the European economy, which was noted for lagging the global economy,
began to improve. Gross Domestic Product (GDP) growth in the Euro zone
during the second quarter of 2006 grew at an annualized rate of 2.6% -
the
4
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
fastest growth rate since 2000. This expansion was fueled principally by
strong exports to economies outside the region, although domestic demand
did improve somewhat. The region's unemployment rate declined to about 8%,
which was an improvement for Europe even though it did not compare
favorably with rates in other developed economies. Inflation in Europe was
above the target rate of 2%, but much of this was attributed to rising oil
prices and higher commodity prices.
European companies in general were in healthy financial condition, with
strong balance sheets and high cash levels. This strength enabled many
corporations to increase dividends, buy back outstanding shares, and
consider merger-and-acquisition deals. All these factors combined with
rising earnings to support stock prices.
The better-performing parts of the market were: diversified financials,
where the average stock produced a 37% return; materials, where the
average stock gain was 36%; real estate, where the typical stock rose 33%;
followed by retailers, insurance companies and banks. Telecommunications
service operators were the worst-performing area in the market and the
only area with a negative average total return. The average stock in that
sector lost 7%. Other lagging sectors were energy, software and services
and media. All returns cited were based on performance in the euro.
Q: What types of investments had the greatest influence on results?
A: The Fund trailed the benchmark MSCI Europe Index as well as its peer group
of funds, primarily because of stock selection. We maintain a portfolio
of about 35 stocks, which means security selection typically is the
deciding factor in relative performance.
Our stock selection in the pharmaceuticals industry was successful,
especially our investments in the U.K.-based AstraZeneca and the
Swiss-based Roche. We also did well in banks, with especially strong
results from two major French institutions: BNP Paribus, which gained 45%;
and Societe Generale, which rose by 48%. The U.K.-based Barclay's Bank was
another strong performer. TNT, the postal and express delivery service
based in the Netherlands, also showed strong stock appreciation after its
announcement that it was selling an underperforming division. In the
materials sector,
5
Pioneer Europe Select Equity Fund
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PORTFOLIO MANAGEMENT DISCUSSION 8/31/06 (continued)
- --------------------------------------------------------------------------------
we had several solid performers, including: Real Tinto, a U.K.-based
metals and mining company; LaFarge, a French company that has a dominant
position in the consolidated concrete industry; and Syngenta, a Swiss
chemical company specializing in products for the agricultural industry.
We have sold the position in Syngenta. We also sold at a healthy gain our
investment in Boots, a U.K.-based pharmacy and personal care products
retailer, after its successful merger with Alliance Unichem, another
British firm. Carrefour, the global food retailer based in France, also
added to the Fund's results.
Our consumer services picks were less successful. The most notable
detractor in this area was Carnival, the cruise ship company whose stock
is listed on exchanges in both the United States and the United Kingdom.
We continue to hold Carnival, which we believe is a dominant company in a
consolidating industry with good growth characteristics. However, Carnival
had a poor year, in which its troubles were exacerbated by rising energy
prices and hurricane fears. In the lagging telecommunications services
sector, our positions in Vodafone, based in Great Britain, and France
Telecom both produced disappointing results before we sold them. The
industry faces a variety of challenges, including intense competition and
high costs of investing in quickly-changing technologies. Among our
capital goods holdings, the German industrial company Siemens has been
slow to show the positive results of its restructuring, but we have
remained confident in the company's prospects. In the energy sector, which
performed well early in the period, underperformance by the Spanish oil
company Repsol and by BP, or British Petroleum, both held back results.
Repsol was hurt by worries about its Latin American reserves, while BP
suffered from operational problems at its refineries and its Alaskan
pipeline. The Fund's de-emphasis of utilities and insurance stocks, both
of which performed well, hurt.
Q: What were some of the noteworthy changes made in the portfolio during the
year?
A: Two Scandinavian banks, DNB of Norway and SE Banken of Sweden, were among
our major new investments during the period. We saw good growth potential
in the institutions, both of which have undergone restructuring programs.
We also saw growth opportunities among homebuilders in the United
Kingdom, where
6
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
demand has exceeded supply. To take advantage, we invested in Persimmon
and George Wimpey. We also established positions during the 12 months in
WPP, the British based advertising and marketing company, E.On, a German
utility, and Roche, the Swiss pharmaceutical firm that we mentioned
earlier as a contributor.
In addition to liquidating our investments in France Telecom and Vodafone,
we also sold Deutsche Bank, the German investment bank, Syngenta, which
had been a strong performer, and U.K-based pharmaceutical company
GlaxoSmithKline.
Q: What is your investment outlook?
A: European stocks have done well for the past two years, but we believe their
prices remain attractive and they continue to offer highly competitive
dividend yields. The economy in Europe appears to be showing some signs
of improvement, although growth may moderate somewhat in 2007. In
general, we believe European corporations are well managed, with good
cash positions and sound balance sheets. The chief risks to investing in
European equities are the possibility of a global economic slowdown,
rising interest rates on the continent and the chance that earnings
growth rates may slow. European companies already have been pressured by
high energy and commodity costs. For U.S. investors, there is also the
risk that the euro could weaken versus the U.S. dollar.
Overall, we think the outlook is favorable for European equities, although
investors should not have overly enthusiastic expectations.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and, therefore, is susceptible to adverse
economic, political or regulatory developments affecting those countries. The
Fund invests in a limited number of securities and, as a result, the Fund's
performance may be more volatile than the performance of funds holding more
securities. At times, the Fund's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
7
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 8/31/06 (continued)
- --------------------------------------------------------------------------------
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
8
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY 8/31/06
- --------------------------------------------------------------------------------
[The data is a representation of a pie chart in the printed material]
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
Financials 29.8%
Consumer Discretionary 25.0%
Industrials 12.6%
Health Care 11.2%
Energy 10.6%
Materials 6.5%
Information Technology 2.2%
Consumer Staples 1.5%
Utilities 0.6%
[The data is a representation of a bar chart in the printed material]
Geographical Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
United Kingdom 34.6%
France 14.2%
Germany 12.4%
Switzerland 11.6%
Ireland 5.7%
Sweden 4.1%
Netherlands 4.1%
Spain 3.1%
Italy 2.9%
Panama 2.3%
Greece 2.2%
Norway 1.4%
United States 1.4%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)*
1. Royal Bank of Scotland Group Plc 5.29%
2. BNP Paribas SA 5.15
3. BP Amoco Plc 4.61
4. Roche Holdings AG 4.25
5. CS Group 4.25
6. Barclays Plc 4.22
7. TNT NV 4.05
8. CRH Plc 3.65
9. Astrazeneca Plc 3.32
10. UBS AG 3.18
* This list excluded temporary cash and derivative instruments. The portfolio
is actively managed and current holdings may be different. The holdings
listed should not be considered recommendations to buy or sell any security
listed.
9
Pioneer Europe Select Equity Fund
- -----------------------------------------------------------------------------
PRICES AND DISTRIBUTIONS
- -----------------------------------------------------------------------------
Net Asset Value Per Share
- -----------------------------------------------------------------------------
Class 8/31/06 8/31/05
----- ------- -------
A $37.83 $31.54
B $34.26 $28.63
C $34.16 $28.60
R $37.32 $31.27
Y $39.06 $32.54
Distributions Per Share
- -----------------------------------------------------------------------------
9/1/05 - 8/31/06
----------------
Short-Term Long-Term
Class Dividends Capital Gains Capital Gains
----- --------- ------------- -------------
A $0.2405 $ - $ -
B $ - $ - $ -
C $0.0722 $ - $ -
R $0.2985 $ - $ -
Y $0.4061 $ - $ -
10
Pioneer Europe Select Equity Fund
- -------------------------------------------------------------------------------
PERFORMANCE UPDATE 8/31/06 CLASS A SHARES
- -------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Europe Select Equity Fund at public offering
price, compared to that of the Morgan Stanley Capital International (MSCI)
Europe Index.
- -------------------------------------------------------
Average Annual Total Returns
(As of August 31, 2006)
Net Asset Public Offering
Period Value (NAV) Price (POP)
Life-of-Class
(12/29/00) 9.80% 8.66%
5 Years 15.84 14.46
1 Year 20.83 13.90
- -------------------------------------------------------
[The data is a representation of a mountain chart in the printed material]
Value of $10,000 Investment
Pioneer Europe
Select Equity MSCI Europe
Fund Index
12/00 $ 9,425 $10,000
7,681 8,111
8/02 7,546 6,834
8,281 7,457
8/04 10,646 9,218
13,258 11,700
8/06 16,019 14,601
- --------------------------------
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Pioneer Europe Fund acquired the assets and liabilities of Pioneer Europe Select
Fund (the predecessor fund) on June 24, 2005 and changed its name to Pioneer
Europe Select Equity Fund. Returns prior to June 24, 2005 reflect the
performance of the predecessor fund, which has not been restated to reflect any
differences in expenses.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in an Index.
11
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 8/31/06 CLASS B SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Europe Select Equity Fund, compared to that of the
Morgan Stanley Capital International (MSCI) Europe Index.
- -------------------------------------------------
Average Annual Total Returns
(As of August 31, 2006)
Period If Held If Redeemed
Life-of-Class
(12/29/00) 8.83% 8.83%
5 Years 14.72 14.72
1 Year 19.66 15.66
- -------------------------------------------------
[The data is a representation of a mountain chart in the printed material]
Value of $10,000 Investment
Pioneer Europe
Select Equity MSCI Europe
Fund Index
12/00 $10,000 $10,000
8,130 8,111
8/02 7,940 6,834
8,620 7,457
8/04 10,953 9,218
13,501 11,700
8/06 16,156 14,601
- --------------------------------
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CSDC). Effective December 1, 2004, the period during which a CDSC is applied to
withdrawals was shortened to 5 years. The maximum CDSC for class B shares
continues to be 4%. For more complete information, please see the prospectus for
details. Note: Shares purchased prior to December 1, 2004 remain subject to the
CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerinvestments.com/bshares. All results are historical and assume the
reinvestment of dividends and capital gains. Other share classes are available
for which performance and expenses will differ.
Pioneer Europe Fund acquired the assets and liabilities of Pioneer Europe Select
Fund (the predecessor fund) on June 24, 2005 and changed its name to Pioneer
Europe Select Equity Fund. Returns prior to June 24, 2005 reflect the
performance of the predecessor fund, which has not been restated to reflect any
differences in expenses.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in an Index.
12
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 8/31/06 CLASS C SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Europe Select Equity Fund, compared to that of the
Morgan Stanley Capital International (MSCI) Europe Index.
- -------------------------------------------------
Average Annual Total Returns
(As of August 31, 2006)
Period If Held If Redeemed
Life-of-Class
(12/29/00) 9.13% 9.13%
5 Years 15.06 15.06
1 Year 19.73 19.73
- -------------------------------------------------
[The data is a representation of a mountain chart in the printed material]
Value of $10,000 Investment
Pioneer Europe
Select Equity MSCI Europe
Fund Index
12/00 $10,000 $10,000
8,140 8,111
8/02 7,960 6,834
8,690 7,457
8/04 11,094 9,218
13,709 11,700
8/06 16,415 14,601
- --------------------------------
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not reflect
the 1% front-end sales charge in effect prior to February 1, 2004. If you paid a
1% sales charge, your returns would be lower than those shown above. "If held"
results represent the percent change in net asset value per share. Returns would
have been lower had sales charges been reflected. All results are historical and
assume the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Pioneer Europe Fund acquired the assets and liabilities of Pioneer Europe Select
Fund (the predecessor fund) on June 24, 2005 and changed its name to Pioneer
Europe Select Equity Fund. Returns prior to June 24, 2005 reflect the
performance of the predecessor fund, which has not been restated to reflect any
differences in expenses.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in an Index.
13
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 8/31/06 CLASS R SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Europe Select Equity Fund, compared to that of the
Morgan Stanley Capital International (MSCI) Europe Index.
- -------------------------------------------------
Average Annual Total Returns
(As of August 31, 2006)
Period If Held If Redeemed
Life-of-Class
(12/29/00) 9.31% 9.31%
5 Years 15.32 15.32
1 Year 20.46 20.46
- -------------------------------------------------
[The data is a representation of a mountain chart in the printed material]
Value of $10,000 Investment
Pioneer Europe
Select Equity MSCI Europe
Fund Index
12/00 $10,000 $10,000
8,123 8,111
8/02 7,940 6,834
8,669 7,457
8/04 11,090 9,218
13,752 11,700
8/06 16,566 14,601
- --------------------------------
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class R shares are not subject to sales charges and are available for limited
groups of eligible investors, including institutional investors. All results are
historical and assume the reinvestment of dividends and capital gains. Other
share classes are available for which performance and expenses will differ.
Pioneer Europe Fund acquired the assets and liabilities of Pioneer Europe Select
Fund (the predecessor fund) on June 24, 2005 and changed its name to Pioneer
Europe Select Equity Fund. The predecessor fund did not offer Class R shares.
Returns prior to June 24, 2005 are based on the performance of the predecessor
fund's Class A shares, reduced to reflect the higher distribution and service
fees of Class R shares.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in an Index.
14
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 8/31/06 CLASS Y SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Europe Select Equity Fund, compared to that of the
Morgan Stanley Capital International (MSCI) Europe Index.
- ------------------------------------------------
Average Annual Total Returns
(As of August 31, 2006)
Period If Held If Redeemed
Life-of-Class
(12/29/00) 9.94% 9.94%
5 Years 15.99 15.99
1 Year 21.50 21.50
- ------------------------------------------------
[The data is a representation of a mountain chart in the printed material]
Value of $10,000 Investment
Pioneer Europe
Select Equity MSCI Europe
Fund Index
12/00 $10,000 $10,000
8,150 8,111
8/02 8,007 6,834
8,786 7,457
8/04 11,295 9,218
14,085 11,700
8/06 17,113 14,601
- --------------------------------
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class Y shares are not subject to sales charges and are available for limited
groups of eligible investors, including institutional investors. All results are
historical and assume the reinvestment of dividends and capital gains. Other
share classes are available for which performance and expenses will differ.
Pioneer Europe Fund acquired the assets and liabilities of Pioneer Europe Select
Fund (the predecessor fund) on June 24, 2005 and changed its name to Pioneer
Europe Select Equity Fund. The predecessor fund did not offer Class Y shares.
Returns prior to June 24, 2005 are based on the performance of the predecessor
fund's Class A shares, which has not been restated to reflect any differences in
expenses, including Rule 12b-1 fees applicable to Class A shares.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in an Index.
15
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
COMPARING ONGOING FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Europe Select Equity Fund
Based on actual returns from March 1, 2006 through August 31,
2006
Share Class A B C R Y
- ---------------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 3/1/06
Ending Account Value $1,092.69 $1,086.93 $1,087.47 $1,090.93 $1,096.27
On 8/31/06
Expenses Paid During Period* $ 8.76 $ 13.94 $ 13.63 $ 10.54 $ 5.81
* Expenses are equal to the Fund's annualized expense ratio of 1.66%, 2.65%,
2.59%, 2.00% and 1.10%, multiplied by the average account value over the
period, multiplied by 184/365, for Class A, Class B, Class C, Class R and
Class Y (to reflect the one-half year period).
16
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Europe Select Equity Fund
Based on a hypothetical 5% return per year before expenses, reflect
ing the period from March 1, 2006 through August 31, 2006
Share Class A B C R Y
- ---------------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 3/1/06
Ending Account Value $1,016.84 $1,011.85 $1,012.15 $1,015.12 $1,019.66
On 8/31/06
Expenses Paid During Period* $ 8.44 $ 13.44 $ 13.14 $ 10.16 $ 5.60
* Expenses are equal to the Fund's annualized expense ratio of 1.66%, 2.65%,
2.59%, 2.00% and 1.10%, multiplied by the average account value over the
period, multiplied by 184/365, for Class A, Class B, Class C, Class R and
Class Y (to reflect the one-half year period).
17
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 8/31/06
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCK - 2.9%
Automobiles & Components - 2.9%
Automobile Manufacturers - 2.9%
5,836 Porsche AG $ 6,005,370
------------
TOTAL PREFERRED STOCK
(Cost $3,553,694) $ 6,005,370
------------
COMMON STOCKS - 95.6%
Energy - 10.4%
Integrated Oil & Gas - 10.4%
824,156 BP Amoco Plc $ 9,352,638
193,850 Eni S.p.A.* 5,932,615
215,426 Repsol SA 6,196,029
------------
$ 21,481,282
------------
Total Energy $ 21,481,282
------------
Materials - 6.4%
Construction Materials - 4.6%
213,370 CRH Plc $ 7,405,314
15,411 Lafarge Br 1,989,712
------------
$ 9,395,026
------------
Diversified Metals & Mining - 1.8%
73,414 Rio Tinto Plc $ 3,703,980
------------
Total Materials $ 13,099,006
------------
Capital Goods - 8.5%
Building Products - 2.8%
78,350 Compagnie de Saint Gobain $ 5,820,194
------------
Industrial Conglomerates - 3.1%
75,235 Siemens $ 6,380,752
------------
Trading Companies & Distributors - 2.6%
239,339 WOLSELEY* $ 5,222,368
------------
Total Capital Goods $ 17,423,314
------------
Transportation - 4.0%
Air Freight & Couriers - 4.0%
218,348 TNT NV* $ 8,214,885
------------
Total Transportation $ 8,214,885
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Automobiles & Components - 5.6%
Tires & Rubber - 5.6%
82,656 Compagnie Generale des Etablissements
Michelin* $ 5,625,248
55,163 Continental AG 5,904,602
------------
$ 11,529,850
------------
Total Automobiles & Components $ 11,529,850
------------
Consumer Durables & Apparel - 6.8%
Apparel, Accessories & Luxury Goods - 2.7%
118,416 Adidas-Salomon AG $ 5,641,888
------------
Homebuilding - 4.1%
210,293 Persimmon Plc. $ 4,990,228
364,846 Wimpey (George) Plc* 3,465,382
------------
$ 8,455,610
------------
Total Consumer Durables & Apparel $ 14,097,498
------------
Consumer Services - 4.5%
Casinos & Gaming - 2.2%
127,150 Opap SA $ 4,516,290
------------
Hotels, Resorts & Cruise Lines - 2.3%
112,544 Carnival Corp. $ 4,715,594
------------
Total Consumer Services $ 9,231,884
------------
Media - 3.1%
Advertising - 3.1%
525,924 WPP Group Plc $ 6,413,723
------------
Total Media $ 6,413,723
------------
Retailing - 1.7%
Department Stores - 1.7%
108,688 Next Plc $ 3,453,459
------------
Total Retailing $ 3,453,459
------------
Food & Drug Retailing - 1.5%
Drug Retail - 1.5%
211,726 Alliance Boots Plc $ 3,110,205
------------
Total Food & Drug Retailing $ 3,110,205
------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 8/31/06 (continued)
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 1.4%
Health Care Equipment - 1.4%
26,476 Synthes, Inc. $ 2,892,817
------------
Total Health Care Equipment & Services $ 2,892,817
------------
Pharmaceuticals & Biotechnology - 9.6%
Pharmaceuticals - 9.6%
103,559 Astrazeneca Plc $ 6,735,684
46,740 Roche Holdings AG 8,621,158
261,114 Shire PLC 4,436,099
------------
$ 19,792,941
------------
Total Pharmaceuticals & Biotechnology $ 19,792,941
------------
Banks - 22.1%
Diversified Banks - 22.1%
155,596 Allied Irish Banks Plc $ 4,068,486
683,309 Barclays Plc 8,564,654
98,142 BNP Paribas SA 10,434,927
224,760 Dnb Nor Asa* 2,907,064
315,850 Royal Bank of Scotland Group Plc 10,731,259
147,939 Skand Enkilda Banken* 3,832,109
30,246 Societe Generale 4,887,161
------------
$ 45,425,660
------------
Total Banks $ 45,425,660
------------
Diversified Financials - 7.3%
Diversified Capital Markets - 7.3%
154,422 CS Group $ 8,619,395
113,744 UBS AG* 6,444,309
------------
$ 15,063,704
------------
Total Diversified Financials $ 15,063,704
------------
Technology Hardware & Equipment - 2.2%
Communications Equipment - 2.2%
1,331,801 Ericsson LM Tel Sur B $ 4,449,447
------------
Total Technology Hardware & Equipment $ 4,449,447
------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Utilities - 0.5%
Electric Utilities - 0.5%
8,792 E.On AG $ 1,117,372
------------
$ 1,117,372
------------
TOTAL COMMON STOCKS
(Cost $153,256,128) $196,797,047
------------
TOTAL INVESTMENT IN SECURITIES - 98.5%
(Cost $156,809,822) (a)(b) $202,802,417
------------
OTHER ASSETS AND LIABILITIES - 1.5% $ 3,035,789
------------
TOTAL NET ASSETS - 100.0% $205,838,202
============
* Non-income producing security
(a) At August 31, 2006, the net unrealized gain on investments based on cost
for federal income tax purposes of $157,170,586 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $47,022,663
Aggregate gross unrealized loss for all investments in which there is
an excess of tax cost over value (1,390,832)
-----------
Net unrealized gain $45,631,831
===========
(b) Distributions of investments by country of issue (excluding temporary
cash investments), as a percentage of total investment in securities, is
as follows:
United Kingdom 34.6%
France 14.2
Germany 12.4
Switzerland 11.6
Ireland 5.7
Sweden 4.1
Netherlands 4.1
Spain 3.1
Italy 2.9
Panama 2.3
Greece 2.2
Norway 1.4
United States 1.4
-----
100.0%
=====
Purchases and sales of securities (excluding temporary cash investments) for
the year ended August 31, 2006 aggregated $80,735,892 and $98,416,265,
respectively.
The accompanying notes are an integral part of these financial statements. 21
Pioneer Europe Select Equity Fund
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 8/31/06
- -------------------------------------------------------------------------------
ASSETS:
Investment in securities (cost $156,809,822) $202,802,417
Cash 2,419,577
Foreign currencies, at value (cost $3) 3
Receivables -
Fund shares sold 192,499
Dividends, interest and foreign taxes withheld 877,221
Other 7,934
------------
Total assets $206,299,651
------------
LIABILITIES:
Payables -
Fund shares repurchased $ 202,241
Due to affiliates 107,361
Accrued expenses 151,847
------------
Total liabilities $ 461,449
------------
NET ASSETS:
Paid-in capital $166,228,137
Undistributed net investment income 1,998,669
Accumulated net realized loss on investments and foreign
currency transactions (8,383,800)
Net unrealized gain on investments 45,992,595
Net unrealized gain on forward foreign currency contracts
and other assets and liabilities denominated in foreign
currencies 2,601
------------
Total net assets $205,838,202
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $155,549,626/4,111,317 shares) $ 37.83
============
Class B (based on $30,960,439/903,598 shares) $ 34.26
============
Class C (based on $15,270,323/446,995 shares) $ 34.16
============
Class R (based on $130,582/3,498 shares) $ 37.32
============
Class Y (based on $3,927,232/100,533 shares) $ 39.06
============
MAXIMUM OFFERING PRICE:
Class A ($37.83 [divided by] 94.25%) $ 40.14
============
22 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 8/31/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $770,131) $ 5,869,065
Interest 46,433
-----------
Total investment income $ 5,915,498
-----------
EXPENSES:
Management fees $ 1,713,961
Transfer agent fees and expenses
Class A 468,798
Class B 229,160
Class C 73,070
Class R 4,601
Class Y 244
Distribution fees
Class A 297,644
Class B 373,941
Class C 147,740
Class R 489
Administrative reimbursements 35,031
Custodian fees 76,089
Registration fees 100,575
Professional fees 95,387
Printing expense 28,975
Fees and expenses of nonaffiliated trustees 15,165
Miscellaneous 26,528
-----------
Total expenses $ 3,687,398
Less management fees waived and expenses
reimbursed by Pioneer Investment Management, Inc. (35,412)
-----------
Net expenses $ 3,651,986
-----------
Net investment income $ 2,263,512
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments $17,533,200
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (264,447) $17,268,753
----------- -----------
Change in net unrealized gain (loss) on:
Investments $15,925,867
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (99) $15,925,768
----------- -----------
Net gain on investments and foreign currency transactions $33,194,521
-----------
Net increase in net assets resulting from operations $35,458,033
===========
The accompanying notes are an integral part of these financial statements. 23
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 8/31/06 and 8/31/05, respectively
Year Ended Year Ended
8/31/06 8/31/05
FROM OPERATIONS:
Net investment income $ 2,263,512 $ 214,002
Net realized gain on investments and foreign currency
transactions 17,268,753 12,815,962
Change in net unrealized gain (loss) on investments
and foreign currency transactions 15,925,768 (651,021)
------------ ------------
Net increase in net assets resulting from
operations $ 35,458,033 $ 12,378,943
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.24 and $0.19* per share, respectively) $ (928,894) $ (104,079)
Class B ($0.00 and $0.09* per share, respectively) - (20,763)
Class C ($0.07 and $0.13* per share, respectively) (35,655) (32,010)
Class R ($0.30 and $0.00 per share, respectively) (952) -
Class Y ($0.41 and $0.00 per share, respectively) (42,073) -
Net realized gain:
Class A ($0.00 and $0.72* per share, respectively) - (354,852)
Class B ($0.00 and $0.72* per share, respectively) - (142,572)
Class C ($0.00 and $0.72* per share, respectively) - (164,906)
------------ ------------
Total distributions to shareowners $ (1,007,574) $ (819,182)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 39,982,365 $ 13,853,315
Shares issued in reorganization - 172,232,428
Reinvestment of distributions 901,560 583,662
Cost of shares repurchased (59,171,619) (14,736,364)
Redemption fees 3,147 9,008
------------ ------------
Net increase (decrease) in net assets resulting
from Fund share transactions $(18,284,547) $171,942,049
------------ ------------
Net increase in net assets $ 16,165,912 $183,501,810
NET ASSETS:
Beginning of year 189,672,290 6,170,480
------------ ------------
End of year $205,838,202 $189,672,290
============ ============
Undistributed net investment income $ 1,998,669 $ 1,007,178
============ ============
* Historical distribution per share amounts prior to June 24, 2005 have been
adjusted to reflect the conversion ratios utilized for the merger of Europe
Fund and Europe Select Fund.
24 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares* '05 Amount*
CLASS A
Shares sold 903,475 $ 31,809,911 246,778 $ 7,600,141
Shares Issued in
Reorganization - - 3,998,421 118,720,989
Reinvestment of distributions 26,478 858,693 10,423 311,471
Less shares repurchased (914,893) (30,897,558) (273,436) (8,366,404)
-------- ------------ --------- ------------
Net increase 15,060 $ 1,771,046 3,982,186 $118,266,197
======== ============ ========= ============
CLASS B
Shares sold 141,314 $ 4,483,916 74,664 $ 2,104,729
Shares Issued in
Reorganization - - 1,475,024 39,828,322
Reinvestment of distributions - - 4,838 131,446
Less shares repurchased (713,065) (22,404,853) (139,768) (3,905,571)
-------- ------------ --------- ------------
Net increase (decrease) (571,751) $(17,920,937) 1,414,758 $ 38,158,926
======== ============ ========= ============
CLASS C
Shares sold 91,123 $ 2,897,861 101,900 $ 2,873,196
Shares Issued in
Reorganization - - 420,453 11,339,208
Reinvestment of distributions 995 29,333 5,182 140,745
Less shares repurchased (157,692) (4,893,772) (77,710) (2,171,611)
-------- ------------ --------- ------------
Net increase (decrease) (65,574) $ (1,966,578) 449,825 $ 12,181,538
======== ============ ========= ============
CLASS R
Shares sold 2,272 $ 73,397 81 $ 2,502
Shares Issued in
Reorganization - - 1,657 48,790
Reinvestment of distributions 29 943 - -
Less shares repurchased (511) (17,620) (30) (905)
-------- ------------ --------- ------------
Net increase 1,790 $ 56,720 1,708 $ 50,387
======== ============ ========= ============
CLASS Y
Shares sold 20,160 $ 717,280 41,514 $ 1,272,747
Shares Issued in
Reorganization - - 75,016 2,295,119
Reinvestment of distributions 378 12,591 - -
Less shares repurchased (27,398) (957,816) (9,137) (291,873)
-------- ------------ --------- ------------
Net increase (decrease) (6,860) $ (227,945) 107,393 $ 3,275,993
======== ============ ========= ============
* Historical distribution per share amounts prior to June 24, 2005 have been
adjusted to reflect the conversion ratios utilized for the merger of Europe
Fund and Europe Select Fund.
The accompanying notes are an integral part of these financial statements. 25
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
CLASS A 8/31/06 8/31/05 (a) 8/31/04 (a) 8/31/03 (a) 8/31/02 (a)
Net asset value, beginning of period $ 31.54 $ 27.25 $21.41 $ 19.51 $ 20.10
-------- -------- ------ ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.50 $ 0.11 $ 0.20 $ 0.17 $ 0.10
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 6.03 5.09 5.89 1.73 (0.44)
-------- -------- ------ ------- -------
Net increase (decrease) from investment operations $ 6.53 $ 5.20 $ 6.09 $ 1.90 $ (0.34)
-------- -------- ------ ------- -------
Distributions to shareowners:
Net investment income $ (0.24) $ (0.19) $(0.25) $ - $ (0.25)
Net realized gain - (0.72) - - -
-------- -------- ------ ------- -------
Total distributions $ (0.24) $ (0.91) $(0.25) $ - $ (0.25)
-------- -------- ------ ------- -------
Redemption fee $ -(b) $ -(b) $ - $ - $ -
-------- -------- ------ ------- -------
Net increase (decrease) in net asset value $ 6.29 $ 4.29 $ 5.84 $ 1.90 $ (0.59)
-------- -------- ------ ------- -------
Net asset value, end of period $ 37.83 $ 31.54 $27.25 $ 21.41 $ 19.51
======== ======== ====== ======= =======
Total return* 20.83% 24.53% 28.56% 9.73% (1.76)%
Ratio of net expenses to average net assets+ 1.66% 1.71% 1.25% 1.62% 1.75%
Ratio of net investment income to average net assets+ 1.47% 0.72% 1.58% 1.02% 0.17%
Portfolio turnover rate 43% 149% 48% 67% 68%
Net assets, end of period (in thousands) $155,550 $129,215 $3,108 $ 914 $ 567
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.66% 2.21% 8.30% 16.15% 31.21%
Net investment income (loss) 1.47% 0.22% (5.47)% (13.51)% (29.29)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.66% 1.69% 1.25% 1.62% 1.75%
Net investment income 1.47% 0.74% 1.58% 1.02% 0.17%
(a) Historical per-share amounts prior to June 24, 2005 have been adjusted to
reflect the conversion ratios utilized for the merger of the Europe Fund and
Europe Select Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
26 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
CLASS B 8/31/06 8/31/05 (a) 8/31/04 (a) 8/31/03 (a) 8/31/02 (a)
Net asset value, beginning of period $28.63 $ 24.85 $19.65 $ 18.10 $ 18.53
------ ------- ------ ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.24 $ (0.03) $(0.02) $ (0.02) $ (0.11)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 5.39 4.62 5.33 1.57 (0.32)
------- ------- ------ ------- -------
Net increase (decrease) from investment operations $ 5.63 $ 4.59 $ 5.31 $ 1.55 $ (0.43)
------- ------- ------ ------- -------
Distributions to shareowners:
Net investment income $ - $ (0.09) $(0.11) $ - $ -
Net realized gain - (0.72) - - -
------- ------- ------ ------- -------
Total distributions $ - $ (0.81) $(0.11) $ - $ -
------- ------- ------ ------- -------
Redemption fee $ -(b) $ -(b) $ - $ - $ -
------- ------- ------ ------- -------
Net increase (decrease) in net asset value $ 5.63 $ 3.78 $ 5.20 $ 1.55 $ (0.43)
------- ------- ------ ------- -------
Net asset value, end of period $ 34.26 $ 28.63 $24.85 $ 19.65 $ 18.10
+====== ======= ====== ======= =======
Total return* 19.66% 23.19% 27.07% 8.57% (2.34)%
Ratio of net expenses to average net assets+ 2.65% 2.69% 2.17% 2.78% 2.33%
Ratio of net investment income (loss) to average net assets+ 0.36% (0.27)% 0.65% (0.10)% (0.52)%
Portfolio turnover rate 43% 149% 48% 67% 68%
Net assets, end of period (in thousands) $30,960 $42,249 $1,505 $ 457 $ 295
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 2.74% 3.32% 9.20% 17.41% 31.81%
Net investment income (loss) 0.27% (0.90)% (6.38)% (14.73)% (30.00)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 2.65% 2.65% 2.17% 2.78% 2.33%
Net investment income (loss) 0.36% (0.23)% 0.65% (0.10)% (0.52)%
(a) Historical per-share amounts prior to June 24, 2005 have been adjusted to
reflect the conversion ratios utilized for the merger of the Europe Fund and
Europe Select Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges.Total return would be reduced if sales charges were taken into
account.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 27
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
CLASS C 8/31/06 8/31/05 (a) 8/31/04 (a) 8/31/03 (a) 8/31/02 (a)
Net asset value, beginning of period $ 28.60 $ 24.81 $19.63 $ 17.98 $ 18.39
------- ------- ------ ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.19 $ 0.01 $ 0.09 $ 0.07 $ (0.09)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 5.44 4.61 5.34 1.58 (0.32)
------- ------- ------ ------- -------
Net increase (decrease) from investment operations $ 5.63 $ 4.62 $ 5.43 $ 1.65 $ (0.41)
------- ------- ------ ------- -------
Distributions to shareowners:
Net investment income $ (0.07) $ (0.13) $(0.25) $ - $ -
Net realized gain - (0.72) - - -
------- ------- ------ ------- -------
Total distributions $ (0.07) $ (0.85) $(0.25) $ - $ -
------- ------- ------ ------- -------
Redemption fee $ - $ 0.02 $ - $ - $ -
------- ------- ------ ------- -------
Net increase (decrease) in net asset value $ 5.56 $ 3.79 $ 5.18 $ 1.65 $ (0.41)
------- ------- ------ ------- -------
Net asset value, end of period $ 34.16 $ 28.60 $24.81 $ 19.63 $ 17.98
======= ======= ====== ======= =======
Total return* 19.73% 23.53% 27.67% 9.17% (2.21)%
Ratio of net expenses to average net assets+ 2.59% 2.41% 1.72% 2.27% 2.22%
Ratio of net investment income (loss) to average net assets+ 0.52% 0.35% 1.14% 0.54% (0.35)%
Portfolio turnover rate 43% 149% 48% 67% 68%
Net assets, end of period (in thousands) $15,270 $14,661 $1,557 $ 404 $ 201
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 2.59% 3.72% 8.75% 17.02% 31.70%
Net investment income (loss) 0.52% (0.96)% (5.89)% (14.21)% (29.83)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 2.59% 2.39% 1.72% 2.27% 2.22%
Net investment income (loss) 0.52% 0.37% 1.14% 0.54% (0.35)%
(a) Historical per-share amounts prior to June 24, 2005 have been adjusted to
reflect the conversion ratios utilized for the merger of the Europe Fund and
Europe Select Fund.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales charges.
Total return would be reduced if sales charges were taken into account.
+ Ratios with no reduction for fees paid indirectly.
28 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year 6/24/05 (a)
Ended to
8/31/06 8/31/05
CLASS R
Net asset value, beginning of period $31.27 $29.45
------ ------
Increase from investment operations:
Net investment income $ 0.49 $ 0.01
Net realized and unrealized gain on investments
and foreign currency transactions 5.86 1.81
------ ------
Net increase from investment operations $ 6.35 $ 1.82
------ ------
Distributions to shareowners:
Net investment income (0.30) -
------ ------
Net increase in net asset value $ 6.05 $ 1.82
------ ------
Net asset value, end of period $37.32 $31.27
====== ======
Total return* 20.46% 6.19%(b)
Ratio of net expenses to average net assets+ 2.00% 2.14%**
Ratio of net investment income to average net
assets+ 1.37% 0.08%**
Portfolio turnover rate 43% 149%
Net assets, end of period (in thousands) $ 131 $ 53
Ratios with no waiver of management fees and
assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 6.27% 2.14%**
Net investment income (loss) 5.63% 0.08%**
Ratios with waiver of management fees and
assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 2.00% 2.00%**
Net investment income 1.37% 0.22%**
(a) Class R shares were first publicly offered on June 24, 2005.
(b) Not annualized.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 29
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year 6/24/05 (a)
Ended to
8/31/06 8/31/05
CLASS Y
Net asset value, beginning of period $32.54 $30.59
------ ------
Increase from investment operations:
Net investment income $ 0.89 $ 0.07
Net realized and unrealized gain on investments
and foreign currency transactions 6.04 1.88
------ ------
Net increase from investment operations $ 6.93 $ 1.95
------ ------
Distributions to shareowners:
Net investment income (0.41) -
------ ------
Net increase in net asset value $ 6.52 $ 1.95
------ ------
Net asset value, end of period $39.06 $32.54
====== ======
Total return* 21.50% 6.36%(b)
Ratio of net expenses to average net assets+ 1.10% 1.18%**
Ratio of net investment income to average net
assets+ 2.00% 1.05%**
Portfolio turnover rate 43% 149%
Net assets, end of period (in thousands) $3,927 $3,495
Ratios with no waiver of management fees and
assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 1.10% 1.18%**
Net investment income 2.00% 1.05%**
Ratios with waiver of management fees and
assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 1.10% 1.18%**
Net investment income 2.00% 1.05%**
(a) Class Y shares were first publicly offered on June 24, 2005.
(b) Not annualized.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
30 The accompanying notes are an integral part of these financial statements.
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 8/31/06
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Europe Select Equity Fund (the Fund) is a Massachusetts business trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. On June 24, 2005 Pioneer Europe Select Fund was
merged into Pioneer Europe Fund and, in connection with the merger, Pioneer
Europe Fund was renamed Pioneer Europe Select Equity Fund. Pioneer Europe
Select Fund is the accounting survivor and its historical performance, as
adjusted, is presented in the Fund's financial highlights. These financial
highlights and shareholder activity as reflected in the statement of changes in
net assets have been adjusted to reflect the conversion ratios used for the
merger of Europe Fund and Europe Select Fund. The investment objective of the
Fund is long-term capital growth.
Investing in the securities of European issuers involves unique risks compared
to investing in securities of U.S. issuers. These risks are more pronounced to
the extent the Fund invests a significant portion of its investments in any one
European region. Information regarding the Fund's principal investment risks is
contained in the Fund's prospectus(es). Please refer to those documents when
considering the Fund's risks.
The Fund offers five classes of shares - Class A, Class B, Class C, Class R and
Class Y shares. Class A, Class B and Class C Shares were first publicly offered
on December 29, 2000. Class R and Class Y shares were first publicly offered on
June 24, 2005. Shares of Class A, Class B, Class C, Class R and Class Y each
represent an interest in the same portfolio of investments of the Fund and have
equal rights to voting, redemptions, dividends and liquidation, except that
each class of shares can bear different transfer agent and distribution fees
and have exclusive voting rights with respect to the distribution plans that
have been adopted by Class A, Class B, Class C and Class R shareowners,
respectively. There is no distribution plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from
31
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 8/31/06 (continued)
- --------------------------------------------------------------------------------
those estimates. The following is a summary of significant accounting policies
followed by the Trust in the preparation of its financial statements, which are
consistent with those policies generally accepted in the investment company
industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value
of the Fund is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE.
In computing the net asset value, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that
have not traded on the date of valuation, or securities for which sale
prices are not generally reported, are valued at the mean between the last
bid and asked prices. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees. The Fund invests primarily
in securities of non-U.S. issuers. The principal exchanges and markets for
such securities have closing times prior to the close of the NYSE.
However, the value of these securities may be influenced by changes in
global markets occurring after the closing times of the local exchanges
and markets up to the time the Fund determines its net asset value.
Consequently, the Board of Trustees of the Fund has determined that the
use of daily fair valuations as provided by a pricing service is
appropriate for the Fund. The Fund may also take into consideration other
significant events in determining the fair value of these securities.
Thus, the Fund's securities valuations may differ from prices reported by
the various local exchanges and markets. Cash equivalent securities are
valued at amortized cost.
Dividend income is recorded on the ex-dividend date, except that certain
dividends where the ex-dividend date may have passed are recorded as soon
as the Fund becomes aware of the ex-dividend data in the exercise of
reasonable diligence. Interest income, including interest on income
bearing cash accounts, is recorded on the accrual basis, net of
unrecoverable foreign taxes withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
32
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions, if any,
represent, among other things, the net realized gains and losses on
foreign currency contracts, disposition of foreign currencies and the
difference between the amount of income accrued and the U.S. dollars
actually received. Further, the effects of changes in foreign currency
exchange rates on investments are not segregated in the statement of
operations from the effects of changes in market price of those securities
but are included with the net realized and unrealized gain or loss on
investments.
C. Forward Foreign Currency Contracts
The Fund enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio
hedges). All contracts are marked to market daily at the applicable
exchange rates and any resulting unrealized gains or losses are recorded
in the Fund's financial statements. The Fund records realized gains and
losses at the time a portfolio hedge is offset by entering into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
At August 31, 2006, the Fund had no outstanding portfolio hedges or
settlement hedges.
D. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investments companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with
33
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 8/31/06 (continued)
- --------------------------------------------------------------------------------
federal income tax rules. Therefore, the sources of the Trust's
distributions may be shown in the accompanying financial statements as
either from or in excess of net investment income or net realized gain on
investment transactions, or from paid-in-capital, depending on the type of
book/tax differences that may exist.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
(FIN 48). FIN 48 provides guidance for how uncertain tax positions should
be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing the fund's (series',
trust's) tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more-likely-than-not threshold would
be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and
is to be applied to all open tax years as of the effective date. At this
time, management is evaluating the implications of FIN 48 and its impact
in the financial statements has not been determined.
At August 31, 2006, the Fund had a net capital loss carryforward of
$8,023,036, which will expire in 2011 if not utilized.
At August 31, 2006, the Fund has reclassified $264,447 to decrease
accumulated net investment income and $264,447 to decrease accumulated net
realized loss on investments and foreign currency transactions to reflect
permanent book/tax differences. The reclassification has no impact on the
net asset value of the Fund and is designed to present the Fund's capital
accounts on a tax basis.
For federal income tax purposes, Pioneer Europe Select Fund ceased to
exist on June 24, 2005 and has filed a final tax return for the period
from September 1, 2004 through June 24, 2005. The tax character of
distributions paid by the Fund during the years ended August 31, 2005 and
2006 were:
34
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2006 2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $1,007,574 $403,585
Long-term capital gain - 415,597
---------- --------
Total $1,007,574 $819,182
========== ========
- --------------------------------------------------------------------------------
For federal income tax purposes, Pioneer Europe Fund (now Pioneer Europe
Select Equity Fund) is the tax survivor previously described of the merger
and has filed a tax return for the period from November 1, 2004 through
August 31, 2005, including the combined operations of the merged Fund. The
tax survivor paid ordinary income distributions of $151,401 during the
period from November 1, 2004 through August 31, 2005.
The following shows the components of distributable earnings on a federal
income tax basis at August 31, 2006.
- --------------------------------------------------------------------------------
2006
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 1,998,669
Capital loss carryforward (8,023,036)
Unrealized appreciation 45,634,432
-----------
Total $39,610,065
===========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appre
ciation is attributable to the tax deferral of losses on wash sales.
E. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the
Fund and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano) earned $21,405 in underwriting commissions on the
sale of Class A shares during the year ended August 31, 2006.
F. Class Allocations
Distribution fees are calculated based on the average daily net asset
value attributable to Class A, Class B, Class C and Class R shares of the
Fund, respectively (See Note 4). Class Y shares are not subject to a
distribution plan. Shareowners of each class share
35
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 8/31/06 (continued)
- --------------------------------------------------------------------------------
all expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services, which are
allocated based on the number of accounts in each class and the ratable
allocation of related out-of-pocket expenses (see Note 3). Income, common
expenses and realized and unrealized gains and losses are calculated at
the Fund level and allocated daily to each class of shares based on their
respective percentage of adjusted net assets at the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, Class C, Class R and Class Y shares can bear
different transfer agent and distribution fees.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), a wholly owned indirect subsidiary
of UniCredito Italiano, manages the Trust's portfolio. Effective January 1,
2006, management fees are calculated daily at the annual rate of 0.85% of the
Fund's average daily nets assets up to $500 million; and 0.75% of the excess
over $500 million. Prior to January 1, 2006, management fees were calculated
daily at the annual rate of 1.00% of the Fund's average daily net assets up to
$300 million; 0.85% of the next $200 million; and 0.75% of the excess over $500
million. The management fee was equivalent to 0.90% of the average daily net
assets for the period.
Effective June 24, 2005, PIM has contractually agreed to limit ordinary
operating expenses to the extent required to reduce Fund expenses to 1.75%,
2.65%, 2.65% and 2.00% of the average daily net assets attributable to Class A,
Class B, Class C and Class R shares, respectively. Class Y shares do not have
an expense limitation. These expense limitations are in effect through January
1, 2009 for Class A shares and through January 1, 2007 for Class B, Class C and
Class R shares.
Prior to the merger, PIM had contractually agreed not to impose all or a
portion of its management fee and to assume other operating expenses of Pioneer
Europe Select Fund to the extent necessary to limit Class A expenses to 1.75%
of the average daily net assets attributable to Class A shares. The portion of
the Fund-wide expenses
36
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
attributable to Class B and Class C shares were reduced only to the extent that
such expenses are reduced for Class A shares.
In addition, under the management fees, administrative costs and certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At August 31, 2006, $32,332 was payable to PIM
related to management fees, administrative costs and certain other services and
is included in due to affiliates.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareowner services to the Fund at
negotiated rates. Included in due to affiliates is $72,783 in transfer agent
fees payable to PIMSS at August 31, 2006.
4. Distribution Plans
The Fund adopted Plans of Distribution with respect Class A, Class B, Class C,
and Class R shares (Class A Plan, Class B Plan, Class C Plan, and Class R Plan)
in accordance with Rule 12b-1 under the Investment Company Act of 1940.
Pursuant to the Class A Plan, the Fund pays PFD a service fee of up to 0.25% of
the average daily net assets attributable to Class A shares in reimbursement of
its actual expenditures to finance activities primarily intended to result in
the sale of Class A shares. Pursuant to the Class B Plan and the Class C Plan,
the Fund pays PFD 1.00% of the average daily net assets attributable to each
class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class
C shares. Pursuant to the Class R Plan, the Fund pays PFD 0.50% of the average
daily net assets attributable to Class R shares for distribution services.
Included in due to affiliates is $2,246 in distribution fees payable to PFD at
August 31, 2006. The Fund has also adopted a separate service plan for Class R
shares (Service Plan). The Service Plan authorizes the Fund to pay securities
dealers, plan administrators or other service organizations that agree to
provide certain services to retirement plans or plan participants holding
shares of the Fund a service fee of up to 0.25% of the Fund's average daily net
assets attributable to Class R shares held by such plans.
37
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 8/31/06 (continued)
- --------------------------------------------------------------------------------
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within 18 months of
purchase. Class B shares subscribed on or after December 1, 2004 that are
redeemed within five years of purchase are subject to a CDSC at declining rates
beginning at 4.00%, based on the lower of cost or market value of shares being
redeemed. Redemptions of Class C shares within one year of purchase are subject
to a CDSC of 1.00%. There are no CDSCs for Class R shares. Proceeds from the
CDSCs are paid to PFD. For the year ended August 31, 2006 CDSCs in the amount
of $50,565 were paid to PFD.
Prior to August 1, 2006, the Fund charged a 2.0% redemption fee on each class
of shares sold within 30 days of purchase. For the year ended August 30, 2006,
the Fund collected $3,147 in redemption fees, which are included in the Fund's
capital account. Effective August 1, 2006, this redemption fee is no longer
charged.
5. Expense Offset Arrangements
The Fund can enter into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the year ended August 31, 2006 the Fund's expenses were
not reduced under such arrangements.
6. Merger Information
On June 21, 2005, beneficial owners of Pioneer Europe Select Fund approved a
proposed Agreement and Plan of Reorganization that provided for the merger
listed below. This tax-free reorganization was completed on June 24, 2005, by
exchanging all of Europe Select Fund's net assets for Europe Fund's shares,
based on Europe Fund's Class A, Class B, Class C, Class R and Class Y shares'
ending net asset value, respectively. In connection with the reorganization,
Pioneer Europe Fund was subsequently renamed Pioneer Europe Select Equity Fund.
The following charts show the details of the reorganizations as of that closing
date ("Closing Date"):
38
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Pioneer Europe Pioneer Europe
Pioneer Europe Fund Select Fund Select Equity Fund
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ----------------------------------------------------------------------------------------------
Net Assets
Class A $118,720,989 $ 7,534,637 $126,255,626
Class B 39,828,322 2,849,243 42,677,565
Class C 11,339,208 3,362,380 14,701,588
Class R 48,790 - 48,790
Class Y 2,295,119 - 2,295,119
------------ ----------- ------------
Total Net
Assets $172,232,428 $13,746,260 $185,978,688
------------ ----------- ------------
Shares
Outstanding
Class A 3,998,421 253,776* 4,252,197
Class B 1,475,024 105,527* 1,508,551
Class C 420,453 124,671* 545,125
Class R 1,657 - 1,657
Class Y 75,016 - 75,016
Shares
Issued in
Reorganization
Class A 3,998,421
Class B 1,475,024
Class C 420,453
Class R 1,657
Class Y 75,016
- ----------------------------------------------------------------------------------------------
* Share amounts have been adjusted to reflect the conversion ratios utilized
for the merger.
- ----------------------------------------------------------------------------------------------
Unrealized Accumulated
Appreciation Gain on
on Closing Date Closing Date
- ----------------------------------------------------------------------------------------------
Pioneer Europe Fund $30,263,828 $(38,630,452)
=========== =============
- ----------------------------------------------------------------------------------------------
On June 24, 2005, the unrealized appreciation of Pioneer Europe Select Fund,
which as noted above, was the acquired fund for tax purposes, was $864,305.
39
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 8/31/06 (continued)
- --------------------------------------------------------------------------------
Tax Information (unaudited)
For the fiscal year ending August 30, 2006, the Fund has elected to pass
through foreign tax credits of $429,270.
40
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Board of Trustees and the Shareowners of
Pioneer Europe Select Equity Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Pioneer Europe Select Equity Fund as of August
31, 2006, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of August 31, 2006, by correspondence with
the custodian and brokers. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Europe Select Equity Fund at August 31, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated therein, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
October 13, 2006
41
Pioneer Europe Select Equity Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Trustees and Officers
The Fund's Board of Trustees provides broad supervision over the Fund's affairs.
The officers of the Fund are responsible for the Fund's operations. The Fund's
Trustees and officers are listed below, together with their principal
occupations during the past five years. Trustees who are interested persons of
the Fund within the meaning of the 1940 Act are referred to as Interested
Trustees. Trustees who are not interested persons of the Fund are referred to as
Independent Trustees. Each of the Trustees (except Mr. Hood and Mr. West) serves
as a Trustee of each of the 89 U.S. registered investment portfolios for which
Pioneer serves as investment adviser (the "Pioneer Funds"). Mr. Hood and Mr.
West each serves as Trustee of 37 of the 89 Pioneer Funds. The address for all
Interested Trustees and all officers of the Fund is 60 State Street, Boston,
Massachusetts 02109.
The Fund's statement of additional information provides more detailed
information regarding the Fund's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available
to shareowners at www.pioneerinvestments.com and on the SEC's web site
at http://www.sec.gov.
42
Pioneer Europe Select Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Fund and Term of Office During Past Five Years Held by this Trustee
John F. Cogan, Jr. (80)* Chairman of the Trustee since 1990. Deputy Chairman and a Director of Chairman (until June
Board, Trustee Serves until a Pioneer Global Asset Management 2006) and Director of
and President successor trustee is S.p.A. ("PGAM"); Non-Executive ICI Mutual Insurance
elected or earlier Chairman and a Director of Pioneer Company; Director
retirement or removal. Investment Management USA Inc. of Harbor Global
("PIM-USA"); Chairman and a Director Company, Ltd.
of Pioneer; Chairman and Director of
Pioneer Institutional Asset
Management, Inc. (since 2006);
Director of Pioneer Alternative
Investment Management Limited
(Dublin); President and a Director
of Pioneer Alternative Investment
Management (Bermuda) Limited and
affiliated funds; Director of
PIOGLOBAL Real Estate Investment
Fund (Russia) (until June 2006);
Director of Nano-C, Inc. (since
2003); Director of Cole Investment
Corporation (since 2004); Director
of Fiduciary Counseling, Inc.;
President and Director of Pioneer
Funds Distributor, Inc. ("PFD")
(until May 2006); President of all
of the Pioneer Funds; and Of
Counsel, Wilmer Cutler Pickering
Hale and Dorr LLP (counsel to
PIM-USA and the Pioneer Funds)
- ------------------------------------------------------------------------------------------------------------------------------------
43
Pioneer Europe Select Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Fund and Term of Office During Past Five Years Held by this Trustee
Osbert M. Hood (54)* Trustee and Trustee since 2003. President and Chief Executive None
Executive Vice Serves until a Officer, PIM-USA since May 2003
President successor trustee is (Director since January 2001;
elected or earlier Executive Vice President and Chief
retirement or removal. Operating Officer from November 2000
- May 2003); Director of PGAM since
June 2003; President and Director of
Pioneer since May 2003; President
and Director of Pioneer
Institutional Asset Management, Inc.
since February 2006; Chairman and
Director of Pioneer Investment
Management Shareholder Services,
Inc. ("PIMSS") since May 2003;
Director of PFD since May 2006;
Director of Oak Ridge Investments,
L.L.C. (a registered investment
adviser in which PIM-USA owns a
minority interest) since January
2005; Director of Vanderbilt Capital
Advisors, LLC (an institutional
investment adviser wholly-owned by
PIM-USA) since June 2006; Executive
Vice President of all of the Pioneer
Funds since June 2003
*Mr. Cogan and Mr. Hood are Interested Trustees because each is an officer or director of the fund's investment adviser and certain
of its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
44
Pioneer Europe Select Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships Held
Name, Age and Address With the Fund and Term of Office During Past Five Years by this Trustee
David R. Bock (62) Trustee Trustee since 2005. Senior Vice President and Chief Director of The Enterprise
3050 K Street NW, Serves until a Financial Officer, I-trax, Inc. Social Investment
Washington, DC 20007 successor trustee is (publicly traded health care Company (privately-held
elected or earlier services company) (2001 - present); affordable housing
retirement or removal. Managing Partner, Federal City finance company);
Capital Advisors (boutique merchant Director of New York
bank) (2002 to 2004); and Executive Mortgage Trust (publicly
Vice President and Chief Financial traded mortgage REIT)
Officer, Pedestal Inc.
(internet-based mortgage trading
company) (2000 - 2002)
- ------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (58) Trustee Trustee since 1997. President, Bush International Director of Brady
3509 Woodbine Street Serves until a (international financial Corporation (industrial
Chevy Chase, MD 20815 successor trustee is advisory firm) identification and
elected or earlier specialty coated material
retirement or removal. products manufacturer),
Director of Briggs &
Stratton Co. (engine
manufacturer) Director
of Mortgage Guaranty
Insurance Corporation,
and Director of UAL
Corporation (airline
holding company)
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (59) Trustee Trustee since 1990. Founding Director, The Winthrop None
1001 Sherbrooke Street West, Serves until a Group, Inc. (consulting firm);
Montreal, Quebec, Canada successor trustee is Desautels Faculty of Management,
H3A 1G5 elected or earlier McGill University
retirement or removal.
- ------------------------------------------------------------------------------------------------------------------------------------
45
Pioneer Europe Select Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships Held
Name, Age and Address With the Fund and Term of Office During Past Five Years by this Trustee
Thomas J. Perna (55) Trustee Trustee since Private investor (2004 - present); Director of Quadriserv
89 Robbins Avenue, February, 2006. Senior Executive Vice President, The Inc. (technology products
Berkeley Heights, NJ 07922 Serves until a Bank of New York (financial and for securities lending
successor trustee is securities services) (1986 - 2004) industry)
elected or earlier
retirement or removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (58) Trustee Trustee since 1990. President and Chief Executive Director of New America
One Boston Place, 28th Floor, Serves until a Officer, Newbury, Piret & Company, High Income Fund, Inc.
Boston, MA 02108 successor trustee is Inc. (investment banking firm) (closed-end investment
elected or earlier company)
retirement or removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (77) Trustee Trustee since 1993. Senior Counsel, Sullivan Director, The Swiss
125 Broad Street Serves until a & Cromwell (law firm) Helvetia Fund, Inc.
New York, NY 10004 successor trustee is (closed-end investment
elected or earlier company)
retirement or removal.
- ------------------------------------------------------------------------------------------------------------------------------------
John Winthrop (70) Trustee Trustee since 1990. President, John Winthrop & Co., Inc. None
One North Adgers Wharf, Serves until a (private investment firm)
Charleston, SC 29401 successor trustee is
elected or earlier
retirement or removal.
- ------------------------------------------------------------------------------------------------------------------------------------
46
Pioneer Europe Select Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships Held
Name and Age With the Fund and Term of Office During Past Five Years by this Officer
Dorothy E. Bourassa (58) Secretary Since 2003. Serves Secretary of PIM-USA; Senior Vice None
at the discretion of President - Legal of Pioneer; and
the Board. Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all
of the Pioneer Funds since September
2003 (Assistant Secretary from
November 2000 to September 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (41) Assistant Since 2003. Serves Vice President and Senior Counsel of None
Secretary at the discretion of Pioneer since July 2002; Vice
the Board. President and Senior Counsel of
BISYS Fund Services, Inc. (April
2001 to June 2002); Senior Vice
President and Deputy General Counsel
of Funds Distributor, Inc. (July
2000 to April 2001), and Assistant
Secretary of all Pioneer Funds since
September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher P. Harvey (45) Assistant Since July 2006. Partner, Wilmer Cutler Pickering None
Secretary Serves at the Hale and Dorr LLP; and Assistant
discretion of Secretary of all Pioneer Funds since
the Board. July 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Vincent Nave (61) Treasurer Since 2000. Serves Vice President - Fund Accounting, None
at the discretion of Administration and Controllership
the Board. Services of Pioneer; and Treasurer
of all of the Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (46) Assistant Since 2004. Serves Deputy Treasurer of Pioneer since None
Treasurer at the discretion of 2004; Treasurer and Senior Vice
the Board. President, CDC IXIS Asset Management
Services from 2002 to 2003;
Assistant Treasurer and Vice
President, MFS Investment Management
from 1997 to 2002; and Assistant
Treasurer of all of the Pioneer
Funds since November 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (41) Assistant Since 2000. Serves Assistant Vice President - Fund None
Treasurer at the discretion of Accounting, Administration and
the Board. Controllership Services of Pioneer;
and Assistant Treasurer of all of
the Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
47
Pioneer Europe Select Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships Held
Name and Age With the Fund and Term of Office During Past Five Years by this Officer
Gary Sullivan (48) Assistant Since 2002. Serves Fund Accounting Manager - Fund None
Treasurer at the discretion of Accounting, Administration and
the Board. Controllership Services of Pioneer;
and Assistant Treasurer of all of
the Pioneer Funds since May 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (32) Assistant Since 2003. Serves Fund Administration Manager - Fund None
Treasurer at the discretion of Accounting, Administration and
the Board. Controllership Services since June
2003; Assistant Vice President -
Mutual Fund Operations of State
Street Corporation from June 2002 to
June 2003 (formerly Deutsche Bank
Asset Management); Pioneer Fund
Accounting, Administration and
Controllership Services (Fund
Accounting Manager from August 1999
to May 2002); and Assistant
Treasurer of all Pioneer Funds since
September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Terrence J. Cullen (45) Chief Since March 2006. Chief Compliance Officer of Pioneer None
Compliance Serves at the and Pioneer Funds since March 2006;
Officer discretion of the Vice President and Senior Counsel of
Board. Pioneer since September 2004; and
Senior Vice President and Counsel,
State Street Research & Management
Company (February 1998 to September
2004)
- ------------------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly owned by UniCredito Italiano S.p.A.
("UniCredito Italiano"), one of the largest banking groups in Italy. Pioneer, the fund's investment adviser, provides investment
management and financial services to mutual
funds, institutional and other clients.
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
Before investing consider the Fund's investment objectives, risks, charges and
expenses. Contact your advisor or Pioneer Investments for a prospectus
containing this information. Read it carefully.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, DC.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Fund, including fees associated with
the annual filing of its Form N-1A, totaled approximately $32,860 in 2006 and
$31,510 in 2005.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
There were no fees for audit-related services provided to the Fund during the
fiscal years ended August 31, 2006 and 2005.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns, totaled
approximately $7,515 and $6,800 in 2006 and 2005, respectively.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no fees for other services provided to the Fund during the fiscal
years ended August 31, 2006 and 2005.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on or
after May 6, 2003, the effective date of the new SEC pre-approval
rules, the Fund's audit committee is required to pre-approve services
to affiliates defined by SEC rules to the extent that the services
are determined to have a direct impact on the operations or financial
reporting of the Fund. For the years ended August 31, 2006 and 2005,
there were no services provided to an affiliate that required the
Fund's audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Fund and affiliates, as
previously defined, totaled approximately $7,515 in 2006 and
$6,800 in 2005.
The Fund's audit committee of the Board of Trustees has considered
whether the provision of non-audit services that were rendered to
the Affiliates (as defined) that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
N/A
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Europe Select Equity Fund
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date October 31, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date October 31, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date October 31, 2006
* Print the name and title of each signing officer under his or her signature.