-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JyYXa3Qs8q01uCX78zOqSKuM3pBsakPVs9O0gDRL6/impWIzUS73+3H8NQ0nN8aY A5ElJXlNgSvqWbeU/ZJ0fw== 0001016964-99-000057.txt : 19990305 0001016964-99-000057.hdr.sgml : 19990305 ACCESSION NUMBER: 0001016964-99-000057 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19990303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER INDEPENDENCE PLANS CENTRAL INDEX KEY: 0001051008 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 333-42113 FILM NUMBER: 99556621 BUSINESS ADDRESS: STREET 1: C/O THE PIONEER GROUP INC STREET 2: 60 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109-1820 BUSINESS PHONE: 6174224960 MAIL ADDRESS: STREET 1: C/O THE PIONEER GROUP INC STREET 2: 60 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109-1820 485APOS 1 PIONEER INDEPENDENCE PLANS - POST-EFF. 1 As filed with the Securities and Exchange Commission on March 3, 1999 Registration No. 333-42113 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 POST-EFFECTIVE AMENDMENT NO. 1 A. Exact name of trust: Pioneer Independence Plans B. Name of depositor: Pioneer Funds Distributor, Inc. C. Complete address of depositor's principal executive offices: 60 State Street Boston, MA 02109-1820 D. Name and complete address of agent for service: Robert P. Nault, Esq. The Pioneer Group, Inc. 60 State Street Boston, MA Copy to: Joseph P. Barri, Esq. Hale and Dorr LLP 60 State Street Boston, MA 02109 It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [X] on May 3, 1999 pursuant to paragraph (a)(1) of Rule 485 [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment E. Title of securities being registered: Pioneer Independence Plans F. Approximate date of proposed public offering: Not applicable [ ] Check box if it is proposed that this filing will become effective on (date) at (time) pursuant to Rule 487 PIONEER INDEPENDENCE PLANS Reconciliation and Tie of Information in Prospectus with Items of Form N-8B-2 pursuant to Instruction 4 of Form S-6 ITEM NUMBER LOCATION IN PROSPECTUS OR PROSPECTUS CAPTION(S) I. ORGANIZATION AND GENERAL INFORMATION 1. (a) Cover page; Employer identification numbers 1. (b) Cover page 2. Basic information about the plans; The sponsor; Employer identification numbers 3. The custodian; Employer identification numbers 4. Basic information about the plans; The sponsor; Employer identification numbers 5. The sponsor; The custodian 6. (a) Basic information about the plans; The custodian 6. (b) Basic information about the plans; The custodian 7. Not applicable 8. Omitted pursuant to Instruction 3(a) of Form S-6 9. Not applicable II. GENERAL DESCRIPTION OF TRUST AND SECURITIES OF THE TRUST 10. (a) Basic information about the plans; The custodian; Accompanying prospectus for Pioneer Independence Funds 10. (b) Dividends, capital gains and taxes 10. (c) General rules on withdrawals and terminations 10. (d) Partial withdrawals; Terminating your plan; Systematic withdrawal program; Transfer or assignment of rights in a plan; Fund substitution 10. (e) Cancellation rights; Surrender rights; Replacement of partial withdrawals; Replacement privilege on termination; Termination of a plan by Pioneer or State Street Bank 10. (f) Basic information about the plans; Voting rights in fund shares 10. (g) (1) Creation and sales charge; Fund substitution 10. (g) (2) Fund substitution 10. (g) (3) Basic information about the plans 10. (g) (4) Basic information about the plans 10. (h) (1) Fund substitution 10. (h) (2) Basic information about the plans 10. (h) (3) Basic information about the plans; The custodian 10. (h) (4) Basic information about the plans; The custodian 10. (i) Extended investment option; Creation and sales charges; Qualifying for reduced sales charges; Purchasing Two or more plans; Rights of accumulation; Making investments ahead of schedule to complete a plan early; Changing the face amount of you plan; Requesting a transaction; Retirement plans; Voluntary tax withholding; Other policies 11. Basic information about the plans; Basic information about the fund 12. (a) Basic information about the plans 12. (b) Not applicable 12. (c) Accompanying prospectus for Pioneer Independence Fund 12. (d) Accompanying prospectus for Pioneer Independence Fund 12. (e) Not applicable 13. (a) Basic information about the fund; Choosing a fact amount; Creation and sales charges; Service charges and other fees; Accompanying prospectus for Pioneer Independence Fund 13. (b)-(e) Creation and sales charge; Choosing a face amount; A typical $100 monthly investment plan; Creation and sales charges; Qualifying for reduced sales charges; Purchasing two or more plans; Rights of accumulation; Changing the face amount of your plan 13. (f) Omitted pursuant to Instruction 3 of Form S-6 13. (g) Omitted pursuant to Instruction 3 of Form S-6 14. Basic information about the plans; Investments, withdrawals and terminations; General rules on withdrawals and terminations; The custodian 15. Automatic investments; By check 16. Basic information about the plans; The custodian; Accompanying prospectus for Pioneer Independence Fund 17. (a) General rules on withdrawals and terminations; Systematic withdrawal program 17. (b) Basic information about the plans; The custodian; Accompanying prospectus for Pioneer Independence Fund 17. (c) Investments, withdrawals and terminations; Termination of a plan by Pioneer or State Street Bank 18. (a) Omitted pursuant to Instruction 3 of Form S-6 18. (b) Dividends, capital gains and taxes; Accompanying prospectus for Pioneer Independence Fund 18. (c) Omitted pursuant to Instruction 3 of Form S-6 18. (d) Omitted pursuant to Instruction 3 of Form S-6 19. Statements, reports and notices; Dividends, capital gains and taxes 20. (a) Omitted pursuant to Instruction 3 of Form S-6 20. (b) The custodian 20. (c) The custodian 20. (d) Omitted pursuant to Instruction 3 of Form S-6 20. (e) The sponsor 20. (f) Omitted pursuant to Instruction 3 of Form S-6 21. (a) Omitted pursuant to Instruction 3 of Form S-6 21. (b) Omitted pursuant to Instruction 3 of Form S-6 21. (c) Omitted pursuant to Instruction 3 of Form S-6 22. Custodian Agreement (exhibit) 23. Response set forth in Form N-8B-2 only 24. Omitted pursuant to Instruction 3 of Form S-6 VI. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR 25. The sponsor 26. (a) Financial statements 26. (b) (1) Basic information about the fund; Accompanying prospectus for Pioneer Independence Fund 26. (b) (2) Basic information about the fund; Accompanying prospectus for Pioneer Independence Fund 26. (b) (3) Basic information about the fund; Accompanying prospectus for Pioneer Independence Fund 26. (b) (4) Accompanying prospectus for Pioneer Independence Fund 27. The sponsor; Accompanying prospectus for Pioneer Independence Fund 28. (a) The sponsor 28. (b) Names, positions and offices 29. The sponsor 30. Omitted pursuant to Instruction 3 of Form S-6 31. Omitted pursuant to Instruction 3 of Form S-6 32. Omitted pursuant to Instruction 3 of Form S-6 33. Omitted pursuant to Instruction 3 of Form S-6 34. Omitted pursuant to Instruction 3 of Form S-6 IV. DISTRIBUTION AND REDEMPTION OF SECURITIES 35. (A) Pioneer Independence Plans 35. (B) Omitted pursuant to Instruction 3 of Form S-6 35. (C) Omitted pursuant to Instruction 3 of Form S-6 36. Omitted pursuant to Instruction 3 of Form S-6 37. Omitted pursuant to Instruction 3 of Form S-6 38. (a) Basic information about the plans 38. (b) The sponsor 38. (c) Face amount; The sponsor 39. (a) The sponsor 39. (b) The sponsor 40. Financial statements 41. (a) The sponsor; Accompanying prospectus for Pioneer Independence Fund 41. (b) Omitted pursuant to Instruction 1 of Form S-6 41. (c) Omitted pursuant to Instruction 1 of Form S-6 42. Omitted pursuant to Instruction 3 of Form S-6 43. Omitted pursuant to Instruction 3 of Form S-6 44. (a) Accompanying prospectus for Pioneer Independence Fund 44. (b) Financial statements 44. (c) 15-Year Plan; 25-Year Plan Extended Investment Option; Purchasing two or more plans; Rights of accumulation 45. Omitted pursuant to Instruction 3 of Form S-6 46. Omitted pursuant to Instruction 3 of Form S-6 47. Basic information about the fund; Fund substitution; The custodian V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN 48. The custodian 49. Service charges and other fees 50. Omitted pursuant to Instruction 3 of Form S-6 VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES 51. Omitted pursuant to Instruction 3 of Form S-6 VII. POLICY OF REGISTRANT/REGULATED INVESTMENT COMPANY 52. (a) Fund substitution 52. (b) Omitted pursuant to Instruction 3 of Form S-6 52. (c) (1) Fund substitution 52. (c) (2) Fund substitution 52. (c) (3) Omitted pursuant to Instruction 3 of Form S-6 52. (c) (4) Fund substitution 52. (c) (5) Fund substitution 52. (d) Omitted pursuant to Instruction 3 of Form S-6 53. Dividends, capital gains and taxes; Accompanying prospectus for Pioneer Independence Fund VIII. FINANCIAL AND STATISTICAL INFORMATION 54. Omitted pursuant to Instruction 3 of Form S-6 55. A typical $100 monthly investment plan 56. Omitted pursuant to Instruction 1 of Form S-6 57. Omitted pursuant to Instruction 1 of Form S-6 58. Omitted pursuant to Instruction 1 of Form S-6 59. (a)(1) To be filed by amendment 59. (a)(2) Not applicable 59. (c)(1) Consolidated statement of financial condition at December 31, 1998 59. (c)(2) Consolidated statement of operations at December 31, 1998 PIONEER INDEPENDENCE PLANS PROSPECTUS MAY 3, 1999 Contents Basic information about the plans Basic information about the fund Investments, withdrawals and terminations Plan owner options and services Plan rights and policies Dividends, capital gains and taxes Service charges and other fees Additional information Financial statements NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES AGENCY HAS APPROVED THE PLANS OR THE FUND'S SHARES OR DETERMINED WHETHER THESE PROSPECTUSES ARE ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIME. THE PLAN PROSPECTUS MUST BE ACCOMPANIED BY THE FUND'S CURRENT PROSPECTUS. YOU SHOULD READ BOTH PROSPECTUSES AND KEEP THEM FOR FUTURE REFERENCE. SHARES OF THE FUND ARE OFFERED TO THE GENERAL PUBLIC ONLY THROUGH THE PLANS. YOU HAVE THE RIGHT TO A REFUND OF THE CURRENT VALUE OF YOUR FUND SHARES DURING THE 18 MONTHS AFTER YOUR PLAN PURCHASE. YOU ALSO HAVE OTHER LIMITED REFUND RIGHTS UNDER THE CONDITIONS DESCRIBED IN MORE DETAIL UNDER "PLAN RIGHTS AND POLICIES." AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. BASIC INFORMATION ABOUT THE PLANS Pioneer Funds Distributor, Inc., the plans' sponsor, designed PIONEER INDEPENDENCE PLANS to help you create an investment fund for future capital or income needs and build equity over a period of years by systematically investing a modest sum each month in shares of Pioneer Independence Fund. Under a plan, you make fixed monthly investments for 15 years (a total of 180 investments), with the option to make additional monthly investments for 25 years (a total of 300 investments). You should consider the following aspects of the plan before making an investment: o A plan represents an agreement among you, Pioneer, and State Street Bank and Trust Company, the plan's custodian. Under this agreement, State Street Bank applies your plan investments (after deduction of a creation and sales charges and other fees) to the purchase shares of the fund at net asset value. No agent or other person has the authority to modify, alter or otherwise change the terms of the plan or to bind Pioneer, State Street Bank or the issuer of fund shares by any statement, written or oral, not contained in this prospectus. - -------------------------------------------------------------------------------- TEXT BOX CREATION AND SALES CHARGE State Street Bank will deduct a creation and sales charge, sometimes called a front-end load, of up to 50% from each of your first 12 investments. - -------------------------------------------------------------------------------- o If you complete all scheduled payments under a 15-year plan, you will pay a maximum creation and sales charge of only 3.33% of the total plan investments. If, however, you withdraw part of your investment or terminate your plan before making the first 12 investments in your plan, you will probably lose money because of the creation and sales charge. If you terminate your plan after 18 months, the creation and sales charge may amount to as much as 31.6% of your plan investments. You should therefore consider a plan a long-term investment. o Your plan's value is based on the value of the fund shares in your plan. The value of the fund shares is, in turn, based on the value of the securities in its portfolio. The fund's investment results will vary depending on the composition of its portfolio, market conditions and the fund's operating expenses. A plan calls for monthly investments at regular intervals regardless of the price of fund shares. You should therefore consider your financial ability to continue investments in a plan. You will lose money if you terminate your plan at a time when the value of the fund shares in your plan is less than your plan's cost. o Your plan investments are not direct ownership of fund shares. Rather, your plan represents an interest in a trust that has direct ownership of the fund's shares on behalf of each plan owner. You have only a beneficial interest in the underlying shares of the fund. You will, however, retain full voting rights with respect to the underlying shares of the fund. State Street Bank will vote the shares held for your account in accordance with your instructions. o State Street Bank or Pioneer may terminate your plan if you fail to make investments under your plan for a period of 12 consecutive months or if fund shares are not available and a substitution is not made. You will be notified of any substitution of the plan's underlying investment. o Your dealer firm of record has proprietary rights to all commissions, including any service fees earned from Pioneer during the duration of your plan. The dealer is not obligated to transfer your plan to another dealer firm as long as its dealer agreement with Pioneer is still in effect. As a result, if you engage a new dealer, the new dealer may have no direct incentive to provide services with respect to your plan. If the dealer firm of record chooses to release 2 your plan to the new dealer firm, the new dealer firm must first complete, sign and signature guarantee a release form that can be obtained from Pioneer. The form must be returned to and accepted by State Street Bank. o Pioneer is not required to notify you or seek your approval prior to replacing State Street Bank. The terms of State Street Bank's custodian agreement, however, cannot be amended to adversely affect your rights and privileges without obtaining your written consent. BASIC INFORMATION ABOUT THE FUND See the attached fund prospectus for more information about the fund, including charges and expenses. INVESTMENT OBJECTIVE Growth of capital. INVESTMENT STRATEGY The fund will invest in a diversified portfolio of securities consisting primarily of common stocks. Even though the fund seeks capital growth, you could lose money on your investment.
ANNUAL FUND OPERATING EXPENSES PAID FROM THE ASSETS OF THE FUND as a percentage of average daily net assets - ----------------------------------------------------------- ---------------------- Management Fee(1) 0.75% - ----------------------------------------------------------- ---------------------- Distribution and Service (12b-1) Fee 0.25% - ----------------------------------------------------------- ---------------------- Other Expenses 16.26% - ----------------------------------------------------------- ---------------------- Total Annual Fund Operating Expenses 17.26% - ----------------------------------------------------------- ---------------------- (1) Pioneer Investment Management, Inc. the fund's investment adviser, has agreed not to impose all or a portion of its management fee and to make other arrangements, if necessary, to limit the operating expenses of the fund to 1.50% of the fund's average daily net assets. This agreement is voluntary and temporary and may be revised or terminated at any time.
The fund incurs certain advisory fees and other expenses. These fees and expenses may vary. A Board of Trustees governs the fund, and Pioneer Independence Plans does not fix or specify the level of expenses of the fund. The fund's fees and expenses, including the fund's payment of plan custody charges, are described in detail in the fund's prospectus and statement of additional information. The fund has adopted a plan of distribution for its shares in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended. The fund pays certain distribution and service fees under this distribution plan. 3 INVESTMENTS, WITHDRAWALS AND TERMINATIONS CHOOSING A FACE AMOUNT - -------------------------------------------------------------------------------- TEXT BOX FACE AMOUNT The face amount of your plan is the total value of the monthly plan investments you have scheduled to make for your plan. - -------------------------------------------------------------------------------- Use the following tables to select among the range of available monthly plan investment options. Each table shows the face amount of the plan, the creation and sales charges that will be charged and the total charges as a percentage of the total amount invested under a plan and as a percentage of the net amount invested. This information is based solely on investments made under a plan and does not reflect any investment performance, dividend or income from the fund over the period of a plan, or expenses of the fund or any other charges. The creation and sales charges shown are specified under the plans and may not be increased. The fund also incurs expenses, which are not specified under the terms of the plans and may vary from year to year. 15-YEAR PLAN Use this table to select your monthly plan investment for a 15-year plan.
CREATION AND SALES CHARGE --------------------------------------------------------------------------------------- MONTHLY PLAN PER PER TO NET MONTHLY PLAN INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL SALES TO TOTAL INVESTMENT INVESTMENT INVESTMENT 1 THRU 12 13 THRU 180 CHARGE (A) INVESTMENT IN SHARES - --------------- --------------- -------------- ------------- -------------- -------------- ------------- -------------- $50.00 $9,000.00 $25.00 $0 $300.00 3.33% 3.45% $50.00 75.00 13,500.00 37.50 0 450.00 3.33% 3.45% 75.00 100.00 18,000.00 50.00 0 600.00 3.33% 3.45% 100.00 125.00 22,500.00 62.50 0 750.00 3.33% 3.45% 125.00 150.00 27,000.00 75.00 0 900.00 3.33% 3.45% 150.00 166.66 29,998.80 83.33 0 999.96 3.33% 3.45% 166.66 200.00 36,000.00 100.00 0 1,200.00 3.33% 3.45% 200.00 250.00 45,000.00 125.00 0 1,500.00 3.33% 3.45% 250.00 300.00 54,000.00 150.00 0 1,800.00 3.33% 3.45% 300.00 350.00 63,000.00 175.00 0 2,100.00 3.33% 3.45% 350.00 400.00 72,000.00 200.00 0 2,400.00 3.33% 3.45% 400.00 450.00 81,000.00 225.00 0 2,700.00 3.33% 3.45% 450.00 500.00 90,000.00 250.00 0 3,000.00 3.33% 3.45% 500.00 600.00 108,000.00 300.00 0 3,600.00 3.33% 3.45% 600.00 700.00 126,000.00 350.00 0 4,200.00 3.33% 3.45% 700.00 800.00 144,000.00 400.00 0 4,800.00 3.33% 3.45% 800.00 900.00 162,000.00 450.00 0 5,400.00 3.33% 3.45% 900.00 1,000.00 180,000.00 500.00 0 6,000.00 3.33% 3.45% 1,000.00 1,250.00 225,000.00 625.00 0 7,500.00 3.33% 3.45% 1,250.00 1,500.00 270,000.00 675.00 0 8,100.00 3.00% 3.09% 1,500.00 1,750.00 315,000.00 700.00 0 8,400.00 2.67% 2.74% 1,750.00 2,000.00 360,000.00 750.00 0 9,000.00 2.50% 2.56% 2,000.00 2,500.00 450,000.00 812.50 0 9,750.00 2.17% 2.21% 2,500.00 5,000.00 900,000.00 1,250.00 0 15,000.00 1.67% 1.69% 5,000.00 10,000.00 1,800,000.00 1,500.00 0 18,000.00 1.00% 1.01% 10,000.00 (A) Does not include an annual distribution and service fee paid by the fund of up to 0.25% based on the fund's average daily net assets. See the fund's prospectus.
4 25-YEAR PLAN EXTENDED INVESTMENT OPTION Use this table to select your monthly plan investment for a 25-year plan under the extended investment option.
CREATION AND SALES CHARGE --------------------------------------------------------------------------------------- MONTHLY PLAN PER PER TO NET MONTHLY PLAN INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL SALES TO TOTAL INVESTMENT INVESTMENT INVESTMENT 1 THRU 12 13 THRU 300 CHARGE (A) INVESTMENT IN SHARES - --------------- --------------- -------------- ------------- -------------- -------------- ------------- -------------- $50.00 $15,000.00 $25.00 $0 $300.00 2.00% 2.04% $50.00 75.00 22,500.00 37.50 0 450.00 2.00% 2.04% 75.00 100.00 30,000.00 50.00 0 600.00 2.00% 2.04% 100.00 125.00 37,500.00 62.50 0 750.00 2.00% 2.04% 125.00 150.00 45,000.00 75.00 0 900.00 2.00% 2.04% 150.00 166.66 49,998.00 83.33 0 999.96 2.00% 2.04% 166.66 200.00 60,000.00 100.00 0 1,200.00 2.00% 2.04% 200.00 250.00 75,000.00 125.00 0 1,500.00 2.00% 2.04% 250.00 300.00 90,000.00 150.00 0 1,800.00 2.00% 2.04% 300.00 350.00 105,000.00 175.00 0 2,100.00 2.00% 2.04% 350.00 400.00 120,000.00 200.00 0 2,400.00 2.00% 2.04% 400.00 450.00 135,000.00 225.00 0 2,700.00 2.00% 2.04% 450.00 500.00 150,000.00 250.00 0 3,000.00 2.00% 2.04% 500.00 600.00 180,000.00 300.00 0 3,600.00 2.00% 2.04% 600.00 700.00 210,000.00 350.00 0 4,200.00 2.00% 2.04% 700.00 800.00 240,000.00 400.00 0 4,800.00 2.00% 2.04% 800.00 900.00 270,000.00 450.00 0 5,400.00 2.00% 2.04% 900.00 1,000.00 300,000.00 500.00 0 6,000.00 2.00% 2.04% 1,000.00 1,250.00 375,000.00 625.00 0 7,500.00 2.00% 2.04% 1,250.00 1,500.00 450,000.00 675.00 0 8,100.00 1.80% 1.83% 1,500.00 1,750.00 525,000.00 700.00 0 8,400.00 1.60% 1.63% 1,750.00 2,000.00 600,000.00 750.00 0 9,000.00 1.50% 1.52% 2,000.00 2,500.00 750,000.00 812.50 0 9,750.00 1.30% 1.32% 2,500.00 5,000.00 1,500,000.00 1,250.00 0 15,000.00 1.00% 1.01% 5,000.00 10,000.00 3,000,000.00 1,500,00 0 18,000.00 0.60% 0.60% 10,000.00 (A) Does not include an annual distribution and service fee paid by the fund of up to 0.25% based on the fund's average daily net assets. See the fund's prospectus.
A TYPICAL $100 MONTHLY INVESTMENT PLAN This table shows you the investments and deductions under a plan for a typical $100 monthly investment plan. The 15-year schedule assumes that all investments were made in accordance with the terms of Pioneer Independence Plans. The 25-year schedule reflects the charges 5 applicable to a 15-year plan that is continued under the extended investment option. The table does not reflect fund performance or the payment of any dividends or distributions by the fund.
AT THE END OF 6 MONTHS AT THE END OF 1 YEAR AT THE END OF 12 YEARS AGGREGATE AMOUNT (6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS) -------------------------- ------------------------- -------------------------- ------------------------- % OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL AMOUNT INVESTMENT AMOUNT INVESTMENT AMOUNT INVESTMENT AMOUNT INVESTMENT - -------------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------ ------------ 15 YEARS (180 INVESTMENTS) Total Investments $18,000 100.00% $600 100% $1,200 100% $2,400 100% Deduct: Creation and Sales Charge $600 3.33% $300 50% $600 50% $600 25% Net Amount Invested in a Plan $17,400 96.67% $300 50% $600 50% $1,800 75% 25 YEARS (300 INVESTMENTS) Total Investments $30,000 100.00% $600 100% $1,200 100% $2,400 100% Deduct: Creation and Sales Charge $600 2.00% $300 50% $600 50% $600 25% Net Amount Invested in a Plan $29,400 98.00% $300 50% $600 50% $1,800 75%
MAKING YOUR MONTHLY INVESTMENTS To start a plan, complete the plan application indicating your monthly plan investment amount. You may make plan payments automatically or by check. - -------------------------------------------------------------------------------- TEXT BOX AUTOMATIC INVESTMENTS Consider investing automatically through military or government allotments or preauthorized check transactions (PACT). The plans are specifically designed for regular monthly investing. - -------------------------------------------------------------------------------- AUTOMATIC INVESTMENTS To use an automatic investment option complete the required forms and have your investment dealer forward them to State Street Bank. Each plan for which you elected an automatic investment option is funded automatically each month through your bank account, PACT or, for U.S. military personnel, a government allotment. State Street Bank must receive a request to terminate a PACT at least 15 days prior to the date of the next scheduled monthly plan investment. BY CHECK To invest by check, have your investment dealer send your check to State Street Bank with your plan application. Write your check for the amount of your initial monthly plan investment and make it payable to State Street Bank and Trust Company. After State Street Bank accepts your plan application and receives your initial investment, you will receive a confirmation statement showing the number of whole and fractional fund shares purchased for your plan. After the initial investment, you should send regularly scheduled monthly plan investments, made payable to State Street Bank and Trust Company, directly to 6 State Street Bank. If State Street Bank does not receive monthly plan investments for a period of 12 consecutive months, Pioneer or State Street Bank may terminate your plan. Address all correspondence regarding your plan to your investment dealer or to Boston Financial Data Services, P.O. Box 8300, Boston, Massachusetts 02266-8300. EXTENDED INVESTMENT OPTION Under the extended investment option, you may continue making monthly investments after you complete all scheduled investments under a your 15-year plan. You must exercise the extended investment option within six months after completing all scheduled investments. If you fail to make regularly scheduled investments for six consecutive months after being credited for any advance investments made under the extended investment option, you forfeit your right to make such additional investments. When you complete 300 monthly plan investments, your extended investment option will terminate. State Street will not accept investments after that date. CREATION AND SALES CHARGES Pioneer receives a creation and sales charge as compensation for its services and costs in creating the plans and arranging for their administration, for making the fund shares available to you at their net asset value and for certain selling expenses and commissions with respect to the plans. State Street deducts this charge from each of your first 12 monthly plan investments. For example, on a $100 a month plan, State Street deducts $50 from each of the first 12 plan investments. After you make your twelfth investment, State Street will not deduct a creation and sales charges unless you increase your monthly plan investment amount. The larger your plan, the smaller the creation and sales charge. QUALIFYING FOR REDUCED SALES CHARGES To qualify for reduced creation and sales charges, you must submit a written request that the applicable creation and sales charge for the new plan(s) be calculated by combining the face amounts of existing plans and/or the then current net asset value of other Pioneer mutual fund accounts with the face amounts indicated on any new plan applications. PURCHASING TWO OR MORE PLANS The face amounts of two or more plans purchased at one time by "any person" may be combined to take advantage of the lower creation and sales charges available on larger sized plans. Creation and sales charges will be determined by the face amounts of the plans selected. 7 - -------------------------------------------------------------------------------- TEXT BOX ANY PERSON The term "any person" includes: o You, your spouse, your children under the age of 21 and your grandchildren under age 21 who are beneficiaries of a Uniform Gifts to Minors Act or Uniform Transfers to Minors Act account in which you serve as custodian, or o A trustee or other fiduciary of a single trust estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Internal Revenue Code of 1986, as amended). - -------------------------------------------------------------------------------- RIGHTS OF ACCUMULATION You may have a right of accumulation when purchasing any new plan(s) or increasing the face amount of any existing plan(s). If such plans are registered in the name of "any person" (see above), the plans may qualify for a reduced creation and sales charge on the new plan by combining the face amount of the new plan with the face amount(s) of any existing plan(s) on which investments due are current (see below) and/or with the current value of shares owned in certain other Pioneer mutual funds for which Pioneer Investment Management, Inc. or an affiliate is the investment manager. Your new plan includes the total face amounts of any new plans plus the face amounts of plans on which an increase in monthly investments is requested. To qualify for rights of accumulation, your plan must be current. Your plan is current if: o It has been completed and not redeemed; o It has not been completed but has at least as many investments recorded as there are months elapsed since the establishment date or since a plan face amount increase date; or o The plan owner is a tax-qualified plan or an individual retirement account (IRA). MAKING INVESTMENTS AHEAD OF SCHEDULE TO COMPLETE A PLAN EARLY You will normally make 12 scheduled investments each calendar year. If you wish to complete your plan ahead of schedule, you may make up to 36 monthly plan investments in advance of their normal due date during the life of your plan. Normally, no more than 24 investments may be made in any one calendar year (including the current investment). Monthly plan investments may be accrued and periodically paid in a lump sum to make a plan that is in arrears current. These prepayment rules may be waived for a transfer or rollover of an IRA into a plan or in the event of the death of the plan owner. You pay the same creation and sales charge when you make advance investments. CHANGING THE FACE AMOUNT OF YOUR PLAN You may increase or decrease the face amount of your plan by writing to State Street Bank and sending a new completed plan application. You may change the face amount of a plan under the following circumstances. 8 o You may increase the face amount of your plan at any time, provided the new face amount is a face amount offered by Pioneer. An increase in the face amount of a plan does not create new cancellation and refund rights as to the new plan that is created. o You may decrease the face amount of your plan by 50% within 12 investments of the start of a plan. You may not request a decrease on an existing plan that previously had been increased if the decrease will result in a new face amount lower than that of the original plan. Each time you change the face amount of a plan, State Street Bank will recompute the creation and sales charge already paid on the existing plan to reflect the new plan face amount. The creation and sales charges you have already paid on your existing plan will be credited to the creation and sales charge applicable to the new face amount. If you paid an excess creation and sales charges, State Street will invest the excess directly in fund shares for your plan at the net asset value calculated on the day the change is made. If you owe any additional creation and sales charges due under a plan, State Street will deduct the amount due from the next 12 monthly plan investments. GENERAL RULES ON WITHDRAWALS AND TERMINATIONS Normally, when you sell some or all of the fund shares held in your plan, State Street Bank will send you a check within seven days after State Street Bank receives, in good order, your request and any other required documents. However, State Street Bank will not mail redemption proceeds to you until your checks or other orders for payment for fund shares have cleared. This may take up to 15 calendar days from the date on which State Street Bank receives the check or other order for payment. State Street Bank will mail your sale proceeds to your address of record unless you provide other instructions. GOOD ORDER Good order means that: o You have provided adequate instructions o There are no outstanding claims against your account o There are no transaction limitations on your account o Your request includes a signature guarantee if you: o Are withdrawing or selling over $100,000 worth of shares o Changed your account registration within the last 30 days o Instruct State Street Bank to mail the check to an address different from the one on your account o Want the check paid to someone other than the plan owner(s) o Are transferring the sale proceeds to a Pioneer mutual fund account with a different registration - -------------------------------------------------------------------------------- TEXT BOX Withdrawals and sales may be taxable transactions to plan owners. - -------------------------------------------------------------------------------- 9 SIGNATURE GUARANTEES AND OTHER REQUIREMENTS You are required to obtain an acceptable signature guarantee when you are: o Requesting certain types of transactions including transfers of plan ownership and sales of fund shares o Requesting certain types of changes for your existing plan You can obtain a signature guarantee from most broker-dealers, banks, credit unions (if authorized under state law) and federal savings and loan associations. State Street Bank will not accept signature guarantees by facsimile. You cannot obtain a signature guarantee from a notary public. Pioneer reserves the right to require signature guarantees on all withdrawals or sales of fund shares. Pioneer or State Street Bank may require a signature guarantee if either believes that a signature guarantee is warranted. State Street Bank will determine whether a guarantee is acceptable. State Street Bank or Pioneer may require you to submit additional documentation for a cash withdrawal (a sale of fund shares) or for requests made by fiduciaries or corporations. REQUESTING A TRANSACTION You may withdraw or sell fund shares held by your plan by writing or calling State Street Bank. WRITTEN REQUESTS You must use a written request if you are withdrawing or selling more than $100,000 and/or if you need to provide a signature guarantee. Send your letter of instruction, signed by all plan owners to State Street Bank. Include in your request your name, your account number and the dollar amount or number of fund shares to be sold. TELEPHONE REQUESTS You are automatically authorized to make telephone withdrawals and sales from your plan (except plans established as retirement accounts) unless you indicate otherwise on your plan application. You may not terminate your plan or exercise your cancellation or surrender rights by phone. - -------------------------------------------------------------------------------- TEXT BOX For personal assistance, call State Street Bank at 1-800-765-9565 weekdays between 8 a.m. and 6 p.m. Eastern time. - -------------------------------------------------------------------------------- You may make a cash withdrawal by telephone only if: o The proceeds are payable to the plan owner(s) of record and mailed to the address of record; o There has been no change in the address of record on the plan within the preceding 30 days; o The person requesting the withdrawal can provide proper identification information; and o The proceeds do not exceed $100,000 per plan per day. 10 State Street Bank will not accept telephone transaction requests that specify a particular transaction date or any other special conditions. Pioneer has made arrangements with certain dealers to accept telephone transaction instructions from the dealer on behalf of plans for which the dealer is the firm of record. Pioneer reserves the right to impose conditions on these dealers, including the condition that they enter into agreements (which contain additional conditions for telephone transactions) with Pioneer. The dealer will bear any loss resulting from its failure to submit a telephone transaction within the prescribed time frame. To confirm that each transaction instruction received by telephone is genuine, State Street Bank will record each telephone transaction, require the caller to provide proper personal identification information and send the plan owner a written confirmation of each telephone transaction. If reasonable procedures, such as those described above, are followed, neither Pioneer Independence Plans, the fund, State Street Bank nor Pioneer will be responsible for the authenticity of instructions received by telephone. You, the plan owner, bear the risk of loss from unauthorized or fraudulent telephone transactions. State Street Bank and/or Pioneer may implement other procedures from time to time. During times of economic turmoil or market volatility or as a result of severe weather or a natural disaster, it may be difficult to contact State Street Bank by telephone. At such times, you should communicate with State Street Bank by writing. PARTIAL WITHDRAWALS You may request a partial withdrawal or sale of your fund shares without terminating your plan, if you have owned your plan for at least 45 days. If you withdraw or sell all of the fund shares in your plan, your plan will normally be terminated. If you have owned your plan for at least 45 days, you may elect to withdraw up to 90% of the underlying fund shares from your plan (and hold fund shares directly). Or, you may direct State Street Bank , as your agent, to withdraw and then sell up to 90% of your fund shares and pay the sale proceeds to you. If you request a withdrawal of more than 90% of the net asset value of the fund shares in your account, State Street may sell all the fund shares in your plan. You may request a partial withdrawal or sale in writing or by telephone. While there is currently no limit to the number of partial withdrawals or sales that you can make, each partial withdrawal or redemption must be at least $100. Shares are withdrawn or sold at the net asset value determined after State Street Bank receives a request in good order (including signature guarantees and other documentation, if applicable). If State Street receives your request in good order prior to the close of the New York Stock Exchange on any business day that the fund is open, State Street will process it at the net asset value determined as of the close of that day. No partial withdrawal or sale will affect the total number of monthly plan investments to be made or the unpaid balance of monthly plan investments. 11 REPLACEMENTS OF PARTIAL WITHDRAWALS After a partial cash withdrawal, you may, but are not required to, restore the value of your plan by remitting to State Street Bank an amount equal to the amount redeemed. State Street Bank will use the reinvested amount to purchase fund shares for your account at the net asset value determined after your request is received in good order. You may make a repayment of a partial cash withdrawal after a period of 90 days from the date of redemption, except in the case of plan accounts that are IRAs, for which a reinvestment may be made after a period of 45 days. If the amount redeemed exceeds $500, you need not make a full reinstatement of your withdrawal in one transaction. However, you must reinvest at least 25% of the amount withdrawn or $500, whichever is less. You must clearly identify replacements of partial cash withdrawals to distinguish them from regular monthly plan investments. TERMINATING YOUR PLAN You may terminate your plan at any time. To terminate your plan, you must send a written request to State Street Bank. You should instruct State Street Bank to: (1) Redeem the fund shares held in your account or (2) Transfer the fund shares held in your account to the fund and deliver to you a confirmation statement for the transfer. If you direct the sale of your fund shares, State Street Bank will withdraw the fund shares from your plan account, redeem the fund shares and send the proceeds directly to you. If you direct State Street to transfer the fund shares held under the plan to a fund account, State Street will first sell sufficient shares of the fund to pay any authorized deductions and/or transfer taxes and then instruct the fund's transfer agent to register the remaining fund shares in your name. If you choose to receive fund shares, you may then exchange your fund shares for shares of certain other Pioneer mutual funds for which Pioneer Investment Management, Inc. or an affiliate is the investment manager. The exchange privilege is more fully described in the fund's prospectus. You will not be permitted to exchange these shares back into the fund or to make additional direct investments in the fund. REPLACEMENT PRIVILEGE ON TERMINATION If you have completely terminated a plan, the replacement privilege allows you to reinvest an amount equal to not less than 10% of the net asset value of the fund shares you redeemed from your plan, without any creation and sales charge except as described below. Your new account registration must be identical to your terminated account's registration. You reinvest at the net asset value per fund share next determined after State Street Bank receives your replacement order and payment. You must exercise the replacement privilege within 90 days following the date you terminate your plan. - -------------------------------------------------------------------------------- TEXT BOX Replacements and reinvestments may be taxable to plan owners. - -------------------------------------------------------------------------------- 12 The replacement privilege is available to plan owners who have not previously exercised this privilege. The replacement privilege does not eliminate your privilege of partial withdrawal or sale. If you have redeemed fund shares from a plan under your cancellation or surrender rights, you will not be permitted to replace the proceeds of the cancellation or surrender at net asset value until all refunded creation and sales charges have been deducted from the amount offered for the replacement. Pioneer may in its sole discretion offer additional replacement options from time to time. PLAN OWNER OPTIONS AND SERVICES RETIREMENT PLANS Tax-sheltered retirement plans, including IRAs and qualified pension and profit-sharing plans may purchase plans. Pioneer also offers the Pioneer Individual Retirement Plan (the "Pioneer IRA"). Pioneer IRAs may be established through contributions to a plan or through a lump sum investment in a plan from the proceeds of a rollover of prior year qualified assets or a direct transfer of qualified assets from other fiduciary agencies. Such rollovers or transfers may contain either or both employer-sponsored retirement assets and owner contributions. Pioneer offers detailed information concerning the Pioneer IRA. You should read this information carefully and you should consult with an attorney or tax adviser before establishing an IRA in connection with a plan. The information sets forth the additional service fees charged for IRAs and describes the federal income tax consequences of establishing an IRA. Under the Pioneer IRA, dividends and distributions will be reinvested automatically in additional fund shares for the plan. You pay a maintenance fee on Pioneer IRAs. Premature termination of a plan can have adverse financial consequences and therefore prospective investors should consider carefully whether the IRA or other qualified retirement plan would have the financial resources to honor a 15-year commitment to making monthly plan investments. SYSTEMATIC WITHDRAWAL PROGRAM You may elect a systematic withdrawal program after you complete all regularly scheduled investments. You may also elect a systematic withdrawal program from an incomplete plan if the withdrawal is to be taken from a plan that is part of an IRA and you have reached age 59 1/2. Under a systematic withdrawal program, State Street Bank, as your agent, will redeem sufficient fund shares from the plan at the net asset value at the time of such redemption to provide regular withdrawal payments of $50 or more on a monthly or quarterly basis, as you have elected. Except for the $50 minimum, there is no limitation on the size of withdrawals. All systematic withdrawal program transactions will be made as of the end of the day you have specified for the withdrawal (or, if not a business day, the first business day after that date). 13 You have the right to change the dollar amount of withdrawals paid to you under the systematic withdrawal program or to discontinue a systematic withdrawal program at any time. There are no charges imposed for any regular withdrawals under a systematic withdrawal program. Your plan will remain in full force and effect with all rights and privileges until all fund shares have been withdrawn from your plan. While the systematic withdrawal program is in effect, you must elect to reinvest all dividends and distributions in fund shares to be held in your plan account. You should realize that withdrawals in excess of dividends and distributions will be made from principal and may eventually exhaust your plan account. Also, you may realize a gain or loss for tax purposes on each withdrawal payment. Pioneer reserves the right to discontinue offering the systematic withdrawal program at any time after 90 days' notification to all plan owners. VOLUNTARY TAX WITHHOLDING You may request, in writing, that State Street Bank withhold 28% of the dividends and capital gains distributions paid on any fund shares held in your plan account (before any reinvestment) and forward the amount withheld to the IRS as a credit against your federal income taxes. This option is not available for plan accounts registered as retirement plan accounts or for plan accounts subject to backup withholding. STATEMENTS, REPORTS AND NOTICES For the first 18 months after the issuance of your plan, State Street Bank will mail you a confirmation statement for each financial transaction as it occurs. Beginning after the nineteenth month, State Street Bank may mail statements to you quarterly. Each transaction confirmation statement, quarterly statement or other statement, as required, will state the price per share of the fund shares purchased after applicable deductions and the total number of fund shares held in the your account. State Street or Pioneer is required or may be authorized to provide you with certain notices, reports or documents under the plans. When you are given or sent these documents, State Street or Pioneer will consider the mailing date to be the date you received notice. PLAN RIGHTS AND POLICIES CANCELLATION RIGHTS You have a right to cancel your plan subject to the following conditions. Within 60 days after your first investment under a plan (which, for this purpose, is the date appearing on the confirmation statement following the initial investment), State Street Bank will send a notice to you regarding your cancellation rights. You may elect to cancel your plan within 45 days of the mailing date of that notice by submitting a signed, written request for cancellation to State Street Bank. In addition, if you are canceling a plan with current net assets valued at more than $100,000, you must get a signature guarantee. 14 Upon cancellation, you will receive a payment equal to: (1) The total current net asset value of the fund shares credited to your plan account as of the end of the business day that State Street Bank receives your cancellation request in good order and (2) A refund of all the creation and sales charges you paid under the plan. SURRENDER RIGHTS State Street Bank will send you a written notice of your 18-month right of cancellation if either of the following occurs: (1) If, during the first 15 months after the date of issuance of the plan, you have missed three or more investments; or (2) Following the first 15 months after the date of issuance of the plan, but prior to the expiration of 18 months after such date, you have missed one or more investments. (If State Street Bank has already sent a notice at 15 months, a second notice will not be required even if additional investments are missed.) These notices will inform you of your rights and will also include the value of your account at the time the notice is sent. You have a right to surrender (terminate) your plan subject to the following conditions. At any time within an 18-month period after you purchase a plan, you may surrender your plan. To surrender a plan, you must send State Street Bank a signed, written request. In addition, if you are surrendering a plan with current net assets valued at more than $100,000, you must get a signature guarantee. Upon surrender, you will receive a payment equal to: (1) The total current net asset value of the fund shares credited to your plan account as of the end of the business day that State Street Bank receives your surrender request in good order and (2) A refund equal to all creation and sales charges you paid up to the date of surrender minus 15% of the gross amount you have paid as of that date. You will not receive a refund of any service charges or other fees you may have paid. If you surrender your plan, you may not reinstate your plan at net asset value until all creation and sales charges included in the sale amount are first deducted from the reinstatement amount. This requirement is more fully explained below in "Replacement privilege on termination." Exercise of cancellation rights may be a taxable event for you. You should consult your tax adviser. VOTING RIGHTS IN FUND SHARES Pioneer Independence Plans is a direct shareholder of the fund and has certain voting rights in fund shares which are held on behalf of the plans. You are permitted to exercise voting rights attributable to the fund shares 15 held in your account. State Street Bank will vote the fund shares held in your account in accordance with your instructions. If you do not vote your fund shares, State Street Bank will vote your shares in the same proportion as it votes the shares for which it has received instructions from other plan owners. Plan owners may attend any shareholder meetings of the fund. If you wish to vote the fund shares held in your plan account in person, you may submit a written request for a proxy to State Street Bank prior to the meeting. The proxy will permit you to vote the fund shares in person. TRANSFER OR ASSIGNMENT OF RIGHTS IN A PLAN If you want to secure a loan, you may assign your rights (other than for a tax-qualified retirement plan or an IRA) to a bank or other lending institution. The bank or other lending institution, however, will not be entitled to exercise the right of partial withdrawal or sale. During the term of the assignment, you will be entitled to all dividends and distributions on fund shares. You may also transfer your rights to another person: for example, a relative, charitable institution or trust. You may accomplish this two ways: (1) You may transfer your right, title and interest to another person whose only right shall be the privilege of complete and prompt withdrawal from the plan; or (2) You may transfer your entire right, title and interest to another person, trustee or custodian acceptable to Pioneer, who has applied to Pioneer for a similar plan. State Street Bank will provide you with the appropriate assignment forms upon request. Transfers may be subject to income and other taxes and may be restricted for those plans held in connection with IRAs or qualified retirement plans. TERMINATION OF A PLAN BY PIONEER OR STATE STREET BANK Although a plan calls for regular monthly investments over a 15-year period or for an extended 25-year period, neither Pioneer nor State Street Bank can elect to terminate a plan until 300 investments have been made unless: o You have not made investments under your plan for more than 12 consecutive months or o Fund shares are not obtainable and a substitution is not made. If you have not made investments under your plan for more than 12 consecutive months, State Street Bank will first count as monthly investments any advance monthly plan investments you have made and then determine the beginning of the default period. After 300 investments, or if other events justify termination, Pioneer or State Street Bank has the right to terminate your plan 60 days after mailing you a written notice. The notice will request that you elect to have your plan distributed either in cash or in fund shares after deduction of all authorized charges, fees and expenses. Upon termination, State Street Bank (as your agent) may surrender for liquidation all of the fund shares credited to your plan account, or sufficient fund shares to pay all authorized deductions. State Street will hold the balance of fund shares and/or 16 cash, after payment of all authorized deductions, for delivery to you against the surrender of your plan. State Street Bank will not pay interest on any cash balances. If you do not surrender your plan within 60 days after the notice of termination, State Street Bank may, at its discretion, fully discharge its obligations by mailing to you: o A confirmation statement for the fund shares or o A check, drawn in accordance with the terms of the plan, to your address of record. You will then have no further rights under your plan except that if the confirmation statement or check is returned to State Street Bank as undeliverable, the bank will continue to hold these assets for your benefit, subject to any applicable laws including the escheatment laws. FUND SUBSTITUTION Pioneer may substitute the shares of another investment as the underlying investment for the shares of the fund if it deems such action to be in the best interests of plan owners. Substituted shares generally will be comparable in character and quality to the fund's shares and will be registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended. Before any substitution is made, Pioneer must: 1. To the extent required, obtain an order from the Securities and Exchange Commission approving such substitution under the provisions of Section 26(b) of the Investment Company Act of 1940; 2. Submit written notice of the proposed substitution to State Street Bank; 3. Submit written notice of the proposed substitution to each plan owner, giving a reasonable description of the substituted fund shares, disclosing that unless the plan is surrendered within 30 days of the date of mailing such notice, the plan owner will be considered to have consented to the substitution and to have agreed to bear his or her pro rata share of expenses and taxes in connection with the substitution; and 4. Provide State Street Bank with a signed certificate stating that the required notice has been given to plan owners. If you do not surrender your plan within 30 days from the date of the substitution notice, State Street Bank shall purchase the shares of the substituted fund for the plan with the proceeds of any plan investments received from you and any dividends or distributions which may be reinvested for the plan. If shares of the substituted fund are also to be substituted for the fund shares already held, Pioneer must arrange for State Street Bank to be furnished, without payment of a sales charge or fees of any kind, with shares of the substituted fund having an aggregate value equal to the value of the fund shares for which they are to be exchanged. A substitution may be a taxable event for plan owners. If fund shares are not available for purchase for a period of 120 days or longer, and Pioneer fails to substitute other shares, State Street Bank may, but is not required to, select a substitute investment or terminate Pioneer Independence Plans. If State Street Bank selects a substitute 17 investment, it will, to the extent required, first obtain an order from the Securities and Exchange Commission approving such substitution as specified above and then notify you. If, within 30 days after mailing such notice, you give written approval of the substitution and agree to bear your pro rata share of actual expenses, including tax liability sustained by the bank, State Street Bank may thereafter purchase such substituted shares. Pioneer will have authority to terminate the plan if you fail to give such written approval within the 30-day period. If shares of the fund are not available for purchase for a period of 120 days or longer, and neither Pioneer nor State Street Bank substitutes other shares, the bank will have authority, without further action on its part, to terminate the plans. The underlying investment could change under certain other circumstances. For instance, the fund could be reorganized with, or acquired by or merge with another entity, which would result in a plan investing in the successor to any such transaction. OTHER POLICIES Transactions in fund shares may be suspended and payments of sale proceeds may be postponed during any period in which any of the following conditions exist: o The New York Stock Exchange is closed, other than for customary weekends and holidays; o Trading on the New York Stock Exchange is restricted; o An emergency exists as a result of which disposal by the fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for the fund to fairly determine the value of the net assets of its portfolio; or o The Securities and Exchange Commission, by order, so permits. DIVIDENDS, CAPITAL GAINS AND TAXES All fund dividends and capital gains distributions, after any applicable deductions, are reinvested automatically in additional shares of the fund as of the payment date, at the net asset value determined on the ex-dividend date of the dividend or distribution, unless you elect to receive the dividends or distributions by check. No creation and sales charge is deducted from any reinvestments. If you wish to receive the dividends and other distributions by check, rather than in additional shares of the fund, you must notify State Street Bank in writing. State Street Bank must receive these instructions at least seven days prior to the fund's record date for a dividend or distribution. You may change these instructions at any time. Dividends and other distributions by the fund are made on a per share basis. After every distribution, the value of a fund share drops by the amount of the distribution. If a plan investment is made shortly before the ex-dividend date of the dividend or distribution, you will pay the full price for the shares including the amount that is soon to be paid as a dividend. Under the tax code, you are deemed, for federal income tax purposes, to directly own the fund shares accumulated in your plan account. Designated long-term capital gain distributions, which 18 are automatically reinvested in additional fund shares, are treated as long-term capital gains. The tax cost of the fund shares acquired is the amount paid for those shares, including the creation and sales charge. As more fully described in the fund's prospectus, dividends and distributions paid by the fund are reportable for federal income tax purposes by plan owners who are otherwise subject to federal income tax. Dividends and distributions are reportable by plan owners regardless of whether the amounts are invested in additional shares of the fund or are received in cash. Gains realized on cash withdrawals (sales) generally also will be subject to taxes, and the ability to deduct losses from such redemptions may be limited. There may also be limitations on the amount of loss you may recognize in the event of cancellation and refund or a replacement and reinvestment. In general, the tax code restricts loss recognition when securities are sold and reacquired in a short period of time; these restrictions may in certain circumstances apply to plan owners. Each year State Street Bank will send you an appropriate notice regarding taxes. You, and not State Street Bank or Pioneer, pay taxes levied, assessed or imposed on: o Any of the profits realized on sales or transfers of fund shares by State Street Bank or Pioneer or o Other property credited to your account in accordance with the provisions of the plan or o Income on fund shares. The foregoing is a brief summary of certain U.S. federal income tax consequences of investing in the fund through Pioneer Independence Plans. You should consult the fund prospectus and your tax adviser for additional information. SERVICE CHARGES AND OTHER FEES There are currently no deductions against plan owners' accounts or against fund dividends and/or distributions to compensate Pioneer or State Street Bank for its services except the fees and charges described below. If your plan is not current and you have not made any plan investments for a 12-month period, State Street Bank will deduct from your account a fee of $12 per year for its services. If you send a plan investment by check or other order for the payment of money which is not honored by the bank on which it is drawn, State Street Bank will deduct $5.00 from your account for each monthly plan investment. State Street Bank will charge you $2.50 for terminating a plan on which investments have not been completed. If you established your plan as an IRA, State Street Bank will deduct an annual IRA custodial fee of $10 from your account, a portion of which is paid to The Pioneer Group, Inc., as IRA custodian. You may pay this annual fee by sending a separate check clearly identified as an IRA custodial fee payment to State Street Bank. 19 The fund and Pioneer reserve the right to impose a processing fee of $1.50 for each monthly plan investment received by check (up to a maximum of $5 per event). You do not pay a fee for your initial investment to establish a plan. There is no processing fee on monthly plan investments made through an automatic investment option. The check processing fee is not currently in effect. All other custodian fees that would otherwise be charged to you or your plan, or deducted from fund dividends and/or distributions, may be paid by the fund. Although there is no current intention to do so, the fund reserves the right to cease paying such fees, and Pioneer reserves the right to make deductions from the plans, the plan owners, and fund dividends and/or distributions to compensate State Street Bank for its services. ADDITIONAL INFORMATION THE SPONSOR Pioneer Funds Distributor, Inc., 60 State Street, Boston, Massachusetts 02109-1820, is a Massachusetts corporation organized on March 2, 1989. It is a broker-dealer registered under the Securities Exchange Act of 1934 and a member of the National Association of Securities Dealers, Inc. (NASD). Pioneer is an indirect wholly owned subsidiary of The Pioneer Group, Inc. In order to establish the plans, Pioneer invested a lump sum in a plan on which the creation and sales charges were waived and which is exempt from the terms of the plans. Pioneer's directors and executive officers are listed below. NAME, POSITIONS AND OFFICES JOHN F. COGAN, JR., CHAIRMAN AND DIRECTOR President, Chief Executive Officer and a Director of The Pioneer Group, Inc. (PGI); Chairman and a Director of Pioneer Investment Management, Inc. (Pioneer Investments); Director of Pioneering Services Corporation (PSC), Pioneer Capital Corporation (PCC), Pioneer Real Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer Management (Ireland) Ltd. (PMIL) and Closed Joint Stock Company "Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc., Pioneer International Corp. (PIntl), Pioneer First Russia, Inc. (First Russia) and Pioneer Omega, Inc. (Omega); Chairman of the Board and Director of Pioneer Goldfields Limited and Teberebie Goldfields Limited; Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer First Polish Trust Fund Joint Stock Company, S.A. and Pioneer Czech Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer Euro Reserve Fund Plc, Pioneer European Equity Fund Plc, Pioneer Emerging Europe Fund Plc, Pioneer US Real Estate Fund Plc and Pioneer U.S. Growth Fund Plc; and Partner, Hale and Dorr LLP (counsel to PGI and Pioneer Independence Fund). 20 DAVID D. TRIPPLE, DIRECTOR AND PRESIDENT Executive Vice President and a Director of PGI; President and a Director of Pioneer Investments; Director of PCC, PIntl, First Russia, Omega, Pioneer SBIC Corporation, PMIL, Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer Euro Reserve Fund Plc, Pioneer European Equity Fund Plc, Pioneer Emerging Europe Fund Plc, Pioneer US Real Estate Fund Plc and Pioneer U.S. Growth Plc; and Executive Vice President and Trustee of all of the Pioneer mutual funds. STEPHEN W. LONG, DIRECTOR AND EXECUTIVE VICE PRESIDENT Senior Managing Director - Retail Sales of Pioneer Investments. JOHN A. BOYNTON, TREASURER Executive Vice President, Treasurer and Chief Financial Officer of PGI; and Treasurer of Pioneer Investments and all of the Pioneer mutual funds. Prior to joining PGI in November 1998, Mr. Boynton was a Senior Vice President of The Quaker Oats Company. JOSEPH P. BARRI, CLERK Corporate Secretary of PGI and most of its subsidiaries; Secretary of all of the Pioneer mutual funds; and Partner, Hale and Dorr LLP. STEPHEN M. GRAZIANO, EXECUTIVE VICE PRESIDENT Senior Managing Director - Marketing of Pioneer Investments SENIOR VICE PRESIDENTS: William A. Misata, Constance D. Spiros and Marcy L. Supovitz. VICE PRESIDENTS: Mark R. Kiniry, Barry G. Knight, William H. Spencer and Elizabeth A. Watson. Pioneer pays commissions ranging from 80% to 95% of the total creation and sales charges to authorized investment broker-dealer firms that are members of the NASD and have executed a sales agreement with Pioneer. Pioneer may terminate its obligations under the plans under certain circumstances including, but not limited to, circumstances where: the underlying fund ceases operations or is subject to a merger or acquisition; or the shareholders of the underlying fund have approved the cessation of operations or merger or acquisition; or the obligations of Pioneer as described in this prospectus and the custodian agreement will be assumed by another entity that Pioneer believes at the time of assignment is capable of fulfilling its obligations as described in this prospectus and under terms of the custodian agreement. THE CUSTODIAN State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, acts as custodian for Pioneer Independence Plans pursuant to a custodian agreement with Pioneer, dated February 17, 1998. State Street Bank is a trust company organized under the laws of Massachusetts. 21 Investments under a plan should be payable to Pioneer Independence Plans and sent to State Street Bank. After making authorized deductions, State Street Bank applies the remaining balance of the investment to the purchase of fund shares for a plan. The bank holds these shares in its custody, receiving dividends and distributions that are automatically reinvested in additional fund shares for the plan accounts, unless you elect to receive such dividends and distributions by check. The duties of State Street Bank under the custodian agreement include the receipt of all investments from plan owners and income dividends and capital gains distributions on fund shares, the processing of all authorized deductions from plan investments and fund distributions and the purchase and retention of fund shares for plan owner accounts. The bank also effects partial or complete liquidations of plans in connection with withdrawals or terminations and the various other functions discussed above. State Street Bank has assumed only those obligations specifically imposed on it under the custodian agreement. The bank has no responsibility for the choice of the underlying investment, for the investment policies and practices of the fund or for the acts or omissions of Pioneer or the investment manager of the fund. The custodian agreement cannot be amended to adversely affect the rights and privileges of the plan owners without their written consent. State Street Bank may not resign unless an eligible successor has been designated and has accepted the custodianship. Such successor must be a bank or trust company having capital, surplus and undivided profits totaling at least $2,000,000. The custodian may be changed without notice to, or the approval of, the plan owners. State Street Bank may terminate its obligation to accept new plans for custodianship if Pioneer fails to perform certain activities it is required to perform under the custodian agreement or if the bank terminates the custodian agreement upon 90 days' notice to Pioneer. PIONEER INDEPENDENCE PLANS Pioneer Independence Plans is a unit investment trust under the Investment Company Act of 1940 and is registered with the Securities and Exchange Commission. This registration does not imply supervision of management or investment practices or policies by the Commission. Pioneer Independence Plans is currently registered in all states. The Plans may be offered in all states where it is lawful to do so. EMPLOYER IDENTIFICATION NUMBERS Pioneer Independence Plans: 04-3401100 Pioneer Funds Distributor, Inc.: 04-3042318 State Street Bank and Trust Company: 04-1867445 FINANCIAL STATEMENTS [plan financial statements to be filed by amendment] 22 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Pioneer Funds Distributor, Inc.: We have audited the accompanying consolidated statement of financial condition of Pioneer Funds Distributor, Inc. (a Massachusetts corporation and wholly owned subsidiary of Pioneer Investment Management, Inc.) as of December 31, 1998, and the related consolidated statements of operations, changes in stockholder's equity and cash flows for the year then ended that you are filing pursuant to Rule 17a-5 under the Securities and Exchange Act of 1934. These consolidated financial statements, and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the schedules based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pioneer Funds Distributor, Inc. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The information contained in Schedules I and II is presented for the purposes of additional analysis and is not a required part of the consolidated financial statements, but is supplementary information required by Rule 17a-5 under the Securities Exchange Act of 1934. Such information has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole. /s/ Arthur Andersen LLP Boston, Massachusetts February 1, 1999 23
PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) ASSETS CASH AND TEMPORARY INVESTMENTS, AT COST, WHICH APPROXIMATES VALUE (Note 2) $ 13,300 INVESTMENTS IN MARKETABLE SECURITIES, AT VALUE (Note 2) 1,870 RECEIVABLES: From securities brokers and dealers for sales of mutual fund shares 14,072 From the Pioneer family of mutual funds 2,940 From the sale of Class B share rights 2,883 Due from affiliates, net 53,925 Other 730 PREPAID SERVICE FEES 3,984 OTHER ASSETS 2,034 FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, AT COST (NET OF ACCUMULATED DEPRECIATION OF $663) (Note 2) 1,180 DEALER ADVANCES (NET OF ACCUMULATED AMORTIZATION OF $1,054) (Note 9) 927 DEFERRED INCOME TAXES, NET (Note 4) 142 DEFERRED COST OF RESTRICTED STOCK PLAN (Note 5) 1,875 --------------- Total assets $ 99,862 =============== LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES: Payable to funds for shares sold $ 14,053 Accrued expenses and accounts payable 11,060 Distribution fees due to brokers and dealers 1,340 --------------- Total liabilities 26,453 COMMITMENTS AND CONTINGENCIES (Note 8) STOCKHOLDER'S EQUITY: Common stock, $0.10 par value- Authorized--100,000 shares Issued and outstanding--100 shares - Paid-in capital 165,581 Accumulated deficit (91,988) Cumulative translation adjustment (184) --------------- Total stockholder's equity 73,409 --------------- Total liabilities and stockholder's equity $ 99,862 ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 24
PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) REVENUES AND OTHER INCOME (Note 2): Distribution revenues $ 16,233 Commissions- Mutual funds 9,365 Variable annuities 2,586 Gain on sales of Class B share rights 8,132 Other income 1,675 Unrealized and realized gains and losses on marketable securities, net (608) --------------- 37,383 --------------- DISTRIBUTION AND ADMINISTRATIVE EXPENSES: Sales and marketing 26,507 Salaries and related benefits 11,796 Amortization of dealer advances 10,560 Other 12,754 --------------- 61,617 --------------- Loss before benefit for income taxes (24,234) --------------- BENEFIT (PROVISION) FOR INCOME TAXES (Note 4): State 1,425 Federal 8,037 Foreign 8 --------------- 9,470 --------------- Net loss $ (14,764) ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 25
PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) COMMON STOCK CUMULATIVE TOTAL NUMBER PAID-IN ACCUMULATED TRANSLATION STOCKHOLDER'S COMPREHENSIVE OF SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT EQUITY INCOME DECEMBER 31, 1997 100 $ - $ 115,925 $ (77,224) $ (174) $ 38,527 $ - Net loss - - - (14,764) - (14,764) (14,764) Cumulative translation adjustment - - - - (10) (10) (10) Capital contributions (Note 7) - - 49,656 - - 49,656 - ----------- Comprehensive loss - - - - - - $ (14,774) --------- -------- ----------- ---------- ----------- ---------- =========== DECEMBER 31, 1998 100 $ - $ 165,581 $ (91,988) $ (184) $ 73,409 ========= ======== =========== ========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 26
PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (14,764) Adjustments to reconcile net loss to net cash provided by operating activities- Gain on sale of Class B share rights (8,132) Deferred income taxes, net (16,343) Depreciation and amortization 10,962 Unrealized and realized gains and losses on marketable securities, net 608 Restricted stock plan expense 474 Changes in operating assets and liabilities- Investments in marketable securities (531) Proceeds from sale of marketable securities 4,498 Receivable from securities brokers and dealers for sale of mutual fund shares (2,320) Receivable from Pioneer family of mutual funds (109) Receivable from the sale of Class B share rights (2,883) Other receivables 352 Prepaid service fees (2,122) Other assets (739) Dealer advances, net (22,783) Proceeds from initial sale of Class B share rights 61,631 Payable to funds for shares sold 2,322 Accrued expenses and accounts payable 6,217 Distribution fees due to brokers and dealers 266 Accrued foreign income taxes (202) Deferred cost of restricted stock plan (1,728) ------------ Total adjustments 29,438 ------------ Net cash provided by operating activities 14,674 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to furniture, equipment and leasehold improvements (1,092) ------------ Net cash provided by investing activities (1,092) CASH FLOWS FROM FINANCING ACTIVITIES: Due to affiliates, net (4,695) ------------ Net cash used by financing activities (4,695) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (5) ------------ NET INCREASE IN CASH AND TEMPORARY INVESTMENTS 8,882 CASH AND TEMPORARY INVESTMENTS, BEGINNING OF YEAR 4,418 ------------ CASH AND TEMPORARY INVESTMENTS, END OF YEAR $ 13,300 ============ SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES: Conversion of amount due to parent company to additional paid-in capital $ 49,656 ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 27 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (1) NATURE OF OPERATIONS AND ORGANIZATION NATURE OF OPERATIONS Pioneer Funds Distributor, Inc. (the Company) serves as the principal underwriter and distributor of shares of the Pioneer Family of Mutual Funds, utilizing a large network of independent broker-dealers. In addition, the Company serves as the exclusive distributor of the Pioneer Vision Variable Annuity Contracts Trust. ORGANIZATION The Company is a wholly owned subsidiary of Pioneer Investment Management, Inc. (PIM), formerly Pioneering Management Corporation. Pioneer Fonds Marketing GmbH (PFM) and Pioneer Global Funds Distributor, Ltd. (PGFDL) are wholly owned subsidiaries of the Company. PFM performs marketing and sales activities with respect to sales of shares of certain of the Pioneer Family of Mutual Funds primarily in Germany, Austria and Switzerland. PGFDL was established during 1998, and serves as the exclusive worldwide distributor of Pioneer's Irish mutual funds. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. Consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles require the use of management estimates and assumptions that affect the reported amounts of assets and liabilities and 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 those estimates. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions between the Company and its subsidiaries have been eliminated in consolidation. RECOGNITION OF REVENUE Commissions consist of underwriting commissions earned from the distribution of Class A mutual fund shares and are recorded as income on the trade (execution) date. Variable annuity commissions are earned on the distribution of variable annuity contracts. Distribution revenues include distribution fees earned based on 0.75% of certain mutual fund net assets and the gains on sales of Class B share rights sold pursuant to the Class B Share Rights Program (see Note 9). In addition, a 0.25% basis point service 28 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) fee is collected by the Company as reimbursement for service fees prepaid to brokers and dealers in the initial year that an account is established. In subsequent years, these fees are collected by the Company and remitted to third-party brokers and dealers as compensation pursuant to the underlying funds' distribution plans. Other income primarily consists of intercompany revenue, commissions as dealer and interest and dividend income. INVESTMENTS IN MARKETABLE SECURITIES Investments in marketable securities represent investments in mutual funds for which the Company acts as the distributor. Net realized and unrealized gains and losses are reported as such in the accompanying consolidated statement of operations. VALUATION OF FINANCIAL INSTRUMENTS The Company considers the liquid nature and ready availability of market quotations when estimating the fair value of financial instruments. CONSOLIDATED STATEMENT OF CASH FLOWS Cash and temporary investments consist primarily of cash on deposit in banks, commercial paper, a resale agreement and amounts invested in Pioneer Cash Reserves Fund and Pioneer DM Cash Funds PLC. Resale agreements involve the overnight purchase of securities under agreements to resell. It is the policy of the Company to obtain possession of collateral with a market value equal to or in excess of the principal amount loaned under resale agreements. The Company's net benefit for state and federal income taxes of approximately $9,462,000 in 1998 is reflected as an increase to amounts due from affiliates. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Depreciation and amortization are provided for financial reporting purposes on a straight-line basis over the following estimated useful lives: furniture and equipment--three to five years; and leasehold improvements--over the term of the lease, not exceeding ten years. In the event of retirement or other disposition of fixed assets, the cost of the assets and the related accumulated depreciation and amortization amounts are removed from the accounts, and any resulting gains or losses are reflected in earnings. 29 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) FOREIGN CURRENCY TRANSLATION Net assets of the Company's operations outside of the United States are translated into U.S. dollars using current exchange rates with the effects of translation adjustments deferred and included as a separate component of stockholder's equity. Revenues and expenses are translated at the average rates of exchange during the period. COMPREHENSIVE INCOME The Company adopted SFAS No. 130, REPORTING COMPREHENSIVE INCOME, during 1998. SFAS No. 130 establishes standards for the reporting of comprehensive income and its components. Comprehensive income, as defined, includes all changes in equity during a period from non-owner sources. The Company's foreign currency translation adjustments, which are excluded from net income, are included in comprehensive income, as reported in the accompanying consolidated statement of changes in stockholder's equity. CONCENTRATIONS OF CREDIT RISK The Company is primarily engaged in the selling of mutual fund shares of the Pioneer Family of Mutual Funds. In the event counterparties do not fulfill their obligations to the Company, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties. It is the Company's policy to review, as necessary, the credit standing of each counterparty. (3) NET CAPITAL AND RESERVE REQUIREMENTS As a broker-dealer, the Company is subject to the Securities and Exchange Commission's regulations and operating guidelines, which require the Company to maintain a specified amount of net capital, as defined. Net capital may fluctuate on a daily basis. Effective with the June 30, 1998 net capital computation, the Company changed its method of net capital computation from the Aggregate Indebtedness method to the Alternative Standard. The Company's net capital, as computed under Rule 15c3-1, was $1,946,975 at December 31, 1998, which exceeded required net capital of $250,000 by $1,696,975. The Company is exempt from the reserve requirements of Rule 15c3-3 since its broker-dealer transactions are limited to the purchase, sale and redemption of redeemable securities of registered investment companies. The Company promptly transmits all customer funds and delivers all securities received in connection with activities as a broker-dealer and does not otherwise hold funds or securities for, or owe money or securities to, customers. 30 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) (4) INCOME TAXES The Pioneer Group, Inc. (PGI), the parent company of PIM, files a consolidated federal income tax return with its direct and indirect subsidiaries, including the Company. Consolidated income tax benefits (provisions) are allocated among the companies based on the income taxes that would have been benefited (accrued) had separate returns been filed for each entity or when subsidiary losses are utilized in consolidation. The benefit for income taxes, as stated as a percentage of loss before income taxes, consists of the following:
Federal statutory rate (35.0)% (Increases) decreases in tax rate resulting from- State income tax, new apportionment rate (6.0)% Foreign income taxes .3% Other 1.6% ----------- Effective tax rate (39.1)% ===========
The increase in the Company's 1998 tax benefit above the federal statutory rate was primarily due to the enactment of certain changes to the method of apportioning income or loss for purposes of calculating Massachusetts state income taxes. Statement of Financial Accounting Standards (SFAS) No. 109, ACCOUNTING FOR INCOME TAXES, requires restating deferred tax liabilities and assets to reflect the lower rate. Accordingly, in 1998, the Company recorded an additional tax benefit of approximately $1,450,000. Absent the required adjustment, the effective income tax rate for 1998 would have been approximately 33%. The components of deferred income taxes recognized in the accompanying consolidated statement of financial condition are comprised of deferred tax assets of approximately $470,000 and deferred tax liabilities of approximately $328,000. The approximate income tax effect of each type of temporary difference is as follows:
Dealer advances $ (325,000) Restricted stock 203,000 Other, net 264,000 ----------------- Net deferred tax asset $ 142,000 =================
31 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) (5) STOCK PLANS PGI has a Stock Incentive Plan (the 1997 Plan) to provide incentives to certain employees who have contributed and are expected to contribute materially to the success of PGI and its subsidiaries. An aggregate total of 1,500,000 shares of PGI common stock may be awarded to participants under the 1997 Plan. Under the 1997 Plan, PGI may grant restricted stock awards, stock options and other stock based awards. The participant's right to resell the awarded stock vests evenly over a four-year period, and PGI may repurchase unvested restricted shares at $.10 per share upon termination of the participant's employment. The 1997 Plan expires in February 2007. The 1997 Plan is administered by the Compensation Committee of PGI's Board of Directors (the Committee). PGI's 1995 Restricted Stock Plan (the 1995 Plan) and 1988 Stock Option Plan (the 1988 Option Plan) were terminated upon the approval of the 1997 Plan by the stockholders of PGI on May 20, 1997. PGI's 1990 Restricted Stock Plan (the 1990 Plan) expired in January 1995. In 1998, certain employees of PFD were awarded 68,680 of PGI common stock under the 1997 Plan, with a fair market value on the award date of approximately $1,740,000. At December 31, 1998, cumulative shares awarded to certain employees of the Company, net of forfeitures, under the 1997 Plan, the 1995 Plan and the 1990 Plan were 85,783, 26,725 and 120,363, respectively. Awards under the restricted stock plans are compensatory, and accordingly, the difference between the award price and market price of the shares under the plans on the award date, less the applicable tax benefit, is being amortized on a straight-line basis over a four-year period. The Company expensed $474,000 in connection with these plans, which is included in salaries and related benefits expense in the accompanying consolidated statement of operations. Under the 1997 Plan, PGI may grant to key employees, consultants and advisors, options to purchase PGI's common stock. Both incentive stock options intended to qualify under Section 422A of the Internal Revenue Code of 1986 (incentive stock options) and nonstatutory options not intended to qualify for incentive stock option treatment (nonstatutory options) may be granted under the 1997 Plan. Unless the 1997 Plan is earlier terminated, no option may be granted after February 3, 2007. The option price per share is determined by the Committee, but (i) in the case of incentive stock options, may not be less than 100% of the fair market value of such shares on the date of option grant, and (ii) in the case of nonstatutory options, may not be less than 90% of the fair market value on the date of option grant. Options issuable under the 1997 Plan become exercisable, as determined by the Committee, not to exceed 10 years from the date of grant. Options granted to date vest over five years at an annual rate of 20% on each anniversary date of the date of grant. During 1998, 15,000 incentive stock options were granted under the 1997 Plan at an exercise price of $16.125. At December 31, 1998, nonstatutory options to purchase 52,500 shares of PGI common stock at exercise prices ranging from $16.125 to $29.875, equal to fair market value at the dates of the grants, were granted to certain employees of the Company under the 1997 Plan. 32 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) Prior to the adoption of the 1997 Plan, options were granted under the 1988 Option Plan. As of December 31, 1998, nonstatutory options to purchase 367,500 shares of PGI common stock at exercise prices ranging from $4.188 to $27.50, equal to fair market value at the dates of the grants, were granted to certain employees of the Company under the 1988 Option Plan. Of such options, 152,000 shares were exercised at prices ranging from $4.188 to $18.25, and 18,000 shares were forfeited as of December 31, 1998. On May 4, 1995, PGI adopted the 1995 Employee Stock Purchase Plan (the 1995 Purchase Plan), which qualifies as an "Employee Stock Purchase Plan" within the meaning of Section 423 of the Internal Revenue Code of 1986. An aggregate total of 500,000 shares of common stock have been authorized for issuance under the 1995 Purchase Plan, to be implemented through one or more offerings, each approximately six months in length beginning on the first business day of each January and July. The price at which shares may be purchased during each offering will be the lower of (i) 85% of the closing price of the common stock as reported on the NASDAQ National Market (the closing price) on the date that the offering commences or (ii) 85% of the closing price of the common stock on the date the offering terminates. In 1998, employees of the Company purchased 9,574 shares under the 1995 Purchase Plan. The Company has determined based on the analysis and assumptions prepared by management that the disclosure requirements pursuant to SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, are immaterial to these financial statements taken as a whole. (6) BENEFIT PLANS PGI and its subsidiaries have two defined contribution benefit plans for eligible employees: a retirement benefit plan and a savings and investment plan (collectively, the Plans) qualified under section 401 of the Internal Revenue Code. PGI makes contributions to a trustee, on behalf of eligible employees, to fund both plans. Both of the Plans cover all full-time employees who have met certain age and length-of-service requirements. Regarding the retirement benefit plan, the Company contributes an amount that would purchase a certain targeted monthly pension benefit at the participant's normal retirement date. In connection with the savings and investment plan, participants may voluntarily contribute up to 12% of their compensation, and the Company will match this contribution up to 2%. The Company's expenses under the Plans amounted to approximately $812,000 in 1998. (7) RELATED PARTY TRANSACTIONS Certain officers and/or directors of the Company are partners of Hale and Dorr LLP, the Company's legal counsel. Amounts paid by the Company for legal services of Hale and Dorr LLP amounted to approximately $112,000 in 1998. 33 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) During 1998, the Company was charged by PGI and affiliates for office rental, equipment expense, salaries, dealer-related services and other operating expenses. These charges represent expenses directly attributable to the Company's operations or an allocation of its proportionate share of these expenses using formulas that management believes are reasonable. Included in the accompanying consolidated statement of operations in other expenses is $5,926,000 related to these charges. During 1998, obligations in the amount of $49,656,000 owed by the Company to PIM were canceled. The forgiveness of debt was accounted for as a capital contribution in the accompanying consolidated financial statements. Included in other income is approximately $771,000, which the Company earned from an affiliate, Pioneer Management (Ireland) Limited, for underwriting fees on mutual funds. (8) COMMITMENTS AND CONTINGENCIES In 1992, PGI entered into a 10-year lease agreement. In 1994, PGI entered into a direct lease agreement for office space rental on an additional floor. Future minimum payments under these agreements, which are expected to be allocated to the Company, amount to $899,000 in 1999, $848,000 in 2000, $869,000 in 2001 and $288,000 in 2002. These future minimum rental payments include estimated annual operating expenses of approximately $390,000 in 1999, 2000 and 2001, and $98,000 in 2002. (9) DEALER ADVANCES Certain of the Pioneer Family of Mutual Funds maintain a multi-class share structure whereby the participating funds offer both the traditional front-end load shares (Class A shares) and back-end load shares (Class B and Class C shares). Back-end load shares do not require the investor to pay any sales charge unless there is a redemption before the expiration of the minimum holding period, which ranges from three to six years in the case of Class B shares and one year in the case of Class C shares. However, the Company pays upfront sales commissions (dealer advances) to broker-dealers ranging from 2% to 4% of the sales transaction amount on Class B shares and 1% on Class C shares. The participating funds pay the Company distribution fees of 0.75% and service fees of 0.25% per annum of their net assets invested in Class B and Class C shares, subject to annual renewal by the participating fund's Board of Trustees. In addition, the Company is paid a contingent deferred sales charge (CDSC) on Class B and C shares redeemed within the minimum holding period. The CDSC is paid based on declining rates ranging from 2% to 4% on the purchases of Class B shares and 1% for Class C shares. 34 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (Continued) In September 1998, the Company entered into an agreement to sell to a third party its rights to receive future distribution fees and deferred sales charges from the then outstanding Class B shares of the Pioneer Family of Mutual Funds. The Class B share rights were sold for $61.7 million resulting in a gain of $8.1 million, reported in the accompanying consolidated statement of operations as gain on sale of Class B share rights. In addition, the agreement (B Share Rights Program) also provides for the sale, at a premium, of additional rights arising from future sales of Class B shares on a monthly basis through September 2001. The Company capitalizes and amortizes Class C share dealer advances for financial statement purposes over a 12-month period. The Company deducts the dealer advances in full for tax purposes in the year such advances are paid. Distribution fees received by the Company from participating funds are recorded in income as earned. CDSC received by the Company from redeeming shareholders reduce unamortized dealer advances directly. 35 SCHEDULE I
PIONEER FUNDS DISTRIBUTOR, INC. COMPUTATION OF NET CAPITAL UNDER RULE 15C3-1 OF THE SECURITIES EXCHANGE ACT OF 1934 DECEMBER 31, 1998 COMPUTATION OF NET CAPITAL: Consolidated stockholder's equity $ 73,408,167 Less--Retained earnings of subsidiary 85,014 --------------- Unconsolidated stockholder's equity 73,323,153 Deduct--Nonallowable assets before consolidation- Receivables and other assets 12,898,122 Furniture, equipment and leasehold improvements 835,092 Investments in and receivables from affiliates 57,676,599 Haircuts on securities and outstanding wire trades 339,469 Add--Deferred income taxes, associated with dealer advances 373,104 --------------- Net capital $ 1,946,975 =============== COMPUTATION OF BASIC NET CAPITAL REQUIREMENT: Minimum net capital required (greater of $250,000 or 2% of aggregate debits) $ 250,000 Net capital in excess of requirement $ 1,696,975 Reconciliation with Company's Computation (included in Part IIA of Form X-17A-5 as of December 31, 1998) NET CAPITAL, AS REPORTED IN COMPANY'S PART II A (UNAUDITED) FOCUS REPORT $ 1,298,075 NET INCREASE RESULTING FROM DEFERRED TAX ADJUSTMENTS 648,900 --------------- Net capital, as adjusted $ 1,946,975 ===============
36 SCHEDULE II PIONEER FUNDS DISTRIBUTOR, INC. COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS FOR BROKER-DEALERS UNDER RULE 15C3-3 OF THE SECURITIES EXCHANGE ACT OF 1934 Pioneer Funds Distributor, Inc. is exempt from the reserve requirements of Rule 15c3-3, as its transactions are limited to the purchase, sale and redemption of redeemable securities of registered investment companies. The Company promptly transmits all customer funds and delivers all securities received in connection with activities as a broker-dealer, and does not otherwise hold funds or securities for, or owe money or securities to, customers; accordingly, the computation for determination of reserve requirements pursuant to Rule 15c3-3 and information relating to the possession or control requirements pursuant to Rule 15c3-3 are not applicable. In the opinion of management, the Company has complied with the exemptive provisions of Rule 15c3-3 throughout the year ended December 31, 1998. 37 SUPPLEMENTARY REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Pioneer Funds Distributor, Inc.: In planning and performing our audit of the consolidated financial statements and supplemental schedules referred to below of Pioneer Funds Distributor, Inc. (the Company) for the year ended December 31, 1998, we considered its internal control, including control activities for safeguarding securities, in order to determine our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements and supplemental schedules referred to below and not to provide assurance on internal control. Also, as required by Rule 17a-5(g)(1) of the Securities and Exchange Commission (SEC), we have made a study of the practices and procedures followed by the Company, including tests of such practices and procedures that we considered relevant to the objectives stated in Rule 17a-5(g), in making the periodic computations of aggregate debits and net capital under Rule 17a-3(a)(11) and for determining compliance with the exemptive provisions of Rule 15c3-3. Because the Company does not carry securities accounts for customers or perform custodial functions relating to customer securities, we did not review the practices and procedures followed by the Company in any of the following: 1. Making quarterly securities examinations, counts, verifications and comparisons 2. Recordation of differences required by Rule 17a-13 3. Complying with the requirements for prompt payment for securities under Section 8 of Federal Reserve Regulation T of the Board of Governors of the Federal Reserve System. The management of the Company is responsible for establishing and maintaining an internal control and the practices and procedures referred to in the preceding paragraph. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls, and of the practices and procedures referred to in the preceding paragraph, and to assess whether those practices and procedures can be expected to achieve the SEC's above-mentioned objectives. Two of the objectives of internal control and the practices and procedures are to provide management with reasonable but not absolute assurance that assets for which the Company has responsibility are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorization and recorded properly to permit preparation of financial statements in accordance with generally accepted accounting principles. Rule 17a-5(g) lists additional objectives of the practices and procedures listed in the preceding paragraph. Because of inherent limitations in internal control or the practices and procedures referred to above, error or fraud may occur and not be detected. Also, projection of any evaluation of them to future periods is subject to the risk that they may become inadequate because of changes in conditions or that the effectiveness of their design and operation may deteriorate. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of the specific internal control components does not reduce to a relatively low level the risk that error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by 38 employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control, including control activities for safeguarding securities, that we consider to be material weaknesses as defined above. We understand that practices and procedures that accomplish the objectives referred to in the second paragraph of this report are considered by the SEC to be adequate for its purposes in accordance with the Securities Exchange Act of 1934 and related regulations, and that practices and procedures that do not accomplish such objectives in all material respects indicate a material inadequacy for such purposes. Based on this understanding and on our study, we believe that the Company's practices and procedures were adequate at December 31, 1998 to meet the SEC's objectives. This report is intended solely for the use of the Board of Directors, management, the SEC, the National Association of Securities Dealers and other regulatory agencies that rely on Rule 17a-5(g) under the Securities Exchange Act of 1934 in their regulation of registered brokers and dealers and should not be used for any other purpose. Boston, Massachusetts February 1, 1999 39 The prospectus for the Fund contained in Post-Effective Amendment No. 1 to its registration statement on Form N-1A, filed with the Securities and Exchange Commission on February 24, 1999 (Accession No. 0001016964-99-000049), is incorporated herein. UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned registrant undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. CONTENTS OF REGISTRATION STATEMENT This registration statement comprises the following papers and documents: The facing sheet Reconciliation and tie of information in Prospectus with items of Form N-8B-2 The prospectus consisting of 39 pages The prospectus for Pioneer Independence Fund (underlying security) The undertaking to file reports Signatures Written consent of the following person: Arthur Andersen LLP (see Exhibit 1(B)) The following exhibits: EXHIBIT NO. DESCRIPTION 1. (A)(1) Custodian Agreement between Pioneer Funds Distributor, Inc. and State Street Bank and Trust Company (depositor and custodian, respectively) 2 1. (A)(2) Not applicable 1. (A)(3)(a) Not applicable 1. (A)(3)(b) Form of Sales Agreement between Pioneer Funds Distributor, Inc. and other broker-dealers 2 1. (A)(3)(c) Schedules of sales commissions 2 1. (A)(4) Not applicable 1. (A)(5) Not applicable 1. (A)(6) Certificate of incorporation and by-laws of Pioneer Funds Distributor, Inc. 1 1. (A)(7) Not applicable 1. (A)(8) Form of Underwriting Agreement between Pioneer Funds Distributor, Inc. and Pioneer Independence Fund 1 1. (A)(9) Not applicable EXHIBIT NO. DESCRIPTION 1. (A)(10) Forms of investment application 2 1. (B) Written consents of Arthur Andersen LLP 3 2. Opinion of counsel as to the legality of the securities being registered 2 3. (1)(b) Not applicable 3. (1)(c) Not applicable 4. Not applicable ___________________________ 1 Previously filed. Incorporated herein by reference from the exhibits filed with Registrant's initial registration statement (File No. 333-42113) as filed with the Securities and Exchange Commission (the "SEC") on December 12, 1997 (Accession No. 0001016964-97-000166). 2 Previously filed. Incorporated herein by reference from the exhibits filed in Pre-Effective Amendment No. 1 to the registration statement as filed with the SEC on March 13, 1998 (Accession No. 0001016964-98-000018). 3 Filed herewith. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the sponsor of the registrant has caused this registration statement to be signed on behalf of the registrant thereto duly authorized in the City of Boston and the Commonwealth of Massachusetts on the 3rd day of March, 1999. PIONEER INDEPENDENCE PLANS (Name of Registrant) By: PIONEER FUNDS DISTRIBUTOR, INC. By: /s/ John F. Cogan, Jr. John F. Cogan, Jr. Chairman Pursuant to the requirements of the Securities Act of 1933, the registrant's sponsor has duly caused this registration statement to be signed on the registrant's behalf by following persons in the capacities indicated on March 3, 1999: Signature Title /s/ John F. Cogan, Jr. Chairman (Chief Executive ) John F. Cogan, Jr. Officer) and Director, Pioneer ) Funds Distributor, Inc. ) ) ) /s/ Stephen W. Long Director, Pioneer Funds ) Stephen W. Long Distributor, Inc. ) ) ) /s/ David D. Tripple Director, Pioneer Funds ) David D. Tripple Distributor, Inc. ) ) ) /s/ Roy P. Rossi Assistant Treasurer (Principal ) Roy P. Rossi Financial and Accounting Officer), ) Pioneer Funds Distributor, Inc. ) EX-99.B 2 CONSENTS OF ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Consent of Independent Public Accountants As independent public accountants, we hereby consent to the use of our report for Pioneer Funds Distributor, Inc. dated February 1, 1999 (and to all references to our firm) included in or made a part of Pioneer Independence Plans' Post-Effective Amendment No. 1 to Registration Statement No. 333-42113. /s/ Arthur Andersen LLP Arthur Andersen LLP March 2, 1999 Massachusetts -----END PRIVACY-ENHANCED MESSAGE-----