485BPOS 1 ip050101pea.txt PEA 4/AMEND. 5 TO N-1A As filed with the Securities and Exchange Commission on April 30, 2001 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. 4 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: Dorothy R. Bourassa, 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) [X] on May 1, 2001 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) 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 without terminating a plan; 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 without terminating a plan; 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 plans and 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 plans and fund; Choosing a face 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 plans and fund; Accompanying prospectus for Pioneer Independence Fund 26. (b) (2) Basic information about the plans and fund; Accompanying prospectus for Pioneer Independence Fund 26. (b) (3) Basic information about the plans and 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 plans and 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) Balance sheet, statement of operations, statements of changes in net assets and notes to financial statements at December 31, 2000 for Pioneer Independence Plans 59. (a)(2) Not applicable 59. (c)(1) Consolidated statement of financial condition at December 31, 2000 for Pioneer Funds Distributor, Inc. 59. (c)(2) Consolidated statement of operations, consolidated statement of changes in stockholder's equity, consolidated statement of cash flows and notes to consolidated financial statements at December 31, 2000 for Pioneer Funds Distributor, Inc. [Pioneer Logo] Pioneer Independence Plans -------------------------------------------------------------------------------- Prospectus, May 1, 2001 Contents Basic information about the plans 1 Basic information about the plans and fund 2 Investments, withdrawals and terminations 3 Plan owner options and services 10 Plan rights and policies 11 Dividends, capital gains and taxes 14 Service charges and other fees 15 Additional information 15 Financial statements 17
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. 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. 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). [Begin sidenote] Creation and sales charge The custodian will deduct a creation and sales charge, sometimes called a front-end load, of up to 50% from each of your first 12 investments. [End sidenote] You should consider the following aspects of the plan before making an investment: - A plan represents an agreement among you, Pioneer, and State Street Bank and Trust Company, the plan's custodian. Under this agreement, the custodian applies your plan investments (after deduction of creation and sales charges and other fees) to the purchase of 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, the custodian or the issuer of fund shares by any statement, written or oral, not contained in this prospectus. - 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 fund shares available to you at their net asset value and for certain selling expenses and commissions with respect to the plans. The custodian deducts this charge from each of your first 12 monthly plan investments. There is no creation and sales charge on investments 13 through 180 (or on investments under the extended investment option). - If you complete all scheduled payments under a 15-year plan, you will pay a maximum creation and sales charge of 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. - 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. - 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. The custodian will vote the shares held for your account in accordance with your instructions. - The custodian 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. - Your dealer firm of record has proprietary rights to all commissions, including any service fees earned from Pioneer for 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 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 BFDS and accepted by the custodian. - Pioneer is not required to notify you or seek your approval prior to replacing the custodian. The terms of the custodian agreement, however, cannot be amended to adversely affect your rights and privileges without obtaining your written consent. 1 Basic information about the plans and fund You should read the attached prospectus for the fund before investing. The following is only a summary of the information contained in the fund's prospectus. Investment objective of the fund Growth of capital. Fund investments The fund invests at least 80% of its assets in common stocks and securities that trade like common stocks. Pioneer Investment Management, Inc. is the fund's investment adviser. Even though the fund seeks capital growth, you could lose money on your investment. Fees and expenses These are the fees and expenses, based on plan creation and sales charges and the fund's latest fiscal year, you may pay if you invest in a plan.
Plan owner fees paid directly from your investment ---------------------------------------------------------------------------------------------- Maximum sales charge (load) when you buy shares as a percentage of offering price 50.00%(1) ---------------------------------------------------------------------------------------------- Annual fund operating expenses paid from the assets of the fund as a percentage of average daily net assets(2) ---------------------------------------------------------------------------------------------- Management Fee 0.75% ---------------------------------------------------------------------------------------------- Distribution and Service (12b-1) Fee 0.25% ---------------------------------------------------------------------------------------------- Other Expenses 2.76% ---------------------------------------------------------------------------------------------- Total Operating Expenses 3.76% ---------------------------------------------------------------------------------------------- Fee Waiver and Expense Limitation(2) (2.26)% ---------------------------------------------------------------------------------------------- Net Expenses(2) 1.50% ----------------------------------------------------------------------------------------------
(1) A creation and sales charge of up to 50% may be deducted from your first 12 investments. There is no creation and sales charge on investments 13 through 180 (or on investments under the extended investment option). If you complete scheduled payments over a 15-year plan, you will pay a creation and sales charge of up to 3.33%. (2) The expenses in the table above reflect the expense limitation in effect through December 31, 2001 under which Pioneer has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses to the extent required to reduce expenses to 1.50% of the fund's average daily net assets. Example This example helps you compare the cost of investing in a plan with the cost of investing in other mutual fund investments. It assumes that: a) you make a $75 monthly investment in the plan for the time periods shown (a total investment of $13,500 after completing a 15-year plan), b) you reinvest all dividends and distributions, c) your investment has a 5% return each year, d) the fund's operating expenses remain the same and e) Pioneer's expense limitation is in effect for year one. Although your actual costs may be higher or lower, under these assumptions your costs would be:
If you sell your shares If you do not sell your shares ------------------------------------------------------------- --------------------------------- Number of years you own your shares ----------------------------------------------------------------------------------------------- 1 3 5 10 1 3 5 10 ----------------------------------------------------------------------------------------------- $71 $560 $805 $2,054 $454 $560 $805 $2,054
2 Investments, withdrawals and terminations [Begin sidenote] 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. [End sidenote] Choosing a face amount 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 -------------------------------------------------------------------------------- Face Monthly Amount Per Per To Net Monthly Plan (Total Investment Investment Total Sales To Total Investment Plan Investment Investment) 1 thru 12 13 thru 180 Charge (A) Investment in Shares Investment -------------------------------------------------------------------------------------------------------------- $ 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. 3 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 -------------------------------------------------------------------------------- Face Monthly Amount Per Per To Net Monthly Plan (Total Investment Investment Total Sales To Total Investment Plan Investment Investment) 1 thru 12 13 thru 300 Charge (A) Investment in Shares Investment -------------------------------------------------------------------------------------------------------------- $ 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. 4 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 applicable to a 15-year plan that is continued under the extended investment option. The table does not reflect fund performance, fund expenses 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 2 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. The minimum monthly investment is $50.00. [Start sidenote] Automatic investments Consider investing automatically through military or government allotments or preauthorized check transactions (PACT). The plans are specifically designed for regular monthly investing. [End sidenote] Automatic investments To use an automatic investment option complete the required forms and give them to your investment dealer for transfer to Boston Financial Data Services (BFDS), the custodian's transfer agency subsidiary (the plan transfer agent). Each plan for which you elect an automatic investment option is funded automatically each month through your bank account, PACT or, for U.S. military personnel, a government allotment. The plan transfer agent 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 the plan transfer agent 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 the custodian accepts your plan application and the plan transfer agent 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 the plan transfer agent. If you do not make monthly plan investments for a period of 12 consecutive months, Pioneer or the custodian 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. 5 Extended investment option Under the extended investment option, you may continue making monthly investments after you complete all scheduled investments under your 15-year plan. When you complete 300 monthly plan investments, your extended investment option will terminate. The custodian 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 fund shares available to you at their net asset value and for certain selling expenses and commissions with respect to the plans. The custodian deducts this charge from each of your first 12 monthly plan investments. For example, on a $100 a month plan, the custodian deducts $50 from each of the first 12 plan investments. After you make your twelfth investment, the custodian will not deduct a creation and sales charges unless you increase your monthly plan investment amount. Larger plans may be eligible for smaller creation and sales charges. 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 and the current value of other Pioneer mutual fund accounts. 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(s) by combining the face amount of the new plan(s) 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. To qualify for rights of accumulation, your plan must be current. Your plan is current if: - It has been completed and not redeemed; - 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 - The plan is a tax-qualified plan or an individual retirement account (IRA). [Start sidenote] Any person The term "any person" includes: - 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 - 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). [End sidenote] 6 Making investments ahead of schedule to complete a plan early You are normally expected to make 12 regularly scheduled investments each calendar year. If you wish to complete your plan ahead of schedule, you may make advance investments singly or in lump sum amounts at any time during the life of your plan, but the amount of all your advance investments may not exceed 48 investments in total over the life of your plan. These prepayment rules may be waived for a transfer or rollover of an IRA or tax-qualified retirement plan into a Pioneer Independence tax-qualified retirement plan, or in the event of your death to allow your plan to be completed at one time by your estate or beneficiary. Monthly investments may also be paid in lump sum amounts to make a plan that is in arrears current. You pay the same creation and sales charges 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 BFDS and sending a new completed plan application. You may change the face amount of a plan under the following circumstances. - 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. - 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, the custodian 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 excess creation and sales charges, the custodian 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, the custodian 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, BFDS will send you a check within seven days after it receives, in good order, your request and any other required documents. However, BFDS 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 BFDS receives the check or other order for payment. BFDS will mail your sale proceeds to your address of record unless you provide other instructions. [Begin sidenote] Withdrawals and sales may be taxable transactions to plan owners. [End sidenote] -------------------------------------------------------------------------------- Good order Good order means that: - You have provided adequate instructions - There are no outstanding claims against your account - There are no transaction limitations on your account - Your request includes a signature guarantee if you: -- Are withdrawing or selling over $100,000 worth of shares -- Changed your account registration or address within the last 30 days -- Instruct BFDS to mail the check to an address different from the one on your account -- Want the check paid to someone other than the plan owner(s) -- Are transferring the sale proceeds to a Pioneer mutual fund account with a different registration -------------------------------------------------------------------------------- 7 Signature guarantees and other requirements You are required to obtain an acceptable signature guarantee when you are: - Requesting certain types of transactions including transfers of plan ownership and sales of fund shares - 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. BFDS 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 the custodian may require a signature guarantee if either believes that a signature guarantee is warranted. The custodian will determine whether a guarantee is acceptable. The custodian 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 BFDS. 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 BFDS. 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 unless you indicate otherwise on your plan application. You may not terminate your plan or exercise your cancellation or surrender rights by phone. For personal assistance, call BFDS 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: - The proceeds are payable to the plan owner(s) of record and mailed to the address of record; - There has been no change in the address of record on the plan within the preceding 30 days; - The person requesting the withdrawal can provide proper identification information; and - The proceeds do not exceed $100,000 per plan per day. BFDS 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, BFDS 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, the custodian 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. The custodian 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 BFDS by telephone. At such times, you should communicate with BFDS by writing. 8 Partial withdrawals without terminating a plan If you withdraw or sell all of the fund shares in your plan, your plan will normally be terminated. You may also request a partial withdrawal or sale of your fund shares without terminating your plan and keep your plan in effect, if you have owned your plan for at least 45 days. If you have owned your plan for at least 45 days and intend to keep your plan in effect, 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 BFDS, 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, BFDS 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 BFDS receives a request in good order (including signature guarantees and other documentation, if applicable). If BFDS 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, it 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. 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 BFDS an amount equal to the amount redeemed. BFDS 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 $500. 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 BFDS. You should instruct BFDS 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, BFDS will withdraw the fund shares from your plan account, redeem the fund shares and send the proceeds directly to you. If you direct BFDS to transfer the fund shares held under the plan to a fund account, it 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. 9 Replacement privilege on termination [Begin sidenote] Replacements and reinvestments may be taxable to plan owners. [End sidenote] 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 BFDS receives your replacement order and payment. You must exercise the replacement privilege within 90 days following the date you terminate your plan. 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 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 591/2. Under a systematic withdrawal program, BFDS, 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). 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. 10 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 BFDS withhold 28% of the dividends and capital gain 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, BFDS will mail you a confirmation statement for each financial transaction as it occurs. Beginning after the nineteenth month, BFDS may mail statements to you quarterly rather than for each transaction. 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 your account. The custodian 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, the custodian or Pioneer will consider the mailing date to be the date you received them. 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), BFDS 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 BFDS. In addition, if you are canceling a plan with current net assets valued at more than $100,000, you must get a signature guarantee. 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 BFDS 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 BFDS 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 BFDS 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. 11 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 BFDS 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 BFDS 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 above 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 held in your account. The custodian will vote the fund shares held in your account in accordance with your instructions. If you do not vote your fund shares, the custodian 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 BFDS 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. BFDS 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 the custodian can elect to terminate a plan until 300 investments have been made unless: - You have not made investments under your plan for more than 12 consecutive months or - Fund shares are not obtainable and a substitution is not made. 12 If you have not made investments under your plan for more than 12 consecutive months, BFDS 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 the custodian 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, BFDS (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. BFDS will hold the balance of fund shares and/or cash, after payment of all authorized deductions, for delivery to you against the surrender of your plan. The custodian will not pay interest on any cash balances. If you do not surrender your plan within 60 days after the notice of termination, the custodian may, at its discretion, fully discharge its obligations by mailing to you: - A confirmation statement for the fund shares or - 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 BFDS 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 the custodian; (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 the custodian 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, the custodian 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 the custodian 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, the custodian may, but is not required to, select a substitute investment or terminate Pioneer Independence Plans. If the custodian selects a substitute 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, the custodian 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. 13 If shares of the fund are not available for purchase for a period of 120 days or longer, and neither Pioneer nor the custodian 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: - The New York Stock Exchange is closed, other than for customary weekends and holidays; - Trading on the New York Stock Exchange is restricted; - 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 - The Securities and Exchange Commission, by order, so permits. Dividends, capital gains and taxes All fund dividends and capital gain 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 BFDS in writing. BFDS 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 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 the custodian will send you an appropriate notice regarding taxes. You, and not the custodian or Pioneer, pay taxes levied, assessed or imposed on: - Any of the profits realized on sales or transfers of fund shares by the custodian or Pioneer or - Other property credited to your account in accordance with the provisions of the plan or - 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. 14 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 the custodian 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, BFDS 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, BFDS will deduct $5.00 from your account for each monthly plan investment. BFDS will charge you $2.50 for terminating a plan on which investments have not been completed. If you established your plan as an IRA, BFDS will deduct an annual IRA custodial fee of $10 from your account, a portion of which is paid to Pioneer Investment Management USA Inc. You may pay this annual fee by sending a separate check clearly identified as an IRA custodial fee payment to BFDS. 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 the custodian 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, majority owned subsidiary of UniCredito Italiano S.p.A., one of the largest banking groups in Italy. 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 David D. Tripple, Chairman and Director Chief Executive Officer--Pioneer US of Pioneer Global Asset Management S.p.A; Director, Chief Executive Officer and President of Pioneer Investment Management USA Inc. (PIM-USA); President and a Director of Pioneer Investment Management, Inc.; Director of Pioneer Investment Management Shareholder Services, Inc. and Pioneer International Corporation; Member of the Supervisory Board of Pioneer First Polish Investment Fund Joint Stock Company, S.A., Pioneer Czech Investment Company, A.S. and Pioneer Asset Management, S.A.; and Executive Vice President and Trustee of all of the Pioneer mutual funds. I-ling Lu, Treasurer Manager of financial reporting for PIM-USA since November 1999; and audit liaison and manager of fund reporting of PIM-USA prior to November 1999. Dorothy E. Bourassa, Clerk Senior Vice President--Legal and Secretary of PIM-USA and Secretary/Clerk of most of its subsidiaries since October 2000; Assistant Secretary of all of the Pioneer mutual funds since November 2000; Senior Counsel, Assistant Vice President and Director of Compliance of PIM-USA from April 1998 through October 2000; Vice President and Assistant General Counsel, First Union Corporation from December 1996 through March 1998; and Vice President and Counsel, Keystone Investments, Inc. from March 1986 through November 1996. Steven M. Graziano, Director and President Executive Vice President--U.S. Domestic Distribution of Pioneer. 15 Daniel Dart, Executive Vice President Senior Managing Director--National Sales of Pioneer. Senior Vice Presidents: Nate Algiere, William A. Misata, William H. Spencer IV, Jeffrey H. Saunders and Marcy L. Supovitz. Vice Presidents: Barry G. Knight 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. Investments under a plan should be payable to State Street Bank and Trust Company and sent to the plan transfer agent. After authorized deductions, the remaining balance of the investment purchases fund shares for a plan. The custodian 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 gain 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 custodian also effects partial or complete liquidations of plans in connection with withdrawals or terminations and the various other functions discussed above. The custodian has assumed only those obligations specifically imposed on it under the custodian agreement. The custodian 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. 16 The custodian agreement cannot be amended to adversely affect the rights and privileges of the plan owners without their written consent. The custodian 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. The custodian 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 registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. 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 Pioneer Independence Plans Report of Independent Public Accountants To Pioneer Funds Distributor, Inc. and the Planholders of Pioneer Independence Plans: We have audited the accompanying balance sheet of Pioneer Independence Plans (the Plans) as of December 31, 2000, and the related statements of operations and changes in net assets for the periods presented. These financial statements are the responsibility of the Plans' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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. Our procedures included confirmation of securities owned as of December 31, 2000, by correspondence with the custodian. 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 audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pioneer Independence Plans as of December 31, 2000, the results of its operations and the changes in its net assets for the periods presented, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP /s/ Arthur Andersen LLP Boston, Massachusetts February 9, 2001 17 PIONEER INDEPENDENCE PLANS BALANCE SHEET December 31, 2000 ASSETS: Investment in Pioneer Independence Fund, at value (cost $26,758,346) ..................... $28,424,997 Cash ..................................................................................... 38,826 Other receivables ........................................................................ 23,544 ----------- Total assets ........................................................................... $28,487,367 ----------- LIABILITIES: Payable for shares of Pioneer Independence Fund purchased ................................ $ 26,111 Payable to custodian ..................................................................... 36,259 ----------- Total liabilities ...................................................................... $ 62,370 ----------- NET ASSETS: Total net assets (equivalent to $12.48 per share based on 2,277,644 shares of beneficial interest held for outstanding plans).................................................... $28,424,997 ===========
STATEMENT OF OPERATIONS For the Year Ended December 31, 2000 INVESTMENT INCOME: Capital gain distributions received from Pioneer Independence Fund ...... $1,263,109 ---------- Total investment income ................................................ 1,263,109 ---------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on plan liquidations .................................. $ 170,595 Change in unrealized appreciation on investments ........................ 477,581 ---------- Net gain on investments ................................................ $ 648,176 ---------- Net increase in net assets resulting from operations ................... $1,911,285 ==========
STATEMENTS OF CHANGES IN NET ASSETS For the Years Ended December 31, 2000 and December 31, 1999
Year Ended Year Ended 12/31/00 12/31/99 INCREASE (DECREASE) IN NET ASSETS FROM: Operations: Net investment income ............................................... $ 1,263,109 $ 389,547 Net realized gain on plan liquidations .............................. 170,595 67,964 Change in unrealized appreciation on investments .................... 477,581 1,017,287 ----------- ----------- Net increase in assets from operations ............................. $ 1,911,285 $ 1,474,798 Distributions to planholders from net investment income--net ......... $ (941) $ (271) Capital share transactions--net ...................................... 15,515,188 6,790,952 ----------- ----------- Net increase in net assets ......................................... $17,425,532 $ 8,265,479 NET ASSETS: Beginning of year ................................................... 10,999,465 2,733,986 ----------- ----------- End of year ......................................................... $28,424,997 $10,999,465 =========== ===========
The accompanying notes are an integral part of these financial statements. 18 PIONEER INDEPENDENCE PLANS NOTES TO FINANCIAL STATEMENTS December 31, 2000 1. Organization Pioneer Independence Plans (the Plans) is a unit investment trust registered under the Investment Company Act of 1940. The Plans accumulate assets through fixed periodic investments which are in turn invested in shares of Pioneer Independence Fund (the Fund). The following is a summary of significant accounting policies consistently followed by the Plans, which are in conformity with those generally accepted for unit investment trusts: A. Security Valuation Investments are valued at the net asset value of shares held in Pioneer Independence Fund. B. Transaction Dates Share transactions are recorded as of trade date. Dividend income and capital gain distributions are recorded on the ex-dividend date. C. Income Taxes No provision has been made for federal income taxes. All distributions of net investment income and capital gains received by planholders are treated as if received directly from the underlying Fund. A planholder realizes a gain or loss on liquidation for cash but not on withdrawal of the underlying Fund shares. 2. Capital Share Transactions At December 31, 2000, the Plan held 2,277,644 shares of Pioneer Independence Fund. Transactions in Fund shares for the year ended December 31, 2000 were as follows:
Dollars Shares Planholder payments ................................. $22,371,463 Less sales charges .................................. (5,303,924) ------------ Balance invested in fund shares ..................... $17,067,539 1,328,084 Distributions reinvested in fund shares ............. 1,262,168 101,787 Redemptions and withdrawals in fund shares .......... (1,552,351) (120,490) ------------ --------- $16,777,356 1,309,381 ============ =========
3. Planholder's Cost of Pioneer Independence Fund Shares The investment in Pioneer Independence Fund shares is carried at fair market value, which represents the amount available for investment (including reinvested distributions of net investment income and realized gains) in such shares after deduction of sales charges, if applicable. The total investment as of December 31, 2000 is detailed below: Total payments made by planholders on Plans outstanding (net of liquidations) .................................... $34,240,177 Reinvested distributions from net investment income ......... 28,047 Reinvested distributions from realized gains ................ 1,588,119 ------------ Total ....................................................... $35,856,343 Less deduction for creation and sales charges ............... (9,097,997) ------------ Net cost of Pioneer Independence Fund shares ................ $26,758,346 Unrealized appreciation ..................................... 1,666,651 ------------ Net amount applicable to planholders ........................ $28,424,997 ============
4. Related Party Transactions PFD earned $508,519 in creation and sales charges on the sale of contractual Plans during the year ended December 31, 2000. 19 PricewaterhouseCoopers PricewaterhouseCoopers LLP 160 Federal Street Boston MA 02110-9862 Telephone (617) 428 8400 Facsimile (617) 439 7393 Report of Independent Public Accountants To the Board of Directors of Pioneer Funds Distributor, Inc. (A wholly-owned subsidiary of Pioneer Investment Management, Inc.) In our opinion, the accompanying consolidated statement of financial condition and the related consolidated statements of operations, changes in stockholder's equity and cash flows present fairly, in all material respects, the financial condition of Pioneer Funds Distributor, Inc. and its subsidiaries (the "Company") at December 31, 2000 and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedule on page [27] is presented for purposes of additional analysis and is not a required part of the basic 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/ PricewaterhouseCoopers LLP Boston, Massachusetts February 13, 2001 20 PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION December 31, 2000 (Dollars In Thousands) Assets Cash and cash equivalents, at cost, which approximates value (Note 2) .................... $ 29,111 Investments in marketable securities, at value (Note 2) .................................. 5,257 Receivables: From securities brokers and dealers for sales of mutual fund shares ..................... 13,629 From the Pioneer family of mutual funds ................................................. 5,615 From the sale of Class B share rights ................................................... 1,294 Due from affiliates, net ................................................................ 5,433 Other ................................................................................... 477 Prepaid service fees ..................................................................... 4,009 Dealer advances (net of accumulated amortization of $658) (Note 8) ....................... 617 Other assets ............................................................................. 1,142 Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation 278 ---------- of $161) (Note 2) Total assets ........................................................................... $ 66,862 ========== Liabilities and Stockholder's Equity Liabilities: Payable to Pioneer family of mutual funds for fund shares sold .......................... $ 13,620 Accrued expenses and accounts payable ................................................... 7,678 Distribution and service fees due to brokers and dealers ................................ 11,447 ---------- Deferred income taxes, net (Note 4) ..................................................... 155 Total liabilities ...................................................................... 32,900 Commitments and contingencies Stockholder's Equity: Common stock, $0.10 par value: Authorized--100,000 shares Issued and outstanding--100 shares ..................................................... -- Paid-in capital ......................................................................... 185,581 Accumulated deficit ..................................................................... (151,244) Cumulative translation adjustment ....................................................... (375) ---------- Total stockholder's equity ............................................................. 33,962 ---------- Total liabilities and stockholder's equity ............................................. $ 66,862 ==========
The accompanying notes are an integral part of these consolidated financial statements. 21 PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF OPERATIONS for the Year Ended December 31, 2000 (Dollars In Thousands) Revenues and Other Income (Note 2): Distribution revenues ................................................... $ 3,176 Commissions: Mutual funds ........................................................... 3,122 Variable annuities ..................................................... 2,043 Other income ............................................................ 9,472 Unrealized and realized gains and (losses) on marketable securities, net (280) --------- 17,533 --------- Distribution and Administrative Expenses: Sales and marketing ..................................................... 37,632 Salaries and related benefits ........................................... 15,350 Amortization of dealer advances ......................................... 1,349 Related party expenses .................................................. 1,128 Other ................................................................... 10,618 --------- 66,077 --------- Loss before benefit for income taxes ................................... (48,544) --------- Benefit (Provision) for Income Taxes (Note 4): State ................................................................... 3 Federal ................................................................. 17,029 Foreign ................................................................. (562) --------- 16,470 --------- Net loss ............................................................... $ (32,074) =========
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY for the Year Ended December 31, 2000 (In thousands)
Common Stock -------------------- Number Paid-in of Shares Amount Capital --------- ------ ------- December 31, 1999 ......................... 100 $-- $165,581 Net loss ................................. -- -- -- Cumulative translation adjustment ........ -- -- -- Comprehensive loss ....................... -- -- -- Capital contributions (Note 7) ........... -- -- 20,000 --- --- -------- December 31, 2000 ......................... 100 $-- $185,581 === === ======== Cumulative Total Accumulated Translation Stockholder's Comprehensive Deficit Adjustment Equity Loss ----------- ----------- ------------- ------------- December 31, 1999 ......................... $ (119,170) $ (333) $ 46,078 $ -- Net loss ................................. (32,074) -- (32,074) (32,074) Cumulative translation adjustment ........ -- (42) (42) (42) --------- Comprehensive loss ....................... -- -- -- $ (32,116) ========= Capital contributions (Note 7) ........... -- -- 20,000 ---------- ------ ---------- December 31, 2000 ......................... $ (151,244) $ (375) $ 33,962 ========== ====== ==========
The accompanying notes are an integral part of these consolidated financial statements. 22 PIONEER FUNDS DISTRIBUTOR, INC. CONSOLIDATED STATEMENT OF CASH FLOWS for the Year Ended December 31, 2000 (Dollars In Thousands) Cash Flows from Operating Activities: Net loss ................................................................................ $(32,074) Adjustments to reconcile net loss to net cash provided by operating activities: Deferred income taxes, net ............................................................. 200 Depreciation and amortization .......................................................... 2,030 Unrealized and realized gains and losses on marketable securities, net ................. 280 Restricted stock plan expense .......................................................... 266 Changes in operating assets and liabilities: Increase in receivable from securities brokers and dealers for sale of mutual fund (4,200) shares Increase in receivable from Pioneer family of mutual funds ............................ (2,234) Increase in other receivables ......................................................... (168) Decrease in receivable from the sale of Class B share rights .......................... 276 Increase in prepaid service fees ...................................................... (1) Decrease in other assets .............................................................. 555 Decrease in dealer advances, net ...................................................... (1,275) Increase in payable to funds for shares sold .......................................... 4,200 Increase in accrued expenses and accounts payable ..................................... 2,931 Increase in distribution fees due to brokers and dealers .............................. 2,404 Decrease in accrued foreign income taxes .............................................. (485) Decrease in deferred cost of restricted stock plan .................................... (169) ---------- Total adjustments .................................................................... 4,610 ---------- Net cash used in operating activities ............................................... (27,464) ---------- Cash Flows from Investing Activities: Investments in marketable securities .................................................... (3,500) Proceeds from sale of marketable securities ............................................. 12 ---------- Net cash used in investing activities ................................................ (3,488) Cash Flows from Financing Activities: Contributions from parent company ....................................................... 20,000 Due to affiliates, net .................................................................. 25,993 ---------- Net cash provided by financing activities ............................................ 45,993 Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents ............ (42) ---------- Net Increase in Cash and Cash Equivalents ................................................ 14,999 Cash and Cash Equivalents, beginning of year ............................................. 14,112 ---------- Cash and Cash Equivalents, end of year ................................................... $ 29,111 ==========
The accompanying notes are an integral part of these consolidated financial statements. 23 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 (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 (the "Funds"), utilizing a large network of independent broker-dealers. In addition, the Company serves as the exclusive distributor of the Pioneer Variable Contracts Trust. Organization The Company is a wholly owned subsidiary of Pioneer Investment Management, Inc. (PIM). PIM is a wholly-owned subsidiary of Pioneer Investment Management USA, Inc. (PIM-USA), formerly The Pioneer Group, Inc. (PGI). PGI was acquired by UniCredito Italiano S.p.A. on October 24, 2000. 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 Funds primarily in Germany, Austria and Switzerland. PGFDL serves as the worldwide distributor of PIM-USA's Irish mutual funds. (2) Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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. All amounts are expressed in U.S. dollars. 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 and Expenses 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 8). In addition, a 0.25% basis point service fee is collected by the Company as reimbursement from the Funds for service fees prepaid to brokers and dealers in the initial year that an account is established. 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. 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 revenue earned from other PIM affiliates, commissions as dealer and interest and dividend income. Operating expenses are recorded on the accrual basis. Investments in Marketable Securities Investments in marketable securities represent investments in mutual funds for which the Company acts as the distributor and are valued at the last reported net asset value. 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. These instruments approximate market value. Consolidated Statement of Cash Flows Cash and cash equivalents consist primarily of cash on deposit in banks, commercial paper, a repurchase agreement and amounts invested in Pioneer Cash Reserves Fund and Pioneer DM Cash Funds PLC. Cash equivalents are stated at market value. Repurchase agreements involve the overnight sale of securities at which the seller agrees to repurchase at an agreed upon price. 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 repurchase agreements. 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. 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 Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income establishes standards for the reporting of comprehensive income and its components. Comprehensive income, as defined, includes all changes in 24 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 (Continued) equity during a period from non-owner sources. The Company's foreign currency translation adjustments, which are excluded from net loss, are included in comprehensive loss, 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. The Company uses the Alternative Standard as its method of net capital computation. The Company's net capital, as computed under Rule 15c3-1, was $17,369,778 at December 31, 2000, which exceeded required net capital of $250,000 by $17,119,778. 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 and variable annuities. 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. (4) Income Taxes PIM-USA 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: Permanent difference ........................... (0.1)% Foreign income taxes ........................... 1.2% ----- Effective tax rate .............................. (33.9)% =====
The components of deferred income taxes recognized in the accompanying consolidated statement of financial condition are comprised of deferred tax assets of approximately $63,000 and deferred tax liabilities of approximately $218,000. The approximate income tax effect of each type of temporary difference is as follows: Dealer advances ........................................... $(218,000) Unrealized gain (losses) on marketable securities ......... 47,000 Other, net ................................................ 16,000 --------- Net deferred tax liability ................................ $(155,000) =========
(5) Stock Plans Prior to the acquisition of PGI by Unicredito Italiano S.p.A., the Company had a stock incentive plan that granted restricted stock awards to certain employees. In addition, PGI had an Employee Stock Purchase Plan and a Stock Incentive Plan. The Employee Stock Purchase Plan offered shares of PGI to employees on a semiannual basis. PGI's Stock Incentive Plan granted stock option awards to certain employees of the Company and other PGI subsidiaries. The obligations associated with these plans were assumed by PIM in connection with the service agreement described in Note 7. The accompanying consolidated statement of operations includes a charge of $266,000, which is included in salaries and related benefits expense and represents costs incurred for the period January 1, 2000 through the effective date of the service agreement. The Company has determined, based on the analysis and assumptions prepared by management, that the disclosure requirements pursuant to SFAS 123, Accounting for Stock-Based Compensation, are immaterial to these financial statements taken as a whole. (6) Benefit Plans PIM-USA 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. PIM-USA 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 $606,000 in 2000. (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 $42,000 in 2000. The Company is dependent on funding from affiliated companies to finance its operations. During 2000, the Company received $20,000,000 from its affiliates which has been recorded as additional paid-in capital. Effective October 1, 2000, the Company entered into a service agreement with PIM to provide for the payment of the Company's overhead expenses. Additionally, PIM provides 25 PIONEER FUNDS DISTRIBUTOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 (Continued) management, marketing support, systems, software and other administrative services to the Company at no cost. All transactions with PIM are charged or credited through intercompany accounts and may not be the same as those which would otherwise exist or result from agreements and transactions among unaffiliated third parties. In addition, pursuant to the arrangement described above, the Company transferred at no gain, $2,352,000 in fixed assets to PIM. Included in other income is approximately $7,823,000, which the Company earned from other PIM affiliates. This income represents fees earned on the marketing of foreign products. Prior to October 24, 2000, 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 $3,699,000 related to these charges. (8) 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 purchase price of Class B shares and 1% for Class C shares. 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. 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. CDSCs received by the Company from redeeming shareholders reduce unamortized dealer advances directly. 26 PIONEER FUNDS DISTRIBUTOR , INC. SCHEDULE I COMPUTATION OF NET CAPITAL UNDER RULE 15C3-1 OF THE SECURITIES EXCHANGE ACT OF 1934
December 31, 2000 ----------------- Computation of Net Capital: Consolidated stockholder's equity ............................................ $33,961,873 Less--Retained earnings of subsidiaries ...................................... 140,841 ----------- Unconsolidated stockholder's equity ........................................ 33,821,032 Deduct--Nonallowable assets before consolidation-- Receivables and other assets ................................................ 1,704,075 Prepaid service fees and dealer advances .................................... 4,626,226 Investments in and receivables from affiliates .............................. 9,572,164 Haircuts on securities and outstanding wire trades .......................... 766,305 Add--Deferred income taxes, associated with dealer advances .................. 217,516 ----------- Net capital ................................................................ $17,369,778 =========== 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 ......................................... $17,119,778 Reconciliation with Company's Computation (included in Part IIA of Form X-17A-5 as of December 31, 2000) Net Capital, as reported in Company's Part II A (unaudited) Focus Report ...... $12,568,797 Net decrease in investments and receivables from affiliates ................... 3,580,160 Net decrease in receivables ................................................... 1,036,353 Net decrease other assets ..................................................... 184,468 ----------- Net capital, as adjusted ...................................................... $17,369,778 ===========
SCHEDULE II 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, 2000. 27 Supplementary Report of Independent Public Accountants on Internal Control Required by SEC Rule 17a-5 To the Board of Directors of Pioneer Funds Distributor, Inc. (A wholly-owned subsidiary of Pioneer Investment Management, Inc.) In planning and performing our audit of the consolidated financial statements and supplemental schedule of Pioneer Funds Distributor, Inc. (the "Company") for the year ended December 31, 2000, 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 not to provide assurance on the internal control. Also, as required by Rule 17a-5(g)(1) of the Securities and Exchange Commission (the "SEC"), we have made a study of the practices and procedures followed by the Company, including tests of compliance with such practices and procedures, that we considered relevant to the objectives stated in Rule 17a-5(g) in the following: 1. Making the periodic computations of aggregate indebtedness and net capital under Rule 17a-3(a)(11); and 2. 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 the quarterly securities examinations, counts, verifications, and comparisons, and the recordation of differences required by Rule 17a-13; 2. 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; and 3. Obtaining and maintaining physical possession or control of all fully paid and excess margin securities of customers as required by Rule 15c3-3; The management of the Company is responsible for establishing and maintaining 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 control 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 the 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, errors or fraud may occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that controls 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 one or more 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 employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control, including procedures 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, 2000 to meet the SEC's objectives. This report is intended solely for the information and use of the Board of Directors, management, the SEC, the National Association of Securities Dealers, Inc., 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 is not intended to be and should not be used by anyone other than these specified parties. /s/ PricewaterhouseCoopers LLP February 13, 2001 28 The prospectus for Pioneer Independence Fund contained in Post-Effective Amendment No. 4 to its registration statement on Form N-1A, filed with the Securities and Exchange Commission on May 1, 2001 (Accession No. 0001016964-01- 500014), 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 29 pages The prospectus for Pioneer Independence Fund (underlying security) The undertaking to file reports Signatures Written consents 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) Underwriting Agreement between Pioneer Funds Distributor, Inc. and Pioneer Independence Fund 3 1. (A)(9) Not applicable EXHIBIT NO. DESCRIPTION 1. (A)(10) Form of investment application (retail account) 2 1. (A)(11) Form of IRA application 3 1. (B) Written consents of PricewaterhouseCoopers LLP and 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 exhibit 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 registrant, Pioneer Independence Plans, certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Boston and The Commonwealth of Massachusetts on the 30th day of April 2001. PIONEER INDEPENDENCE PLANS (Name of Registrant) By: PIONEER FUNDS DISTRIBUTOR, INC. By: /s/ David D. Tripple David D. Tripple 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 April 30, 2001: Signature Title /s/ David D. Tripple Chairman (Chief Executive ) David D. Tripple Officer) and Director, Pioneer ) Funds Distributor, Inc. ) ) ) /s/ Steven M. Graziano Director and President, Pioneer ) Steven M. Graziano Funds Distributor, Inc. ) ) ) /s/ I-ling Lu Treasurer (Principal Financial ) I-ling Lu and Accounting Officer), Pioneer ) Funds Distributor, Inc. )