-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q3LSS2CnjDVMwkcY6mdy3ACI2HbEATrevynWGMzhbpEUF3MvpmmvK3yzba/79E5q waoUB1/sOTyQj5D/6cSbuw== 0001145443-04-001266.txt : 20040820 0001145443-04-001266.hdr.sgml : 20040820 20040820170513 ACCESSION NUMBER: 0001145443-04-001266 CONFORMED SUBMISSION TYPE: N-14 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20040820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER AMERICA INCOME TRUST CENTRAL INDEX KEY: 0000831120 IRS NUMBER: 046588306 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-14 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118424 FILM NUMBER: 04989507 BUSINESS ADDRESS: STREET 1: 60 STATE ST 19TH FL CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6177427825 MAIL ADDRESS: STREET 1: 60 STATE ST STREET 2: 19TH FLOOR CITY: BOSTON STATE: MA ZIP: 82109-1820 FORMER COMPANY: FORMER CONFORMED NAME: PIONEER US GOVERNMENT TRUST DATE OF NAME CHANGE: 19920703 N-14 1 d15181.txt As filed with the Securities and Exchange Commission on August 20, 2004 File No. 333-_______ United States Securities and Exchange Commission Washington, D.C. 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. _______ Post-Effective Amendment No. ______ (Check appropriate box or boxes) PIONEER AMERICA INCOME TRUST (Exact Name of Registrant as Specified in Charter) (617) 742-7825 (Area Code and Telephone Number) 60 State Street, Boston, Massachusetts 02109 (Address of Principal Executive Offices: Number, Street, City, State, Zip Code) Dorothy E. Bourassa, Esq. Pioneer Investment Management, Inc. 60 State Street Boston, Massachusetts 02109 (Name and Address of Agent for Service) Copies to: David C. Phelan, Esq. Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement. Calculation of Registration Fee under the Securities Act of 1933: No filing fee is due because of reliance on Section 24(f) of the Investment Company Act of 1940, which permits registration of an indefinite number of securities. Title of Securities Being Registered: Shares of beneficial interest of the Registrant. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment, which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall be effective on such date as the Commission, acting pursuant to Section 8(a), may determine. COMBINED PROXY STATEMENT OF SAFECO COMMON STOCK TRUST on behalf of its Series: Safeco International Stock Fund Safeco Balanced Fund Safeco Core Equity Fund Safeco Large-Cap Growth Fund Safeco Large-Cap Value Fund Safeco Small-Cap Value Fund Safeco Growth Opportunities Fund Safeco Multi-Cap Core Fund SAFECO TAXABLE BOND TRUST on behalf of its Series: Safeco Intermediate-Term U.S. Government Fund Safeco High-Yield Bond Fund SAFECO TAX-EXEMPT BOND TRUST on behalf of its Series: Safeco Intermediate-Term Municipal Bond Fund Safeco California Tax-Free Income Fund Safeco Municipal Bond Fund SAFECO MANAGED BOND TRUST on behalf of its Series: Safeco Intermediate-Term Bond Fund SAFECO MONEY MARKET TRUST on behalf of its Series: Safeco Money Market Fund Safeco Tax-Free Money Market Fund (each, "your Safeco Fund" and collectively, the " Safeco Funds") The address and telephone number of each Trust is [INSERT ADDRESS] [INSERT PHONE NUMBER ] NOTICE OF SPECIAL MEETING OF SHAREHOLDERS SCHEDULED FOR [ ], 2004 TO THE SHAREHOLDERS OF THE FUNDS: A joint special meeting of shareholders (the "Meeting") for each of the Safeco Funds will be held at the offices of [address] on [ ], 2004 at [ : ] [a/p].m., local time, to consider the following: 1. With respect to each Safeco Fund, a proposal to approve an Agreement and Plan of Reorganization. Under the Agreement and Plan of Reorganization, your Safeco Fund will transfer all of its assets to an investment company (each a 1 "Pioneer Fund") managed by Pioneer Investment Management, Inc. ("Pioneer") in exchange for Investor Class shares of the Pioneer Fund. The Pioneer Fund also will assume your Safeco Fund's liabilities that are included in the calculation of your Safeco Fund's net assets at the closing. Generally, each Pioneer Fund is an existing mutual fund with substantially similar investment objective and policies as your Safeco Fund. In the case of certain Safeco Funds, the Pioneer Fund is a newly organized mutual fund with investment objective and policies substantially the same as your Safeco Fund. Holders of all share classes of your Safeco Fund will receive Investor Class shares of the corresponding Pioneer Fund. Investor Class shares of the applicable Pioneer Fund will be distributed to shareholders in proportion to the relative net asset value of their share holdings on the closing date of the reorganization. Following the reorganization, your Safeco Fund will then be dissolved. As a result of the reorganization you will become shareholders of the Pioneer Fund. YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL. 2. With respect to each Safeco Fund, a proposal to approve an interim investment advisory agreement between your Safeco Fund and Pioneer. Pioneer has provided advisory services for your Safeco Funds pursuant to this agreement since August 2, 2004, when the advisory agreement between your Safeco Fund and Safeco Asset Management Company terminated. Approval of the interim investment advisory agreement will enable Pioneer to receive advisory fees currently held in escrow. YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL. 3. Any other business that may properly come before the Meeting. Shareholders of record as of the close of business on [ ], 2004, are entitled to vote at the Meeting and any related follow-up meetings. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY CARD. IF SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, YOUR SAFECO FUND MAY BE REQUIRED TO MAKE ADDITIONAL SOLICITATIONS. By order of the Boards of Trustees, [Name] [Title] [ ], 2004 2 COMBINED PROXY STATEMENT OF SAFECO COMMON STOCK TRUST on behalf of its Series: Safeco International Stock Fund Safeco Balanced Fund Safeco Core Equity Fund Safeco Large-Cap Growth Fund Safeco Large-Cap Value Fund Safeco Small-Cap Value Fund Safeco Growth Opportunities Fund Safeco Multi-Cap Core Fund SAFECO TAXABLE BOND TRUST on behalf of its Series: Safeco Intermediate-Term U.S. Government Fund Safeco High-Yield Bond Fund SAFECO TAX-EXEMPT BOND TRUST on behalf of its Series: Safeco Intermediate-Term Municipal Bond Fund Safeco California Tax-Free Income Fund Safeco Municipal Bond Fund SAFECO MANAGED BOND TRUST on behalf of its Series: Safeco Intermediate-Term Bond Fund SAFECO MONEY MARKET TRUST on behalf of its Series: Safeco Money Market Fund Safeco Tax-Free Money Market Fund (each, "your Safeco Fund" and collectively, the " Safeco Funds") The address and telephone number of each Trust is [INSERT ADDRESS] [INSERT PHONE NUMBER ] PROSPECTUS FOR INVESTOR CLASS SHARES OF PIONEER AMERICA INCOME TRUST PIONEER BALANCED FUND PIONEER BOND FUND PIONEER CALIFORNIA TAX FREE INCOME FUND PIONEER CASH RESERVES FUND PIONEER FUND PIONEER GROWTH OPPORTUNITIES FUND 3 PIONEER GROWTH SHARES PIONEER HIGH YIELD FUND PIONEER INTERNATIONAL EQUITY FUND PIONEER MID CAP VALUE FUND PIONEER MUNICIPAL BOND FUND PIONEER SMALL CAP VALUE FUND PIONEER TAX FREE INCOME FUND PIONEER TAX FREE MONEY MARKET FUND PIONEER VALUE FUND (each a "Pioneer Fund") The address and telephone number of each Pioneer Fund is 60 State Street, Boston, Massachusetts 02109 and 1-800-622-3265 or 1-800-225-6292. This combined proxy statement and prospectus ( "Proxy Statement/Prospectus") dated [____], 2004 is being furnished to shareholders of the series listed above (each a "Safeco Fund") of Safeco Common Stock Trust, Safeco Taxable Bond Trust, Safeco Tax-Exempt Bond Trust, Safeco Money Market Trust and Safeco Managed Bond Trust (each a "Safeco Trust," and collectively, the "Safeco Trusts") in connection with the solicitation by the respective boards of trustees (the "Boards, or the "Trustees") of the Safeco Trusts of proxies to be used at a joint meeting of shareholders of the Safeco Funds (the "Meeting") to be held at [INSERT ADDRESS] on [___], 2004 at [time]. The Proxy Statement/Prospectus contains information you should know before voting on (i) the approval of a proposed Agreement and Plan of Reorganization (each a "Plan") that provides for the reorganization of each Safeco Fund into a corresponding Pioneer Fund (each a "Reorganization"), and (ii) the approval of an interim advisory agreement for each Safeco Fund. The following table indicates the corresponding Pioneer Fund shares that each Safeco Fund shareholder would receive if each Plan is approved, which Safeco Fund shareholders may vote on which proposals and on what page of this Proxy Statement/Prospectus the discussion regarding each proposal begins. Shareholders of each class of shares of a Safeco Fund will vote together as a single class on each proposal. Although each Reorganization is similar in structure, you should read carefully the specific discussion regarding your Safeco Fund's Reorganization.
SAFECO FUND PIONEER FUND SHAREHOLDERS ENTITLED TO VOTE PAGE - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 1 Safeco Balanced Fund Pioneer Balanced Fund Safeco Balanced Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 2 Safeco California Tax-Free Pioneer California Tax Free Safeco California Tax-Free Income Fund Income Fund Income Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 3 Safeco Core Equity Fund Pioneer Fund Safeco Core Equity Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 4 Safeco Growth Pioneer Growth Safeco Growth Opportunities Fund Opportunities Fund Opportunities Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 5 Safeco High-Yield Bond Pioneer High Yield Fund Safeco High-Yield Bond Fund Fund - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 6 Safeco Intermediate-Term Pioneer Bond Fund Safeco Intermediate-Term Bond Fund Bond Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 7 Safeco Intermediate-Term Pioneer Tax Free Income Safeco Intermediate-Term Municipal Bond Municipal Bond Fund Fund Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 8 Safeco Intermediate-Term Pioneer America Income Safeco Intermediate-Term U.S. Government U.S. Government Fund Trust Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 9 Safeco International Stock Pioneer International Equity Safeco International Stock Fund Fund Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 10 Safeco Large-Cap Growth Pioneer Growth Shares Safeco Large-Cap Growth Fund Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 11 Safeco Large-Cap Value Pioneer Value Fund Safeco Large-Cap Value Fund shareholders Fund - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 12 Safeco Money Market Fund Pioneer Cash Reserves Fund Safeco Money Market Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 13 Safeco Multi-Cap Core Fund Pioneer Mid Cap Value Fund Safeco Multi-Cap Core Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 14 Safeco Municipal Bond Pioneer Municipal Bond Fund Safeco Municipal Bond Fund shareholders Fund - ---------------------------------------------------------------------------------------------------------------------------------
4 - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 15 Safeco Small-Cap Value Pioneer Small Cap Value Safeco Small-Cap Value Fund shareholders Fund Fund - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 16 Safeco Tax-Free Money Pioneer Tax Free Money Safeco Tax-Free Money Market Fund Market Fund Market Fund shareholders - --------------------------------------------------------------------------------------------------------------------------------- PROPOSAL 17(a) - Each Fund Not applicable Shareholders of each Fund voting separately (p) as to the proposal that affects their Fund - ---------------------------------------------------------------------------------------------------------------------------------
WHERE TO GET MORE INFORMATION - --------------------------------------------------------------------------------------------------------------------------------- The Safeco Funds' prospectuses dated April 30, 2004. Available to you free of charge by calling 1-800-528-6501. Each prospectus, which is also on file with the SEC, is incorporated by reference into this proxy statement and prospectus. The Safeco Funds' annual report dated December 31, 2003 and semiannual report dated June 30, 2004. Available to you free of charge by calling 1-800-528-6501. Also on file with the SEC. See "Available Information." These reports are incorporated by reference into this Proxy Statement and Prospectus. - --------------------------------------------------------------------------------------------------------------------------------- Each Pioneer Funds' current prospectus and each Pioneer Available to you free of charge by calling 1-800-225-6292. These Fund's most recent annual and semi-annual reports to prospectuses are also on file with the SEC. shareholders - --------------------------------------------------------------------------------------------------------------------------------- A statement of additional information for this joint Available to you free of charge by calling 1-800-225-6292. Also on proxy statement and prospectus (the "SAI"), dated file with the SEC. This SAI is incorporated by reference into this September , 2004. It contains additional information Proxy Statement and Prospectus. about your Safeco Funds and the Pioneer Funds. - --------------------------------------------------------------------------------------------------------------------------------- To ask questions about this proxy statement and Call your Safeco Fund's toll-free telephone number: 1-800-[________]. prospectus. - ---------------------------------------------------------------------------------------------------------------------------------
AN INVESTMENT IN ANY PIONEER FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE PIONEER FUNDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE `SEC"). THE SEC HAS NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. BACKGROUND TO THE REORGANIZATIONS Safeco Asset Management Company ("SAM"), the Safeco Funds' investment adviser until August 1, 2004, was a subsidiary of Safeco Corporation, a multi-line insurance company. On August 2, 2004, Symetra Financial Corporation ("Symetra") acquired certain assets from Safeco Corporation, including all of the capital stock of SAM. While reviewing the operations of SAM in anticipation of that transaction, Symetra determined that engaging in the business of investment adviser to the Safeco Funds was not a core business that it intended to continue. After investigating and discussing several alternatives for ongoing investment management of the Safeco Funds with the Trustees, Symetra conducted a search for a new investment adviser for the Safeco Funds. Ultimately Symetra decided to recommend to the Boards that Pioneer Investment Management, Inc. ("Pioneer") be hired to manage the Safeco Funds on an interim basis until the reorganizations occur and the Safeco Funds be reorganized into similar mutual funds managed by Pioneer. The Boards met at a series of meetings in July 2004. At these meetings your Trustees received and evaluated materials regarding Pioneer and the Pioneer Funds, including the performance record and expense structure of each of the Pioneer Funds, the impact of the proposed Reorganizations on the Funds' shareholders, and the quality of the services offered by Pioneer. At these meetings, Trustees met with representatives of Pioneer. In addition to these general factors, the Trustees also considered these and other factors specifically in the context of each Reorganization. On July 30, 2004, the Boards of Trustees, including all of the Trustees who are not interested persons of SAM (the "Independent Trustees"), unanimously voted to approve each of the Reorganizations. Pioneer believes that it offers favorable long-term investment performance and enhanced shareholder services to the Safeco Funds' shareholders. The Reorganizations will, by combining the assets of two mutual funds and, by being part of a family of funds with greater distribution capabilities, offer the potential for increased economies of scale. Increased economies of scale have the potential of benefiting the shareholders of your Safeco Funds and the Pioneer Funds by spreading fixed costs over a larger asset base and reducing expenses on a per share basis. There can be no assurance that such economies of scale will be realized. 5 WHY THE TRUSTEES ARE RECOMMENDING THE REORGANIZATIONS The Trustees believe that reorganizing your Safeco Fund into a portfolio with substantially similar investment objective and policies that is part of the Pioneer family of funds offers you potential benefits. These potential benefits and considerations include: o SAM, the investment adviser to each of the Funds until August 1, 2004, was acquired by Symetra. Symetra informed the Board that it was not interested in continuing to provide investment advisor services to the Safeco Funds. Therefore, a change in your Safeco Fund's investment advisor was necessary; o The track record of Pioneer in managing the Pioneer Funds as compared to the historical performance of the Safeco Funds; o The resources of Pioneer, including its infrastructure in shareholder services; o The opportunity to be part of a significantly larger family of funds, with additional product offerings and enhanced shareholder servicing options; o Pioneer's commitment until the second anniversary of the closing date of the Reorganizations to limit the total operating expenses of the Investor Class shares of each Pioneer Fund; and o Shareholders who own shares in their name as of the closing of the reorganization (i.e., not in the name of a broker) and maintain their account may purchase Class A shares of the corresponding Pioneer fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. Investor Class shares will not be offered after the Reorganizations. HOW EACH REORGANIZATION WILL WORK o Each Safeco Fund will transfer all of its assets to the corresponding Pioneer Fund. Each Pioneer Fund will assume the corresponding Safeco Fund's liabilities that are included in the calculation of such Safeco Fund's net asset value at the closing of the Reorganization (the "Closing Date"). o Each Pioneer Fund will issue Investor Class shares to the corresponding Safeco Fund in amounts equal to the aggregate net asset value of that Safeco Fund's shares. Holders of all share classes of your Safeco Fund will receive Investor Class shares of the corresponding Pioneer Fund. These shares will be distributed to shareholders in proportion to the relative net asset value of their share holdings on the Closing Date. On the Closing Date, you will hold the shares of the Pioneer Fund with the same aggregate net asset value as the shares of your Safeco Fund that you held immediately prior to the reorganization. o Each Safeco Fund will be dissolved after the Closing Date. o Shares of the Investor Class of a Pioneer Fund will automatically convert to Class A shares of the Pioneer Fund at the end of the calendar month that is two years after the Closing Date. o Pioneer acts as investment adviser to each Pioneer Fund. For a two-year period following the Closing Date, Pioneer has agreed to limit each Pioneer Fund's total operating expenses (other than extraordinary expenses) for Investor Class shares. The expense limitation, if any, applicable to the class of shares of the Pioneer Fund into which your Safeco Fund is being reorganized is set forth under the discussion of the proposal relating to such Reorganization. Pioneer is not required to limit any expenses after the second anniversary of the Reorganization. o The Reorganizations are intended to result in no income, gain or loss being recognized for federal income tax purposes to any of the Pioneer Funds, the Safeco Funds or the shareholders of the Safeco Funds. WHO IS PIONEER Pioneer is registered as an investment adviser under the Investment Advisers Act of 1940 and acts as investment adviser to mutual fund and institutional accounts. Pioneer or its predecessors have been managing mutual funds since 1928 and at June 30, 2004 had, together with its affiliates, over $35 billion in assets under management. Pioneer is an indirect, wholly-owned subsidiary of UniCredito Italiano S.p.A., an Italian Bank. 6 WHO BEARS THE EXPENSES ASSOCIATED WITH THE REORGANIZATIONS Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. WILL PIONEER AND SYMETRA BENEFIT FROM THE REORGANIZATIONS Pioneer will benefit from managing a larger pool of assets. Pioneer is also acquiring certain assets associated with SAM's mutual funds and institutional account advisory business. In consideration of the acquisition of these assets and certain covenants from Symetra and SAM, including their assistance in facilitating the Reorganization and their assistance in facilitating the Reorganizations and their obligation to indemnify Pioneer against certain liabilities, Pioneer has agreed to pay Symetra up to $30 million. This amount is subject to downward adjustment if the net assets of the Safeco Funds that approve the Reorganizations (together with assets in certain other accounts) are less than $2.6 billion. Under this agreement, Pioneer and Symetra have also agreed, among other things, that (i) once the Investor Class converts to Class A shares, Pioneer Funds Distributor, Inc. ("PFD"), the principal underwriter of the Pioneer Funds, shall make payments to Safeco Securities pursuant to a Rule 12b-1 plan equal to 0.25% of the average daily net assets attributable to accounts maintained by former shareholders of the Safeco Funds; (ii) PFD will make additional continuing payments out of its own resources to Safeco Securities, following Pioneer's acquisition of assets from SAM, at an annual rate of 0.5% of the average daily net assets of any Pioneer Fund held by or for the account of any former shareholders of the Safeco Funds (including assets invested in any Pioneer Fund as a result of the Reorganization or otherwise) and, in connection with purchases of shares of the Pioneer Funds by former shareholders of the Funds after the acquisition, PFD will pay out of its own resources to Safeco Securities an amount equal to 0.20% of the amount of such purchases; and (iii) Symetra and SAM will be subject to certain non-competition provisions. WHY ARE INTERIM ADVISORY AGREEMENTS BEING VOTED ON Having determined to recommend the Reorganizations, the Trustees elected to appoint Pioneer as investment adviser to each Safeco Fund until the closing of the Reorganization given that Symetra had indicated that it did not wish to continue to offer investment advisory services to the Safeco Funds. Under the Investment Company Act of 1940, as amended (the "Investment Company Act"), shareholders must approve any new investment adviser to a Safeco Fund. However, Rule 15a-4 under the Investment Company Act permits your trustees to appoint an adviser on an interim basis without prior shareholder approval if the new adviser agrees to provide such services on the same terms as the previous adviser and approval of the new adviser is submitted to shareholders within 150 days. Because Pioneer will be making the payment to Symetra discussed above, any fees that Pioneer would be entitled to under the interim advisory agreement will be held in escrow until shareholders approval is obtained. If Pioneer is not approved as investment adviser to a Fund, Pioneer will not receive the fee under the current investment advisory agreement with SAM but instead would be paid a fee based upon Pioneer's cost in managing the Fund. If the Reorganizations and the appointment of Pioneer as interim investment adviser is not approved by December [ ], 2004, Pioneer will no longer provide advisory services to the Funds, unless an extension of the 150 day period is permitted by a Rule or independent position of the staff of the SEC. WHAT HAPPENS IF A REORGANIZATION IS NOT APPROVED If a Reorganization is not approved, the Board for that Safeco Fund will consider what alternative action to take. Such action could include the liquidation of the Fund. WHO IS ELIGIBLE TO VOTE Shareholders of record on [ ], 2004 are entitled to attend and vote at the Meeting or any adjournment of the Meeting. On each proposal, all shareholders of a Safeco Fund, regardless of the class of shares held, will vote together as a single class. Each share is entitled to one vote. Shares represented by properly executed proxies, unless revoked before or at the Meeting, will be voted according to shareholders' instructions. If you sign a proxy but do not fill in a vote, your shares will be voted to approve the Agreement and Plan of Reorganization and the interim advisory agreement with Pioneer. If any other business comes before the Meeting, your shares will be voted at the discretion of the persons named as proxies. 7 TABLE OF CONTENTS - ------------------------------------------------------------------------- PAGE - ------------------------------------------------------------------------- INTRODUCTION - ------------------------------------------------------------------------- Proposal 1 - Safeco Balanced Fund - ------------------------------------------------------------------------- Proposal 2 - Safeco California Tax-Free Income Fund - ------------------------------------------------------------------------- Proposal 3 - Safeco Core Equity Fund - ------------------------------------------------------------------------- Proposal 4 - Safeco Growth Opportunities Fund - ------------------------------------------------------------------------- Proposal 5 - Safeco High-Yield Bond Fund - ------------------------------------------------------------------------- Proposal 6 - Safeco Intermediate-Term Bond Fund - ------------------------------------------------------------------------- Proposal 7 - Safeco Intermediate-Term Municipal Bond Fund - ------------------------------------------------------------------------- Proposal 8 - Safeco Intermediate-Term U.S. Government Fund - ------------------------------------------------------------------------- Proposal 9 - Safeco International Stock Fund - ------------------------------------------------------------------------- Proposal 10 - Safeco Large-Cap Growth Fund - ------------------------------------------------------------------------- Proposal 11 - Safeco Large-Cap Value Fund - ------------------------------------------------------------------------- Proposal 12 - Safeco Money Market Fund - ------------------------------------------------------------------------- Proposal 13 - Safeco Multi-Cap Core Fund - ------------------------------------------------------------------------- Proposal 14 - Safeco Municipal Bond Fund - ------------------------------------------------------------------------- Proposal 15 - Safeco Small-Cap Value Fund - ------------------------------------------------------------------------- Proposal 16 - Safeco Tax-Free Money Market Fund - ------------------------------------------------------------------------- TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION - ------------------------------------------------------------------------- TAX STATUS OF EACH REORGANIZATION - ------------------------------------------------------------------------- PROPOSAL 17(A)-(P) - APPROVAL OF PIONEER AS INVESTMENT ADVISER FOR EACH FUND - ------------------------------------------------------------------------- VOTING RIGHTS AND REQUIRED VOTE - ------------------------------------------------------------------------- ACTIONS TO BE TAKEN IF THE PROPOSALS ARE NOT APPROVED - ------------------------------------------------------------------------- ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS - ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------- INFORMATION CONCERNING THE MEETING - ------------------------------------------------------------------------- OWNERSHIP OF SHARES OF THE FUNDS - ------------------------------------------------------------------------- EXPERTS - ------------------------------------------------------------------------- AVAILABLE INFORMATION - ------------------------------------------------------------------------- ANNEX A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION - ------------------------------------------------------------------------- ANNEX B - FORM OF INTERIM ADVISORY AGREEMENT - ------------------------------------------------------------------------- ANNEX C - ADDITIONAL INFORMATION REGARDING PIONEER - ------------------------------------------------------------------------- 8 SAFECO BALANCED FUND AND PIONEER BALANCED FUND PROPOSAL 1 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO BALANCED FUND TO THE PIONEER BALANCED FUND - --------------------------------------------------------------------------------------------------------------------------------- SAFECO BALANCED FUND PIONEER BALANCED FUND - --------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company diversified open-ended management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - --------------------------------------------------------------------------------------------------------------------------------- Net assets as of $19.5 million $132 million June 30, 2004 - --------------------------------------------------------------------------------------------------------------------------------- Investment advisers Investment adviser (until August 2, 2004): Investment adviser and portfolio managers SAM Pioneer Portfolio Managers (until August 2, 2004): Portfolio Managers: Rex L. Bently (since 1996) Day-to-day management of the Fund's portfolio is the Lynette D. Sagvold (since 1996) responsibility of co-managers Timothy Mulrenan Greg Card (since 2001) (equity securities) and Richard Schlanger (fixed Tim Hokari (since 2000) income securities). Lesley Fox (since 2000) Nancy McFadden (since 2004) Mr. Mulrenan joined Pioneer in 1997 and has managed portfolios since 1998. Mr. Schlanger joined Pioneer Currently Pioneer is acting as investment in 1988. adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manage your Safeco Fund. - --------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks growth and income consistent The Fund seeks capital growth and current income by with the preservation of capital. actively managing a diversified portfolio of equity securities and bonds. ------------------------------------------------------------------------------------------------------- The investment objective of each Fund is fundamental and cannot be changed without shareholder approval. - --------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal market conditions, the Fund Under normal market conditions, the Fund invests in a invests from 50% to 70% of its net assets (plus diversified portfolio of equity securities and any borrowing for investment purposes) in bonds. Pioneer allocates the Fund's assets between common stocks and at least 25% of its assets in equity and debt securities based on its assessment of debt securities. current business, economic and market conditions. Normally, equity and debt securities each represent 25% to 75% of the Fund's net assets. - --------------------------------------------------------------------------------------------------------------------------------- Investment strategies The Fund seeks growth and income consistent The Fund uses a blended value/growth style of with the preservation of capital through a management. In selecting equity securities, the Fund "disciplined value" approach. seeks securities selling at reasonable prices and then holds these securities until the market values When evaluating a stock to purchase for the reflect their intrinsic values. In selecting debt Fund, SAM historically looked for companies securities, the Fund considers both broad economic having one or more of the following factors and issuer specific factors. characteristics: o Undervalued stock price as measured by price-to-earnings ratios and dividend potential relative to comparable companies o Potential to beat the S&P 500 Index average for - ---------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- SAFECO BALANCED FUND PIONEER BALANCED FUND - --------------------------------------------------------------------------------------------------------------------------------- risk adjusted returns over the next three- to five-year outlook o Good long-term growth potential. When evaluating a debt security to buy for the Fund, SAM historically considered factors such as: o The issuer's creditworthiness o The sensitivity of the security to changes in interest rates o The level to which that market sector is already represented by the Fund's assets - --------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest up to 10% of its total The Fund may invest up to 10% of its total assets in assets in debt securities rated below debt securities rated below investment grade, investment grade. including convertible debt. The Fund may invest up to 25% of its total assets in real estate investment trusts. Up to 25% of the Fund's total assets may be invested in equity and debt securities of non-U.S. issuers. The Fund will not invest more than 5% of its total assets in the securities of emerging markets issuers. The Fund may invest in U.S. government securities, mortgage-backed and asset-backed securities. - --------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - --------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - --------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund may not invest more than 25% of its assets in any one industry. - --------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ---------------------------------------------------------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------------------------------------------------------- SAFECO BALANCED FUND PIONEER BALANCED FUND - --------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may: (ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's additional securities purchases if total total assets (including the amount borrowed); (b) to outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to of total assets. an additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) the Fund may purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - --------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may make both short-term (nine months or institutional investors with a value of up to less) and long-term loans of its portfolio securities 33% of the Fund's total assets. to the extent of 30% of the value of the Fund's total assets computed at the time of making such loans. - --------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities, a result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options does not contracts and other derivatives. The Fund does not exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may purchase a put or call option or Fund may use derivatives for a variety of option on a futures contract if, as a result non-principal purposes, including: thereof, the aggregate premiums paid on all options or options on futures contracts held by o As a hedge against adverse changes in stock the fund do not exceed 20% of the Fund's net marketprices, interest rates or currency assets. exchange rates o As a substitute for purchasing or selling securities The Fund may enter into any futures contract or o To increase the Fund's return as a non-hedging option on futures contract if, as a result strategy that may be considered speculative thereof, the aggregate margin deposits and premiums required on all such instruments do not exceed 5% of the Fund's net assets. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - --------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - --------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - --------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Balanced Fund the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be subject charge. to any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. Balanced Fund and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of 1% if you future without paying any sales charge. redeem Class A shares within one year of purchase. Except as described above, Class A shares of Pioneer Balanced Fund are subject to a front-end sales charge Purchases of Investor Class shares of the Fund of up to 4.50%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO BALANCED FUND PIONEER BALANCED FUND - --------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco Balanced Fund pays an advisory fee on a Pioneer Balanced Fund pays Pioneer a management fee fees monthly basis at an annual rate as follows: equal to Pioneer's annual fee is equal to: $0 - $250,000,000: 0.70 of 1% 0.65% of average daily net assets up to $1 billion; $250,000,001 - $750,000,000: 0.65 of 1% 0.60% of the next $4 billion; $750,000,001 - $1,250,000,000: 0.60 of 1% 0.55% on assets over $5 billion. Over $1,250,000,000: 0.55 of 1% During its most recent fiscal year, Pioneer Balanced SAM serves as administrator and Fund accounting Fund paid an advisory fee at an average rate of 0.65% agent for the Fund. The Fund pays SAM an of average daily net assets. administrative services fee of 0.05% of the Fund's average daily net assets up to the first In addition, the Fund reimburses Pioneer for certain $200,000,000 and 0.01% of its net assets fund accounting and legal expenses incurred on behalf thereafter, and an accounting fee of 0.04% of of the Fund and pays a separate shareholder the Fund's average daily net assets up to the servicing/transfer agency fee to Pioneer Investment first $200,000,000 and 0.01% of its net assets Management Shareholder Services, Inc. ("PIMSS"), an thereafter. affiliate of Pioneer. During its most recent fiscal year, Safeco For the fiscal year ended April 30, 2004, the Fund's Balanced Fund paid aggregate advisory and annual operating expenses for Class A shares were administration fees at an average rate of [xx]% 1.38% per share. of average daily net assets. Pioneer has agreed until the second anniversary of SAM had contractually agreed until April 30, the closing of the Reorganization to limit the 2009, to pay certain fund operating expenses ordinary operating expenses (excluding taxes, (but not all of the operating expenses of the commissions, interest and extraordinary expenses) of Fund) that exceeded the rate of 0.40% per annum the Investor Class to 1.10% of the average daily net of the Fund's average daily net assets. This assets attributable to the Investor Class. arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.35%, and without giving effect to the expense limitation, were 1.93% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 2.10%, and without giving effect to the expense limitation, were 2.75% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 2.10%, and without giving effect to the expense limitation, were 42.09% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 1.10%, and without giving effect to the expense limitation, were 1.43% per share. - --------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO BALANCED FUND PIONEER BALANCED FUND - --------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD. Existing shareholders of underwriter or through brokers, registered Safeco Balanced Fund who own shares in their own name investment advisers, banks and other financial as of the closing date of the Reorganization and who institutions that have entered into selling maintain their accounts may buy shares of any fund in agreements with the Fund's principal the Pioneer family of funds through such accounts in underwriter, as described in the Fund's the future without paying sales charges. prospectus. If the account is established in the shareholder's own name, shareholders may also purchase additional Certain account transactions may be done by shares of Pioneer Balanced Fund by telephone or telephone. online. - --------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Balanced Fund acquire through dividend reinvestment or other without incurring any fee on the exchange with the fund distributions or for shares that you have more than 62 other Pioneer Funds. Your exchange would exchanged for shares of the same class of be for Class A shares, which would be subject to a another Fund. Rule 12b-1 fee. An exchange generally is treated as a sale and a new purchase of shares for federal income Certain account transactions may be done by tax purposes. telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Balanced Fund for shares of other Pioneer Funds by telephone or online. - --------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. ------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Balanced Fund by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o The stock market goes down (this risk may be greater in the short term) o The Fund's equity investments do not have the growth potential originally expected o Stocks selected for income do not achieve the same return as securities selected for capital growth Each Fund also has risks associated with investing in debt securities. Each Fund could underperform other investments if: o Interest rates go up causing the value of the Fund's portfolio to decline o The issuer of a debt security owned by the Fund defaults on its obligation to pay principal or interest or has its credit rating downgraded o During periods of declining interest rates, the issuer of a security may exercise its option to repay earlier than scheduled, forcing the Fund to reinvest in lower yielding securities. This is known as a call prepayment risk o During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected principal payments. This may lock in a below market interest rate, increase the security's duration (the estimated period until the security is paid in full) and reduce the value of the security. This is known as an extension risk 5 o Pioneer's judgment about the attractiveness, relative value or potential appreciation of a particular sector, security or investment strategy proves to be incorrect Investments in the Funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money by investing in either Fund. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO BALANCED FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1997 16.64 1998 12.56 1999 1.05 2000 5.09 2001 -0.29 2002 -8.74 2003 16.9 * During the period shown in the bar chart, your Fund's highest quarterly return was 11.10% for the quarter ended June 30, 2003, and the lowest quarterly return was -10.04% for the quarter ended September 30, 2002. PIONEER BALANCED FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -4.31 1995 22.00 1996 9.89 1997 13.92 1998 1.14 1999 3.15 2000 5.38 2001 -2.87 2002 -11.2 2003 15.99 * During the period shown in the bar chart, Pioneer Balanced Fund's highest quarterly return was 8.99% for the quarter ended June 30, 2003, and the lowest quarterly return was -11.66% for the quarter ended September 30, 2002. 6 SAFECO BALANCED FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1) ------ ------- ------------------- SAFECO BALANCED FUND, CLASS A SHARES Return Before Taxes 9.96% 1.00% 5.48% Return After Taxes on Distributions(2) 9.45% 0.03% 4.12% Return After Taxes on Distributions and 6.70% 0.27% 3.94% Sale of Fund Shares(2) SAFECO BALANCED FUND, CLASS B SHARES Return Before Taxes 10.79% 1.08% 5.66% SAFECO BALANCED FUND, CLASS C SHARES Return Before Taxes 14.76% 1.45% 5.53% SAFECO BALANCED FUND, INVESTOR CLASS SHARES Return Before Taxes 16.90% 2.47% 6.55% Return After Taxes on Distributions(2) 16.29% 1.37% 5.06% Return After Taxes on Distributions and 11.26% 1.45% 4.79% Sale of Fund Shares(2) S&P 500 INDEX(3) 28.67% -0.57% 9.02% (reflects no deduction for fees, expenses or taxes) 60% RUSSELL 1000 VALUE/40% LEHMAN BROTHERS 19.66% 4.79% 9.11% AGGREGATE BOND INDEX(3) (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on January 31, 1996. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The S&P 500 Index, an unmanaged index of 500 stocks, and the 60/40 combination of the Russell 1000 Value Index and the Lehman Brothers Aggregate Bond Index, are for reference only, do not mirror the Fund's investments, and reflect no deduction for fees, expenses, or taxes. PIONEER BALANCED FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS (1) ------ ------- ------------ PIONEER BALANCED FUND, CLASS A SHARES Return Before Taxes 10.78% 0.76% 4.38% Return After Taxes on Distributions(2) 10.19% -0.11% 2.40% Return After Taxes on Distributions and 6.98% 0.10% 2.56% Sale of Fund Shares(2) S&P 500 INDEX(3) 28.67% -0.57% 11.06% (reflects no deduction for fees, expenses or taxes) LEHMAN BROTHERS AGGREGATE 4.10% 6.62% 6.95% BOND INDEX(4) (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on May 17, 1968. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The S&P 500 Index, an unmanaged index of 500 stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses, or taxes. 7 (4) The Lehman Brothers Aggregate Bond Index is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses, or taxes. Pioneer Balanced Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Balanced Fund, the expenses of Pioneer Balanced Fund for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
---------------------------------------------------------------------------------------------------------- PIONEER SHAREHOLDER BALANCED TRANSACTION FEES SAFECO BALANCED SAFECO BALANCED SAFECO BALANCED SAFECO BALANCED FUND (PAID DIRECTLY FROM FUND FUND FUND FUND INVESTOR YOUR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ---------------------------------------------------------------------------------------------------------- Maximum sales 5.75% None None None None (1) charge (load) when you buy shares as a percentage of offering price ---------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00% 1.00% None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ---------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% None shares held less than 30 days ---------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) $ 10 ---------------------------------------------------------------------------------------------------------- Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) None fee ---------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ---------------------------------------------------------------------------------------------------------- Management fee 0.70% 0.70% 0.70%(9) 0.70% 0.65% ---------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00%(9) None None service (12b-1) fee ---------------------------------------------------------------------------------------------------------- Other expenses 0.98% 1.05% 40.39%(9) 0.73% 0.50% ---------------------------------------------------------------------------------------------------------- Total fund 1.93% 2.75% 42.09%(9) 1.43% 1.15% operating expenses ---------------------------------------------------------------------------------------------------------- Expense reduction 0.58%(2) 0.65%(2) 39.99%(2) (9) 0.33%(2) 0.05% (3) ---------------------------------------------------------------------------------------------------------- Net fund operating 1.35% 2.10% 2.10%(9) 1.10% 1.10% expenses ----------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Balanced Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the 8 Reorganization may purchase Class A Shares of Pioneer Balanced Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco Balanced Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Balanced Fund to 1.10% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco Balanced Fund and two years for Pioneer Balanced Fund and (e) and the Investor Class shares of Pioneer Balanced Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ------------------------------------------------------------ EXAMPLE ------------------------------------------------------------ SAFECO BALANCED FUND ------------------------------------------------------------ CLASS A SHARES ------------------------------------------------------------ Year 1 $ 705 ------------------------------------------------------------ Year 3 $ 978 ------------------------------------------------------------ Year 5 $ 1,272 ------------------------------------------------------------ Year 10 $ 2,105 ------------------------------------------------------------ CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 713 $ 213 ------------------------------------------------------------ Year 3 $ 958 $ 658 ------------------------------------------------------------ Year 5 $ 1,329 $ 1,129 ------------------------------------------------------------ Year 10 $ 2,064 $ 2,064 ------------------------------------------------------------ CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 313 $ 213 ------------------------------------------------------------ Year 3 $ 658 $ 658 ------------------------------------------------------------ Year 5 $ 1,129 $ 1,129 ------------------------------------------------------------ Year 10 $ 2,431 $ 2,431 ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 112 ------------------------------------------------------------ Year 3 $ 350 ------------------------------------------------------------ Year 5 $ 606 ------------------------------------------------------------ Year 10 $ 1,340 ------------------------------------------------------------ PIONEER BALANCED FUND ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 112 ------------------------------------------------------------ Year 3 $ 374 ------------------------------------------------------------ Year 5 $ 679 ------------------------------------------------------------ Year 10 $ 1,548 ------------------------------------------------------------ 9 REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco Balanced Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the investment performance of Pioneer Balanced Fund is comparable to the investment performance of your Fund. For the five year period ended June 30, 2004, Class A shares of Pioneer Balanced Fund had an average annual return of [xx]% compared to an average annual of the Class A shares and Investor shares of your Fund of [xx]% and [xx]%, respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer Balanced Fund's lower gross operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Balanced Fund to 1.10% of average daily net assets. This expense ratio is below the gross expenses of each class of shares of your Fund and is the same or lower than expenses net of expense reimbursement of each class of shares of your Fund. FIFTH, the substantially larger size of Pioneer Balanced Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer Balanced Fund received in the Reorganization will provide Safeco Balanced Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Balanced Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Balanced Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Balanced Fund and its shareholders. 10 CAPITALIZATION The following table sets forth the capitalization of each fund as of December 31, 2003 for Safeco Balanced Fund and December 31, 2003 for Pioneer Balanced Fund. - ------------------------------------------------------------------------ SAFECO BALANCED FUND PIONEER BALANCED FUND DECEMBER 31, 2003 DECEMBER 31, 2003 - ------------------------------------------------------------------------ NET ASSETS (IN MILLIONS) $ 20.164 $ 131.849 - ------------------------------------------------------------------------ NET ASSET VALUE PER SHARE Class A shares $ 11.88 $ 9.47 Class B shares $ 11.84 $ 9.37 Class C shares $ 11.84 $ 9.45 Investor Class shares $ 11.83 N/A - ------------------------------------------------------------------------ SHARES OUTSTANDING Class A shares 141,000 11,325,991 Class B shares 151,000 1,724,616 Class C shares 9,000 890,865 Investor Class shares 1,402,000 N/A - ------------------------------------------------------------------------ It is impossible to predict how many shares of Pioneer Balanced Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Balanced Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Balanced Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Balanced Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 SAFECO CALIFORNIA TAX-FREE INCOME FUND AND PIONEER CALIFORNIA TAX FREE INCOME FUND PROPOSAL 2 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO CALIFORNIA TF INCOME FUND TO THE PIONEER CALIFORNIA TF INCOME FUND - ----------------------------------------------------------------------------------------------------------------------------------- SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND - ----------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Tax-Exempt Bond Trust, a A newly organized series of Pioneer Series Trust II, diversified open-end management investment an open-end management investment company organized company organized as a Delaware statutory trust. as a Delaware statutory trust. - ----------------------------------------------------------------------------------------------------------------------------------- Net assets as of $82.4 million None. The Pioneer California TF Income Fund is newly June 30, 2004 organized and does not expect to commence investment operations until the Reorganization occurs. - ----------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers (until August 2, 2004): Portfolio Managers: Stephen C. Bauer (since 1983) Day-to-day management of the Fund's portfolio will be President and Director, SAM the responsibility of a team of fixed income portfolio managers led by Kenneth J. Taubes. Mary Metastasio (since 2003) Mr. Taubes joined Pioneer as a senior vice president in September 1998 and has been an investment Currently Pioneer is investment adviser to the professional since 1982. Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manage your Safeco Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Investment objective Each Fund seeks to provide as high a level of current interest income exempt from federal income tax and California state personal income tax as is consistent with the relative stability of capital. During normal market conditions, each Fund will not invest less than 80% of its net assets in obligations the interest on which is exempt from federal income tax and from California state personal income tax. The investment objective of each Fund is fundamental and cannot be changed without shareholder approval. - ----------------------------------------------------------------------------------------------------------------------------------- Primary investments To achieve its investment objective, each Fund invests primarily in investment-grade municipal bonds issued by the state of California or its political subdivisions and having average maturities of 15 years or longer. Under normal circumstances, each Fund invests: o At least 80% of its assets in securities the interest on which is exempt from federal income tax and California personal income tax o At least 65% of its assets in investment-grade municipal bonds with a maturity of more than one year o Up to 20% of its assets in unrated municipal bonds, as long as Pioneer determines they are of comparable quality to investment-grade securities - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND - ----------------------------------------------------------------------------------------------------------------------------------- Investment strategies When evaluating a bond to buy, each Fund's advisor considers among other things: o Yield o Maturity o Structural features such as an issuer's right to buy the bond back at a stated price (a "call") or the Fund's right to require the issuer to buy the bond back at a stated price (a "put") o Credit quality (including the underlying rating of insured bonds) o The project the issuer is financing o The original offering price o Any state or local tax exemption o The amount of discount off or premium on the stated principal amount of the bond represented by the price offered o Whether the bond appears to offer the best overall value when compared to other available bonds Each Fund's advisor favors long-term maturity bonds in essential services that offer a significant degree of protection against issuer repurchase rights prior to maturity and good value relative to their peers. Each Fund's advisor may use the rating services provided by Moody's, S&P, or Fitch. Bond ratings indicate an issuer's financial strength and ability to meet its debt obligations. Each Fund may sell bonds when: o They become fully valued o More attractively valued bonds become available; or o Cash is needed to meet shareholder redemptions. Because it often takes years for attractive relative valuations to be recognized by the municipal securities market, turnover of each Fund's portfolio can be low. - ----------------------------------------------------------------------------------------------------------------------------------- Other investments Each Fund will limit its investment in municipal obligations the interest on which is payable from the revenues of similar types of projects to less than 25% of each Funds' total assets. As a matter of operating policy, "similar types of projects" may include sports, convention or trade show facilities; airports or mass transportation; sewage or solid waste disposal facilities; or air and water pollution control projects. Each Fund may invest in any of the following short-term, tax-exempt obligations: municipal notes of issuers rated, at the time of the purchase, within one of the three highest grades assigned by a nationally recognized statistical rating organization ("NRSRO"); unrated municipal notes offered by issuers having outstanding municipal bonds rated within one of the three highest grades assigned by an NRSRO; notes issued by or on behalf of municipal issuers that are guaranteed by the U.S. government; tax-exempt commercial paper assigned one of the two highest grades by an NRSRO; certificates of deposit issued by banks with assets of $1,000,000,000 or more; and municipal obligations that have a maturity of one year or less from the date of purchase. Each Fund may invest in obligations of the U.S. government, its agencies or instrumentalities or in qualified repurchase agreements, the net interest on which is taxable for federal income tax purposes. - ----------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or as a temporary The Fund may invest all or part of its assets in strategies defensive measure when market conditions so securities with remaining maturities of less than one warrant. year, cash equivalents or may hold cash. - ----------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ----------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined in the 1940 Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments in the securities of issuers primarily engaged in the same industry, provided that this restriction does not limit each Fund from investing in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. - ----------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such action the value of the following securities, in the securities aggregate, would exceed 10% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND - ----------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. The Fund will not commit to additional securities purchases if total outstanding borrowings are equal to 5% or more of total assets. - ----------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified institutional investors with a value of up to 33% of the Fund's total assets. - ----------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ----------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ----------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer California TF the Fund are subject to a 4.50% front-end sales Income Fund you receive in the Reorganization will charge. not be subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the A contingent deferred sales charge of up to Reorganization (i.e., not in the name of a broker) 5.00% if you redeem Class B shares within six and maintain your account, you may purchase Class A years of purchase. shares of Pioneer California TF Income Fund and Class A shares of any fund in the Pioneer family of funds A contingent deferred sales charge of up to through such account in the future without paying any 1.00% if you redeem Class C shares within one sales charge. year of purchase. Except as described above, Class A shares of Pioneer Purchases of Investor Class shares of the Fund California TF Income Fund are subject to a front-end are not subject to a sales load. sales charge of up to 4.50%. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Investor Class shares held less than 30 days. - ----------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco California TF Income Fund pays an Pioneer California TF Income Fund will pay Pioneer a fees advisory fee on a monthly basis at an annual management fee equal to 0.50% of the Fund's average rate as follows: daily net assets. $0 - $250,000,000: 0.50 of 1% $250,000,001 - $750,000,000: 0.45 of 1% In addition, the Fund will reimburse Pioneer for Over $750,000,000: 0.40 of 1% certain Fund accounting and legal expenses incurred on behalf of the Fund and pays a separate shareholder servicing/transfer agency fee to PIMSS, an affiliate SAM serves as administrator and Fund accounting of Pioneer. agent for the Fund. The Fund pays SAM an administrative services fee of 0.05% of the Pioneer has agreed until the second anniversary of Fund's average daily net assets up to the first the closing of the Reorganization to limit the $200,000,000 and 0.01% of its net assets ordinary operating expenses (excluding taxes, thereafter, and an accounting fee of 0.04% of commissions, interest and extraordinary expenses) of the Fund's average daily net assets up to the the Investor Class to 0.63% of the average daily net first $200,000,000 and 0.01% of its net assets assets attributable to the Investor Class. thereafter. During its most recent fiscal year, Safeco California TF Income Fund paid aggregate advisory and administration fees at an average rate of 0.59% of average daily net assets. SAM had contractually agreed until April 30, 2009, to pay certain fund operating expenses (but not all of the operating expenses of the Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO CALIFORNIA TF INCOME FUND PIONEER CALIFORNIA TF INCOME FUND - ----------------------------------------------------------------------------------------------------------------------------------- For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares were 1.06%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares were 1.76%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 1.90%, and without given effect to the expense limitation were 4.09%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares after giving effect to the expense limitation were 0.75%. - ----------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. service (12b-1) fee - ----------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer California TF underwriter or through brokers, registered Income Fund's distributor. Existing shareholders of investment advisers, banks and other financial Safeco California TF Income Fund who own shares in institutions that have entered into selling their own name as of the closing date of the agreements with the Fund's principal Reorganization and who maintain their accounts may underwriter, as described in the Fund's buy shares of any fund in the Pioneer family of funds prospectus. through such accounts in the future without paying sales charges. Certain account transactions may be done by If the account is established in the shareholder's telephone own name, shareholders may also purchase additional shares of Pioneer California TF Income Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer California TF acquire through dividend reinvestment or other Income Fund without incurring any fee on the exchange fund distributions. with the more than 62 other Pioneer Funds. Your exchange would be for Class A shares, which would be Certain account transactions may be done by subject to a Rule 12b-1 fee. An exchange generally is telephone. treated as a sale and a new purchase of shares for federal income tax purposes. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer California TF Income Fund for shares of other Pioneer Funds by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. --------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer California TF Income Fund by telephone or online. - -----------------------------------------------------------------------------------------------------------------------------------
4 COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment or not make as much as if you invested elsewhere if: o Interest rates go up, causing the value of the Fund's investments to decline o The issuer of a security owned by the Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o The investment adviser's judgment about the credit quality, attractiveness or relative value of a particular security proves to be incorrect Investing in mutual fund shares is not the same as making a bank deposit. Your investment is not insured or guaranteed by the Federal Deposit Insurance Corporation. PAST PERFORMANCE Set forth below is performance information for Safeco California TF Income Fund. The bar charts show how Safeco California TF Income Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for Safeco California TF Income Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. Because Pioneer California TF Income Fund is a newly organized mutual fund, it has no past performance. SAFECO CALIFORNIA TF INCOME FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -9.20 1995 26.14 1996 2.53 1997 11.55 1998 6.19 1999 -9.18 2000 18.79 2001 4.12 2002 8.76 2003 4.97 * During the period shown in the bar chart, Safeco California TF Income Fund's highest quarterly return was 10.59% for the quarter ended March 31, 1995, and the lowest quarterly return was -6.16% for the quarter ended March 31, 1994. 5 SAFECO CALIFORNIA TF INCOME FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS (1) ------ ------- ------------ SAFECO CALIFORNIA TF INCOME FUND, CLASS A SHARES Return Before Taxes 0.05% 3.84% 5.25% Return After Taxes on Distributions (2) -0.01% 3.74% 5.07% Return After Taxes on Distributions and 1.51% 3.85% 5.07% Sale of Fund Shares (2) SAFECO CALIFORNIA TF INCOME FUND, CLASS B SHARES Return Before Taxes -1.04% 3.68% 5.26% SAFECO CALIFORNIA TF INCOME FUND, CLASS C SHARES Return Before Taxes 2.97% 4.02% 5.16% SAFECO CALIFORNIA TF INCOME FUND, INVESTOR CLASS SHARES Return Before Taxes 4.97% 5.10% 5.96% Return After Taxes on Distributions (2) 4.91% 5.00% 5.78% Return After Taxes on Distributions and 4.87% 4.99% 5.74% Sale of Fund Shares (2) LEHMAN BROTHERS LONG MUNICIPAL 6.13% 5.95% 6.40% BOND INDEX (3) (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on September 30, 1996. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Lehman Brothers Long Municipal Bond Index, an unmanaged index of bonds with a minimum credit rating of BAA3 issued as part of a deal of at least $50 million, having an amount of at least $5 million and maturing in 22 or more years, is for reference only, is not limited to California issuers, does not mirror the Fund's investments and reflects no deduction of fees, expenses or taxes. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for Safeco California TF Income Fund, the expenses of Safeco California TF Income Fund for the period ended December 31, 2003 and (ii) for Pioneer California TF Income Fund, estimated expenses of Pioneer California TF Income Fund. Future expenses for all share classes may be greater or less. 6
---------------------------------------------------------------------------------------------------------------- PIONEER SHAREHOLDER CALIFORNIA TRANSACTION FEES TF INCOME (PAID DIRECTLY SAFECO CALIFORNIA SAFECO CALIFORNIA SAFECO CALIFORNIA SAFECO CALIFORNIA FUND FROM YOUR TF INCOME FUND TF INCOME FUND TF INCOME FUND TF INCOME FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ---------------------------------------------------------------------------------------------------------------- Maximum sales 4.50%(6) None None None None (1) charge (load) when you buy shares as a percentage of offering price ---------------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ---------------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ---------------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A ---------------------------------------------------------------------------------------------------------------- Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A fee ---------------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ---------------------------------------------------------------------------------------------------------------- Management fee 0.50% 0.50% 0.50% 0.50% 0.50% ---------------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ---------------------------------------------------------------------------------------------------------------- Other expenses 0.31% 0.26% 2.59% 0.25% 0.42% ---------------------------------------------------------------------------------------------------------------- Total fund 1.06% 1.76% 4.09% 0.75% 0.92% operating expenses ---------------------------------------------------------------------------------------------------------------- Expense reduction None (2) None (2) 2.19%(2) None (2) 0.29% (3) ---------------------------------------------------------------------------------------------------------------- Net fund operating 1.06% 1.76% 1.90% 0.75% 0.63% expenses ----------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer California TF Income Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer California TF Income Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco California TF Income Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary operating expenses) of the Investor Class shares of Pioneer California TF Income Fund to 0.63% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco California TF Income Fund and two years for Pioneer California TF Income Fund and (e) and the Investor Class shares of Pioneer 7 California TF Income Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ------------------------------------------------------------ EXAMPLE ------------------------------------------------------------ SAFECO CALIFORNIA TF INCOME FUND ------------------------------------------------------------ CLASS A SHARES ------------------------------------------------------------ Year 1 $ 553 ------------------------------------------------------------ Year 3 $ 772 ------------------------------------------------------------ Year 5 $ 1,008 ------------------------------------------------------------ Year 10 $ 1,686 ------------------------------------------------------------ CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 679 $ 179 ------------------------------------------------------------ Year 3 $ 854 $ 554 ------------------------------------------------------------ Year 5 $ 1,154 $ 954 ------------------------------------------------------------ Year 10 $ 1,719 $ 1,719 ------------------------------------------------------------ CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 293 $ 193 ------------------------------------------------------------ Year 3 $ 597 $ 597 ------------------------------------------------------------ Year 5 $ 1,026 $ 1,026 ------------------------------------------------------------ Year 10 $ 2,222 $ 2,222 ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 77 ------------------------------------------------------------ Year 3 $ 240 ------------------------------------------------------------ Year 5 $ 417 ------------------------------------------------------------ Year 10 $ 930 ------------------------------------------------------------ PIONEER CALIFORNIA TF INCOME FUND ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 64 ------------------------------------------------------------ Year 3 $ 233 ------------------------------------------------------------ Year 5 $ 449 ------------------------------------------------------------ Year 10 $ 1,072 ------------------------------------------------------------ REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco California TF Income Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. THIRD, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer California TF Income Fund to 0.63% of average daily net assets. This expense ratio is no higher than both the gross expenses and expenses net of expense reimbursement of the Class A shares and Investor Class shares of your Fund. Although you will experience higher expenses once 8 the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. FOURTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. FIFTH, the Investor Class shares of Pioneer California TF Income Fund received in the Reorganization will provide Safeco California TF Income Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer California TF Income Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer California TF Income Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer California TF Income Fund. CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003. ------------------------------------------------------------------------ SAFECO CALIFORNIA TF PIONEER CALIFORNIA TF INCOME FUND INCOME FUND DECEMBER 31, 2003 DECEMBER 31, 2003 ------------------------------------------------------------------------ NET ASSETS (in thousands) $ 87,594 N/A ------------------------------------------------------------------------ NET ASSET VALUE PER SHARE Class A shares $ 12.69 N/A Class B shares $ 12.66 Class C shares $ 12.66 Investor Class shares $ 12.68 ------------------------------------------------------------------------ SHARES OUTSTANDING Class A shares 58,000 N/A Class B shares 81,000 Class C shares 8,000 Investor Class shares 6,760,000 ------------------------------------------------------------------------ It is impossible to predict how many shares of Pioneer California TF Income Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer California TF Income Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer California TF Income Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer California TF Income Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 9 SAFECO CORE EQUITY FUND AND PIONEER FUND PROPOSAL 3 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary. COMPARISON OF SAFECO CORE EQUITY FUND TO THE PIONEER FUND
- --------------------------------------------------------------------------------------------------------------------------------- SAFECO CORE EQUITY FUND PIONEER FUND - --------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - --------------------------------------------------------------------------------------------------------------------------------- Net assets as of $ 694.6 million $6,321 million June 30, 2004 - --------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers (until August 2, 2004): Portfolio Managers: Richard D. Meagley (since 1995) Day-to-day management of the Fund's portfolio is the Darcy MacLaren (since 2003) responsibility of John A. Carey and Walter Hunnewell, Jr. Mr. Carey joined Pioneer in 1979 and Mr. Currently Pioneer is acting as investment hunnewell joined pioneer in 2001. adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manage your Safeco Fund. - --------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks long-term growth of capital and The Fund seeks reasonable income and capital growth reasonable current income. through investments primarily in equity securities of U.S. issuers. ------------------------------------------------------------------------------------------------------- The investment objective of each Fund is fundamental and cannot be changed without shareholder approval. - --------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal market conditions, the Fund The Fund invests a major portion of its assets in invests at least 80% of net assets (plus any equity securities, primarily of U.S. issuers. For borrowings for investment purposes) in equity purposes of the Fund's investment policies, equity securities and, to a much lesser extent, securities include common stocks, convertible debt invests in equity related securities. and other equity instruments such as depositary receipts, warrants, rights and preferred stock. - --------------------------------------------------------------------------------------------------------------------------------- Investment strategies The Fund seeks investments in fundamentally The Fund uses a "value" style of management and seeks sound companies with good long-term potential. securities selling at reasonable prices or SAM historically evaluated numerous measures substantial discounts to their underlying values and such as current valuation, profitability, then holds these securities until the market values management, competitive position and financial reflect their intrinsic values. Pioneer looks at the soundness. following factors in selecting investments: favorable expected returns relative to perceived risk; above average potential for earnings and revenue growth; low market valuations relative to earnings forecast, book value, cash flow and sales; a sustainable competitive advantage such as a brand name, customer base, proprietary technology or economies of scale. - ---------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- SAFECO CORE EQUITY FUND PIONEER FUND - --------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest up to 20% of its assets in The Fund may invest up to 10% of its total assets in foreign securities which are listed on a equity and debt securities of non-U.S. corporate national exchange, including investments in issuers and debt securities of non-U.S. government American Depository Receipts. issuers. The Fund may invest in securities convertible The Fund will not invest more than 5% of its total into common stock, but less than 35% of its assets in securities of emerging market issuers. total assets will be invested in such securities. The Fund may invest up to 5% of its net assets in below investment grade debt securities issued by both U.S. and non-U.S. corporate and government issuers. - --------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - --------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - --------------------------------------------------------------------------------------------------------------------------------- Industry Concentration Each Fund may not invest more than 25% of its assets in any one industry. - --------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - --------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may: (ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's additional securities purchases if total total assets (including the amount borrowed); (b) to outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to of total assets. an additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) the Fund may purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - --------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its 33% of the Fund's total assets. assets. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO CORE EQUITY FUND PIONEER FUND - --------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may write put or call options if, as a The Fund may use futures and options on securities, result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options does not contracts and other derivatives. The Fund does not exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may purchase put or call options on Fund may use derivatives for a variety of futures contracts if, as a result thereof, the non-principal purposes, including: aggregate premiums paid on all options or o As a hedge against adverse changes in stock options on futures contracts do not exceed 20% market prices, interest rates or currency of the Fund's net assets. exchange rates o As a substitute for purchasing or selling The Fund may enter into any futures contract or securities option on a futures contract, if as a result o To increase the Fund's return as a thereof, the aggregate margin deposits and non-hedging strategy that may be considered premiums required on all such instruments does speculative not exceed 5% of the Fund's net assets. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - --------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - --------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - --------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Fund you receive the Fund are subject to a 5.75% front-end sales in the Reorganization will not be subject to any charge. sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. Fund and Class A shares of any fund in the Pioneer family of funds through such account in the future Contingent deferred sales charge of 1% if you without paying any sales charge. redeem Class A shares within one year of purchase. Except as described above, Class A shares of Pioneer Fund are subject to a front-end sales charge of up to Purchases of Investor Class shares of the Fund 5.75%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - --------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco Core Equity Fund pays an advisory fee on Pioneer Fund pays Pioneer an annual basic fee of fees a monthly basis at an annual rate as follows: 0.60% of the Fund's average daily net assets. The $0 - $250,000,000: 0.70 of 1% basic fee can increase to a maximum of 0.70% or $250,000,001 - $750,000,000: 0.65 of 1% decrease to a minimum of 0.50%, depending on the $750,000,001 - $1,250,000,000: 0.60 of 1% performance of the Fund's Class A shares relative to Over $1,250,000,000: 0.55 of 1% the S&P 500 Index. SAM serves as administrator and Fund accounting During its most recent fiscal year, Pioneer Fund paid agent for the Fund. The Fund pays SAM an an advisory fee at an average rate of 0.50% of administrative services fee of 0.05% of the average daily net assets. Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets In addition, the fund reimburses Pioneer for certain thereafter, and an accounting fee of 0.04% of fund accounting and legal expenses incurred on behalf the Fund's average daily net assets up to the of the fund and pays a separate shareholder first $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate thereafter. of Pioneer. During its most recent fiscal year, Safeco Core For the fiscal year ended April 30, 2004, the Fund's Equity Fund paid aggregate advisory and annual operating expenses for Class A shares were 1.09% per share. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO CORE EQUITY FUND PIONEER FUND - --------------------------------------------------------------------------------------------------------------------------------- administration fees at an average rate of 0.79% Pioneer has agreed until the second anniversary of of average daily net assets. the closing of the Reorganization to limit the ordinary operating expenses (excluding taxes, SAM had contractually agreed until April 30, commissions, interest and extraordinary expenses) of 2009, to pay certain Fund operating expenses the Investor Class to 1.02% of the average daily net (but not all of the operating expenses of the assets attributable to the Investor Class. Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.32%, and without giving effect to the expense limitation, were 3.40% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 2.07%, and without giving effect to the expense limitation, were 2.38% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 2.07%, and without giving effect to the expense limitation, were 2.41% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares were 1.05% per share. - --------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - --------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco Core investment advisers, banks and other financial Equity Fund who own shares in their own name as of institutions that have entered into selling the closing date of the Reorganization and who agreements with the Fund's principal maintain their accounts may buy shares of any fund in underwriter, as described in the Fund's the Pioneer family of funds through such accounts in prospectus. the future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer Fund by telephone or online. - --------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Fund without acquire through dividend reinvestment or other incurring any fee on the exchange with the more than fund distributions or for Class A shares that 62 other Pioneer Funds. Your exchange would be for Class you have exchanged for Class A shares of A shares, which would be subject to Rule 12b-1 fees. An another Fund. exchange generally is treated as a sale and a new purchase of shares for federal income tax purposes. Certain account transactions may be done by telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Fund for shares of other Pioneer Funds by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------
4
- --------------------------------------------------------------------------------------------------------------------------------- SAFECO CORE EQUITY FUND PIONEER FUND - --------------------------------------------------------------------------------------------------------------------------------- Selling shares Class of shares is sold at the net asset value per share next calculated after the Fund receives your request in good order. ------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Fund by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o The stock market goes down (this risk may be greater in the short term) o Value stocks fall out of favor with investors o The Fund's assets remain undervalued or do not have the potential value originally expected o Stocks selected for income do not achieve the same return as securities selected for capital growth PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO CORE EQUITY FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 9.93 1995 25.26 1996 25.01 1997 24.21 1998 24.93 1999 9.37 2000 -10.97 2001 -9.72 2002 -26.33 2003 24.68 * During the period shown in the bar chart, your Fund's highest quarterly return was 18.72% for the quarter ended December 31, 1998, and the lowest quarterly return was -18.37% for the quarter ended September 30, 2002. 5 PIONEER FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -0.57 1995 26.64 1996 19.70 1997 38.47 1998 29.09 1999 15.63 2000 0.12 2001 -11.13 2002 -20.26 2003 24.58 * During the period shown in the bar chart Pioneer Fund's highest quarterly return was 22.33% for the quarter ended December 31, 1998, and the lowest quarterly return was -18.18% for the quarter ended September 30, 2002. SAFECO CORE EQUITY FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO CORE EQUITY FUND, CLASS A SHARES Return Before Taxes 17.23% -5.61% 7.12% Return After Taxes on Distributions(1) 17.15% -6.09% 5.51% Return After Taxes on Distributions and 11.29% -4.83% 5.36% Sale of Fund Shares(1) SAFECO CORE EQUITY FUND, CLASS B SHARES Return Before Taxes 18.53% -5.54% 7.23% SAFECO CORE EQUITY FUND, CLASS C SHARES Return Before Taxes 22.42% -5.17% 7.14% SAFECO CORE EQUITY FUND, INVESTOR CLASS SHARES Return Before Taxes 24.68% -4.19% 7.99% Return After Taxes on Distributions(1) 24.55% -4.78% 6.28% Return After Taxes on Distributions and 16.19% -3.72% 6.08% Sale of Fund Shares(1) S&P 500 INDEX(2) 28.67% -0.57% 11.06% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The S&P 500 Index, an unmanaged index of 500 stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. 6 PIONEER FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS(1) ------ ------- ----------- PIONEER FUND, CLASS A SHARES Return Before Taxes 17.40% -0.76% 10.00% Return After Taxes on Distributions(2) 17.06% -1.46% 8.47% Return After Taxes on Distributions and 11.28% -0.87% 8.01% Sale of Fund Shares(2) S&P 500 INDEX(3) 28.67% -0.57% 11.06% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on February 13, 1928. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The S&P 500 Index, an unmanaged index of 500 stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. Pioneer Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for the Safeco Core Equity Fund, the expenses of Safeco Core Equity Fund for the period ended December 31, 2003 and (ii) for Pioneer Fund, the expenses of Pioneer Fund for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
--------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES SAFECO CORE SAFECO CORE SAFECO CORE SAFECO CORE PIONEER FUND (PAID DIRECTLY FROM EQUITY FUND EQUITY FUND EQUITY FUND EQUITY FUND INVESTOR YOUR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS --------------------------------------------------------------------------------------------- Maximum sales 5.75% None None None None(1) charge (load) when you buy shares as a percentage of offering price --------------------------------------------------------------------------------------------- Maximum deferred None 5.00% 1.00% None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less --------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days --------------------------------------------------------------------------------------------- Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A --------------------------------------------------------------------------------------------- Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A fee --------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) --------------------------------------------------------------------------------------------- Management fee 0.67% 0.67% 0.67% 0.67% 0.52% --------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee --------------------------------------------------------------------------------------------- Other expenses 2.48% 0.71% 0.74% 0.38% 0.35% --------------------------------------------------------------------------------------------- Total fund 3.40% 2.38% 2.41% 1.05% 0.87% operating expenses --------------------------------------------------------------------------------------------- Expense reduction 2.08%(2) 0.31%(2) 0.34%(2) None(2) None(3) --------------------------------------------------------------------------------------------- Net fund operating 1.32% 2.07% 2.07% 1.05% 0.87% expenses ---------------------------------------------------------------------------------------------
7 (1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco Core Equity Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Fund to 1.02% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. The hypothetical example below helps you compare the cost of investing in each fund. It assumes that: (a) you invest $10,000 in each fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco Core Equity Fund and two years for Pioneer Fund and (e) and the Investor Class shares of Pioneer Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either fund's actual expenses or returns, either past or future. ------------------------------------------------------------ EXAMPLE ------------------------------------------------------------ SAFECO CORE EQUITY FUND ------------------------------------------------------------ CLASS A SHARES ------------------------------------------------------------ Year 1 $ 702 ------------------------------------------------------------ Year 3 $ 969 ------------------------------------------------------------ Year 5 $ 1,257 ------------------------------------------------------------ Year 10 $ 2,074 ------------------------------------------------------------ CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 710 $ 210 ------------------------------------------------------------ Year 3 $ 949 $ 649 ------------------------------------------------------------ Year 5 $ 1,314 $ 1,114 ------------------------------------------------------------ Year 10 $ 2,032 $ 2,032 ------------------------------------------------------------ CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 310 $ 210 ------------------------------------------------------------ Year 3 $ 649 $ 649 ------------------------------------------------------------ Year 5 $ 1,114 $ 1,114 ------------------------------------------------------------ Year 10 $ 2,400 $ 2,400 ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 107 ------------------------------------------------------------ Year 3 $ 334 ------------------------------------------------------------ Year 5 $ 579 ------------------------------------------------------------ Year 10 $ 1,283 ------------------------------------------------------------ PIONEER FUND ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 89 ------------------------------------------------------------ Year 3 $ 298 ------------------------------------------------------------ Year 5 $ 545 ------------------------------------------------------------ Year 10 $ 1,125 ------------------------------------------------------------ 8 REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco Core Equity Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the historical strong investment performance of Pioneer Fund is superior to your Fund's investment performance. For the one, five and 10 year periods ended June 30, 2004, Class A shares of Pioneer Fund had an average annual return of ___%; ___%; and __% compared to an average annual return of the Class A shares and Investor share of ___% and __% (one year), __% and __% (five years) and __% and __% (ten years), respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer Fund's lower operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Fund to 1.02% of average daily net assets. This expense ratio is below both the gross expenses and expenses net of expense reimbursement of the class shares of your Fund. While you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, the Class A expense ratio for the most recent fiscal year, was 1.09% of average daily net assets, which was below the net expenses of the Class A shares of your Fund and only four basis point above the net expenses of the Investor Class of your Fund. FIFTH, the substantially larger size of Pioneer Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer Fund received in the Reorganization will provide Safeco Core Equity Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the 9 Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Fund and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each fund as of December 31, 2003. - ----------------------------------------------------------------------- SAFECO CORE EQUITY FUND PIONEER FUND DECEMBER 31, 2003 DECEMBER 31, 2003 - ----------------------------------------------------------------------- NET ASSETS (IN MILLIONS) $ 743.101 $ 6,361.349 - ----------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 16.78 $ 38.00 Class B shares $ 16.38 $ 37.18 Class C shares $ 16.39 $ 36.84 Investor Class shares $ 16.76 N/A - ----------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 960,000 141,350,188 Class B shares 653,000 14,945,460 Class C shares 11,000 7,940,601 Investor Class shares 42,735,000 N/A - ----------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 10 SAFECO GROWTH OPPORTUNITIES FUND AND PIONEER GROWTH OPPORTUNITIES FUND PROPOSAL 4 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO OPPORTUNITIES FUND TO THE PIONEER OPPORTUNITIES FUND - ---------------------------------------------------------------------------------------------------------------------------------- SAFECO OPPORTUNITIES FUND PIONEER OPPORTUNITIES FUND - ---------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A newly organized series of Pioneer Series Trust II, diversified open-end management investment an open-end management investment company organized as company organized as a Delaware statutory trust. a Delaware statutory trust. - ---------------------------------------------------------------------------------------------------------------------------------- Net assets as of $545.5 million None. The Pioneer Opportunities Fund is newly June 30, 2004 organized and does not expect to commence investment operations until the Reorganization occurs. - ---------------------------------------------------------------------------------------------------------------------------------- Investment advisers Investment adviser (until August 2, 2004): Investment adviser and portfolio managers SAM Pioneer Portfolio Managers (since 2003 until August 2, Portfolio Managers: 2004): Day-to-day management of the Fund's portfolio will be Jeffrey Schwartz the responsibility of John A. Carey and Walter CFA, Vice President, SAM Hunnewell, Jr. Mr. Carey joined Pioneer in 1979 and Mr. Hunnewell joined Pioneer in 2001. Bill Whitlow CFA, Vice President, SAM Mr. Acheson is Vice President and joined Pioneer as a portfolio manager in 2001 and has been an investment Currently Pioneer is acting as investment professional since 1994. adviser to the Fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ---------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks growth of capital. The Fund seeks growth of capital. The Fund provides written notice to shareholders at least 60 days prior to any change to its investment objective as described above. - ---------------------------------------------------------------------------------------------------------------------------------- Primary investments To achieve its investment objective, under normal circumstances, each Fund invests most of its assets in common stocks of companies Pioneer considers to be reasonably priced or undervalued, with above average growth potential. - ---------------------------------------------------------------------------------------------------------------------------------- Investment strategies When evaluating a stock to buy for each Fund, Pioneer considers factors such as: o The strength of the company's balance sheet o The quality of the management team o The rate at which the company's earnings are projected to grow o Whether the company's stock may be trading at a discount relative to its industry peers or the overall markets - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- The Fund may sell as stock if: The Fund may sell a security when Pioneer believes that the security no longer offers above average o Any of the above factors or other growth potential based on the criteria used to relative-value indicators have deteriorated o The stock becomes overvalued, for example, select securities. as a result of overly optimistic earnings forecasts o The stock price reaches a specific target o Changes in market value cause the Fund to hold a larger position in the stock than Pioneer wants; o Other companies present more attractive investment opportunities; and o Cash is needed to meet shareholder redemptions - ---------------------------------------------------------------------------------------------------------------------------------- Other investments Each Fund may invest in securities convertible into common stock, but less than 35% of its total assets will be invested in such securities. Each Fund may invest up to 20% of assets in foreign securities. Each Fund may invest up to 10% of its total assets in debt securities rated below investment grade. Each Fund may write a put or call option if, as a result thereof, the aggregate value of the assets underlying all such options does not exceed 25% of the Fund's net assets. Each Fund may purchase a put or call option or option on a futures contract if, as a result thereof, the aggregate premiums paid on all options or options on futures contracts held by the Fund do not exceed 20% of the Fund's net assets. Each Fund may enter into any futures contract or option on futures contract if, as a result thereof, the aggregate margin deposits and premiums required on all such instruments do not exceed 5% of the Fund's net assets. - ---------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in high-quality, The Fund may invest all or part of its assets in strategies short-term securities issued by an agency or securities with remaining maturities of less than one instrumentality of the U.S. government, year, cash equivalents or may hold cash. high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements as a temporary defensive measure when market conditions so warrant. - ---------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ---------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined in the 1940 Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments in the securities of issuers primarily engaged in the same industry, provided that this restriction does not limit the Fund from investing in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, or governmental issuers of special or general tax-exempt securities, or certain bank instruments issued by domestic banks. - ---------------------------------------------------------------------------------------------------------------------------------- Restricted and If immediately after and as a result of such action the value of the following securities, in the illiquid securities aggregate, would exceed 15% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ---------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. The Fund will not commit to additional securities purchases if total outstanding borrowings are equal to 5% or more of total assets. - ---------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified institutional investors with a value of up to 33% of the Fund's total assets. - ---------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ----------------------------------------------------------------------------------------------------------------------------------
2 - ---------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ---------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGING SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Opportunities the Fund are subject to a 5.75% front-end sales Fund you receive in the Reorganization will not be charge. subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the Contingent deferred sales charge of up to 5% if Reorganization(i.e., not in the name of a broker) and you redeem Class B shares within six years of maintain your account, you may purchase Class A shares purchase. of Pioneer Opportunities Fund and Class A shares of any fund in the Pioneer family of funds through such Contingent deferred sales charge of 1% if you account in the future without paying any sales charge. redeem Class C shares within one year of purchase. Purchases of Investor Class shares of the Fund Except as described above, Class A shares of Pioneer are not subject to a sales load. Opportunities Fund are subject to a front-end sales charge of up to 4.50%. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco Opportunities Fund pays an advisory fee Pioneer Opportunities Fund will pay Pioneer a fees ona monthly basis at an annual rate as follows: management fee equal to 0.68% of the Fund's average $0 - $250,000,000: 0.70 of 1% daily net assets. $250,000,001 - $750,000,000: 0.65 of 1% $750,000,001 - $1,250,000,000: 0.60 of 1% In addition, the Fund will reimburse Pioneer for Over $1,250,000,000: 0.55 of 1% certain Fund accounting and legal expenses incurred on behalf of the Fund and pays a separate shareholder SAM serves as administrator and Fund accounting servicing/transfer agency fee to PIMSS, an affiliate agent for the Fund. The Fund pays SAM an of Pioneer. administrative services fee of 0.05% of the Fund's average daily net assets up to the first Pioneer has agreed until the second anniversary of the $200,000,000 and 0.01% of its net assets closing of the Reorganization to limit the ordinary thereafter, and an accounting fee of 0.04% of operating expenses (excluding taxes, commissions, the Fund's average daily net assets up to the interest and extraordinary expenses) of the Investor first $200,000,000 and 0.01% of its net assets Class to 1.05% of the average daily net assets thereafter. attributable to the Investor Class. During its most recent fiscal year, Safeco Opportunities Fund paid aggregate advisory and administration fees at an average rate of 0.79% of average daily net assets. SAM had contractually agreed until April 30, 2009, to pay certain fund operating expenses (but not all of the operating expenses of the Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.33%, and without giving effect to the expense limitation, were 2.38% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 2.08%, and without giving effect to the expense limitation, were 2.45% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 2.08%, and without giving effect to the expense - ----------------------------------------------------------------------------------------------------------------------------------
3 - ---------------------------------------------------------------------------------------------------------------------------------- limitation, were 2.48% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 1.08%, and without giving effect to the expense limitation, were 1.14% per share - ---------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ---------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has a Safeco Securities, Inc., the Fund's principal sales agreement with PFD, Pioneer Opportunities Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco investment advisers, banks and other financial Opportunities Fund who own shares in their own name as institutions that have entered into selling of the closing date of the Reorganization and who agreements with the Fund's principal underwriter, maintain their accounts may buy shares of any fund in as described in the Fund's prospectus. the Pioneer family of funds through such accounts in the future without paying sales charges. Certain account transactions may be done by If the account is established in the shareholder's own telephone name, shareholders may also purchase additional shares of Pioneer Opportunities Fund by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you acquire You may exchange shares of Pioneer Opportunities Fund through dividend reinvestment or other fund without incurring any fee on the exchange with the distributions or for Class A shares that you more than 62 other Pioneer Funds. Your exchange would be have exchanged for Class A shares of another for Class A shares, which would be subject to Rule 12b-1 fund. fees. An exchange generally is treated as a sale and a new purchase of shares for federal income tax purposes. Certain account transactions may be done by telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Opportunities Fund for shares of other Pioneer Funds by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. --------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a financial to sell shares to PIMSS. You can also sell your intermediary as described in the Fund's shares by contacting the Fund directly if your account prospectus. is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Opportunities Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. Even though each Fund seeks capital growth, you could lose money on your investment or not make as much as if you invested elsewhere if: o The stock market goes down (this risk factor may be greater in the short term) o Growth stocks fall out of favor with investors o The Fund's investments do not have the growth potential originally expected o The Fund's shares may be subject to frequent and more significant changes in value than the stock market in general due to the volatility of some of the smaller companies in which it invests o During periods of market concern about inflation or deflation, some securities in which the Fund invests may become more volatile or decline in value 4 Investing in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. These risks may include: o Inadequate financial information o Smaller, less liquid and more volatile markets o Political and economic upheavals PAST PERFORMANCE Set forth below is performance information for Safeco Opportunities Fund. The bar chart shows how Safeco Opportunities Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for Safeco Opportunities Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. Since Pioneer Opportunities Fund has not yet commenced investment operations, it has no prior performance. SAFECO OPPORTUNITIES FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -1.62 1995 26.1 1996 22.9 1997 49.96 1998 4.37 1999 2.64 2000 -4.16 2001 22.03 2002 -36.92 2003 43.98 * During the period shown in the bar chart, your Fund's highest quarterly return was 34.64% for the quarter ended June 30, 2001, and the lowest quarterly return was -26.84% for the quarter ended September 30, 2002. SAFECO OPPORTUNITIES FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO OPPORTUNITIES, CLASS A SHARES Return Before Taxes 35.37% 0.28% 9.23% Return After Taxes on Distributions (1) 35.37% 0.28% 6.93% Return After Taxes on Distributions and Sale of Fund Shares (1) 22.99% 0.24% 6.62% SAFECO OPPORTUNITIES FUND, CLASS B SHARES Return Before Taxes 37.64% 0.35% 9.38% SAFECO OPPORTUNITIES FUND, CLASS C SHARES Return Before Taxes 41.64% 0.75% 9.28% SAFECO OPPORTUNITIES FUND, INVESTOR CLASS SHARES Return Before Taxes 43.98% 1.74% 10.03% Return After Taxes on Distributions (1) 43.98% 1.74% 7.72% Return After Taxes on Distributions and Sale of Fund Shares (1) 28.59% 1.49% 7.34% RUSSELL 2000 INDEX (2) 47.25% 7.13% 9.48% (reflects no deduction for fees, expenses or taxes)
(1) After-tax returns are calculated using the historical h ighest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after- tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. 5 (2) The Russell 2000 Index, an unmanaged index of 2,000 small capitalization stocks, is for reference only and does not mirror Safeco Opportunities Fund's investments. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the table appearing below are based on (i) for your Fund, the expenses of your Fund for its fiscal year ended December 31, 2003 and (ii) for the Pioneer Opportunities Fund, the estimated annual expenses of the Pioneer Opportunities Fund. The Pioneer Opportunities Fund's actual expenses may be greater or less.
----------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES SAFECO SAFECO SAFECO SAFECO PIONEER (PAID DIRECTLY OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES FROM YOUR FUND FUND FUND FUND FUND INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS INVESTOR CLASS ----------------------------------------------------------------------------------------------------- Maximum sales 5.75%(6) None None None None (1) charge (load) when you buy shares as a percentage of offering price ----------------------------------------------------------------------------------------------------- Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ----------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% None shares held less than 30 days ----------------------------------------------------------------------------------------------------- Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) $ 10 ----------------------------------------------------------------------------------------------------- Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) None fee ----------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ----------------------------------------------------------------------------------------------------- Management fee 0.68% 0.68% 0.68% 0.68% 0.68% ----------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ----------------------------------------------------------------------------------------------------- Other expenses 1.45% 0.77% 0.80% 0.46% 0.27% ----------------------------------------------------------------------------------------------------- Total fund 2.38% 2.45% 2.48% 1.14% 0.95% operating expenses ----------------------------------------------------------------------------------------------------- Expense reduction 1.05%(2) 0.37%(2) 0.40%(2) 0.06%(2) None (3) ----------------------------------------------------------------------------------------------------- Net fund operating 1.33% 2.08% 2.08% 1.08% 0.95% expenses -----------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Opportunities Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Tax Free Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco Opportunities Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement 6 included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Opportunities Fund to 1.05% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's and Pioneer Opportunities Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco Opportunities Fund and two years for Pioneer Opportunities Fund and (f) and the Investor Class shares of Pioneer Opportunities Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either fund's actual expenses or returns, either past or future. ------------------------------------------------------------ EXAMPLE ------------------------------------------------------------ SAFECO OPPORTUNITIES FUND ------------------------------------------------------------ CLASS A SHARES ------------------------------------------------------------ Year 1 $ 703 ------------------------------------------------------------ Year 3 $ 972 ------------------------------------------------------------ Year 5 $ 1,262 ------------------------------------------------------------ Year 10 $ 2,084 ------------------------------------------------------------ CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 711 $ 211 ------------------------------------------------------------ Year 3 $ 952 $ 652 ------------------------------------------------------------ Year 5 $ 1,319 $ 1,119 ------------------------------------------------------------ Year 10 $ 2,043 $ 2,043 ------------------------------------------------------------ CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 311 $ 211 ------------------------------------------------------------ Year 3 $ 652 $ 652 ------------------------------------------------------------ Year 5 $ 1,119 $ 1,119 ------------------------------------------------------------ Year 10 $ 2,410 $ 2,410 ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 110 ------------------------------------------------------------ Year 3 $ 343 ------------------------------------------------------------ Year 5 $ 595 ------------------------------------------------------------ Year 10 $ 1,317 ------------------------------------------------------------ PIONEER OPPORTUNITIES FUND ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 97 ------------------------------------------------------------ Year 3 $ 304 ------------------------------------------------------------ Year 5 $ 528 ------------------------------------------------------------ Year 10 $ 1,171 ------------------------------------------------------------ 7 REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco Opportunities Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. THIRD, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Opportunities Fund to 1.05% of average daily net assets. This expense ratio is no higher than both the gross expenses and expenses net of expense reimbursement of the Investor Class shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. FOURTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. FIFTH, the Investor Class shares of Pioneer Opportunities Fund received in the Reorganization will provide Safeco Opportunities Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The Trustees of Pioneer Opportunities Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Opportunities Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Opportunities Fund and its shareholders. 8 CAPITALIZATION The following table sets forth the capitalization of each fund, as of December 31, 2003. ----------------------------------------------------------------------------- PIONEER OPPORTUNITIES SAFECO OPPORTUNITIES FUND FUND DECEMBER 31, 2003 DECEMBER 31, 2003 ----------------------------------------------------------------------------- NET ASSETS (in millions) $ 526 N/A ----------------------------------------------------------------------------- NET ASSET VALUE PER SHARE N/A Class A shares $ 24.38 Class B shares $ 23.05 Class C shares $ 23.05 Investor Class shares $ 24.75 ----------------------------------------------------------------------------- SHARES OUTSTANDING N/A Class A shares 881,000 Class B shares 483,000 Class C shares 8,000 Investor Class shares 19,928,000 ----------------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Opportunities Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Opportunities Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Opportunities Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Opportunities Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 9 SAFECO HIGH-YIELD BOND FUND AND PIONEER HIGH YIELD FUND PROPOSAL 5 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO HIGH YIELD FUND TO THE PIONEER HIGH YIELD FUND - ---------------------------------------------------------------------------------------------------------------------------------- SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND - ---------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Taxable Bond Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - ---------------------------------------------------------------------------------------------------------------------------------- Net assets as of $37.8 million $7,665 million June 30, 2004 - ---------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers: Portfolio Managers: Greg Card (since July 2003 and until August 2, Margaret D. Patel (since inception) 2004) Joined Pioneer in 1999 Assistant Vice President, SAM Investment professional for over 25 years Joined SAM in 2001 Beverly Denny (since July 2003) Assistant Vice President, SAM Associated with SAM since 1991 Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ---------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks to provide a high level of The Fund seeks to maximize total return through a current interest income through the purchase of combination of income and capital appreciation. high-yield debt securities. -------------------------------------------------------------------------------------------------------- Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment objective as described above. - ---------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal market conditions, the Fund Under normal market conditions, the Fund invests at invests at least 80% of net assets (plus any least 80% of net assets (plus any borrowings for borrowings for investment purposes) in investment purposes) in below investment grade (high high-yield debt securities. yield) debt securities and preferred stocks. - ---------------------------------------------------------------------------------------------------------------------------------- Investment strategies The Fund uses a "value" style of management and The Fund uses a "value" style of management and seeks seeks to invest in an issuer that is a good securities selling at reasonable prices or value relative to its peers. Pioneer evaluates substantial discounts to their underlying values and an issuer's creditworthiness, liquidity and then holds these securities for their incremental prospects for growing earnings and cash flow. yields or until the market values reflect their intrinsic values. - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND - ---------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest up to 20% of its assets in The Fund's investments may have fixed or variable unrated securities. In addition, the Fund may principal payments and all types of interest rate and invest up to 5% of its total assets in dividend payment and reset terms, including ?xed securities which are in default. rate, adjustable rate, zero coupon, contingent, deferred, payment in kind and auction rate features. The Fund may invest in restricted securities The Fund invests in securities with a broad range of that are exempt from registration requirements maturities. and eligible for resale to qualified institutional investors under Rule 144A or The Fund may invest in mortgage-backed and Section 4(2). asset-backed securities. To the extent the Fund invests significantly in asset-backed and The Fund may invest in Yankee sector debt mortgage-related securities, its exposure to securities. Yankee debt securities are prepayment and extension risks may be greater than if securities issued in the U.S. by foreign it invested in other fixed income securities. issuers. These bonds involve investment risks that are different from those of domestic The Fund may invest in mortgage derivatives and issuers. structured securities. Mortgage derivatives can become illiquid and hard to value in declining The Fund may invest in securities that are markets. direct obligations of the U.S. Treasury and supported by the full faith and credit of the Consistent with its objective, the Fund may invest in U.S. government. The Fund may invest in other equity securities issued by both U.S. and non-U.S. U.S. Government Securities, including (a) issuers, including common stocks, depositary securities supported by the full faith and receipts, warrants, rights and other equity interests credit of the U.S. government but that are not when Pioneer believes they offer the potential for direct obligations of the U.S. Treasury, (b) capital appreciation or to diversity the Fund's securities that are not supported by the full portfolio. faith and credit of the U.S. government but are supported by the issuer's ability to borrow The Fund may invest in securities of Canadian issuers from the U.S. Treasury, and (c) securities to the same extent as U.S. issuers. The Fund may supported solely by the creditworthiness of the invest up to 15% of its total assets in securities of issuer. non-U.S. and non-Canadian issuers, including debt and equity securities of corporate issuers and debt The Fund may invest up to 20% of assets in securities of government issuers in developed and foreign securities. emerging markets. - ---------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - ---------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ---------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund may not invest more than 25% of its assets in any one industry. - ---------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND - ---------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may: (ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's additional securities purchases if total total assets (including the amount borrowed); (b) to outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to of total assets. an additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) the Fund may purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - ---------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its 33% of the Fund's total assets. assets. - ---------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may not purchase securities on margin. The Fund may use futures and options on securities, However, the Fund may (i) obtain short-term indices and currencies, forward currency exchange credits as necessary to clear its purchases and contracts and other derivatives. The Fund does not sales of securities, and (ii) make margin use derivatives as a primary investment technique and deposits in connection with its use of generally limits their use to hedging. However, the financial options and futures, forward and spot Fund may use derivatives for a variety of currency contracts, swap transactions and other non-principal purposes, including: financial contracts or derivative instruments. o As a hedge against adverse changes in stock market prices, interest rates or currency exchange rates o As a substitute for purchasing or selling securities o To increase the Fund's return as a non-hedging strategy that may be considered speculative - ---------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ---------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGING SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer High Yield Fund the Fund are subject to a 4.50% front-end sales you receive in the Reorganization will not be subject charge. to any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. High Yield Fund and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of 1% if you future without paying any sales charge. redeem Class C shares within one year of purchase. Except as described above, Class A shares of Pioneer High Yield Fund are subject to a front-end sales Purchases of Investor Class shares of the Fund charge of up to 4.50%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco High Yield Fund pays an advisory fee on Pioneer High Yield Fund pays Pioneer a management fee fees a monthly basis at an annual rate as follows: equal to: $0 - $250,000,000: 0.65 of 1% 0.70% of average daily net assets up to $500 million; $250,000,001 - $750,000,000: 0.55 of 1% 0.65% of the next $500 million; Over $750,000,000: 0.50 of 1% 0.60% of the next $4 billion; 0.55% of the next $1 billion; SAM serves as administrator and Fund accounting 0.50% of the next $1 billion; agent for the Fund. The Fund pays SAM an 0.45% of the next $1 billion; administrative services fee of 0.05% of the 0.40% of the next $1 billion; Fund's average daily net assets up to the first 0.35% of the next $1 billion; and $200,000,000 and 0.01% of its net assets 0.30% on assets over $10 billion. thereafter, and an accounting fee of 0.04% of the Fund's average daily - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND - ---------------------------------------------------------------------------------------------------------------------------------- net assets up to the first $200,000,000 and During its most recent fiscal year, Pioneer High 0.01% of its net assets thereafter. Yield Fund paid an advisory fee at an average rate of 0.61% of average daily net assets. During its most recent fiscal year, Safeco High-Yield Fund paid aggregate advisory and In addition, the Fund reimburses Pioneer for certain administration fees at an average rate of 0.74% fund accounting and legal expenses incurred on behalf of average daily net assets. of the Fund and pays a separate shareholder servicing/transfer agency fee to PIMSS, an affiliate SAM had contractually agreed until April 30, of Pioneer. 2009, to pay certain fund operating expenses (but not all of the operating expenses of the Through October 31, 2005, Pioneer may recover Fund) that exceeded the rate of 0.40% per annum expenses that it incurred under a prior expense of the Fund's average daily net assets. This limitation (within three years of being incurred) arrangement included all Fund operating from the Fund if the expense ratio of the Class A expenses except management fees, Rule 12b-1 shares is less than 1.00%. Each class will reimburse fees, brokerage commissions, taxes, interest, Pioneer no more than the amount by which that class' and extraordinary expenses. expenses were reduced. For the fiscal year ended December 31, 2003, For the fiscal year ended October 31, 2003, the the Fund's annual operating expenses for Class Fund's annual operating expenses for Class A shares A shares, after giving effect to the expense were 1.06% per share. limitation were 1.30%, and without giving effect to the expense limitation, were 1.41% Pioneer has agreed until the second anniversary of per share. the closing of the Reorganization to limit the ordinary operating expenses (excluding taxes, For the fiscal year ended December 31, 2003, commissions, interest and extraordinary expenses) of the Fund's annual operating expenses for Class the Investor Class to 0.90% of the average daily net B shares, after giving effect to the expense assets attributable to the Investor Class. limitation were 2.05%, and without giving effect to the expense limitation, were 2.88% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 2.05%, and without giving effect to the expense limitation, were 2.45% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 1.05%, and without giving effect to the expense limitation, were 1.27% per share. - ---------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ---------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer High Yield Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco High investment advisers, banks and other financial Yield Fund who own shares in their own name as of the institutions that have entered into selling closing date of the Reorganization and who maintain agreements with the Fund's principal their accounts may buy shares of any fund in the underwriter, as described in the Fund's Pioneer family of funds through such accounts in the prospectus. future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer High Yield Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------
4
- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND - ---------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer High Yield Fund acquire through dividend reinvestment or other without incurring any fee on the exchange with the fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would you have exchanged for Class A shares of be for Class A shares, which would be subject to Rule another fund. 12b-1 fees. An exchange generally is treated as a sale and a new purchase of shares for federal income tax Certain account transactions may be done by purposes. telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer High Yield Fund for shares of other Pioneer Funds by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Selling Shares Class of shares is sold at the net asset value per share next calculated after the Fund receives your request in good order. -------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer High Yield Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o Interest rates go up, causing the value of debt securities in the Fund's portfolio to decline o The issuer of a security owned by a Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest in lower yielding securities. This is known as call or prepayment risk o During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected principal payments. This may lock in a below market interest rate, increase the security's duration (the estimated period until the security is paid in full) and reduce the value of the security. This is known as extension risk o The investment adviser's judgment about the attractiveness, relative value or potential appreciation of a particular sector, security or investment strategy proves to be incorrect o A downturn in equity markets causes the price of convertible securities to drop even when the prices of below investment grade bonds otherwise would not go down Investment in high yield securities involves substantial risk of loss. High yield securities are considered speculative with respect to the issuer's ability to pay interest and principal and are susceptible to default or decline in market value due to adverse economic and business developments. The market values for high yield securities tend to be very volatile, and these securities are less liquid than investment grade debt securities. For these reasons, an investment in either Fund is subject to the following specific risks: o Increased price sensitivity to changing interest rates and deteriorating economic environment o Greater risk of loss due to default or declining credit quality o Adverse company-specific events are more likely to render the issuer unable to make interest and/or principal payments o A negative perception of the high yield market develops, depressing the price and liquidity of high yield securities. This negative perception could last for a significant period of time 5 In addition, each Fund holds a material percentage of the outstanding debt securities of certain high yield issuers, which practice may adversely impact the liquidity and market value of those investments. Investments in the Funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money by investing in either Fund. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO HIGH YIELD FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -2.25 1995 15.14 1996 10.39 1997 12.79 1998 4.45 1999 3.74 2000 -5.52 2001 -2.05 2002 -17.47 2003 30.5 * During the period shown in the bar chart, your Fund's highest quarterly return was 10.53% for the quarter ended June 30, 2003, and the lowest quarterly return was -12.38% for the quarter ended June 30, 2002. PIONEER HIGH YIELD FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1999 27.09 2000 12.81 2001 16.74 2002 -2.7 2003 32.13 * During the period shown in the bar chart, since the Fund's inception on February 12, 1998, Pioneer High Yield Fund's highest quarterly return was 11.10% for the quarter ended December 31, 1999, and the lowest quarterly return was - -8.97% for the quarter ended September 30, 2002. 6 SAFECO HIGH YIELD FUND AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO HIGH YIELD FUND, CLASS A SHARES Return Before Taxes 24.55% -0.45% 3.65% Return After Taxes on Distributions(2) 20.85% -3.67% 0.20% Return After Taxes on Distributions and Sale of Fund Shares(2) 15.68% -2.35% 0.95% SAFECO HIGH YIELD FUND, CLASS B SHARES Return Before Taxes 24.21% -0.58% 3.66% SAFECO HIGH YIELD FUND, CLASS C SHARES Return Before Taxes 28.35% -.027% 3.59% SAFECO HIGH YIELD FUND, INVESTOR CLASS SHARES Return Before Taxes 30.50% 0.67% 4.28% Return After Taxes on Distributions(1) 26.51% -2.68% 0.75% Return After Taxes on Distributions and Sale of Fund Shares(1) 19.53% -1.49% 1.44% MERRILL LYNCH HIGH-YIELD MASTER II INDEX(2) 28.15% 5.02% 7.05% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Merrill Lynch High-Yield Master II Index, an unmanaged index of outstanding debt of domestic market issuers rater below investment grade, but not in default, is for reference only and does not mirror Safeco High Yield Fund's investments. PIONEER HIGH YIELD FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED OCTOBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION(1) ------ ------- ------------------ PIONEER HIGH YIELD FUND, CLASS A SHARES Return Before Taxes 26.15% 15.49% 11.71% Return After Taxes on Distributions(2) 23.09% 11.39% 7.99% Return After Taxes on Distributions and Sale of Fund Shares(2) 16.78% 10.72% 7.63% MERRILL LYNCH HIGH-YIELD MASTER II INDEX(3) 28.15% 5.02% 4.45% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on February 12, 1998. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Merrill Lynch High-Yield Master II Index, an unmanaged index of outstanding debt of domestic market issuers rater below investment grade, but not in default, is for reference only and does not mirror Pioneer High Yield Fund's investments. Pioneer High Yield Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for Safeco High Yield Fund, the expenses of Safeco High Yield Fund for the year ended December 31, 2003 and 7 (ii) for Pioneer High Yield Fund, the expenses of Pioneer High Yield Fund for the year ended October 31, 2003. Future expenses for all share classes may be greater or less.
----------------------------------------------------------------------------------------------------------------- SHAREHOLDER PIONEER TRANSACTION FEES HIGH YIELD (PAID DIRECTLY SAFECO HIGH YIELD SAFECO HIGH YIELD SAFECO HIGH YIELD SAFECO HIGH YIELD FUND FROM YOUR FUND FUND FUND FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ----------------------------------------------------------------------------------------------------------------- Maximum sales 4.50%(6) None None None None(1) charge (load) when you buy shares as a percentage of offering price ----------------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ----------------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ----------------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A ----------------------------------------------------------------------------------------------------------------- Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A fee ----------------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ----------------------------------------------------------------------------------------------------------------- Management fee 0.65% 0.65% 0.65% 0.65% 0.58% ----------------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ----------------------------------------------------------------------------------------------------------------- Other expenses 0.51% 1.23% 0.80% 0.62% 0.39% ----------------------------------------------------------------------------------------------------------------- Total fund 1.41% 2.88% 2.45% 1.27% 0.97% operating expenses ----------------------------------------------------------------------------------------------------------------- Expense reduction 0.11%(2) 0.83%(2) 0.40%(2) 0.22%(2) None(3) ----------------------------------------------------------------------------------------------------------------- Net fund operating 1.30% 2.05% 2.05% 1.05% 0.90% expenses -----------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer High Yield Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (i.e., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer High Yield Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco High Yield Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer High Yield Fund to 0.90% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. 8 (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco High Yield Fund and two years for Pioneer High Yield Fund and (f) and the Investor Class shares of Pioneer High Yield Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ----------------------------------------------------- EXAMPLE ----------------------------------------------------- SAFECO HIGH YIELD FUND ----------------------------------------------------- CLASS A SHARES ----------------------------------------------------- Year 1 $ 576 ----------------------------------------------------- Year 3 $ 844 ----------------------------------------------------- Year 5 $ 1,131 ----------------------------------------------------- Year 10 $ 1,947 ----------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ----------------------------------------------------- Year 1 $ 708 $ 208 ----------------------------------------------------- Year 3 $ 943 $ 643 ----------------------------------------------------- Year 5 $ 1,303 $ 1,103 ----------------------------------------------------- Year 10 $ 2,010 $ 2,010 ----------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ----------------------------------------------------- Year 1 $ 308 $ 208 ----------------------------------------------------- Year 3 $ 643 $ 643 ----------------------------------------------------- Year 5 $ 1,103 $ 1,103 ----------------------------------------------------- Year 10 $ 2,379 $ 2,379 ----------------------------------------------------- INVESTOR CLASS SHARES ----------------------------------------------------- Year 1 $ 107 ----------------------------------------------------- Year 3 $ 334 ----------------------------------------------------- Year 5 $ 579 ----------------------------------------------------- Year 10 $ 1,283 ----------------------------------------------------- PIONEER HIGH YIELD FUND ----------------------------------------------------- INVESTOR CLASS SHARES ----------------------------------------------------- Year 1 $ 92 ----------------------------------------------------- Year 3 $ 299 ----------------------------------------------------- Year 5 $ 536 ----------------------------------------------------- Year 10 $ 1,217 ----------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco High Yield Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the investment performance of Pioneer High Yield Fund, which has one of the best performance records of any mutual fund specializing high yield securities. For the one and five year periods ended June 30, 2004, Class A shares of Pioneer High Yield Fund had an average annual return of ___% and ___% compared to an average annual of the Class A shares and Investor 9 Class shares of ___% and ___% (one year) and ___% and ___% (five years), respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer High Yield Fund's lower operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer High Yield Fund to 0.90% of average daily net assets. The estimated expenses of the Investor Class shares of Pioneer High Yield Fund are below both the gross expenses and expenses net of expense reimbursement of each class of shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, based upon the Class A expense ratio for the most recent fiscal year, were 1.06% of average daily net assets, which was below the net expenses of the Class A shares of your Fund and only one basis point above the net expenses of the Investor Class of your Fund. FIFTH, the substantially larger size of Pioneer High Yield Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer High Yield Fund received in the Reorganization will provide Safeco High Yield Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all of out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra". The board of trustees of Pioneer High Yield Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer High Yield Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer High Yield Fund and its shareholders. 10 CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003 for Safeco High Yield Fund and October 31, 2003 for Pioneer High Yield Fund. ---------------------------------------------------------------------------- SAFECO HIGH YIELD FUND PIONEER HIGH YIELD FUND DECEMBER 31, 2003 OCTOBER 31, 2003 ---------------------------------------------------------------------------- NET ASSETS (in millions) $ 43 $ 8,693.4 ---------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 5.85 $ 11.59 Class B shares $ 5.84 $ 11.63 Class C shares $ 5.86 $ 11.73 Investor Class shares $ 5.84 N/A ---------------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 489,000 282,113,431 Class B shares 112,000 160,751,979 Class C shares 27,000 205,806,601 Investor Class shares 6,726,000 N/A ---------------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer High Yield Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer High Yield Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer High Yield Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer High Yield Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 SAFECO INTERMEDIATE-TERM BOND FUND AND PIONEER BOND FUND PROPOSAL 6 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO IT BOND FUND TO THE PIONEER BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- SAFECO IT BOND FUND PIONEER BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Managed Bond Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - --------------------------------------------------------------------------------------------------------------------------------- Net assets as of $9.6 million $259 million June 30, 2004 - --------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers (since 2004 and until August Portfolio Managers: 2, 2004): Day-to-day management of the fund's portfolio is the Greg Card responsibility of a team of fixed income portfolio Assistant Vice President, SAM managers led by Kenneth J. Taubes. Joined SAM in 2001 Mr. Taubes joined Pioneer as a senior vice president in September 1998 and has been an investment Tim Hokari professional since 1982. Assistant Vice President, SAM Joined SAM in 2000 Lesley Fox Assistant Vice President, SAM Joined SAM in 2000 Nancy McFadden Fixed Income Analyst, SAM Joined SAM in 2001 Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, are currently managing your Safeco Fund. - --------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks a high level of current income The Fund seeks current income by investing primarily as is consistent with the preservation of in an investment-grade portfolio, consistent with capital. capital preservation and prudent investment risk. ------------------------------------------------------------------------------------------------------- Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment objective as described above. - ---------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- SAFECO IT BOND FUND PIONEER BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal circumstances, the Fund invests at Under normal market conditions, the Fund invests at least 80% of net assets (plus any borrowings least 80% of total assets in for investment purposes) in bonds, including o Debt securities issued or guaranteed by the but not limited to corporate, government and U.S. government or its agencies and mortgage bonds, most of which will be instrumentalities investment-grade quality, whether rated or o Debt securities, including convertible debt, unrated. of corporate and other issuers rated at least investment grade at the time of investment, and The dollar weighted average maturity of the comparably rated commercial paper Fund generally ranges between three and ten o Cash and cash equivalents, certificates of years deposit, repurchase agreements maturing in one week or less and bankers' acceptances - --------------------------------------------------------------------------------------------------------------------------------- Investment strategies In managing the portfolio and selecting Pioneer considers both broad economic and issuer securities, SAM historically considered: specific factors in selecting a portfolio designed to o The price of the security relative to achieve the fund's investment objective. In assessing its rating and market sector the appropriate maturity, rating and sector weighting o Structural features, such as an of the fund's portfolio, Pioneer considers a variety issuer's right to buy the bond back at a of factors that are expected to influence economic stated price or the Fund's right to activity and interest rates. These factors include require the issuer to buy the bond back at fundamental economic indicators, such as the rates of a stated price economic growth and inflation, Federal Reserve o The effect the security might have on monetary policy and the relative value of the U.S. existing diversification of Fund assets dollar compared to other currencies. Once Pioneer and allocation among various market determines the preferable portfolio characteristics, sectors it selects individual securities based upon the terms o The effect the security might have on of the securities (such as yields compared to U.S. the yield and sensitivity to interest rate Treasuries or comparable issuers), liquidity and changes of the Fund's overall portfolio rating, sector and issuer diversification. The Fund may engage in short-term trading to achieve its objective. - --------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest up to 20% of its assets in The Fund may invest up to 20% of its total assets in high yield debt securities rated below debt securities rated below investment grade or, if investment grade ("junk" or "high-risk" bonds) unrated, of equivalent quality as determined by and may invest in Yankee sector bonds and Pioneer. Eurodollar bonds. Up to 15% of its total assets in equity and debt The Fund may also invest in mortgage-backed or securities of non-U.S. corporate issuers and in debt asset-backed securities. securities of non-U.S. government issuers. The Fund may invest up to 20% of assets in The Fund will not invest more than 5% of its total foreign securities. assets in the securities of emerging markets issuers. The Fund may invest a substantial portion of its assets in mortgage-related securities, which represent interests in pools of mortgage loans assembled for sale to investors by various U.S. governmental agencies, government-related organizations and private issuers. These investments may include mortgage-related derivative securities such as collateralized mortgage obligations. The Fund may invest in securities of Canadian issuers to the same extent as securities of U.S. issuers. - --------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - --------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - --------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund may not invest more than 25% of its assets in any one industry. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO IT BOND FUND PIONEER BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - --------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may: (ii) by engaging in reverse repurchase (a) borrow from banks or through reverse repurchase agreements. The Fund will not commit to agreements in an amount up to 33 1/3% of the Fund's additional securities purchases if total total assets (including the amount borrowed); (b) to outstanding borrowings are equal to 5% or more the extent permitted by applicable law, borrow up to of total assets. an additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - --------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its total 33% of the Fund's total assets. assets. - --------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may not purchase securities on margin. The Fund may use futures and options on securities, However, the Fund may (i) obtain short-term indices and currencies, forward currency exchange credits as necessary to clear its purchases and contracts and other derivatives. The Fund does not sales of securities, and (ii) make margin use derivatives as a primary investment technique and deposits in connection with its use of generally limits their use to hedging. However, the financial options and futures, forward and spot Fund may use derivatives for a variety of currency contracts, swap transactions and other non-principal purposes, including: financial contracts or derivative instruments. o As a hedge against adverse changes in stock market prices, interest rates or currency exchange rates o As a substitute for purchasing or selling securities o To increase the Fund's return as a non-hedging strategy that may be considered speculative - --------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - --------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGING SHARES - --------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Bond Fund you the Fund are subject to a 3.50% front-end sales receive in the Reorganization will not be subject to charge. any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 4% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. Bond Fund and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of 1% if you future without paying any sales charge. redeem Class C shares within one year of purchase. Except as described above, Class A shares of Pioneer Bond Fund are subject to a front-end sales charge of Purchases of Investor Class shares of the Fund up to 4.50%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO IT BOND FUND PIONEER BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco IT Bond Fund pays an advisory fee on a Pioneer Bond Fund pays Pioneer a management fee equal fees monthly basis at an annual rate as follows: to 0.50% of the Fund's average daily net assets. $0 - $750,000,000: 0.50 of 1% $750,000,001 - $1,250,000,000: 0.45 of 1% During its most recent fiscal year, Pioneer Bond Fund Over $1,250,000,000: 0.40 of 1% paid an advisory fee at an average rate of 0.50% of average daily net assets. SAM serves as administrator and Fund accounting agent for the Fund. The Fund pays SAM an In addition, the fund reimburses Pioneer for certain administrative services fee of 0.05% of the fund accounting and legal expenses incurred on behalf Fund's average daily net assets up to the first of the fund and pays a separate shareholder $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate thereafter, and an accounting fee of 0.04% of of Pioneer. the Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets For the fiscal year ended June 30, 2003, the Fund's thereafter. annual operating expenses for Class A shares were 1.20% per share. During its most recent fiscal year, Safeco IT Bond Fund paid aggregate advisory and Pioneer has agreed until the second anniversary of administration fees at an average rate of 0.59% the closing of the Reorganization to limit the of average daily net assets. ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of SAM had contractually agreed until April 30, the Investor Class to 0.74% of the average daily net 2009, to pay certain fund operating expenses assets attributable to the Investor Class. (but not all of the operating expenses of the Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.15%, and without giving effect to the expense limitation, were 2.05% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 1.90%, and without giving effect to the expense limitation, were 2.78% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 1.90%, and without giving effect to the expense limitation, were 42.54% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation, were 0.90%, and without giving effect to the expense limitation, were 1.53% per share. - --------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO IT BOND FUND PIONEER BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Bond Fund's underwriter, or through brokers, registered distributor. Existing shareholders of Safeco IT Bond investment advisers, banks and other financial Fund who own shares in their own name as of the institutions that have entered into selling closing date of the Reorganization and who maintain agreements with the Fund's principal their accounts may buy shares of any fund in the underwriter, as described in the Fund's Pioneer family of funds through such accounts in the prospectus. future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer Bond Fund by telephone or online. - --------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Bond Fund without acquire through dividend reinvestment or other incurring any fee on the exchange with the more than fund distributions or for Class A shares that 62 other Pioneer Funds. Your exchange would be for Class you have exchanged for Class A shares of A shares, which would be subject to Rule 12b-1 fees. An another fund. exchange generally is treated as a sale and a new purchase of shares for federal income tax purposes. Certain account transactions may be done by telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Bond Fund for shares of other Pioneer Funds by telephone or online. - --------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. ------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Bond Fund by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. The market value of fixed income securities tends to be more volatile the longer the maturity of such security. Since Pioneer Bond Fund may invest in securities of longer maturity than your Fund, an investment in Pioneer Bond Fund may have correspondingly greater risk. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o Interest rates go up, causing the value of debt securities in the Fund's portfolio to decline o The issuer of a security owned by a Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest in lower yielding securities. This is known as call or prepayment risk o During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected principal payments. This may lock in a below market interest rate, increase the security's duration (the estimated period until the security is paid in full) and reduce the value of the security. This is known as extension risk o The investment adviser's judgment about the attractiveness, relative value or potential appreciation of a particular sector, security or investment strategy proves to be incorrect o A downturn in equity markets causes the price of convertible securities to drop even when the prices of below investment grade bonds otherwise would not go down 5 o To the extent that the Fund invests significantly in high yield securities, its exposure to the credit risks associated with such securities may be greater, its income and net asset value may be more volatile, and it may be more difficult to achieve preservation of principal Government sponsored entities such as the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal National Mortgage Association (FNMA) and the Federal Home Loan Banks (FHLB), although chartered or sponsored by Congress, are not funded by congressional appropriations and the debt and mortgage-backed securities issued by them are neither guaranteed nor issued by the U.S. government. To the extent the Funds invest significantly in mortgaged-backed securities, its exposure to prepayment and extension risks may be greater than if it invested in other fixed income securities. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO IT BOND FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1995 17.35 1996 0.02 1997 8.23 1998 8.43 1999 -3.82 2000 11.57 2001 6.95 2002 7.44 2003 3.56 * During the period shown in the bar chart, your Fund's highest quarterly return since the Fund's inception in 1994 was 5.74% for the quarter ended June 30, 1995, and the lowest quarterly return was -3.27% for the quarter ended March 31, 1996. PIONEER BOND FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1993 11.43 1994 -4.2 1995 18.16 1996 1.96 1997 9.16 1998 7.69 1999 -3.2 2000 8.45 2001 7.54 2002 8.77 * During the period shown in the bar chart, Pioneer Bond Fund's highest quarterly return was 6.11% for the quarter ended June 30, 1995, and the lowest quarterly return was -3.03% for the quarter ended March 31, 1994. 6 SAFECO IT BOND FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS LIFE OF Fund(1) ------ ------- --------------- SAFECO IT BOND FUND, CLASS A SHARES Return Before Taxes -0.31% 3.96% 4.95% Return After Taxes on Distributions (2) -1.67% 2.01% 2.81% Return After Taxes on Distributions and Sale of Fund Shares (2) -0.21% 2.14% 2.87% SAFECO IT BOND FUND, CLASS B SHARES Return Before Taxes -1.33% 3.77% 4.80% SAFECO IT BOND FUND, CLASS C SHARES Return Before Taxes 1.47% 3.90% 4.69% SAFECO IT BOND FUND, INVESTOR CLASS SHARES Return Before Taxes 3.56% 5.01% 5.58% Return After Taxes on Distributions (2) 2.05% 2.94% 3.34% Return After Taxes on Distributions and Sale of Fund Shares (2) 2.30% 2.97% 3.35% LEHMAN BROTHERS AGGREGATE BOND INDEX (3) 4.10% 6.62% 7.11% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on February 28, 1994. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Lehman Brothers Aggregate Bond Index, an unmanaged index of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset Backed Securities Index, is for reference only and does not mirror Safeco IT Bond Fund's investments. PIONEER BOND FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2002
1 YEAR 5 YEARS 10 YEARS (1) ------ ------- ----------- PIONEER BOND FUND, CLASS A SHARES Return Before Taxes 3.93% 4.78% 5.89% Return After Taxes on Distributions (2) 1.79% 2.27% 3.17% Return After Taxes on Distributions and Sale of Fund Shares (2) 2.35% 2.52% 3.30% LEHMAN BROTHERS AGGREGATE BOND INDEX (3) 10.25% 7.55% 7.51% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on October 31, 1978. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Lehman Brothers Aggregate Bond Index, an unmanaged index of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset Backed Securities Index, is for reference only and does not mirror Pioneer Bond Fund's investments. 7 Pioneer Bond Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A, B and C shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Bond Fund, the expenses of Pioneer Bond Fund for the period ended June 30, 2003. Future expenses for all share classes may be greater or less.
- -------------------------------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION SAFECO IT BOND FUND SAFECO IT BOND FUND SAFECO IT BOND SAFECO IT BOND PIONEER BOND FEES (PAID DIRECTLY FROM CLASS A CLASS B FUND FUND FUND YOUR INVESTMENT) CLASS C INVESTOR CLASS INVESTOR CLASS - -------------------------------------------------------------------------------------------------------------------------- Maximum sales charge (load) 3.50%(6) None None None None (1) when you buy shares as a percentage of offering price - ------------------------------------------------------------------------------------------------------------------------ Maximum deferred sales None 4.00%(7) 1.00%(8) None None charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less - ------------------------------------------------------------------------------------------------------------------------ Redemption fees for shares 2.00% None None 2.00% N/A held less than 30 days - ------------------------------------------------------------------------------------------------------------------------ Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A - ------------------------------------------------------------------------------------------------------------------------ Annual low balance fee $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A - ------------------------------------------------------------------------------------------------------------------------ ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) - ------------------------------------------------------------------------------------------------------------------------ Management fee 0.50% 0.50% 0.50% .50% 0.50% - ------------------------------------------------------------------------------------------------------------------------ Distribution and service 0.25% 1.00% 1.00% None None (12b-1) fee - ------------------------------------------------------------------------------------------------------------------------ Other expenses 1.30% 1.28% 41.04% 1.03% 0.38% - ------------------------------------------------------------------------------------------------------------------------ Total fund operating 2.05% 2.78% 42.54% 1.53% 0.88% expenses - ------------------------------------------------------------------------------------------------------------------------ Expense reduction 0.90%(2) 0.88%(2) 40.64%(2) 0.63%(2) 0.14% (3) - ------------------------------------------------------------------------------------------------------------------------ Net fund operating expenses 1.15% 1.90% 1.90% 0.90% 0.74% - ------------------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Bond Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Bond Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco IT Bond Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Bond Fund to 0.74% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. 8 (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for one year for Safeco IT Bond Fund and two years for Pioneer Bond Fund and (f) and the Investor Class shares of Pioneer Bond Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ------------------------------------------------------------ EXAMPLE ------------------------------------------------------------ SAFECO IT BOND FUND ------------------------------------------------------------ CLASS A SHARES ------------------------------------------------------------ Year 1 $ 463 ------------------------------------------------------------ Year 3 $ 703 ------------------------------------------------------------ Year 5 $ 961 ------------------------------------------------------------ Year 10 $ 1,699 ------------------------------------------------------------ CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 593 $ 193 ------------------------------------------------------------ Year 3 $ 797 $ 597 ------------------------------------------------------------ Year 5 $ 1,126 $ 1,026 ------------------------------------------------------------ Year 10 $ 1,764 $ 1,764 ------------------------------------------------------------ CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------ Year 1 $ 293 $ 193 ------------------------------------------------------------ Year 3 $ 597 $ 597 ------------------------------------------------------------ Year 5 $ 1,026 $ 1,026 ------------------------------------------------------------ Year 10 $ 2,222 $ 2,222 ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 92 ------------------------------------------------------------ Year 3 $ 287 ------------------------------------------------------------ Year 5 $ 498 ------------------------------------------------------------ Year 10 $ 1,108 ------------------------------------------------------------ PIONEER BOND FUND ------------------------------------------------------------ INVESTOR CLASS SHARES ------------------------------------------------------------ Year 1 $ 76 ------------------------------------------------------------ Year 3 $ 282 ------------------------------------------------------------ Year 5 $ 554 ------------------------------------------------------------ Year 10 $ 1,328 ------------------------------------------------------------ REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco IT Bond Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. 9 SECOND, the investment performance of Pioneer Bond Fund, which has outperformed your Fund over the most recent one, five and ten year periods (one year), ___% and ___% (five years) and ___%, and ___% (ten years). For the one, five and ten year periods ended June 30, 2004, Class A shares of Pioneer Bond Fund had an average annual return of ___%, ___% and ___% compared to an average annual of the Class A shares and Investor Class shares of [xx]% and [xx]%, respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer Bond Fund's lower gross expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Bond Fund to 0.74 % of average daily net assets. The gross expense ratio of Pioneer Bond Fund's Class A shares is lower than the gross expense ratio of each class of shares of your Fund. In addition, the next expense ratio of the investor class of Pioneer Bond Fund is lower than the net expenses of the Class A, Class B and Class C shares of your Fund and the same as the net expense of the Investor class. The trustees also considered the difference in the investment policies of the two Funds, particularly by Pioneer Bond Fund's ability to invest in securities with longer maturity than your Fund. While this may result in the Prime Bond Fund having greater risk of volatility of net asset value than your Fund, the trustees believe this then functions in favor of the Reorganization mitigated this risk. This expense ratio is no higher than both the gross expenses and expenses net of expense reimbursement of the Class A and Investor Class shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. FIFTH, the substantially larger size of Pioneer Bond Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the trustees also considered the differences in the investment policies of the two Funds, particularly Pioneer Bond Fund's ability to invest in securities with longer maturities than your Fund. While this may result in Pioneer Bond Fund having greater volatility of net asset value than your Fund, the trustees believe that the factors in favor of the Reorganization mitigate this risk. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Bond Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Bond Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Bond Fund and its shareholders. 10 CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003 for Safeco IT Bond Fund and June 30, 2003 for Pioneer Bond Fund.
------------------------------------------------------------------- SAFECO IT BOND FUND PIONEER BOND FUND DECEMBER 31, 2003 JUNE 30, 2003 ------------------------------------------------------------------- NET ASSETS (in millions) $ 9.7 $ 298 ------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 8.51 $ 9.41 Class B shares $ 8.51 $ 9.37 Class C shares $ 8.50 $ 9.31 Investor Class shares $ 8.52 N/A ------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 137,000 Class B shares 120,000 Class C shares 12,000 Investor Class shares 870,000 N/A -------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Bond Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Bond Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Bond Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Bond Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND AND PIONEER TAX FREE INCOME FUND PROPOSAL 7 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO IT MUNI BOND FUND TO THE PIONEER TAX FREE FUND - ----------------------------------------------------------------------------------------------------------------------------------- SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND - ----------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Tax-Exempt Bond Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - ----------------------------------------------------------------------------------------------------------------------------------- Net assets as of $16.4 million $332.1 million June 30, 2004 - ----------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers (until August 2, 2004): Portfolio Managers: Mary Metastasio (since 1996) Day-to-day management of the Fund's portfolio is the Vice President, SAM responsibility of a team of fixed income portfolio managers led by Kenneth J. Taubes. Stephen C. Bauer (since 2003) Mr. Taubes joined Pioneer as a senior vice president President and Director, SAM in September 1998 and has been an investment Associated with SAM since 1971 professional since 1982. Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks to provide a high level of The Fund seeks as high a level of current income current interest income exempt from federal exempt from federal income taxes as possible income tax as is consistent with prudent consistent with the preservation of capital. investment risk. The investment objective of the Fund may not be The Fund provides written notice to changed without the affirmative vote of the holders shareholders at least 60 days prior to any of a "majority of the outstanding voting securities" change to its investment objective as described (as defined in the Investment Company Act) of the above. Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal circumstances, the Fund invests at Normally, the Fund invests at least 80%of its total least 80% of its net assets (plus any assets in investment grade securities that provide borrowings for investment purposes) in income that is exempt from regular federal income tax investment grade municipal bonds with and may not be subject to the alternative minimum maturities of more than one year and the tax. These investments include bonds, notes and interest on which is exempt from federal income other debt instruments issued by or on behalf of tax. states, counties, municipalities, territories and possessions of the United States and the District of The Fund will not invest in securities the Columbia and their authorities, political income interest on which is a tax preference subdivisions, agencies or instrumentalities. item for purposes of the federal alternative minimum tax. The Fund may invest in securities the income interest on which is a tax preference item for purposes of the The Fund will maintain an average federal alternative minimum tax. dollar-weighted maturity of between three and ten years. The Fund may invest in securities of any maturity. - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND - ----------------------------------------------------------------------------------------------------------------------------------- The Fund may invest 25% or more of its assets in issuers in any one or more states or securities the payments on which are derived from gas, electric, telephone, sewer and water segments of the municipal bond market. The Fund may also invest up to 20% of its assets in industrial development bonds. The Fund's investments may have fixed or variable principal payments and all types of interest rate payment and reset terms, including fixed and floating rates, inverse floating rate, zero coupon, contingent, deferred and payment in kind and auction rate features. - ----------------------------------------------------------------------------------------------------------------------------------- Investment strategies In managing the portfolio and selecting Pioneer considers both broad economic factors and securities, SAM historically considered, among issuer-specific factors in selecting a portfolio other things: designed to achieve the Fund's investment objective. o Yield In assessing the appropriate maturity and rating o Maturity weighting of the Fund's portfolio, Pioneer considers o Structural features such as an a variety of factors that are expected to influence issuer's right to buy the bond back at a economic activity and interest rates. These factors stated price or the Fund's right to buy include fundamental economic indicators such as the the bond back at a stated price rates of economic growth and inflation, Federal o Credit quality (including the Reserve monetary policy and the relative value of the underlying rating of insured bonds) U.S. dollar compared to other currencies. Once o The purpose the issuer is financing; Pioneer determines the preferable portfolio o The original offering price characteristics, Pioneer selects individual o Any state or local tax exemption securities based upon the terms of the securities o The amount of discount off or premium (such as yields compared to U.S. Treasuries or on the stated principal amount of the bond comparable issues), liquidity and rating and issuer represented by the price offered diversification. After evaluating a bond, SAM compares the bond to other available bonds, which may have different features, and will buy the bond if it appears to offer the best relative value. - ----------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest up to 20% of its assets in The Fund may invest 25% or more of its assets in unrated municipal bonds, as long as the adviser issuers in any one or more states or securities the determines they are of comparable quality to payments on which are derived from gas, electric, investment-grade securities. Unrated telephone, sewer and water segments of the municipal securities are not necessarily lower in quality bond market. than rated securities but may not be as attractive to as many investors as rated The Fund may invest up to 20% of its assets in securities. industrial development bonds. The Fund will invest no more than 33% of its The Fund may invest up to 20% of its net assets in total assets in municipal bonds rated in the securities of other investment companies, investment fourth highest grade (or in comparable unrated grade commercial paper, U.S. government securities, bonds subject to the 20% limit). Such bonds are U.S. or foreign bank instruments and repurchase of medium grade, have speculative agreements. characteristics, and are more likely to have a weakened capacity to make principal and The Fund may invest up to 10% of its net assets in interest payments under changing economic debt securities rated below investment grade or, if conditions or upon deterioration in the unrated, of equivalent quality as determined by financial condition of the issuer. Pioneer. Debt securities rated below investment grade are commonly referred to as "junk bonds" and The Fund will not hold more than 5% of its net are considered speculative. Below investment grade assets in below investment-grade securities or, debt securities involve greater risk of loss, are if unrated, in securities that cease to be subject to greater price volatility and are less comparable to a rated investment-grade security liquid, especially during periods of economic (such below investment-grade securities are uncertainty or change, than higher quality debt commonly referred to as "high yield" or "junk" securities. bonds). The Fund may invest up to 10% of its net assets in The Fund may invest up to 20% of assets in inverse floating rate obligations (a type of foreign securities. derivative instrument). Inverse floating rate obligations represent interests in tax-exempt bonds. The interest rate on inverse floating rate obligations will generally decrease as short-term interest rates increase, and increase as short-term rates decrease. Inverse floating rate obligations may be volatile and involve - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND - ----------------------------------------------------------------------------------------------------------------------------------- leverage risk. The Fund's investments may have fixed or variable principal payments and all types of interest rate payment and reset terms, including fixed and floating rates, inverse floating rate, zero coupon, contingent, deferred and payment in kind and auction rate features. - ----------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - ----------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ----------------------------------------------------------------------------------------------------------------------------------- Industry concentration The Fund may not invest more than 25% of its The Fund will not concentrate its assets in the assets in any one industry. securities of issuers in any one industry except that the Fund may invest 25% or more of its assets in issuers in any one or more states or securities the payments on which are derived from gas, electric, telephone, sewer and water segments of the municipal bond market. - ----------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund does not have a policy again investing in securities action the value of the following securities, illiquid securities. in the aggregate, would exceed 15% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ----------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except from a bank for (ii) by engaging in reverse repurchase temporary or emergency purposes and not for agreements. The Fund will not commit to investment purposes, and then only in an amount not additional securities purchases if total exceeding 5% of the value of the Fund's total assets outstanding borrowings are equal to 5% or more at the time of borrowing. of total assets. - ----------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may not make loans, except through the institutional investors with a value of up to purchase of securities, including repurchase 33% of the Fund's total assets. agreements, in accordance with its investment objective, policies and limitations. - ----------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may not purchase securities on margin. The Fund may use futures and options on securities, However, the Fund may (i) obtain short-term indices and currencies, forward currency exchange credits as necessary to clear its purchases and contracts and other derivatives. The Fund does not sales of securities, and (ii) make margin use derivatives as a primary investment technique and deposits in connection with its use of generally limits their use to hedging. However, the financial options and futures, forward and spot Fund may use derivatives for a variety of currency contracts, swap transactions and other non-principal purposes, including: financial contracts or derivative instruments. o As a hedge against adverse changes in stock market prices, interest rates or currency exchange rates o As a substitute for purchasing or selling securities o To increase the Fund's return as a non-hedging strategy that may be considered speculative - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND - ----------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ----------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGING SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Tax Free Fund the Fund are subject to a 3.50% front-end sales you receive in the Reorganization will not be subject charge. to any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 4% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. Tax Free Fund and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of 1% if you future without paying any sales charge. redeem Class C shares within one year of purchase. Except as described above, Class A shares of Pioneer Tax Free Fund are subject to a front-end sales charge Purchases of Investor Class shares of the Fund of up to 4.50%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ----------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco IT Muni Bond Fund pays an advisory fee Pioneer Tax Free Fund pays Pioneer a management fee fees on a monthly basis at an annual rate as follows: equal to: $0 - $250,000,000: 0.50 of 1% 0.50% of average daily net assets up to $250 million; $250,000,001 - $750,000,000: 0.45 of 1% 0.48% of the next $50 million; and Over $750,000,000: 0.40 of 1% 0.45% on assets over $300 million. SAM serves as administrator and Fund accounting During its most recent fiscal year, Pioneer Tax Free agent for the Fund. The Fund pays SAM an Fund paid an advisory fee at an average rate of 0.49% administrative services fee of 0.05% of the of average daily net assets. Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets In addition, the Fund reimburses Pioneer for certain thereafter, and an accounting fee of 0.04% of Fund accounting and legal expenses incurred on behalf the Fund's average daily net assets up to the of the Fund and pays a separate shareholder first $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate thereafter. of Pioneer. During its most recent fiscal year, Safeco IT For the fiscal year ended December 31, 2003, the Muni Bond Fund paid aggregate advisory and Fund's annual operating expenses for Class A shares administration fees at an average rate of 0.59% were 0.93% per share. of average daily net assets. Pioneer has agreed until the second anniversary of SAM had contractually agreed until April 30, the closing of the Reorganization to limit the 2009, to pay certain Fund operating expenses ordinary operating expenses (excluding taxes, (but not all of the operating expenses of the commissions, interest and extraordinary expenses) of Fund) that exceeded the rate of 0.40% per annum the Investor Class to 0.70% of the average daily net of the Fund's average daily net assets. This assets attributable to the Investor Class. arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.15%, and without giving effect to the expense limitation, were 7.70% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 1.90%, and without giving effect to the expense limitation, were 16.43% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, - -----------------------------------------------------------------------------------------------------------------------------------
4
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND - ----------------------------------------------------------------------------------------------------------------------------------- after giving effect to the expense limitation were 1.90%, and without giving effect to the expense limitation, were 20.82% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 0.90%, and without giving effect to the expense limitation, were 1.04% per share. - ----------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ----------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Tax Free Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco IT Muni investment advisers, banks and other financial Bond Fund who own shares in their own name as of the institutions that have entered into selling closing date of the Reorganization and who maintain agreements with the Fund's principal their accounts may buy shares of any fund in the underwriter, as described in the Fund's Pioneer family of funds through such accounts in the prospectus. future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer Tax Free Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Tax Free Fund acquire through dividend reinvestment or other without incurring any fee on the exchange with the Fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would you have exchanged for Class A shares of be for Class A shares, which would be subject to Rule another fund. 12b-1 fees. An exchange generally is treated as a sale and a new purchase of shares for federal income tax Certain account transactions may be done by purposes. telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Tax Free Fund for shares of other Pioneer Funds by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. --------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Tax Free Fund by telephone or online. - -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. The market value of a fixed income security tends to be more volatile the longer the maturity of such security. Since Pioneer Tax Free Fund can invest in securities of longer maturity than your Fund, an investment in Pioneer Tax Free Fund may have correspondingly greater risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o Interest rates go up, causing the value of debt securities in the Fund's portfolio to decline 5 o The issuer of a security owned by the Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o New federal or state legislation adversely affects the tax-exempt status of securities held by the Fund or the financial ability of municipalities to repay these obligations o The issuer of a security owned by the Fund may not be able to make timely payments because of a general economic downturn or increased governmental costs o To the extent the Fund concentrates its investments in a single state or securities the payments on which are dependent upon a single industry, the Fund will be more susceptible to risks associated with that state or industry o The Fund's investment adviser is incorrect in its expectation of changes in interest rates or the credit quality of an issuer Although distributions of interest income from the Funds' tax-exempt securities are generally exempt from regular federal income tax, distributions from other sources, including capital gain distributions and any gains on the sale of your shares, are not. You should consult a tax adviser about whether an alternative minimum tax applies to you and about state and local taxes on Fund distributions. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO IT MUNI BOND FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -5.62 1995 15.22 1996 3.75 1997 7.5 1998 5.33 1999 -0.84 2000 7.44 2001 4.53 2002 8.89 2003 4.78 * During the period shown in the bar chart, your Fund's highest quarterly return was 6.25% for the quarter ended March 31, 1995, and the lowest quarterly return was -4.47% for the quarter ended March 31, 1994. PIONEER TAX FREE FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -6.38 1995 16.83 1996 3.57 1997 8.94 1998 6.2 1999 -4.29 2000 11.63 2001 4.13 2002 7.07 2003 5.8 * During the period shown in the bar chart, Pioneer Tax Free Fund's highest quarterly return was 7.11% for the quarter ended March 31, 1995, and the lowest quarterly return was -5.87% for the quarter ended March 31, 1994. 6 SAFECO IT MUNI BOND FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO IT MUNI BOND FUND, CLASS A SHARES Return Before Taxes 0.94% 4.12% 4.57% Return After Taxes on Distributions (2) 0.85% 4.01% 4.51% Return After Taxes on Distributions and Sale of Fund Shares (2) 1.95% 4.05% 4.49% SAFECO IT MUNI BOND FUND, CLASS B SHARES Return Before Taxes -0.11% 4.56% 4.87% SAFECO IT MUNI BOND FUND, CLASS C SHARES Return Before Taxes 2.89% 4.73% 4.87% SAFECO IT MUNI BOND FUND, INVESTOR CLASS SHARES Return Before Taxes 4.78% 4.91% 4.96% Return After Taxes on Distributions (1) 4.69% 4.79% 4.90% Return After Taxes on Distributions and Sale of Fund Shares (1) 4.56% 4.75% 4.84% LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX (2) 5.45% 5.92% 5.86% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Lehman Brothers 7-Year Municipal Bond Index, an unmanaged index of binds rated BAA3 or above, issued as part of a deal of at least $50 million, having an amount of at least $5 million and maturing in six or more years, is for reference only and does not mirror Safeco IT Muni Bond Fund's investments. PIONEER TAX FREE FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- PIONEER TAX FREE FUND, CLASS A SHARES Return Before Taxes 1.01% 3.77% 4.66% Return After Taxes on Distributions (1) 1.02% 3.66% 4.43% Return After Taxes on Distributions and 2.30% 3.83% 4.55% Sale of Fund Shares (1) LEHMAN BROTHERS MUNICIPAL BOND INDEX (2) 5.31% 5.83% 6.03% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Lehman Brothers Municipal Bond Index, an unmanaged measure of approximately 15,000 municipal bonds with a minimum credit rating of BBB, and that were a part of at least a $50 million issuance made within the past fives years and have a maturity of at least two years, is for reference only and does not mirror Pioneer Tax Free Fund's investments. Pioneer Tax Free Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Shares class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Tax Free 7 Fund, the expenses of Pioneer Tax Free Fund for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
----------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES PIONEER TAX (PAID DIRECTLY SAFECO IT MUNI SAFECO IT MUNI SAFECO IT MUNI SAFECO IT MUNI FREE FUND FROM YOUR BOND FUND BOND FUND BOND FUND BOND FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ----------------------------------------------------------------------------------------------------- Maximum sales 3.50%(6) None None None None (1) charge (load) when you buy shares as a percentage of offering price ----------------------------------------------------------------------------------------------------- Maximum deferred None 4.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ----------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ----------------------------------------------------------------------------------------------------- Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A ----------------------------------------------------------------------------------------------------- Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A fee ----------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ----------------------------------------------------------------------------------------------------- Management fee 0.50% 0.50% 0.50% 0.50% 0.49% ----------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ----------------------------------------------------------------------------------------------------- Other expenses 6.95% 14.93% 19.32% 0.54% 0.21% ----------------------------------------------------------------------------------------------------- Total fund 7.70% 16.43% 20.82% 1.04% 0.70% operating expenses ----------------------------------------------------------------------------------------------------- Expense reduction 6.55%(2) 14.53%(2) 18.92%(2) 0.14%(2) None(3) ----------------------------------------------------------------------------------------------------- Net fund operating 1.15% 1.90% 1.90% 0.90% 0.70% expenses -----------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Tax Free Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Tax Free Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco IT Muni Bond Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Tax Free Fund to 0.70% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. 8 (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco IT Muni Bond Fund and two years for Pioneer Tax Free Fund and (f) and the Investor Class shares of Pioneer Tax Free Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ---------------------------------------------------------- EXAMPLE ---------------------------------------------------------- SAFECO IT MUNI BOND FUND ---------------------------------------------------------- CLASS A SHARES ---------------------------------------------------------- Year 1 $ 463 ---------------------------------------------------------- Year 3 $ 703 ---------------------------------------------------------- Year 5 $ 961 ---------------------------------------------------------- Year 10 $ 1,699 ---------------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ---------------------------------------------------------- Year 1 $ 593 $ 193 ---------------------------------------------------------- Year 3 $ 797 $ 597 ---------------------------------------------------------- Year 5 $ 1,126 $ 1,026 ---------------------------------------------------------- Year 10 $ 1,764 $ 1,764 ---------------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ---------------------------------------------------------- Year 1 $ 293 $ 193 ---------------------------------------------------------- Year 3 $ 597 $ 597 ---------------------------------------------------------- Year 5 $ 1,026 $ 1,026 ---------------------------------------------------------- Year 10 $ 2,222 $ 2,222 ---------------------------------------------------------- INVESTOR CLASS SHARES ---------------------------------------------------------- Year 1 $ 92 ---------------------------------------------------------- Year 3 $ 287 ---------------------------------------------------------- Year 5 $ 498 ---------------------------------------------------------- Year 10 $ 1,108 ---------------------------------------------------------- PIONEER TAX FREE FUND ---------------------------------------------------------- INVESTOR CLASS SHARES ---------------------------------------------------------- Year 1 $ 71 ---------------------------------------------------------- Year 3 $ 248 ---------------------------------------------------------- Year 5 $ 466 ---------------------------------------------------------- Year 10 $ 1,094 ---------------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco IT Muni Bond Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the historical investment performance of Pioneer Tax Free Fund and your Fund are comparable. For the one, five and ten year periods ended June 30, 2004, Class A shares of Pioneer Tax Free Fund had an average annual return of ___%, ____% and ____% compared to an average annual of the Class A shares and Investor Class shares of ___% and ___% (one year), and __% 9 (five years) and ____% and ____% (ten years), respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer Tax Free Fund's lower operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Tax Free Income Fund to 0.70% of average daily net assets. The estimated expenses of the Investor Class shares of Pioneer Tax Free Fund are below both the gross expenses and expenses net of expense reimbursement of each class of shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. FIFTH, the substantially larger size of Pioneer Tax Free Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. The trustees also considered the difference in the investment policies of the two Funds, particularly Pioneer Tax Free Fund's ability to invest in securities with long maturities than your Fund. While the difference in policy may result in Pioneer Tax Free Fund having greater risks of volatility of net assets value than your Fund, the trustees believe that the factors in favor of the reorganizing mitigated the risk. SEVENTH, the trustees also considered the differences in the investment policies of the two Funds, particularly Pioneer Tax Free Fund's ability to invest in securities with longer maturities than your Fund. While this may result in Pioneer Tax Free Fund having greater volatility of net asset value than your Fund, the trustees believe that the factors in favor of the Reorganization mitigate this risk. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra". The board of trustees of Pioneer Tax Free Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Tax Free Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Tax Free Fund and its shareholders. 10 CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003. ---------------------------------------------------------------------------- SAFECO IT MUNI BOND FUND PIONEER TAX FREE FUND DECEMBER 31, 2003 DECEMBER 31, 2003 ---------------------------------------------------------------------------- NET ASSETS (in millions) $ 16.8 $ 718.4 ---------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 11.14 $ 11.70 Class B shares $ 11.13 $ 11.59 Class C shares $ 11.13 $ 11.52 Investor Class shares $ 11.14 N/A ---------------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 37,000 Class B shares 14,000 Class C shares 9,000 Investor Class shares 1,450,000 N/A ---------------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Tax Free Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Tax Free Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Tax Free Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Tax Free Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 SAFECO INTERMEDIATE-TERM U.S. GOVERNMENT FUND AND PIONEER AMERICA INCOME TRUST PROPOSAL 8 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary. COMPARISON OF SAFECO U.S. GOVERNMENT FUND TO THE PIONEER AMERICA INCOME TRUST
- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST - ------------------------------------------------------------------------------------------------------------------------------------ Business A series of Safeco Taxable Bond Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Massachusetts business trust. company organized as a Delaware statutory trust. - ------------------------------------------------------------------------------------------------------------------------------------ Net assets as of $66.7 million $208.2 million June 30, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers (since 2003 and until August Portfolio Manager: 2, 2004): Day-to-day management of the Fund's portfolio is the Paul Stevenson responsibility of a team of fixed income portfolio CFA, Vice President, SAM managers led by Kenneth J. Taubes. Joined SAM in 1988 Mr. Taubes joined Pioneer as a senior vice president Tim Hokari in September 1998 and has been an investment Assistant Vice President, SAM professional since 1982. Joined SAM in 2000 Lesley Fox Assistant Vice President, SAM Joined SAM in 2000 Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Investment objective The Fund seeks a high level of current income The Fund seeks as high a level of current income as as is consistent with the preservation of is consistent with the preservation of capital and capital by investing in securities issued or prudent investment risk. guaranteed by the U.S. government or its agencies or instrumentalities. ---------------------------------------------------------------------------------------------------------- Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment objective as described above. - ------------------------------------------------------------------------------------------------------------------------------------ Primary investments Under normal circumstances, the Fund invests at The Fund invests exclusively in securities that are least 80% of its net assets (plus any backed by the full faith and credit of the U.S. borrowings for investment purposes) in government, and repurchase agreements and securities issued or guaranteed by the U.S. "when-issued" commitments with respect to these government or its agencies and securities. These securities include: instrumentalities. o U.S. Treasury obligations, which differ only U.S. government securities in which the Fund in their interest rates, maturities and times of invests include, but are not limited to: issuance, including U.S. Treasury bills (maturities of one year or less), U.S. Treasury o Mortgage-related securities backed by notes (maturities of one to 10 years), and U.S. pools of mortgages, including modified Treasury bonds (generally maturities greater than pass-through 10 years) - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST - ------------------------------------------------------------------------------------------------------------------------------------ certificates and collateralized mortgage obligations issued by the GNMA, o Obligations issued by or guaranteed as to the Federal Home Loan Mortgage Corporation principal and interest by the U.S. Treasury and (FHLMC), and the Federal National Mortgage certain agencies and instrumentalities of the Association (FNMA) U.S. government, such as Government National o U.S. Treasury bills, notes, bonds, and Mortgage Association (GNMA) certificates and interest or principal components of Federal Housing Administration (FHA) debentures, Separate Trading Registered Interest for which the U.S. Treasury unconditionally and Principal Securities (STRIPS) guarantees payment of principal and interest o Other U.S. government securities guaranteed by the full faith of the U.S. The Fund's investments may have all types of government b not direct obligations of the interest repayment and reset terms, including fixed U.S. Treasury. rate, adjustable rate, zero coupon, contingent, o Government-sponsored agency securities deferred, payment-in-kind and auction rate features. o Securities issued by the Tennessee Valley Authority The Fund may invest in securities of any maturity. Although the average dollar weighted maturity of the The average dollar weighted maturity of the Fund's portfolio may vary significantly, it Fund will generally range between three and ten generally will not exceed 20 years. years, although the maturity of individual securities may be out of that range. - ------------------------------------------------------------------------------------------------------------------------------------ Investment strategies The decision to buy or sell securities in the Pioneer considers both broad economic factors and Fund generally falls into one or more of the issuer-specific factors in selecting a portfolio following categories: designed to achieve the Fund's investment objective. o To move in or to of various sectors In assessing the appropriate maturity and rating based upon their relative values weighting of the Fund 's portfolio, Pioneer considers o To reduce the Fund's investments in a variety of factors that are expected to influence sectors viewed as overhauled, which economic activity and interest rates. These factors increasing the Fund's investment in include fundamental economic indicators such as the undervalued sectors rates of economic growth and inflation, Federal o To realign the overall maturity of Reserve monetary policy and the relative value of the duration of the Fund's portfolio U.S. dollar compared to other currencies. Once o To raise cash to meet shareholder Pioneer determines the preferable portfolio redemptions characteristics, Pioneer selects individual securities based upon the terms of the securities With each buy/sell decision, the adviser also (such as yields compared to U.S. Treasuries or considers the effect the transaction may have comparable issues), and sector diversification. on the performance of the Fund's portfolio as a whole - ------------------------------------------------------------------------------------------------------------------------------------ Other investments The Fund may invest in mortgage-backed or The Fund may invest in mortgage-backed securities asset-backed securities. issued by agencies or instrumentalities of the U.S. government. These securities represent direct or The Fund may purchase "when-issued" or indirect participation in, or are collateralized by "delayed-delivery" securities, and may purchase and payable from, mortgage loans secured by real or sell securities on a "forward commitment" estate. basis. The Fund may purchase and sell securities, including The Fund may invest up to 20% of assets in GNMA certificates, on a when-issued or delayed foreign securities. delivery basis. The Fund may engage in these transactions when it believes they would result in a favorable price and yield for the security being purchased or sold. - ------------------------------------------------------------------------------------------------------------------------------------ Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - ------------------------------------------------------------------------------------------------------------------------------------ Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ------------------------------------------------------------------------------------------------------------------------------------ Industry concentration The Fund may not invest more than 25% of its The Fund does not have a policy against industry assets in any one industry. concentration. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST - ------------------------------------------------------------------------------------------------------------------------------------ Restricted and illiquid If immediately after and as a result of such The Fund does not have a policy again investing in securities action the value of the following securities, illiquid securities. in the aggregate, would exceed 15% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ------------------------------------------------------------------------------------------------------------------------------------ Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except from banks to (ii) by engaging in reverse repurchase meet redemptions in amounts not exceeding 33 1/3% agreements. The Fund will not commit to (taken at the lower of cost or current value) of its additional securities purchases if total total assets (including the amount borrowed). The outstanding borrowings are equal to 5% or more Fund does not intend to borrow money during the of total assets. coming year, and will do so only as a temporary measure for extraordinary purposes or to facilitate redemptions. The Fund will not purchase securities while any borrowings are outstanding. - ------------------------------------------------------------------------------------------------------------------------------------ Lending The Fund may lend securities to qualified The Fund may not make loans, except through the institutional investors with a value of up to purchase of securities, including repurchase 33% of the Fund's total assets. agreements, in accordance with its investment objective, policies and limitations. - ------------------------------------------------------------------------------------------------------------------------------------ Derivative instruments The Fund may not purchase securities on margin. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ------------------------------------------------------------------------------------------------------------------------------------ Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ------------------------------------------------------------------------------------------------------------------------------------ BUYING, SELLING AND EXCHANGING SHARES - ------------------------------------------------------------------------------------------------------------------------------------ Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer America Income the Fund are subject to a 3.50% front-end sales Trust you receive in the Reorganization will not be charge. subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the Contingent deferred sales charge of up to 4% if Reorganization (i.e., not in the name of a broker) you redeem Class B shares within six years of and maintain your account, you may purchase Class A purchase. shares of Pioneer America Income Trust and Class A shares of any fund in the Pioneer family of funds Contingent deferred sales charge of 1% if you through such account in the future without paying any redeem Class C shares within one year of sales charge. purchase. Except as described above, Class A shares of Pioneer Purchases of Investor Class shares of the Fund America Income Trust are subject to a front-end sales are not subject to a sales load. charge of up to 4.50%. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ------------------------------------------------------------------------------------------------------------------------------------ Management and other Safeco U.S. Government Fund pays an advisory Pioneer America Income Trust pays Pioneer a fees fee on a monthly basis at an annual rate as management fee equal to 0.50% of the Fund's average follows: daily net assets. $0 - $250,000,000: 0.55 of 1% $250,000,001 - $750,000,000: 0.50 of 1% During its most recent fiscal year, Pioneer America Income - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST - ------------------------------------------------------------------------------------------------------------------------------------ $750,000,001 - $1,250,000,000: 0.45 of 1% Trust paid an advisory fee at an average rate Over $1,250,000,000: 0.40 of 1% of 0.50% of average daily net assets. SAM serves as administrator and Fund accounting In addition, the Fund reimburses Pioneer for certain agent for the Fund. The Fund pays SAM an Fund accounting and legal expenses incurred on behalf administrative services fee of 0.05% of the of the Fund and pays a separate shareholder Fund's average daily net assets up to the first servicing/transfer agency fee to PIMSS, an affiliate $200,000,000 and 0.01% of its net assets of Pioneer. thereafter, and an accounting fee of 0.04% of the Fund's average daily net assets up to the For the fiscal year ended December 31, 2003, the first $200,000,000 and 0.01% of its net assets Fund's annual operating expenses for Class A shares thereafter. were 0.93% per share. During its most recent fiscal year, Safeco U.S. Pioneer has agreed until the second anniversary of Government Fund paid aggregate advisory and the closing of the Reorganization to limit the administration fees at an average rate of 0.64% ordinary operating expenses (excluding taxes, of average daily net assets. commissions, interest and extraordinary expenses) of the Investor Class to 0.74% of the average daily net SAM had contractually agreed until April 30, assets attributable to the Investor Class. 2009, to pay certain Fund operating expenses (but not all of the operating expenses of the Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.20%, and without giving effect to the expense limitation, were 1.31% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 1.95%, and without giving effect to the expense limitation, were 2.10% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 1.95%, and without giving effect to the expense limitation, were 43.56% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares were 0.94% per share. - ------------------------------------------------------------------------------------------------------------------------------------ Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ------------------------------------------------------------------------------------------------------------------------------------ Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer America Income underwriter or through brokers, registered Trust's distributor. Existing shareholders of Safeco investment advisers, banks and other financial U.S. Government Fund who own shares in their own name institutions that have entered into selling as of the closing date of the Reorganization and who agreements with the Fund's principal maintain their accounts may buy shares of any fund in underwriter, as described in the Fund's the Pioneer family of funds through such accounts in prospectus. the future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer America Income Trust by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO U.S. GOVERNMENT FUND PIONEER AMERICA INCOME TRUST - ------------------------------------------------------------------------------------------------------------------------------------ Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer America Income acquire through dividend reinvestment or other Trust without incurring any fee on the exchange with Fund distributions or for Class A shares that the more than 62 other Pioneer Funds. Your exchange you have exchanged for Class A shares of would be for Class A shares, which would be subject to a another fund. Rule 12b-1 fee. An exchange generally is treated as a sale and a new purchase of shares for federal income tax Certain account transactions may be done by purposes. telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer America Income Trust for shares of other Pioneer Funds by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------ Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. ---------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer America Income Trust by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS While each Fund has a similar investment objective, primary investment policies and strategies, there are differences which effect the risk of each Fund. The market value of fixed income securities tends to be more volatile the greater the maturity of the security. Pioneer America Income Trust can invest in securities of greater average maturity than your Fund and consequently may have greater risk. However, your Fund may invest in U.S. government securities that are not backed by the full faith and credit of the U.S. Treasury, and consequently have an element of credit risk that is not present in Pioneer America Income Trust. Generally, however, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o Interest rates go up, causing the value of debt securities in the Fund's portfolio to decline o During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest in lower yielding securities. This is known as call or prepayment risk o During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected principal payments. This may lock in a below market interest rate, increase the security's duration (the estimated period until the security is paid in full) and reduce the value of the security. This is known as extension risk o Pioneer's judgment about the attractiveness, relative value or potential appreciation of a particular sector, security or investment strategy proves to be incorrect To the extent the Fund invests significantly in mortgage-backed securities, its exposure to prepayment and extension risks may be greater than other investments in fixed income securities. Although mortgage pools issued by U.S. agencies are guaranteed with respect to payments of principal and interest, such guarantee does not apply to losses resulting from declines in the market value of such securities. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. 5 SAFECO U.S. GOVERNMENT FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS(*) [THE FOLLWING TABLE WAS REPRESENTED BY A BAR GRAPFH IN THE PRINTED MATERIAL.] 1994 -4.27% 1995 15.48 1996 3.98 1997 8.97 1998 6.84 1999 0.16 2000 9.5 2001 7.29 2002 9.84 2003 1.4 (*)During the period shown in the bar chart, your Fund's highest quarterly return was 4.79% for the quarter ended March 31, 1995, and the lowest quarterly return was -3.58% for the quarter ended March 31, 1994. PIONEER AMERICA INCOME TRUST - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS(*) [THE FOLLWING TABLE WAS REPRESENTED BY A BAR GRAPFH IN THE PRINTED MATERIAL.] 1994 -3.97 1995 16.07 1996 2.29 1997 9.51 1998 7.78 1999 -2.52 2000 11.58 2001 5.92 2002 9.70 2003 1.47 (*)During the period shown in the bar chart, the Fund's highest quarterly return was 4.72% for the quarter ended June 30, 1995, and the lowest quarterly return was -3.14% for the quarter ended March 31, 1994. 6 SAFECO U.S. GOVERNMENT FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO U.S. GOVERNMENT FUND, CLASS A SHARES Return Before Taxes -2.41% 4.60% 5.30% Return After Taxes on Distributions(2) -3.81% 2.47% 2.93% Return After Taxes on Distributions and -1.57% 2.58% 2.99% Sale of Fund Shares(2) SAFECO U.S. GOVERNMENT FUND, CLASS B SHARES Return Before Taxes -3.50% 4.62% 5.39% SAFECO U.S. GOVERNMENT FUND, CLASS C SHARES Return Before Taxes -0.49% 4.81% 5.40% SAFECO U.S. GOVERNMENT FUND, INVESTOR CLASS SHARES Return Before Taxes 1.40% 5.56% 5.78% Return After Taxes on Distributions(1) -0.14% 3.34% 3.36% Return After Taxes on Distributions and 0.91% 3.34% 3.39% Sale of Fund Shares(1) LEHMAN BROTHERS INTERMEDIATE GOVERNMENT INDEX(2) 2.30% 6.16% 6.33% (reflects no deduction for fees, expenses or taxes) MERRILL LYNCH U.S. TREASURY/AGENCY MASTER INDEX(2) 2.36% 6.22% 6.71% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Lehman Brothers Intermediate Government Index, an unmanaged index comprised of U.S. Treasury and U .S. agency issues from its more comprehensive U.S. Aggregate Index, excluding maturities below one year and above 9.9 years, and the Merrill Lynch U.S. Treasury/Agency Master Index, an unmanaged index of U.S. Treasury and U.S. agency securities, are for reference only and do not mirror your Fund's investments. PIONEER AMERICA INCOME TRUST - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- PIONEER AMERICA INCOME TRUST, CLASS A SHARES Return Before Taxes -3.06% 4.14% 5.04% Return After Taxes on Distributions (1) -4.61% 2.05% 2.65% Return After Taxes on Distributions and -2.00% 2.20% 2.75% Sale of Fund Shares (1) LEHMAN BROTHERS GOVERNMENT BOND INDEX(2) 2.36% 6.26% 6.72% (reflects no deduction for fees, expenses or taxes) LEHMAN BROTHERS FIXED RATE MORTGAGE-BACKED SECURITIES INDEX(2) (reflects no deduction for fees, expenses or taxes) 3.05% 6.55% 6.89%
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Lehman Brothers Government Bond Index, an unmanaged measure of the performance of U.S. Treasury debt, all publicly issued debt of U.S. government agencies and quasi-federal corporations, and corporate debt guaranteed by the U.S. government, and the Lehman Brothers Fixed Rate Mortgage-Backed Securities Index, an unmanaged index including 15- and 30-year fixed rate securities backed by mortgage pools of the GNMA, FHLMC and FNMA, are for reference only and do not mirror the Fund's investments. 7 Pioneer America Income Trust's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer America Income Trust, the expenses of Pioneer America Income Trust for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
-------------------------------------------------------------------------------------------- PIONEER SHAREHOLDER AMERICA TRANSACTION FEES SAFECO U.S. SAFECO U.S. SAFECO U.S. SAFECO U.S. INCOME (PAID DIRECTLY GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT TRUST FROM YOUR FUND FUND FUND FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS -------------------------------------------------------------------------------------------- Maximum sales 3.50%(6) None None None None (1) charge (load) when you buy shares as a percentage of offering price -------------------------------------------------------------------------------------------- Maximum deferred None 4.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less -------------------------------------------------------------------------------------------- Redemption fees 2.00% None None 2.00% N/A for shares held less than 30 days -------------------------------------------------------------------------------------------- Wire redemption $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A fee -------------------------------------------------------------------------------------------- Annual low $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A balance fee -------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) -------------------------------------------------------------------------------------------- Management fee 0.55% 0.55% 0.55% 0.55% 0.50% -------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee -------------------------------------------------------------------------------------------- Other expenses 0.51% 0.55% 42.01% 0.39% 0.45% -------------------------------------------------------------------------------------------- Total fund 1.31% 2.10% 43.56% 0.94% 0.95% operating expenses -------------------------------------------------------------------------------------------- Expense reduction 0.11%(2) 0.15%(2) 41.61%(2) N/A 0.21% (3) -------------------------------------------------------------------------------------------- Net fund operating 1.20% 1.95% 1.95% 0.94% 0.74% expenses --------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer America Income Trust through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer America Income Trust or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. 8 (2) As described above, SAM had contractually agreed to reimburse Safeco U.S. Government Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer America Income Trust to 0.74% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco U.S. Government Fund and two years for Pioneer America Income Trust and (f) and the Investor Class shares of Pioneer America Income Trust convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ------------------------------------------------------------------- EXAMPLE ------------------------------------------------------------------- SAFECO U.S. GOVERNMENT FUND ------------------------------------------------------------------- CLASS A SHARES ------------------------------------------------------------------- Year 1 $ 468 ------------------------------------------------------------------- Year 3 $ 718 ------------------------------------------------------------------- Year 5 $ 978 ------------------------------------------------------------------- Year 10 $ 1,754 ------------------------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------------- Year 1 $ 598 $ 198 ------------------------------------------------------------------- Year 3 $ 812 $ 612 ------------------------------------------------------------------- Year 5 $ 1,152 $ 1,052 ------------------------------------------------------------------- Year 10 $ 1,819 $ 1,819 ------------------------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------------- Year 1 $ 298 $ 198 ------------------------------------------------------------------- Year 3 $ 612 $ 612 ------------------------------------------------------------------- Year 5 $ 1,052 $ 1,052 ------------------------------------------------------------------- Year 10 $ 2,275 $ 2,275 ------------------------------------------------------------------- INVESTOR CLASS SHARES ------------------------------------------------------------------- Year 1 $ 96 ------------------------------------------------------------------- Year 3 $ 300 ------------------------------------------------------------------- Year 5 $ 520 ------------------------------------------------------------------- Year 10 $ 1,155 ------------------------------------------------------------------- PIONEER AMERICA INCOME TRUST ------------------------------------------------------------------- INVESTOR CLASS SHARES ------------------------------------------------------------------- Year 1 $ 76 ------------------------------------------------------------------- Year 3 $ 281 ------------------------------------------------------------------- Year 5 $ 1,311 ------------------------------------------------------------------- Year 10 $ [ ] ------------------------------------------------------------------- 9 COMPARISON OF DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST CHARACTERISTICS OF SAFECO U.S. GOVERNMENT TRUST (A SERIES OF A DELAWARE STATUTORY TRUST) o GOVERNANCE AND MANAGEMENT. Safeco U.S. Government Fund is a series of the Safeco Taxable Bond Trust, a Delaware statutory trust. The governing instrument of Safeco Taxable Bond Trust is its Trust Instrument (the "Trust Instrument"). The Trustees of the Safeco Taxable Bond Trust are responsible for the management and supervision of Safeco U.S. Government Fund. o SHARE CAPITAL AND CLASSES. The Trust Instrument of Safeco Taxable Bond Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest of Safeco U.S. Government Fund without par value. As of the date of this prospectus and proxy statement, the Trustees have authorized shares of Safeco U.S. Government Fund and have authorized the issuance of four classes of shares of Safeco U.S. Government Fund, designated as Class A, Class B, Class C and Investor Class Shares. The shares of each class of Safeco U.S. Government Fund represent an equal proportionate interest in the aggregate net assets attributable to that class of the Fund. Holders of each class of shares have certain exclusive voting rights on matters relating to their respective distribution plans. The different classes of Safeco U.S. Government Fund may bear different expenses relating to the cost of holding shareholder meetings necessitated by the exclusive voting rights of any class of shares. In the event of liquidation, shareholders of each class are entitled to share pro rata in the net assets of their Fund available for distribution to these shareholders. Shares of each class entitle their holders to one vote per share, are freely transferable and have no preemptive, subscription or conversion rights. o MEETINGS. Under Delaware law, Safeco Taxable Bond Trust is not required to hold annual shareholder meetings for any the Fund. Unless otherwise required by the 1940 Act, the Fund has have no intention of holding annual meetings of shareholders. Pursuant to the Trust Instrument, shareholders have power to vote only on certain matters, including (a) the election and removal of trustees; (b) approval of any investment management agreement; (c) termination of the Safeco Taxable Bond Trust; (d) certain amendments to the Trust Instrument; and (e) such additional matters relating to the Trust as may be required by law or as the Trustees may consider desirable. o LIABILITY OF SHAREHOLDERS. Delaware law affords shareholders of a Delaware statutory trust with the same protections afforded stockholders of a Delaware corporation, which means shareholders are not generally subject to liability for the debts or obligations of the statutory trust unless the entity' s trust instrument provides otherwise. The Trust Instrument of the Safeco Taxable Bond Trust contains an express disclaimer of shareholder liability for acts, obligations or affairs of Safeco U.S. Government Fund and provides for indemnification out of the Fund's assets for all losses and expenses of any shareholder held personally liable for reason of being or having been a shareholder. CHARACTERISTICS OF PIONEER AMERICA INCOME TRUST (A MASSACHUSETTS BUSINESS TRUST) o GOVERNANCE AND MANAGEMENT. Pioneer America Income Trust is a Massachusetts business trust. The governing instrument of Pioneer America Income Trust is its Agreement Declaration of Trust ("Declaration of Trust"). The business of Pioneer America Income Trust is managed under the direction of its Board of Trustees. The Trustees, in addition to viewing the actions of the Pioneer America Income Trust's investment adviser, decide upon matters of general policy at their regular meetings. The officers of Pioneer America Income Trust supervise its business operations. o SHARE CAPITAL AND CLASSES. Pioneer America Income Trust is authorized to issue shares of capital stock and to increase or decrease the aggregate number of shares of capital stock or the number of shares of stock of any class that the Fund has authority to issue. Each share is entitled to one vote on all questions relating to the Fund, and each share is entitled to participate equally in dividends and capital gains distributions and in the residual assets of the respective class in the event of liquidation. o MEETINGS. Under Massachusetts law, Pioneer America Income Trust, as registered open-end investment companies, are not required to hold annual shareholder meetings. Unless otherwise required by the 1940 Act, the Papp Funds have no intention of holding annual meetings of stockholders. Pursuant to the Declaration of Trust, special meetings of shareholders may be called at any time by the Chairman, President or by the Board of Trustees or by the secretary upon the written request of shareholders entitled to cast at least 25% of the votes entitled to be cast at such meeting, provided that such request shall state the purposes of such meeting and the matters proposed to be acted on. o LIABILITY OF STOCKHOLDERS. Shareholders of a Massachusetts business trust may, under certain circumstances, be held personally liable for the obligations of the trust. However, the Declaration contains an express disclaimer of shareholder liability for acts or obligations of the Fund or any series of the Fund and provides that notice of such disclaimer may be given in each agreement, obligation or instrument entered into or executed by the Fund or its Trustees. Moreover, the Declaration provides for the indemnification out of Fund property of any shareholders held personally liable for any obligations of the Fund or any series of the Fund. The Declaration also provides that the Fund shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Fund and satisfy any judgment thereon. Thus, the risk of a shareholder incurring financial loss beyond his or her investment because of shareholder liability would be limited to circumstances in 10 which the fund itself will be unable to meet its obligations. In light of the nature of the Fund's business and the nature and amount of its assets, the possibility of the Fund's liabilities exceeding its assets, and therefore a shareholder's risk of personal liability, is remote. REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco U.S. Government Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the performance of Pioneer America Income Trust is generally consistent with the historical investment performance of your Fund. For the one, five and ten year periods ended [June 30], 2004, Class A shares of Pioneer America Income Trust had an average annual return of [xx]% compared to an average annual of the Class A shares and Investor Class shares of [xx]% and [xx]% (one year), ____% and ____% (five years) and ___% and ___% (ten years), respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer America Income Trust's lower operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary operating expenses) of the Investor Class of Pioneer America Income Trust to 0.74% of average daily net assets. The estimated experience of the Investor class of Pioneer America Income Trust are below both the gross expenses and expenses net of expense reimbursement of the end class of shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, based upon the Class A expense ratio of Pioneer America Income Trust for the most recent fiscal year, Pioneer America Income Trust's expenses were lower than the gross and net expense ratio of each class of shares of your Fund. While there are some differences between the policies of the two Funds, the trustees believe that the two Funds represent substantially equivalent investments. FIFTH, the substantially larger size of Pioneer America Income Trust offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer America Income Trust received in the Reorganization will provide Safeco U.S. Government Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." 11 The board of trustees of Pioneer America Income Trust also considered that the Reorganization presents an excellent opportunity for the Pioneer America Income Trust to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer America Income Trust and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003.
--------------------------------------------------------------------------- SAFECO U.S. GOVERNMENT PIONEER AMERICA INCOME FUND TRUST DECEMBER 31, 2003 DECEMBER 31, 2003 --------------------------------------------------------------------------- NET ASSETS (in millions) $ 74.5 $ 247 --------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 9.94 $ 9.95 Class B shares $ 9.60 $ 9.89 Class C shares $ 9.60 $ 9.92 Investor Class shares $ 9.59 N/A --------------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 560,000 Class B shares 309,000 Class C shares 11,000 Investor Class shares 6,893,000 N/A ---------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer America Income Trust will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer America Income Trust's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer America Income Trust, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer America Income Trust. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 12 SAFECO INTERNATIONAL STOCK FUND AND PIONEER INTERNATIONAL EQUITY FUND PROPOSAL 9 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO INTERNATIONAL STOCK FUND TO THE PIONEER INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------------- SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - ----------------------------------------------------------------------------------------------------------------------------------- Net assets as of $37.4 million $36.1 million June 30, 2004 - ----------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser: portfolio managers SAM Pioneer Investment sub-advisor (until August 2, 2004): Portfolio Manager: Bank of Ireland Asset Management Limited Christopher Smart. Mr. Smart is supported by a team ("Sub-advisor") of portfolio managers and analysts. Portfolio Managers (until August 2, 2004): Mr. Smart, Senior Vice President and Director of The Fund is managed by a committee of portfolio International Investments, joined Pioneer in 1995 as managers at the sub-advisor who are jointly and Director of Research of Pioneer First Investments, primarily responsible for the day-to-day Moscow, Russia. management of the portfolio. Currently Pioneer is acting as investment adviser to the fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks maximum long-term total return The Fund seeks long-term capital growth. (capital appreciation and income) by investing primarily in common stocks of established The Fund may change its investment objective upon non-U.S. companies. delivery of notice to its shareholders. This investment objective of the Fund is fundamental and cannot be changed without shareholder approval. - ----------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal market conditions, the Fund Under normal market conditions, at least 80% of total invests at least 80% of net assets (plus any assets (plus any borrowings for investment purposes) borrowings for investment purposes) in stocks are invested in equity securities of non-U.S. issuers. and at least 65% of its assets in securities issued by companies domiciled in countries other than the United States. - ----------------------------------------------------------------------------------------------------------------------------------- Investment strategies The Fund uses a "value" style of management. The Fund uses a balanced growth-value style of The sub-advisor that historically managed the management and seeks to invest in issuers with above Fund focuses on companies that are well average potential for earnings and revenue growth established with a durable business model and that are also trading at attractive market proven track record of delivering earnings and valuations. dividends; undervalued relative to their intrinsic value and/or future growth potential; undervalued when compared to their historic valuations, to competitors, or to companies with similar growth records; and liquid and readily traded on established foreign exchanges. - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest up to 20% of its total assets in debt securities, cash and cash equivalents. Generally the Fund acquires debt securities that are investment grade, but the Fund may invest up to 5% of its net assets in below investment grade convertible debt securities. - ----------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may purchase as temporary investments The Fund may invest all or part of its assets in strategies for its cash: commercial paper; certificates of securities with remaining maturities of less than one deposit; shares of no-load, open-end money year, cash equivalents or may hold cash. market funds; repurchase agreements (subject to restrictions on the Fund's investment in illiquid securities), and other short-term investments. - ----------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ----------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund may not invest more than 25% of its assets in any one industry. - ----------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ----------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except the Fund may (ii) by engaging in reverse repurchase borrow from banks as a temporary measure to agreements. The Fund will not commit to facilitate the meeting of redemption requests or for additional securities purchases if total extraordinary or emergency purposes and except outstanding borrowings are equal to 5% or more pursuant to reverse purchase agreements and dollar of total assets. rolls and then only in amounts not exceeding 33 1/3% of the Fund's total assets (including the amount borrowed) taken at market value. The Fund will not use leverage to attempt to increase income. The Fund will not purchase securities while outstanding borrowings exceed 10% of the Fund's total assets. - ----------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its 33% of the Fund's total assets. assets. - ----------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may write put or call options if, as a The Fund may use futures and options on securities, result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options do not contracts and other derivatives. The Fund does not exceed 20% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may also purchase put or call options Fund may use derivatives for a variety of on futures contracts if, as a result thereof, non-principal purposes, including: the aggregate premiums paid on all options or o As a hedge against adverse changes in stock options on futures contracts held by the Fund market prices, interest rates or currency do not exceed 20% of the Fund's net assets. exchange rates o As a substitute for purchasing or selling The Fund may enter into any futures contracts securities or options on futures contracts if, as a result o To increase the Fund's return as a thereof, the aggregate margin deposits and non-hedging strategy that may be considered premiums required on all such instruments do speculative not exceed 5% of the Fund's net assets. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------------- The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ----------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ----------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer International the Fund are subject to a 5.75% front-end sales Equity Fund you receive in the Reorganization will charge. not be subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the Contingent deferred sales charge of up to 5% if Reorganization (i.e., not in the name of a broker) you redeem Class B shares within six years of and maintain your account, you may purchase Class A purchase. shares of Pioneer International Equity Fund and Class A shares of any fund in the Pioneer family of funds Contingent deferred sales charge of 1% if you through such account in the future without paying any redeem Class A shares within one year of sales charge. purchase. Except as described above, Class A shares of Pioneer Purchases of Investor Class shares and International Equity Fund are subject to a front-end Institutional Class shares of the Fund are not sales charge of up to 5.75%. subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A, Institutional Class and Investor Class shares held less than 30 days. - ----------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco International Stock Fund pays an Pioneer International Equity Fund pays Pioneer a fees advisory fee on a monthly basis at an annual management fee equal to Pioneer's annual fee is equal rate as follows: to: $0 - $250,000,000: 1.00 of 1% 1.00% of average daily net assets up to $300 million; $250,000,001 - $750,000,000: .90 of 1% 0.85% of the next $200 million; Over $750,000,000: .80 of 1% 0.75% on assets over $500 million. SAM serves as administrator and Fund accounting During its most recent fiscal year, Pioneer agent for the Fund. The Fund pays SAM an International Equity Fund paid an advisory fee at an administrative services fee of 0.05% of the average rate of 1.00% of average daily net assets. Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets In addition, the fund reimburses Pioneer for certain thereafter, and an accounting fee of 0.04% of fund accounting and legal expenses incurred on behalf the Fund's average daily net assets up to the of the fund and pays a separate shareholder first $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate thereafter. of Pioneer. During its most recent fiscal year, Safeco For the fiscal year ended March 31, 2004, the Fund's International Stock Fund paid aggregate annual operating expenses for Class A shares were advisory and administration fees at an average 1.75% per share. rate of 1.09% of average daily net assets. Pioneer has agreed until the second anniversary of SAM had contractually agreed until April 30, the closing of the Reorganization to limit the 2009, to pay certain fund operating expenses ordinary operating expenses (excluding taxes, (but not all of the operating expenses of the commissions, interest and extraordinary expenses) of Fund) that exceeded the rate of 0.40% per annum the Investor Class to 1.40% of the average daily net of the Fund's average daily net assets. This assets attributable to the Investor Class. arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for the Class A shares, after giving effect to the expense limitation - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------------- were 1.65%, and without giving effect to the expense limitation, were 2.49% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for the Class B shares, after giving effect to the expense limitation were 2.40%, and without giving effect to the expense limitation, were 4.16% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for the Advisor Class C shares, after giving effect to the expense limitation were 2.40%, and without giving effect to the expense limitation, were 3.29% per share. For the fiscal year ended December 31, 2003, the Fund's annual net operating expenses for the Institutional Class shares, after giving effect to the expense limitation ere 1.40%, and without giving effect to the expense limitation were 2.43%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for the Investor Class, after giving effect to the expense limitation were 1.40%, and without giving effect to the expense limitation, were 2.19% per share. - ----------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor Class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ----------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer International underwriter or through brokers, registered Equity Fund's distributor. Existing shareholders of investment advisers, banks and other financial Safeco International Stock Fund who own shares in institutions that have entered into selling their own name as of the closing date of the agreements with the Fund's principal Reorganization and who maintain their accounts may underwriter, as described in the Fund's buy shares of any fund in the Pioneer family of funds prospectus. through such accounts in the future without paying sales charges. Institutional Class shares have a minimum investment amount of $250,000. If the account is established in the shareholder's own name, shareholders may also purchase additional Certain account transactions may be done by shares of Pioneer International Equity Fund by telephone telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer International acquire through dividend reinvestment or other Equity Fund without incurring any fee on the exchange fund distributions or for shares that you have with the more than 62 other Pioneer Funds. Your exchanged for equivalent shares of another exchange would be for Class A shares, which would be Fund. A 2% redemption fee will be assessed on subject to Rule 12b-1 fees. An exchange generally is the value of exchanged shares that are held treated as a sale and a new purchase of shares for less than 30 days in the Safeco International federal income tax purposes. Stock Fund. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also exchange shares of telephone. Pioneer International Equity Fund for shares of other Pioneer Funds by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Selling shares Each class of shares will be sold at the net asset value per share next calculated after the Fund receives your request in good order. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO INTERNATIONAL STOCK FUND PIONEER INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer International Equity Fund by telephone or online. - -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o The non-U.S. stock markets go down or perform poorly relative to other investments (this risk may be greater in the short term) o Equity securities of non-U.S. issuers or growth stocks fall out of favor with investors o The Fund's investments do not have the growth potential originally expected Investing in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. Some of these risks do not apply to larger, more developed markets. These risks are more pronounced to the extent the Fund invests in issuers in countries with emerging markets or if the fund invests significantly in one country. These risks may include: o Less information about non-U.S. issuers or markets may be available due to less rigorous disclosure or accounting standards or regulatory practices o Many non-U.S. markets are smaller, less liquid and more volatile. In a changing market, Pioneer may not be able to sell the Fund's portfolio securities at times, in amounts and at prices it considers reasonable o Adverse effect of currency exchange rates or controls on the value of the Fund's investments o The economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession o Economic, political and social developments may adversely affect the securities markets o Withholding and other non-U.S. taxes may decrease the Fund's return Investments in the Funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money by investing in either Fund. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. 5 SAFECO INTERNATIONAL STOCK FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1997 4.55 1998 14.26 1999 29.00 2000 -10.95 2001 -24.3 2002 -19.12 2003 27.74 * During the period shown in the bar chart, your Fund's highest quarterly return was 19.79% for the quarter ended December 31, 1999, and the lowest quarterly return was -21.14% for the quarter ended September 30, 2002. PIONEER INTERNATIONAL EQUITY FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1997 5.81 1998 7.4 1999 41.10 2000 -17.87 2001 -19.28 2002 -19.61 2003 32.29 * During the period shown in the bar chart, since the fund's inception on October 31, 1996, Pioneer International Equity Fund's highest quarterly return was 29.50% for the quarter ended December 31, 1999, and the lowest quarterly return was -21.25% for the quarter ended September 30, 2002. 6 SAFECO INTERNATIONAL STOCK FUND* AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1) ------ ------- ------------------- SAFECO INTERNATIONAL STOCK FUND, CLASS A SHARES Return Before Taxes 20.18% -3.53% 1.56% Return After Taxes on Distributions (2) 19.98% -4.02% 1.08% Return After Taxes on Distributions and 13.39% -3.14% 1.12% Sale of Fund Shares (2) SAFECO INTERNATIONAL STOCK FUND, CLASS B SHARES Return Before Taxes 21.41% -3.49% 1.71% SAFECO INTERNATIONAL STOCK FUND, CLASS C SHARES Return Before Taxes 25.38% -3.15% 1.57% SAFECO INTERNATIONAL STOCK FUND, INSTITUTIONAL CLASS SHARES Return Before Taxes 27.99% -2.07% 2.64% Return After Taxes on Distributions (2) 27.74% -2.56% 2.13% Return After Taxes on Distributions and 18.19% -1.92% 2.04% Sale of Fund Shares (2) SAFECO INTERNATIONAL STOCK FUND, INVESTOR CLASS SHARES Return Before Taxes 27.74% -2.11% 2.61% Return After Taxes on Distributions (2) 27.51% -2.60% 2.11% Return After Taxes on Distributions and 18.34% -1.93% 2.03% Sale of Fund Shares (2) MSCI EAFE INDEX (3) 38.59% -0.05% 3.29% (reflects no deduction for fees, expenses or taxes)
- ---------- * Returns have not been restated to reflect Rule 12b-1 fees prior to September 30, 1996, and would be lower if they were. (1) The Fund commenced operations on January 31, 1996. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The MSCI EAFE Index (Morgan Stanley Capital International Europe, Australasia, Far East Index), an unmanaged index comprised of 21 developed equity markets outside of North America, is for reference only, does not mirror the Fund's investments, includes reinvested dividends net of tax withholding, and reflects no deduction of fees or expenses. PIONEER INTERNATIONAL EQUITY FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1) ------ ------- ------------------- PIONEER INTERNATIONAL EQUITY FUND, CLASS A SHARES Return Before Taxes 24.69% -1.27% 1.98% Return After Taxes on Distributions (2) 24.69% -1.54% 1.71% Return After Taxes on Distributions and 16.05% -1.12% 1.62% Sale of Fund Shares (2) MSCI EAFE INDEX (3) 38.59% -0.05% 3.56% (reflects no deduction for fees, expenses or taxes)
- ---------------- (1) The Fund commenced operations on October 31, 1996. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. 7 (3) The MSCI EAFE Index (Morgan Stanley Capital International Europe, Australasia, Far East Index), an unmanaged index comprised of 21 developed equity markets outside of North America, is for reference only, does not mirror the Fund's investments, includes reinvested dividends net of tax withholding, and reflects no deduction of fees or expenses. Pioneer International Equity Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A, B and C shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer International Equity Fund, the expenses of Pioneer International Equity Fund for the period ended December 31, 2002. Future expenses for all share classes may be greater or less.
-------------------------------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES SAFECO SAFECO SAFECO SAFECO SAFECO PIONEER (PAID DIRECTLY INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL STOCK INTERNATIONAL INTERNATIONAL FROM YOUR STOCK FUND STOCK FUND STOCK FUND FUND INSTITUTIONAL STOCK FUND EQUITY FUND INVESTMENT) CLASS A CLASS B CLASS C CLASS INVESTOR CLASS INVESTOR CLASS -------------------------------------------------------------------------------------------------------------------------- Maximum sales 5.75% None None None None None (1) charge (load) when you buy shares as a percentage of offering price -------------------------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00% 1.00% None None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less -------------------------------------------------------------------------------------------------------------------------- Redemption fees 2.00% None None 2.00% 2.00% 2.00% for shares held less than 30 days -------------------------------------------------------------------------------------------------------------------------- Wire redemption $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A fee -------------------------------------------------------------------------------------------------------------------------- Annual low $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A balance fee -------------------------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) -------------------------------------------------------------------------------------------------------------------------- Management fee 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% -------------------------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None None service (12b-1) fee -------------------------------------------------------------------------------------------------------------------------- Other expenses 1.24% 2.16% 1.29% 1.43% 1.19% 1.12% -------------------------------------------------------------------------------------------------------------------------- Total fund 2.49% 4.16% 3.29% 2.43% 2.19% 2.12% operating expenses -------------------------------------------------------------------------------------------------------------------------- Expense reduction 0.84%(2) 1.76%(2) 0.89%(2) 1.03% 0.79%(2) 0.72%(3) -------------------------------------------------------------------------------------------------------------------------- Net fund 1.65% 2.40% 2.40% 1.40% 1.40% 1.40% operating expenses --------------------------------------------------------------------------------------------------------------------------
8 (1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer International Equity Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer International Equity Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco International Stock Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer International Equity Fund to 1.40% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. The hypothetical example below helps you compare the cost of investing in each fund. It assumes that: (a) you invest $10,000 in each fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco International Stock Fund and two years for Pioneer International Equity Fund and (e) and the Investor Class shares of Pioneer International Equity Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either fund's actual expenses or returns, either past or future. --------------------------------------- EXAMPLE --------------------------------------- SAFECO INTERNATIONAL STOCK FUND --------------------------------------- CLASS A SHARES --------------------------------------- Year 1 $ 733 --------------------------------------- Year 3 $ 1,065 --------------------------------------- Year 5 $ 1,420 --------------------------------------- Year 10 $ 2,417 --------------------------------------- CLASS B SHARES WITH REDEMPTION --------------------------------------- Year 1 $ 743 --------------------------------------- Year 3 $ 1,048 --------------------------------------- Year 5 $ 1,480 --------------------------------------- Year 10 $ 2,380 --------------------------------------- CLASS C SHARES WITH REDEMPTION --------------------------------------- Year 1 $ 343 --------------------------------------- Year 3 $ 748 --------------------------------------- Year 5 $ 1,280 --------------------------------------- Year 10 $ 2,736 --------------------------------------- INSTITUTIONAL CLASS SHARES --------------------------------------- Year 1 $ 143 --------------------------------------- Year 3 $ 443 --------------------------------------- Year 5 $ 766 --------------------------------------- Year 10 $ 1,680 --------------------------------------- INVESTOR CLASS SHARES --------------------------------------- Year 1 $ 143 --------------------------------------- Year 3 $ 443 --------------------------------------- Year 5 $ 766 --------------------------------------- Year 10 $ 1,680 --------------------------------------- PIONEER INTERNATIONAL EQUITY FUND --------------------------------------- INVESTOR CLASS SHARES --------------------------------------- Year 1 $ 137 --------------------------------------- Year 3 $ 554 --------------------------------------- Year 5 $ 1,124 --------------------------------------- Year 10 $ 2,677 --------------------------------------- 9 REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco International Stock Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. THIRD, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer International Equity Fund to 1.40% of average daily net assets. The estimated expenses of the Investor Class of Pioneer International Equity Fund are lower than both the gross and net expenses of the expense limits of each class of shares of your Fund. FOURTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. FIFTH, the Investor Class shares of Pioneer International Equity Fund received in the Reorganization will provide Safeco International Stock Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer International Equity Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer International Equity Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer International Equity Fund and its shareholders. 10 CAPITALIZATION The following table sets forth the capitalization of Safeco International Stock Fund as of December 31, 2003 and Pioneer International Equity Fund as of March 31, 2004.
- ---------------------------------------------------------------------------------- SAFECO INTERNATIONAL STOCK PIONEER INTERNATIONAL FUND EQUITY FUND DECEMBER 31, 2003 MARCH 31, 2004 - ---------------------------------------------------------------------------------- NET ASSETS (IN MILLIONS) $ 35,133,00 $ 30,571,882 - ---------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 10.54 $ 17.55 Class B shares $ 10.32 $ 16.41 Class C shares $ 10.33 $ 16.21 Institutional Class shares $ 10.73 N/A Investor Class shares $ 10.64 N/A - ---------------------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 137,000 1,045,193 Class B shares 71,000 522,503 Class C shares 10,000 225,379 Institutional Class shares 826,000 N/A Investor Class shares 2,255,000 N/A - ----------------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer International Equity Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer International Equity Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer International Equity Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer International Equity Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 SAFECO LARGE-CAP GROWTH FUND AND PIONEER GROWTH SHARES PROPOSAL 10 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO LC GROWTH FUND TO THE PIONEER GROWTH SHARES - ---------------------------------------------------------------------------------------------------------------------------------- SAFECO LC GROWTH FUND PIONEER GROWTH SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A diversified open-end management diversified open-end management investment investment company organized as a company organized as a Delaware statutory Delaware statutory trust. trust. - ---------------------------------------------------------------------------------------------------------------------------------- Net assets as of $ 6.6 million $ 732.2 million June 30, 2004 - ---------------------------------------------------------------------------------------------------------------------------------- Investment advisers Investment adviser (until August 2, 2004): Investment adviser and portfolio managers SAM Pioneer Sub-advisor (until August 2, 2004): Portfolio Manager: RCM Capital Management LLC ("Sub-advisor") is Christopher M. Galizio responsible for the day-to-day management of the Fund. Mr. Galizio is a vice president and joined Pioneer in 1994 Portfolio Managers: Seth A. Reicher (joined Sub-advisor in 1993) Peter A. Goetz (joined Sub-advisor in 1999) Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund - ---------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks long-term growth of capital. The Fund seeks capital appreciation primarily through equity securities of large-cap U.S. companies believed to have better-than-average earnings potential. --------------------------------------------------------------------------------------------------------- The investment objective of each Fund is fundamental and cannot be changed without shareholder approval. - ---------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal market conditions, the Fund Under normal market conditions, the Fund invests invests at least 80% of its net assets (plus primarily in equity securities of U.S. issuers. For any borrowings for investment purposes) in purposes of the Fund's investment policies, equity equity and equity-related securities of securities include common stocks, convertible debt companies whose total market capitalization at and other equity instruments, such as depositary the time of the investment is within the range receipts, warrants, rights, interests in real estate of market capitalizations of companies included investment trusts ("REITs") and preferred stocks. in the Russell 1000 Growth Index. - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO LC GROWTH FUND PIONEER GROWTH SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Investment strategies The Fund uses a "growth" style of management. The fund uses a "growth" style and seeks to invest in The Sub-advisor historically has aimed to issuers with above average potential for earnings and generate positive returns over a full market revenue growth. cycle by investing in companies that show long-term sustainable growth in revenue, Factors Pioneer looks for in selecting investments earnings and/or cash flow. include: The Sub-advisor considered factors such as: o companies with experienced management teams, strong market positions and the potential to o the strength of the company's balance support above average earnings growth; sheet; o a sustainable competitive advantage, such as o the quality of the management team; a brand name, customer base, proprietary products or services that differentiate technology or economies of scale; the company from its competitors; o favorable expected returns relative to o the company's commitment to research perceived risk. and development; and o ongoing new products and services. - ---------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest in securities convertible The Fund may invest a portion of its assets not into common stock, but less than 35% of its invested in equity securities in debt securities of total assets will be invested in such corporate and government issuers. securities. Up to 5% of the Funds net assets may be invested in below investment grade debt securities issued by both U.S. and non-U.S. corporate and government issuers. The Fund may invest up to 25% of its total assets in REITs. The Fund may invest up to 30% of its total assets in equity and debt securities of non-U.S. corporate issuers and debt securities of non-U.S. government issuers. The Fund will not invest more than 5% of its total assets in securities of emerging markets issuers. - ---------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - ---------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - --------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund may not invest more than 25% of its assets in any one industry. - ---------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO LC GROWTH FUND PIONEER GROWTH SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or Borrow money, except the Fund may: (a) borrow from (ii) by engaging in reverse repurchase banks or through reverse repurchase agreements in an agreements. The Fund will not commit to amount up to 33 1/3% of the Fund's total assets additional securities purchases if total (including the amount borrowed); (b) to the extent outstanding borrowings are equal to 5% or more permitted by applicable law, borrow up to an of total assets. additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) the Fund may purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - ---------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its 33% of the Fund's total assets. assets. - ---------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may write put or call options if, as a The Fund may use futures and options on securities, result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options does not contracts and other derivatives. The Fund does not exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may purchase put or call options on Fund may use derivatives for a variety of futures contracts if, as a result thereof, the non-principal purposes, including: aggregate premiums paid on all options or o As a hedge against adverse changes in stock options on futures contracts do not exceed 20% market prices, interest rates or currency of the Fund's net assets. exchange rates o As a substitute for purchasing or selling securities The Fund may enter into any futures contract or option on a futures contract, if as a result thereof, the aggregate margin deposits and o To increase the Fund's return as a non-hedging premiums required on all such instruments does strategy that may be considered not exceed 5% of the Fund's net assets. speculative The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ---------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ---------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Growth Shares the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be subject charge. to any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within 6 years of account, you may purchase Class A shares of Pioneer purchase. Growth Shares and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of up to 1% if future without paying any sales charge. you redeem Class C shares within one year of purchase. Except as described above, Class A shares of Pioneer Growth Shares are subject to a front-end sales charge Purchases of Investor Class shares of the Fund of up to 5.75%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco LC Growth Fund pays an advisory fee on a Pioneer Growth Shares pays Pioneer a management fee, - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO LC GROWTH FUND PIONEER GROWTH SHARES - ---------------------------------------------------------------------------------------------------------------------------------- fees monthly basis at an annual rate as follows: subject to a performance adjustment, equal to $0 - $250,000,000: 0.80 of 1% Pioneer's annual fee equal to: $250,000,001 - $750,000,000: 0.75 of 1% 0.70% of average daily net assets up to $500 million; $750,000,001 - $1,250,000,000: 0.70 of 1% 0.65% of the next $500 million; Over $1,250,000,000: 0.65 of 1% 0.625% on assets over $1 billion. SAM paid the Sub-advisor a fee in accordance This basic fee paid to Pioneer also depends on the with the following schedule: Fund's investment performance compared to the Russell $0 - $100,000,000: 0.35 of 1% 1000 Growth Index. The basic fee can increase or $100,000,000 - $250,000,000: 0.25 of 1% decrease by a maximum of 0.10%, depending on the Over $250,000,000: 0.20 of 1% performance of the Fund's Class A shares relative to the index. SAM serves as administrator and Fund accounting agent for the Fund. The Fund pays SAM an During its most recent fiscal year, Pioneer Growth administrative services fee of 0.05% of the Shares paid an advisory fee at an average rate of Fund's average daily net assets up to the first 0.59% of average daily net assets. $200,000,000 and 0.01% of its net assets thereafter, and an accounting fee of 0.04% of In addition, the fund reimburses Pioneer for certain the Fund's average daily net assets up to the fund accounting and legal expenses incurred on behalf first $200,000,000 and 0.01% of its net assets of the fund and pays a separate shareholder thereafter. servicing/transfer agency fee to PIMSS, an affiliate of Pioneer. During its most recent fiscal year, Safeco LC Growth Fund paid aggregate advisory and For the fiscal year ended April 30, 2004, the Fund's administration fees at an average rate of 0.89% annual operating expenses for Class A shares were of average daily net assets. 1.45% per share. Until July 31, 2004, SAM voluntarily agreed to Pioneer has agreed until the second anniversary of pay fund operating expenses that exceeded the the closing of the Reorganization to limit the rate of 1.15% per annum of the Fund's average ordinary operating expenses (excluding taxes, daily net assets. commissions, interest and extraordinary expenses) of the Investor Class to 1.15% of the average daily net For the fiscal year ended December 31, 2003, assets attributable to the Investor Class. the Fund's annual operating expenses for Class A shares were 2.79%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares were 3.55%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares were 3.46%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares were 2.55%. - ---------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - --------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Growth Shares' underwriter or through brokers, registered distributor. Existing shareholders of Safeco LC investment advisers, banks and other financial Growth Fund who own shares in their own name as of institutions that have entered into selling the closing date of the Reorganization and who agreements with the Fund's principal maintain their accounts may buy shares of any fund in underwriter, as described in the Fund's the Pioneer family of funds through such accounts in prospectus. the future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer Growth Shares by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------------------- SAFECO LC GROWTH FUND PIONEER GROWTH SHARES - --------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Growth Shares acquire through dividend reinvestment or other without incurring any fee on the exchange with the fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would be you have exchanged for Class A shares of for Class A shares, which would be subject to Rule 12b-1 another Fund. fees. An exchange generally is treated as a sale and a a new purchase of shares for federal income tax Certain account transactions may be done by purposes. telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Growth Shares for shares of other Pioneer Funds by telephone or online. - --------------------------------------------------------------------------------------------------------------------------------- Selling shares Each class of shares is sold at the net asset value per share next calculated after the Fund receives your request in good order. - --------------------------------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Growth Shares by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o The stock market goes down (this risk may be greater in the short-term) o Growth stocks fall out of favor with investors o The Fund's investments do not have the growth potential originally expected Investing in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. These risks may include: o Less information about non-U.S. issuers or markets may be available due to less rigorous disclosure or accounting standards or regulatory practices o Many non-U.S. markets are small, less liquid and more volatile. In a changing market, Pioneer might not be able to sell the Fund's portfolio securities at times, in amounts and at prices it considers reasonable o Adverse effect of currency exchange rates or controls on the value of the Fund's investments o The economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession o Economic, political and social developments may adversely affect the securities markets o Withholding and other non-U.S. taxes may decrease the Fund's return Investments in the Funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money by investing in either Fund. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. 5 SAFECO LC GROWTH FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 N/A 1995 N/A 1996 N/A 1997 N/A 1998 N/A 1999 N/A 2000 N/A 2001 N/A 2002 26.95 2003 20.16 * During the period shown in the bar chart, your Fund's highest quarterly return was 10.31% for the quarter ended June 30, 2003, and the lowest quarterly return was -16.7% for the quarter ended June 30, 2002. PIONEER GROWTH SHARES - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -2.60 1995 29.82 1996 26.95 1997 43.78 1998 33.54 1999 7.40 2000 -9.57 2001 19.23 2002 -34.89 2003 26.19 * During the period shown in the bar chart, Pioneer Growth Shares' highest quarterly return was 24.06% for the quarter ended June 30, 1997, and the lowest quarterly return was -20.20% for the quarter ended June 30, 2002. 6 SAFECO LC GROWTH FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR SINCE INCEPTION(1) ------ ------------------ SAFECO LC GROWTH FUND, CLASS A SHARES Return Before Taxes 13.05% -5.94% Return After Taxes on Distributions(2) 13.05% -5.98% Return After Taxes on Distributions and 8.48% -5.05% Sale of Fund Shares(2) SAFECO LC GROWTH FUND, CLASS B SHARES Return Before Taxes 4.06% -5.40% SAFECO LC GROWTH FUND, CLASS C SHARES Return Before Taxes 18.06% -4.06% SAFECO LC GROWTH FUND, INVESTOR CLASS SHARES Return Before Taxes 20.16% -3.11% Return After Taxes on Distributions(2) 20.16% -3.18% Return After Taxes on Distributions and 13.10% -2.68% Sale of Fund Shares(2) RUSSELL 1000 GROWTH INDEX(3) 29.76% 1.09% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on October 31, 2001. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Russell 1000 Growth Index, an unmanaged index of growth stocks in the Russell 1000 Index of the 1,000 largest-capitalization U.S. stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. PIONEER GROWTH SHARES - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- PIONEER GROWTH SHARES, CLASS A SHARES Return Before Taxes 18.96% -9.49% 6.47% Return After Taxes on Distributions(1) 18.96% -10.10% 4.23% Return After Taxes on Distributions and 12.32% -7.87% 4.47% Sale of Fund Shares(1) RUSSELL 1000 GROWTH INDEX(2) 29.75% -5.11% 9.21% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Russell 1000 Growth Index, an unmanaged index of growth stocks in the Russell 1000 Index of the 1,000 largest-capitalization U.S. stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. 7 Pioneer Growth Shares' Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Growth Shares, the expenses of Pioneer Growth Shares for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
------------------------------------------------------------------------------------------------------- PIONEER SHAREHOLDER GROWTH TRANSACTION FEES SHARES FUND SHARES (PAID DIRECTLY SAFECO LC SAFECO LC SAFECO LC SAFECO LC FUND FROM YOUR GROWTH FUND GROWTH FUND GROWTH FUND GROWTH FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ------------------------------------------------------------------------------------------------------- Maximum sales 5.75% None None None None(1) charge (load) when you buy shares as a percentage of offering price ------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00% 1.00% None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A ------------------------------------------------------------------------------------------------------- Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A fee ------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ------------------------------------------------------------------------------------------------------- Management fee 0.80% 0.80% 0.80% 0.80% 0.59% ------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ------------------------------------------------------------------------------------------------------- Other expenses 1.74% 1.75% 1.66% 1.75%(9) 0.53% ------------------------------------------------------------------------------------------------------- Total fund 2.79% 3.55% 3.46% 2.55%(9) 1.12% operating expenses ------------------------------------------------------------------------------------------------------- Expense reduction None(2) None(2) None(2) None(2) None(3) ------------------------------------------------------------------------------------------------------- Net fund operating 2.79% 3.55% 3.46% 2.55%(9) 1.12% expenses -------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Growth Shares through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Growth Shares or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. 8 (2) As described above, SAM had contractually agreed to reimburse Safeco LC Growth Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Growth Shares to 1.15% of average daily net assets (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. (9) [SAM voluntarily reimburses the Fund to the extent that its total expenses exceed the rate of 1.15% per annum of the Fund's average daily net assets. SAM does not have the right to recapture waived fees or reimbursed expenses under this arrangement.] The hypothetical example below helps you compare the cost of investing in each fund. It assumes that: (a) you invest $10,000 in each fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for one year for Safeco LC Growth Fund and two years for Pioneer Growth Shares and (e) and the Investor Class shares of Pioneer Growth Shares convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either fund's actual expenses or returns, either past or future. 9 ----------------------------------------------------- EXAMPLE ----------------------------------------------------- SAFECO LC GROWTH FUND ----------------------------------------------------- CLASS A SHARES ----------------------------------------------------- Year 1 $ 841 ----------------------------------------------------- Year 3 $ 1,390 ----------------------------------------------------- Year 5 $ 1,964 ----------------------------------------------------- Year 10 $ 3,514 ----------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ----------------------------------------------------- Year 1 $ 858 $ 358 ----------------------------------------------------- Year 3 $ 1,388 $ 1,088 ----------------------------------------------------- Year 5 $ 2,040 $ 1,840 ----------------------------------------------------- Year 10 $ 3,496 $ 3,496 ----------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ----------------------------------------------------- Year 1 $ 449 $ 349 ----------------------------------------------------- Year 3 $ 1,062 $ 1,062 ----------------------------------------------------- Year 5 $ 1,798 $ 1,798 ----------------------------------------------------- Year 10 $ 3,738 $ 3,738 ----------------------------------------------------- INVESTOR CLASS SHARES ----------------------------------------------------- Year 1 $ 258 ----------------------------------------------------- Year 3 $ 793 ----------------------------------------------------- Year 5 $ 1,355 ----------------------------------------------------- Year 10 $ 2,885 ----------------------------------------------------- PIONEER GROWTH SHARES ----------------------------------------------------- INVESTOR CLASS SHARES ----------------------------------------------------- Year 1 $ 114 ----------------------------------------------------- Year 3 $ 385 ----------------------------------------------------- Year 5 $ 708 ----------------------------------------------------- Year 10 $ 1,622 ----------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco LC Growth Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, Pioneer Growth Shares has a strong short term performance record and a substantially longer performance history. For the one year period ended June 30, 2004, Class A shares of Pioneer Growth Shares had an average annual return of [xx]% compared to an average annual of the Class A shares and Investor share of [xx]% and [xx]%, respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer Growth Shares' lower operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Growth Shares to 1.15% of average daily net assets. The estimated expense ratio of the Investor 10 Class of Pioneer Growth Shares is lower than the gross expenses of each class of shares of your Fund. The expense limitation applicable to Investor Class Shares of Pioneer Growth Shares is the same as the voluntary expense limit applicable to your Fund, and Pioneer has contractually agreed to keep that limit in place for two years while the expense limit applicable to your Fund could be terminated at any time. While you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, the Class A expense ratio for the most recent fiscal year, was 1.45% of average daily net assets, which was below the expenses of the class of shares of your Fund. FIFTH, the substantially larger size of Pioneer Growth Shares offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer Growth Shares received in the Reorganization will provide Safeco LC Growth Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Growth Shares also considered that the Reorganization presents an excellent opportunity for the Pioneer Growth Shares to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Growth Shares and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each fund as of December 31, 2003 for Safeco LC Growth Fund and October 31, 2003 for Pioneer Growth Shares. - ------------------------------------------------------------------------- SAFECO LC GROWTH FUND PIONEER GROWTH SHARES DECEMBER 31, 2003 DECEMBER 31, 2003 - ------------------------------------------------------------------------- NET ASSETS (IN MILLIONS) $ 5.832 $ 789.319 - ------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 9.27 $ 11.42 Class B shares $ 9.12 10.54 Class C shares $ 9.12 10.65 Investor Class shares $ 9.30 N/A - ------------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 117,000 45,198,861 Class B shares 105,000 20,249,782 Class C shares 102,000 5,293,516 Investor Class shares 307,000 N/A - ------------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Growth Shares will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Growth Shares' shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer 11 Growth Shares, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Growth Shares. The Trustees recommend that the shareholders of your Fund vote FOR the proposal to approve the Agreement and Plan of Reorganization. 12 SAFECO LARGE-CAP VALUE FUND AND PIONEER VALUE FUND PROPOSAL 11 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary. COMPARISON OF SAFECO LC VALUE FUND TO THE PIONEER VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO LC VALUE FUND PIONEER VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------------ Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - ------------------------------------------------------------------------------------------------------------------------------------ Net assets as of $ 152.7 million $ 3,855 million June 30, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers (until August 2, 2004): Portfolio Managers: Rex L. Bentley Day-to-day management of the Fund's portfolio is the Vice President, SAM responsibility of J. Rodman Wright, who is assisted by Sean Gavin. Mr. Wright is a senior vice president Lynette D. Sagvold and joined Pioneer in 1994 and has been an investment Vice President, SAM professional since 1988. Mr. Gavin is a vice president and joined Pioneer in 2002. Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manage your Safeco Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Investment objective The Fund seeks long-term growth of capital plus The Fund seeks reasonable income and capital growth current income. primarily through equity securities. ---------------------------------------------------------------------------------------------------------- The Fund provides written notice to The investment objective of the Fund is fundamental shareholders at least 60 days prior to any and cannot be changed without shareholder approval. change to its investment objective as described above. - ------------------------------------------------------------------------------------------------------------------------------------ Primary investments Under normal circumstances, the Fund invests at Under normal market conditions, the Fund invests the least 80% of net assets (plus any borrowings major portion of its assets in equity securities, for investment purposes) in equity and primarily U.S. issuers. For purposes of the Fund's equity-related securities of companies whose investment policies, equity securities include common total market capitalization at the time of the stocks, convertible debt and other equity investment is at least $4 billion. instruments, such as depositary receipts, warrants, rights and preferred stocks. Up to 25% of the portfolio may be invested in the equity securities of non-U.S. companies. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO LC VALUE FUND PIONEER VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------------ Investment strategies In managing the portfolio and selecting Pioneer uses a "value" approach to select the Fund's securities, SAM historically analyzed various investments. Pioneer evaluates a security's valuation measures such as the ratio of a potential value, including the attractiveness of its company's price-to-cash flow compared to its market valuation, based on the company's assets and historical ratios, industry comparisons, the prospects for earnings and revenue growth. Factors ratio for the company's competitors, and Pioneer looks for in selecting investments include: companies with similar growth rates. o Above average potential for earnings and revenue growth SAM generally sought companies having good o Favorable expected returns relative to earnings, good value relative to share price, perceived risks or attractive growth potential. o Management with demonstrated ability and commitment to the company o Low market valuations relative to earnings forecast, book value, cash flow and sales o Turnaround potential for companies that have been through difficult periods o Good prospects for dividend growth - ------------------------------------------------------------------------------------------------------------------------------------ Other investments The Fund may invest up to 25% of its total assets in securities of non-U.S. issuers. The Fund will not invest more than 5% of its total assets in the securities of emerging market issuers. The Fund may invest the balance of its assets in debt securities of corporate and government issuers. The Fund may invest up to 5% of its net assets in below investment grade debt securities issued by both U.S. and non-U.S. corporate and government issuers, including convertible debt securities. - ------------------------------------------------------------------------------------------------------------------------------------ Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - ------------------------------------------------------------------------------------------------------------------------------------ Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ------------------------------------------------------------------------------------------------------------------------------------ Industry Concentration Each Fund may not invest more than 25% of its assets in any one industry. - ------------------------------------------------------------------------------------------------------------------------------------ Restricted and illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO LC VALUE FUND PIONEER VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------------ Borrowing The Fund may borrow money (i) from banks or Borrow money, except the Fund may: (a) borrow from (ii) by engaging in reverse repurchase banks or through reverse repurchase agreements in an agreements. The Fund will not commit to amount up to 33 1/3% of the Fund's total assets additional securities purchases if total (including the amount borrowed); (b) to the extent outstanding borrowings are equal to 5% or more permitted by applicable law, borrow up to an of total assets. additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - ------------------------------------------------------------------------------------------------------------------------------------ Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its total 33% of the Fund's total assets. assets. - ------------------------------------------------------------------------------------------------------------------------------------ Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities, a result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options does not contracts and other derivatives. The Fund does not exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may purchase a put or call option or Fund may use derivatives for a variety of option on a futures contract if, as a result non-principal purposes, including: thereof, the aggregate premiums paid on all o As a hedge against adverse changes in stock options or options on a futures contracts held market prices, interest rates or currency by the Fund do not exceed 20% of the Fund's net exchange rates assets. o As a substitute for purchasing or selling securities The Fund may enter into a futures contract or o To increase the Fund's return as a non-hedging option on futures contract if, as a result strategy that may be considered speculative thereof, the aggregate margin deposits and premiums required on all such instruments do not exceed 5% of the Fund's net assets. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ------------------------------------------------------------------------------------------------------------------------------------ Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ------------------------------------------------------------------------------------------------------------------------------------ BUYING, SELLING AND EXCHANGE SHARES - ------------------------------------------------------------------------------------------------------------------------------------ Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Value Fund you the Fund are subject to a 5.75% front-end sales receive in the Reorganization will not be subject to charge. any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. Value Fund and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of 1% if you future without paying any sales charge. redeem Class C share within one year of purchase. Except as described above, Class A shares of Pioneer Tax Free Income Fund are subject to a front-end sales Purchases of Investor Class shares of the Fund charge of up to 5.75%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO LC VALUE FUND PIONEER VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------------ Management and other Safeco LC Value Fund pays an advisory fee on a Pioneer Value Fund pays Pioneer a management fee fees monthly basis at an annual rate as follows: based on the investment performance of the Fund $0 - $250,000,000: 0.70 of 1% compared to the Russell 1000 Value Index. Pioneer's $250,000,001 - $750,000,000: 0.65 of 1% annual basic fee is 0.60% of the Fund's average daily $750,000,001 - $1,250,000,000: 0.60 of 1% net assets. The basic fee can increase to a maximum Over $1,250,000,000: 0.55 of 1% of 0.70% or decrease to a minimum of 0.50%, depending on the performance of the Fund's Class A shares SAM serves as administrator and Fund accounting relative to the index. agent for the Fund. The Fund pays SAM an administrative services fee of 0.05% of the During its most recent fiscal year, Pioneer Value Fund's average daily net assets up to the first Fund paid an advisory fee at an average rate of 0.70% $200,000,000 and 0.01% of its net assets of average daily net assets. thereafter, and an accounting fee of 0.04% of the Fund's average daily net assets up to the In addition, the fund reimburses Pioneer for certain first $200,000,000 and 0.01% of its net assets fund accounting and legal expenses incurred on behalf thereafter. of the fund and pays a separate shareholder servicing/transfer agency fee to PIMSS, an affiliate During its most recent fiscal year, Safeco LC of Pioneer. Value High-Yield Fund paid aggregate advisory and administration fees at an average rate of For the fiscal year ended January 28, 2004, the [0.xx]% of average daily net assets. Fund's annual operating expenses for Class A shares were 1.19% per share. SAM had contractually agreed until April 30, 2009, to pay certain fund operating expenses Pioneer has agreed until the second anniversary of (but not all of the operating expenses of the the closing of the Reorganization to limit the Fund) that exceeded the rate of 0.40% per annum ordinary operating expenses (excluding taxes, of the Fund's average daily net assets. This commissions, interest and extraordinary expenses) of arrangement included all Fund operating the Investor Class to 1.10% of the average daily net expenses except management fees, Rule 12b-1 assets attributable to the Investor Class. fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.35%, and without giving effect to the expense limitation, were 1.71% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 2.10%, and without giving effect to the expense limitation, were 2.55% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 2.10%, and without giving effect to the expense limitation, were 2.33% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 1.10%, and without giving effect to the expense limitation, were 1.14% per share. - ------------------------------------------------------------------------------------------------------------------------------------ Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ SAFECO LC VALUE FUND PIONEER VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------------ Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Value Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco LC investment advisers, banks and other financial Value Fund who own shares in their own name as of the institutions that have entered into selling closing date of the Reorganization and who maintain agreements with the Fund's principal their accounts may buy shares of any fund in the underwriter, as described in the Fund's Pioneer family of funds through such accounts in the prospectus. future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer Value Fund by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------ Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Value Fund without acquire through dividend reinvestment or other incurring any fee on the exchange with the more than fund distributions or for Class A shares that 62 other Pioneer Funds. Your exchange would be for Class you have exchanged for Class A shares of A shares, which is subject to Rule 12b-1 fees. An another Fund. exchange generally is treated as a sale and a new purchase of shares for federal income tax purposes. Certain account transactions may be done by telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Value Fund for shares of other Pioneer Funds by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------ Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. ---------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Value Fund by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o Stock market goes down (this risk may be greater in the short-term) o Value stocks fall out of favor with investors o The Fund's assets remain undervalued or do not have the potential value originally expected o Stocks selected for income do not achieve the same return as securities selected for capital appreciation Investments in the Funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money by investing in either Fund. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. 5 SAFECO LC VALUE FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -1.09 1995 30.36 1996 23.99 1997 26.43 1998 6.31 1999 1.17 2000 -6.36 2001 -7.06 2002 -17.4 2003 24.20 * During the period shown in the bar chart, your Fund's highest quarterly return was 14.77% for the quarter ended June 30, 2003, and the lowest quarterly return was -17.60% for the quarter ended September 30, 2002. PIONEER VALUE FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -1.73 1995 27.15 1996 21.99 1997 23.70 1998 -7.99 1999 1.61 2000 15.95 2001 -3.09 2002 -18.79 2003 28.54 * During the period shown in the bar chart, Pioneer Value Fund's highest quarterly return was 15.93% for the quarter ended June 30, 2003, and the lowest quarterly return was -22.31% for the quarter ended September 30, 1998. 6 SAFECO LC VALUE FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO LC VALUE FUND, CLASS A SHARES Return Before Taxes 16.75% -3.39% 5.98% Return After Taxes on Distributions(1) 16.57% -4.07% 4.11% Return After Taxes on Distributions and 11.10% -3.20% 4.18% Sale of Fund Shares(1) SAFECO LC VALUE FUND, CLASS B SHARES Return Before Taxes 17.98% -3.36% 6.19% SAFECO LC VALUE FUND, CLASS C SHARES Return Before Taxes 22.00% -2.92% 6.11% SAFECO LC VALUE FUND, INVESTOR CLASS SHARES Return Before Taxes 24.20% -2.01% 6.86% Return After Taxes on Distributions(1) 23.94% -2.79% 4.86% Return After Taxes on Distributions and 16.01% -2.11% 4.87% Sale of Fund Shares(1) RUSSELL VALUE 1000 INDEX(2) 30.03% 3.57% 11.87% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns de pend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to thos e who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that a re tax-exempt. (2) The Russell 1000 Value Index, an unmanaged index of value stocks in the Russell 1000 Index of 1,000 largest-capitalization U.S. stocks, is for reference only, does not mirror the Fund's investment s, and reflects no deduction for fees, expenses or taxes. PIONEER VALUE FUND - CLASS A S HARES AVERAGE ANNUAL TOTAL RETURNS AS OF DEC EMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- PIONEER VALUE FUND, CLASS A SHARES Return Before Taxes 21.13% 2.36% 6.90% Return After Taxes on Distributions(1) 20.74% 0.96% 4.80% Return After Taxes on Distributions and 13.76% 1.44% 4.94% Sale of Fund Shares(1) LEHMAN BROTHERS AGGREGATE BOND INDEX(2) 30.03% 3.56% 11.88% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Russell 1000 Value Index, an unmanaged index of value stocks in the Russell 1000 Index of 1,000 largest-capitalization U.S. stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. Pioneer Value Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A, B and C shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Value Fund, the expenses of Pioneer Value Fund for the period ended June 30, 2003. Future expenses for all share classes may be greater or less. 7
------------------------------------------------------------------------------------------------------- SHAREHOLDER PIONEER TRANSACTION FEES SAFECO LC VALUE SAFECO LC VALUE SAFECO LC VALUE SAFECO LC VALUE VALUE (PAID DIRECTLY FROM FUND FUND FUND FUND INVESTOR YOUR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ------------------------------------------------------------------------------------------------------- Maximum sales 5.75%(6) None None None None(1) charge (load) when you buy shares as a percentage of offering price ------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A ------------------------------------------------------------------------------------------------------- Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A fee ------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ------------------------------------------------------------------------------------------------------- Management fee 0.70% 0.70% 0.70% 0.70% 0.63% ------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ------------------------------------------------------------------------------------------------------- Other expenses 0.76% 0.85% 0.63% 0.44% 0.38% ------------------------------------------------------------------------------------------------------- Total fund 1.71% 2.55% 2.33% 1.14% 1.01% operating expenses ------------------------------------------------------------------------------------------------------- Expense reduction 0.36%(2) 0.45%(2) 0.23%(2) 0.04%(2) None(3) ------------------------------------------------------------------------------------------------------- Net fund operating 1.35% 2.10% 2.10% 1.10% 1.01% expenses -------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Value Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Value Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco LC Value Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Value Fund to 1.10% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. 8 (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco LC Value Fund and two years for Pioneer Value Fund and (e) and the Investor Class shares of Pioneer Value Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ------------------------------------------------------------- EXAMPLE ------------------------------------------------------------- SAFECO LC VALUE FUND ------------------------------------------------------------- CLASS A SHARES ------------------------------------------------------------- Year 1 $ 705 ------------------------------------------------------------- Year 3 $ 978 ------------------------------------------------------------- Year 5 $ 1,272 ------------------------------------------------------------- Year 10 $ 2,105 ------------------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------- Year 1 $ 713 $ 213 ------------------------------------------------------------- Year 3 $ 958 $ 658 ------------------------------------------------------------- Year 5 $ 1,329 $ 1,129 ------------------------------------------------------------- Year 10 $ 2,064 $ 2,064 ------------------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------- Year 1 $ 313 $ 213 ------------------------------------------------------------- Year 3 $ 658 $ 658 ------------------------------------------------------------- Year 5 $ 1,129 $ 1,129 ------------------------------------------------------------- Year 10 $ 2,431 $ 2,431 ------------------------------------------------------------- INVESTOR CLASS SHARES ------------------------------------------------------------- Year 1 $ 112 ------------------------------------------------------------- Year 3 $ 350 ------------------------------------------------------------- Year 5 $ 606 ------------------------------------------------------------- Year 10 $ 1,340 ------------------------------------------------------------- PIONEER VALUE FUND PRO FORMA ------------------------------------------------------------- INVESTOR CLASS SHARES ------------------------------------------------------------- Year 1 $ 103 ------------------------------------------------------------- Year 3 $ 329 ------------------------------------------------------------- Year 5 $ 579 ------------------------------------------------------------- Year 10 $ 1,279 ------------------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco LC Value Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, Pioneer Value Fund's short and long-term performance record is superior to the performance record of your Fund. For the one, five and ten year periods ended June 30, 2004, Class A shares of Pioneer Value Fund had an average annual return of 9 [xx]% ___%, and ___% compared to an average annual of the Class A shares and Investor Class shares of 16.75% and 24.20% (one year) -3.39% and -2.01% (five year) and 5.98% and 6.86% (ten year), respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer Value Fund's lower operating expenses and Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Value Fund to 1.10% of average daily net assets. The estimated expense ratio of the Investor Class shares of Pioneer Value Fund is no lower than both the gross expenses and expenses net of expense reimbursement of each class of shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, the Class A expense ratio for the most recent fiscal year was 1.19% of average daily net assets, which was below the total annual expenses of the Class A shares of your Fund. FIFTH, the substantially larger size of Pioneer Value Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer Value Fund received in the Reorganization will provide Safeco LC Value Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Value Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Value Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Value Fund and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003 for Safeco LC Value Fund and June 30, 2003 for Pioneer Value Fund. - ---------------------------------------------------------------------- SAFECO LC VALUE FUND PIONEER VALUE FUND DECEMBER 31, 2003 MARCH 31, 2004 - ---------------------------------------------------------------------- NET ASSETS (in millions) $ 153.877 $ 3,881.719144 - ---------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 18.84 $ 18.72 Class B shares $ 18.85 $ 17.77 Class C shares $ 18.92 $ 17.81 Investor Class shares $ 18.73 N/A - ---------------------------------------------------------------------- 10 SAFECO LC VALUE FUND PIONEER VALUE FUND DECEMBER 31, 2003 MARCH 31, 2004 - ---------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 76,000 205,299,646 Class B shares 60,000 1,662,814 Class C shares 6,000 502,240 Investor Class shares 8,072,000 N/A - ---------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Value Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Value Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Value Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Value Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 SAFECO MONEY MARKET FUND AND PIONEER CASH RESERVES FUND PROPOSAL 12 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary. COMPARISON OF SAFECO MONEY MARKET FUND TO THE PIONEER CASH RESERVES FUND
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Money Market Trust, a A series of Pioneer Money Market Trust, a diversified diversified open-end management investment open-end management investment company organized as a company organized as a Delaware statutory Delaware statutory trust. trust. - ----------------------------------------------------------------------------------------------------------------------------------- Net assets as of $286.4 million $509.6 million June 30, 2004 - ----------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers: Portfolio Manager: Lesley Fox (since 2000 and until August 2, Day-to-day management of the Fund's portfolio is the 2004) Assistant Vice President, SAM responsibility of a team of fixed income portfolio Joined SAM in 2000 managers led by Kenneth J. Taubes. Mr. Taubes, a senior vice president, joined Pioneer Cathleen Beauchamp (since 2003 until July 31, in 1998 and has been an investment professional since 2004) 1982. CFA Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks as high a level of current The Fund seeks high current income, preservation of income as is consistent with the preservation capital and liquidity through investments in of capital and liquidity through investment in high-quality short-term securities. high-quality money market instruments maturing in 13 months or less. The investment objective of the Fund may not be The Fund provides written notice to changed without the affirmative vote of the holders shareholders at least 60 days prior to any of a "majority of the outstanding voting securities" change to its investment objective as described (as defined in the Investment Company Act) of the above. Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Primary investments To achieve its investment objective, the Fund The Fund seeks to maintain a constant net asset value will purchase only high-quality securities with of $1.00 per share by investing in high-quality, U.S. remaining maturities of 397 days or less. The dollar denominated money market securities, including Fund will maintain a dollar-weighted average those issued by: portfolio maturity of no more than 90 days. o U.S. and foreign banks o U.S. and foreign corporate issuers o The U.S. government and its agencies and instrumentalities o Foreign governments o Multinational organizations such as the World Bank The Fund invests exclusively in securities with a maximum remaining maturity of 397 days and maintains a dollar-weighted average portfolio maturity of 90 days or less. The Funds investments may have fixed, floating or variable interest rates.
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Investment strategies When evaluating a security to buy, SAM In selecting the Fund's portfolio, Pioneer complies historically considered, among other things: with the rating, maturity and diversification o Yield requirements applicable to money market funds. o Maturity Within those factors, Pioneer's assessment of broad o Issuer credit quality economic factors that are expected to affect economic o Relative value compared with other activity and interest rates influence its securities alternatives selection. The Fund may sell a security if: o The adviser becomes concerned about the issuer's creditworthiness o A more attractive alternative is available o Cash is needed to meet shareholder redemptions After evaluating a bond, SAM compares the bond to other available bonds, which may have different features, and will buy the bond if it appears to offer the best relative value. - ----------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund will limit its investment in municipal The Fund may invest more than 25% of its total assets obligations the interest on which is payable in U.S. government securities and obligations of U.S. from the revenues of similar types of projects banks. The Fund may invest in any money market to less than 25% of the Fund's total assets. As instrument that is a permissible investment for a a matter of operating policy, "similar types of money market fun under the rules of the Securities projects" may include sports, convention or and Exchange Commission, including commercial paper, trade show facilities; airports or mass certificates of deposit, time deposits, bankers' transportation; sewage or solid waste disposal acceptances, mortgage-backed and asset-backed facilities; or air and water pollution control securities, repurchase agreements, municipal projects. obligations and other short-term debt securities. The Fund will limit its investment in The Fund invests in U.S. government obligations and securities whose issuers are located in the money market securities rated in one of the two same state to less than 25% of the Fund's total highest rating categories for short-term debt by a assets. nationally recognized statistical rating organization or, if unrated, determined to be of equivalent credit The Fund may invest up to 25% of its total quality by Pioneer. assets in the "first tier securities" of a single issuer for up to three business days after purchase. First tier securities are securities (1) rated in the highest short-term category by two nationally recognized statistical rating organizations (NRSROs); (2) rated in the highest short-term rating category by a single NRSRO if only that NRSRO has assigned the securities a short-term rating; or (3) unrated, but determined by SAM to be of comparable quality. - ----------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements as a temporary defensive measure when market conditions so warrant. - ----------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Industry concentration The Fund will not make investments that will The Fund will not concentrate its assets in the result in the concentration (as defined in the securities of issuers in any one industry except with Investment Company Act of 1940, any rule or respect to investments in obligations of (a) the U.S. order thereunder, or SEC staff interpretation government, its agencies, authorities or thereof) of its investments in the securities instrumentalities and (b) domestic banks, purchase of issuers primarily engaged in the same any security if, as a result (i) more than 5% of the industry, provided that this restriction does assets of the Fund would be in the securities of any not limit the Fund from investing in one issuer, or (ii) more than 25% of its assets would obligations issued or guaranteed by the U.S. be in a particular industry. government, its agencies or instrumentalities, or certain bank instruments issued by domestic banks. - ----------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund does not have a policy again investing in securities action the value of the following securities, illiquid securities. in the aggregate, would exceed 10% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ----------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money, except from banks for (ii) by engaging in reverse repurchase extraordinary purposes or to meet redemptions in agreements. The Fund will not commit to amounts not exceeding 33 1/3% of its total assets additional securities purchases if total (including the amount borrowed). The Fund does not outstanding borrowings are equal to 5% or more intend to borrow money during the coming year. of total assets. - ----------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may not make loans to any person, except by institutional investors with a value of up to (a) the purchase of a debt obligation in which the 33% of the Fund's total assets. Fund is permitted to invest and (b) engaging in repurchase agreements. - ----------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may not purchase securities on margin. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ----------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ----------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGING SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases of Class A shares of the Fund are not The Investor Class shares of Pioneer Cash Reserves subject to a sales load. Fund you receive in the Reorganization will not be subject to any sales charge. Moreover, if you own A contingent deferred sales charge may apply if shares in your own name as of the closing of the you redeem Class B shares that were purchased Reorganization (i.e., not in the name of a broker) by exchange from another fund. and maintain your account, you may purchase Class A shares of Pioneer Cash Reserves Fund and Class A A contingent deferred sales charge of 1% if you shares of any fund in the Pioneer family of funds redeem Class C shares within one year of through such account in the future without paying any purchase, and the shares were purchased by sales charge. exchange from another fund. Except as described above, Class A shares of Pioneer Purchases of Investor Class shares of the Fund Cash Reserves Fund are subject to a front-end sales charge of up to 4.50%. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND - ----------------------------------------------------------------------------------------------------------------------------------- are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ----------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco Money Market Fund pays an advisory fee Pioneer Cash Reserves Fund pays Pioneer a management fees on a monthly basis at an annual rate as follows: fee equal to 0.40% of the Fund's average daily net $0 - $250,000,000: 0.50 of 1% assets. $250,000,001 - $750,000,000: 0.45 of 1% $750,000,001 - $1,250,000,000: 0.40 of 1% During its most recent fiscal year, Pioneer Cash Over $1,250,000,000: 0.35 of 1% Reserves Fund paid an advisory fee at an average rate of 0.40% of average daily net assets. SAM serves as administrator and Fund accounting agent for the Fund. The Fund pays SAM an In addition, the Fund reimburses Pioneer for certain administrative services fee of 0.05% of the Fund accounting and legal expenses incurred on behalf Fund's average daily net assets up to the first of the Fund and pays a separate shareholder $200,000,000 and 0.01% of its net assets servicing/transfer agency fee to PIMSS, an affiliate thereafter, and an accounting fee of 0.04% of of Pioneer. the Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets For the fiscal year ended December 31, 2003, the thereafter. Fund's annual operating expenses for Class A shares were 1.06% per share. During its most recent fiscal year, Safeco Money Market Fund paid aggregate advisory and Pioneer has agreed until the second anniversary of administration fees at an average rate of 0.59% the closing of the Reorganization to limit the of average daily net assets. ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of SAM had contractually agreed until April 30, the Investor Class to 0.71% of the average daily net 2009, to pay certain Fund operating expenses assets attributable to the Investor Class. (but not all of the operating expenses of the Fund) that exceeded the rate of 0.30% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 0.78%, and without giving effect to the expense limitation, were 0.98% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 0.78%, and without giving effect to the expense limitation, were 1.17% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 0.78%, and without giving effect to the expense limitation, were 1.01% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares were 0.67%. - ----------------------------------------------------------------------------------------------------------------------------------- Distribution and Class A shares of your Fund are not currently Class A shares of Pioneer Cash Reserves Fund are service (12b-1) fee subject to a Rule 12b-1 fee. subject to a 12b-1 fee equal to 0.15% annually of average daily net assets. Pioneer Investor Class shares will convert into Class A shares after two years. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO MONEY MARKET FUND PIONEER CASH RESERVES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Investor class shares of each Fund are not subject to a Rule 12b-1 fee. - ----------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Cash Reserves underwriter or through brokers, registered Fund's distributor. Existing shareholders of Safeco investment advisers, banks and other financial Money Market Fund who own shares in their own name as institutions that have entered into selling of the closing date of the Reorganization and who agreements with the Fund's principal maintain their accounts may buy shares of any fund in underwriter, as described in the Fund's the Pioneer family of funds through such accounts in prospectus. the future without paying sales charges. Certain account transactions may be done by If the account is established in the shareholder's telephone own name, shareholders may also purchase additional shares of Pioneer Cash Reserves Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Cash Reserves Fund acquire through dividend reinvestment or other without incurring any fee on the exchange with the Fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would be you have exchanged for Class A shares of for Class A shares, which is subject to Rule 12b-1 fees. another fund. An exchange generally is treated as a sale and a new purchase of shares for federal income tax purposes. Certain account transactions may be done by telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Cash Reserves Fund for shares of other Pioneer Funds by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. --------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Cash Reserves Fund by telephone or online. - -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. Even though the Funds seek to maintain a $1 share price, you could lose money on your investment or the Fund could fail to generate high current income if: o Interest rates go up, causing the value of the Fund's investments to decline o The issuer of a security owned by the Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o The investment adviser's judgment about the credit quality, attractiveness or relative value of a particular security proves to be incorrect Investing in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. These risks may include: o Inadequate financial information o Smaller, less liquid and more volatile markets o Political and economic upheavals 5 PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO MONEY MARKET FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 3.53 1995 5.28 1996 4.75 1997 4.93 1998 5.08 1999 4.65 2000 5.9 2001 3.75 2002 1.32 2003 0.65 * During the period shown in the bar chart, your Fund's highest quarterly return was 1.52% for the quarter ended December 31, 2000, and the lowest quarterly return was 0.13% for the quarter ended September 30, 2003. PIONEER CASH RESERVES FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 3.57 1995 5.17 1996 4.65 1997 4.78 1998 4.84 1999 4.23 2000 5.53 2001 3.29 2002 1.15 2003 0.26 * During the period shown in the bar chart, Pioneer Cash Reserves Fund's highest quarterly return was 1.45% for the quarter ended December 31, 2000, and the lowest quarterly return was 0.01% for the quarter ended December 21, 2003. 6 SAFECO MONEY MARKET FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003 1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO MONEY MARKET FUND, CLASS A SHARES Return Before Taxes 0.55% 3.20% 3.95% SAFECO MONEY MARKET FUND, CLASS B SHARES Return Before Taxes 0.55% 3.21% 3.45% SAFECO MONEY MARKET FUND, CLASS C SHARES Return Before Taxes 0.55 0.32% 3.93% SAFECO MONEY MARKET FUND, INVESTOR CLASS SHARES Return Before Taxes 0.65% 3.24% 3.97% PIONEER CASH RESERVES FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- PIONEER CASH RESERVES FUND, CLASS A SHARES Return Before Taxes 0.26% 2.88% 3.74% 90-DAY U.S. TREASURY BILL 1.03% 3.34% 4.18% (reflects no deduction for fees, expenses or taxes)
Pioneer Cash Reserves Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A, B and C shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Cash Reserves Fund, the expenses of Pioneer Cash Reserves Fund for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
- ------------------------------------------------------------------------------------------------- SHAREHOLDER PIONEER CASH TRANSACTION FEES RESERVES (PAID DIRECTLY SAFECO MONEY SAFECO MONEY SAFECO MONEY SAFECO MONEY FUND FROM YOUR MARKET FUND MARKET FUND MARKET FUND MARKET FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS - ------------------------------------------------------------------------------------------------- Maximum sales None None None None None(1) charge (load) when you buy shares as a percentage of offering price - ------------------------------------------------------------------------------------------------- Maximum deferred None None(6) None(7) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less - ------------------------------------------------------------------------------------------------- Redemption fees for None None None None N/A shares held less than 30 days - ------------------------------------------------------------------------------------------------- Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A - ------------------------------------------------------------------------------------------------- Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A fee - -------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------- SHAREHOLDER PIONEER CASH TRANSACTION FEES RESERVES (PAID DIRECTLY SAFECO MONEY SAFECO MONEY SAFECO MONEY SAFECO MONEY FUND FROM YOUR MARKET FUND MARKET FUND MARKET FUND MARKET FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS - ------------------------------------------------------------------------------------------------- balance fee - ------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) - ------------------------------------------------------------------------------------------------- Management fee 0.48% 0.48% 0.48% 0.48% 0.40% - ------------------------------------------------------------------------------------------------- Distribution and None None None None None service (12b-1) fee - ------------------------------------------------------------------------------------------------- Other expenses 0.50% 0.69% 0.53% 0.19% 0.41% - ------------------------------------------------------------------------------------------------- Total fund 0.98% 1.17% 1.01% 0.67% 0.81% operating expenses - ------------------------------------------------------------------------------------------------- Expense reduction 0.20%(2) 0.39%(2) 0.23%(2) N/A 0.10%(3) - ------------------------------------------------------------------------------------------------- Net fund operating 0.78% 0.78% 0.78% 0.67% 0.71% expenses - -------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Cash Reserves Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Cash Reserves Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco Money Market Fund to the extent the Fund's total ordinary operating expenses exceeded 0.30% of the Fund's average daily net asset value in a fiscal year. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Cash Reserves Fund to 0.71% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. (6) A contingent deferred sales charge may apply if you redeem Class B shares of your Fund that were purchased by exchange from another fund. (7) A 1.00% contingent deferred sales charge may apply if, within the first twelve months of the initial purchase, you redeem Class C shares that were purchased by exchange from another fund. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco Money Market Fund and two years for Pioneer Cash Reserves Fund and (f) and the Investor Class shares of Pioneer Cash Reserves Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. --------------------------------------- EXAMPLE --------------------------------------- SAFECO MONEY MARKET FUND --------------------------------------- CLASS A SHARES --------------------------------------- Year 1 $ 80 --------------------------------------- Year 3 $ 249 --------------------------------------- Year 5 $ 433 --------------------------------------- Year 10 $ 966 --------------------------------------- 8 --------------------------------------- EXAMPLE --------------------------------------- SAFECO MONEY MARKET FUND --------------------------------------- CLASS B SHARES --------------------------------------- Year 1 $ 80 --------------------------------------- Year 3 $ 249 --------------------------------------- Year 5 $ 433 --------------------------------------- Year 10 $ 966 --------------------------------------- CLASS C SHARES --------------------------------------- Year 1 $ 80 --------------------------------------- Year 3 $ 249 --------------------------------------- Year 5 $ 433 --------------------------------------- Year 10 $ 966 --------------------------------------- INVESTOR CLASS SHARES --------------------------------------- Year 1 $ 68 --------------------------------------- Year 3 $ 214 --------------------------------------- Year 5 $ 373 --------------------------------------- Year 10 $ 835 --------------------------------------- PIONEER CASH RESERVES FUND --------------------------------------- INVESTOR CLASS SHARES --------------------------------------- Year 1 $ 73 --------------------------------------- Year 3 $ 256 --------------------------------------- Year 5 $ 484 --------------------------------------- Year 10 $ 1,141 --------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco Money Market Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the investment performance of Pioneer Cash Reserves Fund is comparable to the historical investment performance of your Fund. For the one, five and ten year periods ended [June 30], 2004, Class A shares of Pioneer Cash Reserves Fund had an average annual return of ___%, ___%, and ___%, compared to an average annual of the Class A shares and Investor Class shares of ___% and ___%, (one year) ___% and ___% (five years) and ___% and ___% (ten years) respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Cash Reserves Fund to 0.71% of average daily net assets. This expense ratio is no higher than both the gross expenses and expenses net of expense reimbursement of the Class A and Investor Class shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. 9 FIFTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SIXTH, the Investor Class shares of Pioneer Cash Reserves Fund received in the Reorganization will provide Safeco Money Market Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Cash Reserves Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Cash Reserves Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Cash Reserves Fund and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003. SAFECO MONEY MARKET PIONEER CASH RESERVES FUND FUND DECEMBER 31, 2003 DECEMBER 31, 2003 - ------------------------------------------------------------------------ NET ASSETS (in millions) $ 357.76 $ 318.54 - ------------------------------------------------------------------------ NET ASSET VALUE PER SHARE Class A shares $ 1.00 $ 1.00 Class B shares $ 1.00 $ 1.00 Class C shares $ 1.00 $ 1.00 Investor Class shares $ 1.00 N/A - ------------------------------------------------------------------------ SHARES OUTSTANDING Class A shares 6,641,000 Class B shares 1,173,000 Class C shares 138,000 Investor Class shares 349,808,000 N/A - ------------------------------------------------------------------------ It is impossible to predict how many shares of Pioneer Cash Reserves Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Cash Reserves Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Cash Reserves Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Cash Reserves Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 10 SAFECO MULTI-CAP CORE FUND AND PIONEER MID CAP VALUE FUND PROPOSAL 13 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary. COMPARISON OF SAFECO MULTI CAP FUND TO THE PIONEER MID CAP FUND
- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MULTI CAP FUND PIONEER MID CAP FUND - ---------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - ---------------------------------------------------------------------------------------------------------------------------------- Net assets as of $90 million $1,820 million June 30, 2004 - ---------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers: Portfolio Managers: Bill Whitlow (since 1997 and until August 2, J. Rodman Wright 2004) Senior Vice President, Pioneer CFA, Vice President, SAM Joined Pioneer in 1994 Joined SAM in 2001 Investment professional since 1988 Brian Clancy (since 2003) Sean Gavin CFA, Equity Analyst, SAM Vice President, Pioneer Joined SAM in 1996 Joined Pioneer in 2002 Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manage your Safeco Fund. - ---------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks long-term growth of capital. The Fund seeks capital appreciation by investing in a diversified portfolio of securities consisting primarily of common stocks. -------------------------------------------------------------------------------------------------------- Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment objective as described above. - ---------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal circumstances, the Fund invests in Normally, the Fund invests at least 80% of its total a blend of growth and value-oriented stocks of assets in equity securities of mid-size companies, companies of any size. that is companies with market values within the range of market values of companies included in the Russell Midcap Value Index. The Fund focuses on issuers with capitalizations within the $1 billion to $10 billion range, and that range will change depending on market conditions. The equity securities in which the Fund principally invests are common stocks, preferred stocks, depositary receipts and convertible debt, but the Fund may invest in other types of equity securities to a lesser extent, such as warrants and rights. - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MULTI CAP FUND PIONEER MID CAP FUND - ---------------------------------------------------------------------------------------------------------------------------------- Investment strategies In managing the portfolio and selecting The Fund takes a fundamental, research-driven securities, SAM considers companies with: approach in seeking to provide superior returns over o Faster earnings growth than their competitors time. Pioneer seeks securities selling at o Low price-to-earnings ratios when compared substantial discounts to their underlying values and to competitors then holds these securities until the market values o A share price that represents good value reflect their intrinsic values. o Potential for long-term appreciation Pioneer evaluates a security's potential value, including the attractiveness of its market valuation, based on the company's assets and earnings growth. Pioneer evaluates the issuer based on its financial statements and operations, employing a bottom-up analytic style. Factors Pioneer looks for in selecting investments include: o Favorable expected returns relative to perceived risk; o Management with demonstrated ability and commitment to the company o Low market valuations relative to earnings forecast, book value, cash flow and sales o Turnaround potential for companies that have been through difficult periods o Estimated private market value in excess of current stock price o Whether the issuer's industry has strong fundamentals, such as increasing or sustainable demand and barriers to entry - ---------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest in securities convertible The Fund may invest up to 25% of its total assets in into common stock, but less than 35% of its equity and debt securities of non-U.S. issuers. The total assets will be invested in such Fund will not invest more than 5% of its total securities. assets in the securities of emerging markets issuers. The Fund may invest up to 20% of assets in foreign securities. The Fund may invest up to 20% of its total assets in debt securities of corporate and government issuers. Generally the Fund acquires debt securities that are The Fund may invest up to 10% of its total investment grade, but the Fund may invest up to 5% assets in debt securities rated below of its net assets in below investment grade investment grade. convertible debt securities issued by both U.S. and non-U.S. issuers. The Fund invests in debt securities when Pioneer believes they are consistent with the Fund's investment objective by offering the potential for capital appreciation, to diversify the Fund's portfolio or for greater liquidity. - ---------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than an agency or instrumentality of the U.S. one year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements as a temporary defensive measure when market conditions so warrant. - ---------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ---------------------------------------------------------------------------------------------------------------------------------- Industry Concentration Each Fund may not invest more than 25% of its assets in any one industry. - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MULTI CAP FUND PIONEER MID CAP FUND - ---------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such The Fund will not invest more than 15% of its net securities action the value of the following securities, assets in illiquid and other securities that are not in the aggregate, would exceed 15% of the readily marketable. Repurchase agreements maturing Fund's net assets, the Fund will not (i) in more than seven days will be included for purchase securities for which there is no purposes of the foregoing limit. Securities subject readily available market, (ii) purchase time to restrictions on resale under the 1933 Act, are deposits maturing in more than seven days, considered illiquid unless they are eligible for (iii) purchase over-the-counter (OTC) options resale pursuant to Rule 144A or another exemption or hold assets set aside to cover OTC options from the registration requirements of the 1933 Act written by the Fund, (iv) enter into repurchase and are determined to be liquid by Pioneer. agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ---------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or The Fund may not borrow money in amounts exceeding (ii) by engaging in reverse repurchase 10% of the Fund's total assets (including the amount agreements. The Fund will not commit to borrowed) taken at market value. additional securities purchases if total outstanding borrowings are equal to 5% or more of total assets. - ---------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may not make loans, except that the Fund institutional investors with a value of up to may (i) lend portfolio securities in accordance with 33% of the Fund's total assets. the Fund's investment policies, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of publicly distributed debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities, (iv) participate in a credit facility whereby the Fund may directly lend to and borrow money from other affiliated funds to the extent permitted under the 1940 Act or an exemption therefrom, and (v) make loans in any other manner consistent with applicable law, as amended and interpreted or modified from time to time by any regulatory authority having jurisdiction. - ---------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities, a result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options does not contracts and other derivatives. The Fund does not exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may purchase a put or call option or Fund may use derivatives for a variety of option on a futures contract if, as a result non-principal purposes, including: thereof, the aggregate premiums paid on all o As a hedge against adverse changes in stock options or options on futures contracts held by market prices, interest rates or currency the Fund do not exceed 20% of the Fund's net exchange rates assets. o As a substitute for purchasing or selling securities The Fund may enter into any futures contract or o To increase the Fund's return as a non-hedging option on futures contract if, as a result strategy that may be considered speculative thereof, the aggregate margin deposits and premiums required on all such instruments do not exceed 5% of the Fund's net assets. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MULTI CAP FUND PIONEER MID CAP FUND - ---------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ---------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGING SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Mid Cap Fund the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be charge. subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the Contingent deferred sales charge of up to 5% if Reorganization (i.e., not in the name of a broker) you redeem Class B shares within six years of and maintain your account, you may purchase Class A purchase. shares of Pioneer Mid Cap Fund and Class A shares of any fund in the Pioneer family of funds through such Contingent deferred sales charge of 1% if you account in the future without paying any sales redeem Class C shares within one year of charge. purchase. Except as described above, Class A shares of Pioneer Purchases of Investor Class shares of the Fund Mid Cap Fund are subject to a front-end sales charge are not subject to a sales load. of up to 5.75%. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco Multi Cap Fund pays an advisory fee on a Pioneer Mid Cap Fund pays Pioneer a management fee fees monthly basis at an annual rate as follows: equal to: $0 - $250,000,000: 0.70 of 1% 0.70% of average daily net assets up to $500 million; $250,000,001 - $750,000,000: 0.65 of 1% 0.65% of the next $500 million; and $750,000,001 - $1,250,000,000: 0.60 of 1% 0.625% on assets over $1 billion, based on the Fund's Over $1,250,000,000: 0.55 of 1% performance and the size of the Fund. SAM serves as administrator and Fund accounting Pioneer `s fee increases or decreases depending upon agent for the Fund. The Fund pays SAM an whether the Fund `s performance is up and down more administrative services fee of 0.05% of the or less than that of the index. Each percentage point Fund's average daily net assets up to the first of difference between the performance of the Class A $200,000,000 and 0.01% of its net assets shares and the index (to a maximum of+/-10) is thereafter, and an accounting fee of 0.04% of multiplied by a performance rate adjustment of 0.01%. the Fund's average daily net assets up to the As a result, the maximum annualized rate adjustment first $200,000,000 and 0.01% of its net assets is+/-0.10%. This performance comparison is made at thereafter. the end of each month. An appropriate percentage of this rate (based on the number of days in the current During its most recent fiscal year, Safeco month) is then applied to the Fund `s average net Multi Cap Fund paid aggregate advisory and assets for the entire performance period, giving administration fees at an average rate of 0.79% a dollar amount that will be added to (or subtracted of average daily net assets. from)the basic fee. Because the adjustment to the basic fee is based on the comparative performance of SAM had contractually agreed until April 30, the Fund and the performance record of the index, the 2009, to pay certain Fund operating expenses controlling factor is not whether Fund performance is (but not all of the operating expenses of the up or down, but whether it is up or down more or less Fund) that exceeded the rate of 0.40% per annum than the performance record of the index, regardless of the Fund's average daily net assets. This of general market performance. arrangement included all Fund operating expenses except management fees, Rule 12b-1 During its most recent fiscal year, Pioneer Mid Cap fees, brokerage commissions, taxes, interest, Fund paid an advisory fee at an average rate of 0.76% and extraordinary expenses. of average daily net assets. For the fiscal year ended December 31, 2003, In addition, the Fund reimburses Pioneer for certain the Fund's annual operating expenses for Class Fund accounting and legal expenses incurred on behalf A shares, after giving effect to the expense of the Fund and pays a separate shareholder limitation were 1.35%, and without giving servicing/transfer agency fee to PIMSS, an affiliate effect to the expense limitation, were 1.78% of Pioneer. per share. For the fiscal year ended October 31, 2003, the For the fiscal year ended December 31, 2003, Fund's annual operating expenses for Class A shares the Fund's annual operating expenses for Class were 1.37% per share. B shares, after giving effect to the expense limitation were 2.10%, and without giving Pioneer has agreed until the second anniversary of effect to the expense limitation, were 2.54% the closing of the Reorganization to limit the per share. ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of For the fiscal year ended December 31, 2003, the the Investor Class to 1.10% of - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MULTI CAP FUND PIONEER MID CAP FUND - ---------------------------------------------------------------------------------------------------------------------------------- Fund's annual operating expenses for Class the average daily net assets attributable to the C shares, after giving effect to the expense Investor Class. limitation were 2.10%, and without giving effect to the expense limitation, were 2.46% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 1.10%, and without giving effect to the expense limitation, were 1.23% per share. - ---------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A shares after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ---------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Mid Cap Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco Multi investment advisers, banks and other financial Cap Fund who own Investor Class shares in their own institutions that have entered into selling name as of the closing date of the Reorganization and agreements with the Fund's principal who maintain their accounts may buy shares of any underwriter, as described in the Fund's fund in the Pioneer family of funds through such prospectus. accounts in the future without paying sales charges. Certain account transactions may be done by If the account is established in the shareholder's telephone own name, shareholders may also purchase additional shares of Pioneer Mid Cap Fund by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Mid Cap Fund acquire through dividend reinvestment or other without incurring any fee on the exchange with the Fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would you have exchanged for Class A shares of be for Class A shares, which is subject to Rule 12b-1 another fund. fees. An exchange generally is treated as a sale and a new purchase of shares for federal income tax purposes. Certain account transactions may be done by telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Mid Cap Fund for shares of other Pioneer Funds by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. -------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Mid Cap Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. Even though each Fund seeks capital appreciation, you could lose money on your investment or not make as much as if you invested elsewhere if: o The stock market goes down (this risk may be greater in the short term) o Mid-size or value stocks fall out of favor with investors o The Fund's assets remain undervalued or do not have the potential value originally expected 5 Each Fund also has risks associated with investing in mid-size companies. Compared to large companies, mid-size companies, and the market for their equity securities, are likely to: o Be more sensitive to changes in earnings results and investor expectations o Have more limited product lines and capital resources o Experience sharper swings in market values o Be harder to sell at the times and prices Pioneer thinks appropriate o Offer greater potential for gain and loss Investing in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. These risks may include: o Less information about non-U.S. issuers or markets may be available due to less rigorous disclosure or accounting standards or regulatory practices o Many non-U.S. markets are smaller, less liquid and more volatile. In a changing market, Pioneer may not be able to sell the Fund's portfolio securities at times, in amounts and at prices it considers reasonable o Adverse effect of currency exchange rates or controls on the value of the Fund's investments o The economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession o Economic, political and social developments may adversely affect the securities markets o Withholding and other non-U.S. taxes may decrease the Fund's return PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] SAFECO MULTI CAP FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* 1994 -1.55 1995 20.17 1996 15.04 1997 31.12 1998 3.5 1999 54.25 2000 -16.11 2001 -11.25 2002 -24.13 2003 45.18 * During the period shown in the bar chart, your Fund's highest quarterly return was 34.90% for the quarter ended December 31, 1999, and the lowest quarterly return was -21.03 for the quarter ended September 30, 2001. 6 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] PIONEER MID CAP FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* 1994 14.83 1995 30.73 1996 11.66 1997 17.45 1998 -4.11 1999 12.6 2000 17.64 2001 5.56 2002 11.99 2003 36.87 * During the period shown in the bar chart, Pioneer Mid Cap Fund's highest quarterly return was 17.27% for the quarter ended June 30, 2003, and the lowest quarterly return was -24.42% for the quarter ended September 30, 1998. SAFECO MULTI CAP FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- SAFECO MULTI CAP FUND, CLASS A SHARES Return Before Taxes 36.47% 3.34% 7.99% Return After Taxes on Distributions(1) 36.47% 2.92% 7.03% Return After Taxes on Distributions and Sale of Fund Shares(1) 23.70% 2.27% 6.53% SAFECO MULTI CAP FUND, CLASS B SHARES Return Before Taxes 38.77% 3.46 8.20% SAFECO MULTI CAP FUND, CLASS C SHARES Return Before Taxes 42.74% 3.82% 8.09% SAFECO MULTI CAP FUND, INVESTOR CLASS SHARES Return Before Taxes 45.18% 4.81% 8.86% Return After Taxes on Distributions(1) 45.18% 4.39% 7.89% Return After Taxes on Distributions and Sale of Fund Shares(1) 29.38% 4.00% 7.32% RUSSELL 3000 INDEX(2) 31.04% 0.36% 10.77% (reflects no deduction for fees, expenses or taxes) S&P 500 INDEX(2) 28.67% -0.57% 11.06% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Russell 3000 Index, an unmanaged index of the 3, 000 largest U.S. companies based on market capitalization, and the S&P 500 Index, an unmanaged index of 500 stocks, are for reference only and do not mirror Safeco Multi Cap Fund's investments. 7 PIONEER MID CAP FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- PIONEER MID CAP FUND, CLASS A SHARES Return Before Taxes 28.98% 9.68% 11.53% Return After Taxes on Distributions(1) 28.59% 8.04% 9.51% Return After Taxes on Distributions and Sale of Fund Shares(1) 19.16% 7.58% 9.05% RUSSELL MIDCAP VALUE INDEX(2) 38.07% 8.73% 13.04% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (2) The Russell Midcap Value Index, an unmanaged index that measures the performance of those companies in the Russell Midcap Value Index with lower price-to-book ratios and lower forecasted growth values, is for reference only and does not mirror Pioneer Mid Cap Fund's investments. Pioneer Mid Cap Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A, B and C shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Mid Cap Fund, the expenses of Pioneer Mid Cap Fund for the period ended October 31, 2003. Future expenses for all share classes may be greater or less.
------------------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES PIONEER MID (PAID DIRECTLY SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP CAP FUND FROM YOUR FUND FUND FUND FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ------------------------------------------------------------------------------------------------------------- Maximum sales 5.75%(6) None None None None(1) charge (load) when you buy shares as a percentage of offering price ------------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less ------------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ------------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20(4) $ 20(4) $ 20(4) $ 20(4) N/A ------------------------------------------------------------------------------------------------------------- Annual low balance $ 12(5) $ 12(5) $ 12(5) $ 12(5) N/A fee -------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES PIONEER MID (PAID DIRECTLY SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP SAFECO MULTI CAP CAP FUND FROM YOUR FUND FUND FUND FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS ------------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ------------------------------------------------------------------------------------------------------------- Management fee 0.70% 0.70% 0.70% 0.70% 0.74% ------------------------------------------------------------------------------------------------------------- Distribution and service (12b-1) fee 0.25% 1.00% 1.00% None None ------------------------------------------------------------------------------------------------------------- Other expenses 0.83% 0.84% 0.76% 0.53% 0.46% ------------------------------------------------------------------------------------------------------------- Total fund operating expenses 1.78% 2.54% 2.46% 1.3% 1.20% ------------------------------------------------------------------------------------------------------------- Expense reduction 0.43%(2) 0.44%(2) 0.36%(2) 0.123%(2) 0.10% (3) ------------------------------------------------------------------------------------------------------------- Net fund operating expenses 1.35% 2.10% 2.10% 1.10% 1.10% -------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Mid Cap Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Mid Cap Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco Multi Cap Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer Mid Cap Fund to 1.10% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco Multi Cap Fund and two years for Pioneer Mid Cap Fund and (f) and the Investor Class shares of Pioneer Mid Cap Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ----------------------------------------------------- EXAMPLE ----------------------------------------------------- SAFECO MULTI CAP FUND ----------------------------------------------------- CLASS A SHARES ----------------------------------------------------- Year 1 $ 705 ----------------------------------------------------- 9 ----------------------------------------------------- EXAMPLE ----------------------------------------------------- SAFECO MULTI CAP FUND ----------------------------------------------------- Year 3 $ 978 ----------------------------------------------------- Year 5 $ 1,272 ----------------------------------------------------- Year 10 $ 2,105 ----------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ----------------------------------------------------- Year 1 $ 713 $ 213 ----------------------------------------------------- Year 3 $ 958 $ 658 ----------------------------------------------------- Year 5 $ 1,329 $ 1,129 ----------------------------------------------------- Year 10 $ 2,064 $ 2,064 ----------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ----------------------------------------------------- Year 1 $ 313 $ 213 ----------------------------------------------------- Year 3 $ 658 $ 658 ----------------------------------------------------- Year 5 $ 1,129 $ 1,129 ----------------------------------------------------- Year 10 $ 2,431 $ 2,431 ----------------------------------------------------- INVESTOR CLASS SHARES ----------------------------------------------------- Year 1 $ 112 ----------------------------------------------------- Year 3 $ 350 ----------------------------------------------------- Year 5 $ 606 ----------------------------------------------------- Year 10 $ 1,340 ----------------------------------------------------- PIONEER MID CAP FUND ----------------------------------------------------- INVESTOR CLASS SHARES ----------------------------------------------------- Year 1 $ 112 ----------------------------------------------------- Year 3 $ 360 ----------------------------------------------------- Year 5 $ 639 ----------------------------------------------------- Year 10 $ 1,433 ----------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco Multi Cap Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the performance of Pioneer Mid Cap Fund is generally consistent with the historical investment performance of your Fund. For the one and five year periods ended June 30, 2004, Class A shares of Pioneer Mid Cap Fund had an average annual return of ___% and ___% compared to an average annual of the Class A shares and Investor Class shares of ___% and ___% (one year) and ___% and ____% (five years), respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Mid Cap Fund to 1.10% of average daily net assets. The estimated expenses of the Investor Class shares of Pioneer Mid Cap Fund are below both the gross expenses and expenses net of expense reimbursement of each class of shares of your Fund. Although you will experience higher 10 expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. FIFTH, the substantially larger size of Pioneer Mid Cap Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer Mid Cap Fund received in the Reorganization will provide your Fund's shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Mid Cap Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Mid Cap Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Mid Cap Fund and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003 for Safeco Multi Cap Fund and October 31, 2003 for Pioneer Mid Cap Fund. ------------------------------------------------------------------------- SAFECO MULTI CAP FUND PIONEER MID CAP FUND DECEMBER 31, 2003 OCTOBER 31, 2003 ------------------------------------------------------------------------- NET ASSETS (in millions) $ 89.66 $ 1,512 ------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A shares $ 20.32 $ 22.25 Class B shares $ 19.28 $ 20.48 Class C shares $ 19.29 $ 20.34 Investor Class shares $ 20.77 N/A ------------------------------------------------------------------------- SHARES OUTSTANDING Class A shares 275,000 Class B shares 228,000 Class C shares 9,000 Investor Class shares 3,829,000 N/A ------------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Mid Cap Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Mid Cap Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer Mid Cap Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Mid Cap Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 12 SAFECO MUNICIPAL BOND FUND AND PIONEER MUNICIPAL BOND FUND PROPOSAL 14 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary.
COMPARISON OF SAFECO MUNICIPAL BOND FUND TO THE PIONEER MUNICIPAL BOND FUND - ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Tax-Exempt Bond Trust, a A newly organized diversified open-end management diversified open-end management investment investment company organized as a Delaware statutory company organized as a Delaware statutory trust. trust. - ---------------------------------------------------------------------------------------------------------------------------------- Net assets as of $550 million None. The Pioneer Municipal Bond Fund is newly June 30, 2004 organized and does not expect to commence investment operations until the Reorganization occurs. - ---------------------------------------------------------------------------------------------------------------------------------- Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers: Portfolio Managers: Stephen C. Bauer (since 1981 and until August Day-to-day management of the Fund's portfolio is the 2, 2004) responsibility of a team of fixed income portfolio President and Director, SAM managers led by Kenneth J. Taubes. Mary Metastasio (since 2003 and until July 31, Mr. Taubes joined Pioneer as a senior vice president 2004) in September 1998 and has been an investment professional since 1982. Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Manager of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ---------------------------------------------------------------------------------------------------------------------------------- Investment objective Each Fund seeks to provide as high a level of current interest income exempt from federal income tax as is consistent with the relative stability of capital. During normal market conditions, each Fund will not invest less than 80% of its net assets in obligations the interest on which is exempt from federal income tax. The investment objective of each Fund is fundamental and cannot be changed without shareholder approval. - ---------------------------------------------------------------------------------------------------------------------------------- Primary investments To achieve its investment objective, each Fund invests primarily in municipal bonds rated investment grade or better with average maturities of 15 years or longer. Under normal circumstances, each Fund invests: o at least 80% of its assets in investment-grade municipal bonds with a maturity of more than one year and the interest on which is exempt from federal income tax; and o up to 20% of its assets in unrated municipal bonds, as long as the advisor determines they are of comparable quality to investment-grade securities. Each Fund will not invest in securities the interest on which is a tax preference item for purposes of the federal alternative minimum tax. - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Investment strategies When evaluating a bond to buy, each Fund's advisor considers among other things: o Yield o Maturity o Structural features such as an issuer's right to buy the bond back at a stated price (a "call") or the Fund's right to require the issuer to buy the bond back at a stated price (a "put") o Credit quality (including the underlying rating of insured bonds) o The project the issuer is financing o The original offering price o Any state or local tax exemption o The amount of discount off or premium on the stated principal amount of the bond represented by the price offered Each Fund's advisor may use the rating services provided by Moody's, S&P, or Fitch. Bond ratings indicate an issuer's financial strength and ability to meet its debt obligations. Each Fund may sell bonds when: o They become fully valued o More attractively valued bonds become available o Cash is needed to meet shareholder redemptions Because it often takes years for attractive relative valuations to be recognized by the municipal securities market, turnover of each Fund's portfolio can be low. - ---------------------------------------------------------------------------------------------------------------------------------- Other investments Each Fund will limit its investment in municipal obligations the interest on which is payable from the revenues of similar types of projects less than 25% of each Funds' total assets. As a matter of operating policy, "similar types of projects" may include sports, convention or trade show facilities; airports or mass transportation; sewage or solid waste disposal facilities; or air and water pollution control projects. Each Fund may invest in any of the following short-term, tax-exempt obligations: municipal notes of issuers rated, at the time of the purchase, within one of the three highest grades assigned by a nationally recognized statistical rating organization ("NRSRO"); unrated municipal notes offered by issuers having outstanding municipal bonds rated within one of the three highest grades assigned by an NRSRO; notes issued by or on behalf of municipal issuers that are guaranteed by the U.S. government; tax-exempt commercial paper assigned one of the two highest grades by an NRSRO; certificates of deposit issued by banks with assets of $1,000,000,000 or more; and municipal obligations that have a maturity of one year or less from the date of purchase. Each Fund may invest in obligations of the U.S. government, its agencies or instrumentalities or in qualified repurchase agreements, the net interest on which is taxable for federal income tax purposes. Each Fund will limit its investment in securities whose issuers are located in the same state to less than 25% of each Fund's total assets. - ---------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or as a temporary The Fund may invest all or part of its assets in strategies defensive measure when market conditions so securities with remaining maturities of less than one warrant. year, cash equivalents or may hold cash. - ---------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ---------------------------------------------------------------------------------------------------------------------------------- Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined in the 1940 Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments in the securities of issuers primarily engaged in the same industry, provided that this restriction does not limit each Fund from investing in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. - ---------------------------------------------------------------------------------------------------------------------------------- Restricted and illiquid If immediately after and as a result of such action the value of the following securities, in the securities aggregate, would exceed 10% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND - ---------------------------------------------------------------------------------------------------------------------------------- Borrowing Each Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. Each Fund will not commit to additional securities purchases if total outstanding borrowings are equal to 5% or more of total assets. - ---------------------------------------------------------------------------------------------------------------------------------- Lending Each Fund may lend securities to qualified institutional investors with a value of up to 33% of the Fund's total assets. - ---------------------------------------------------------------------------------------------------------------------------------- Derivative instruments Each Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ---------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ---------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - ---------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer Municipal Bond the Fund are subject to a 4.50% front-end sales Fund you receive in the Reorganization will not be charge. subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the A contingent deferred sales charge of up to Reorganization (i.e., not in the name of a broker) 5.00% if you redeem Class B shares within six and maintain your account, you may purchase Class A years of purchase. shares of Pioneer Municipal Bond Fund and Class A shares of any fund in the Pioneer family of funds A contingent deferred sales charge of up to through such account in the future without paying any 1.00% if you redeem Class C shares within one sales charge. year of purchase. Except as described above, Class A shares of Pioneer Purchases of Investor Class shares of the Fund Municipal Bond Fund are subject to a front-end sales are not subject to a sales load. charge of up to [x.xx]%. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Investor Class shares held less than 30 days. - ---------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco Municipal Bond Fund pays an advisory fee Pioneer Municipal Bond Fund pays Pioneer a management fees on a monthly basis at an annual rate as follows: fee equal to [x.xx]% of the Fund's average daily net $0 - $250,000,000: 0.50 of 1% assets. $250,000,001 - $750,000,000: 0.45 of 1% Over $750,000,000: 0.40 of 1% In addition, the Fund reimburses Pioneer for certain Fund accounting and legal expenses incurred on behalf of the Fund and pays a separate shareholder SAM serves as administrator and Fund accounting servicing/transfer agency fee to PIMSS, an affiliate agent for the Fund. The Fund pays SAM an of Pioneer. administrative services fee of 0.05% of the Fund's average daily net assets up to the first Pioneer has agreed until the second anniversary of $200,000,000 and 0.01% of its net assets the closing of the Reorganization to limit the thereafter, and an accounting fee of 0.04% of ordinary operating expenses (excluding taxes, the Fund's average daily net assets up to the commissions, interest and extraordinary expenses) of first $200,000,000 and 0.01% of its net assets the Investor Class to 0.62% of the average daily net thereafter. assets attributable to the Investor Class. During its most recent fiscal year, Safeco Municipal Bond Fund paid aggregate advisory and administration fees at an average rate of 0.59% of average daily net assets. SAM had contractually agreed until April 30, 2009, to pay certain fund operating expenses (but not all of the operating expenses of the Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. - ----------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- SAFECO MUNICIPAL BOND FUND PIONEER MUNICIPAL BOND FUND - ---------------------------------------------------------------------------------------------------------------------------------- For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares were 0.87%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares were 1.66%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 1.87%, and without given effect to the expense limitation, were 43.13%. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares were 0.61%. - ---------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. service (12b-1) fee - ---------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer Municipal Bond underwriter or through brokers, registered Fund's distributor. Existing shareholders of Safeco investment advisers, banks and other financial Municipal Bond Fund who own shares in their own name institutions that have entered into selling as of the closing date of the Reorganization and who agreements with the Fund's principal maintain their accounts may buy shares of any fund in underwriter, as described in the Fund's the Pioneer family of funds through such accounts in prospectus. the future without paying sales charges. If the account is established in the shareholder's Certain account transactions may be done by own name, shareholders may also purchase additional telephone shares of Pioneer Municipal Bond Fund by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer Municipal Bond acquire through dividend reinvestment or other Fund without incurring any fee on the exchange with fund distributions. the more than 62 other Pioneer Funds. Your exchange would be for Class A shares, which is subject to Rule Certain account transactions may be done by 12b-1 fees. An exchange generally is treated as a sale telephone. and a new purchase of shares for federal income tax purposes. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer Municipal Bond Fund for shares of other Pioneer Funds by telephone or online. - ---------------------------------------------------------------------------------------------------------------------------------- Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. -------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer Municipal Bond Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------
4 COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. Even though each Fund seeks to maintain a $1 share price, you could lose money on your investment or the Fund could fail to generate high current income if: o Interest rates go up, causing the value of the Fund's investments to decline o The issuer of a security owned by the Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o The investment adviser's judgment about the credit quality, attractiveness or relative value of a particular security proves to be incorrect Investing in mutual fund shares is not the same as making a bank deposit. Your investment is not insured or guaranteed by the Federal Deposit Insurance Corporation. PAST PERFORMANCE Set forth below is performance information for Safeco Municipal Bond Fund. The bar charts show how Safeco Municipal Bond Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for Safeco Municipal Bond Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. Pioneer Municipal Bond Fund has not commenced investment operations. SAFECO MUNICIPAL BOND FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1994 -8.25 1995 21.48 1996 3.18 1997 10.68 1998 6.35 1999 -6.18 2000 14.17 2001 5.3 2002 10.33 2003 5.96 * During the period shown in the bar chart, your Fund's highest quarterly return was 8.82% for the quarter ended March 31, 1995, and the lowest quarterly return was -6.77% for the quarter ended March 31, 1994. 5 SAFECO MUNICIPAL BOND FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS 10 YEARS (1) ------ ------- ------------ SAFECO MUNICIPAL BOND FUND, CLASS A SHARES Return Before Taxes 0.91% 4.38% 5.20% Return After Taxes on Distributions (2) 0.65% 4.24% 5.07% Return After Taxes on Distributions and 2.24% 4.34% 5.09% Sale of Fund Shares (2) SAFECO MUNICIPAL BOND FUND, CLASS B SHARES Return Before Taxes -0.07% 4.21% 5.23% SAFECO MUNICIPAL BOND FUND, CLASS C SHARES Return Before Taxes 3.89% 4.54% 5.13% SAFECO MUNICIPAL BOND FUND, INVESTOR CLASS SHARES Return Before Taxes 5.96% 5.69% 5.97% Return After Taxes on Distributions (2) 5.68% 5.55% 5.83% Return After Taxes on Distributions and 5.70% 5.53% 5.81% Sale of Fund Shares (2) LEHMAN BROTHERS LONG MUNICIPAL 6.13% 5.95% 6.40% BOND INDEX (3) (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on September 30, 1996. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Lehman Brothers Long Municipal Bond Index, an unmanaged index of bonds with a minimum credit rating of BAA3 issued as part of a deal of at least $50 million, having an amount of at least $5 million and maturing in 22 or more years, is for reference only, is not limited to California issuers, does not mirror the Fund's investments and reflects no deduction of fees, expenses or taxes. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer Municipal Bond Fund, the expenses of Pioneer Municipal Bond Fund for the period ended December 31, 2003. Future expenses for all share classes may be greater or less.
------------------------------------------------------------------------------------------------------------ SHAREHOLDER TRANSACTION FEES SAFECO SAFECO SAFECO PIONEER (PAID DIRECTLY MUNICIPAL BOND SAFECO MUNICIPAL BOND MUNICIPAL MUNICIPAL BOND FROM YOUR FUND MUNICIPAL BOND FUND BOND FUND FUND INVESTOR INVESTMENT) CLASS A FUND CLASS B CLASS C INVESTOR CLASS CLASS ------------------------------------------------------------------------------------------------------------ Maximum sales 4.50%(6) None None None None (1) charge (load) when you buy shares as a percentage of offering price ------------------------------------------------------------------------------------------------------------ Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase ------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------ SHAREHOLDER TRANSACTION FEES SAFECO SAFECO SAFECO PIONEER (PAID DIRECTLY MUNICIPAL BOND SAFECO MUNICIPAL BOND MUNICIPAL MUNICIPAL BOND FROM YOUR FUND MUNICIPAL BOND FUND BOND FUND FUND INVESTOR INVESTMENT) CLASS A FUND CLASS B CLASS C INVESTOR CLASS CLASS ------------------------------------------------------------------------------------------------------------ price or the amount you receive when you sell shares, whichever is less ------------------------------------------------------------------------------------------------------------ Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days ------------------------------------------------------------------------------------------------------------ Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A ------------------------------------------------------------------------------------------------------------ Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A fee ------------------------------------------------------------------------------------------------------------ ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) ------------------------------------------------------------------------------------------------------------ Management fee 0.47% 0.47% 0.47% 0.47% 0.47% ------------------------------------------------------------------------------------------------------------ Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee ------------------------------------------------------------------------------------------------------------ Other expenses 0.15% 0.19% 41.66% 0.14% 0.27% ------------------------------------------------------------------------------------------------------------ Total fund 0.87% 1.66% 43.13% 0.61% 0.74% operating expenses ------------------------------------------------------------------------------------------------------------ Expense reduction None (2) None (2) 41.26%(2) None (2) 0.12% (3) ------------------------------------------------------------------------------------------------------------ Net fund operating 0.87% 1.66% 1.87% 0.61% 0.62% expenses ------------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer Bond Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer Bond Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco Municipal Bond Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary operating expenses) of the Investor Class shares of Pioneer Bond Fund to 0.62% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. 7 The hypothetical example below helps you compare the cost of investing in each fund. It assumes that: (a) you invest $10,000 in each fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco Municipal Bond Fund and two years for Pioneer Municipal Bond Fund and (e) and the Investor Class shares of Pioneer Municipal Bond Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either fund's actual expenses or returns, either past or future. ---------------------------------------------------------- EXAMPLE ---------------------------------------------------------- SAFECO MUNICIPAL BOND FUND ---------------------------------------------------------- CLASS A SHARES ---------------------------------------------------------- Year 1 $ 535 ---------------------------------------------------------- Year 3 $ 715 ---------------------------------------------------------- Year 5 $ 911 ---------------------------------------------------------- Year 10 $ 1,474 ---------------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ---------------------------------------------------------- Year 1 $ 669 $ 169 ---------------------------------------------------------- Year 3 $ 823 $ 523 ---------------------------------------------------------- Year 5 $ 1,102 $ 902 ---------------------------------------------------------- Year 10 $ 1,561 $ 1,561 ---------------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ---------------------------------------------------------- Year 1 $ 290 $ 190 ---------------------------------------------------------- Year 3 $ 588 $ 588 ---------------------------------------------------------- Year 5 $ 1,011 $ 1,011 ---------------------------------------------------------- Year 10 $ 2,190 $ 2,190 ---------------------------------------------------------- INVESTOR CLASS SHARES ---------------------------------------------------------- Year 1 $ 62 ---------------------------------------------------------- Year 3 $ 195 ---------------------------------------------------------- Year 5 $ 340 ---------------------------------------------------------- Year 10 $ 762 ---------------------------------------------------------- PIONEER MUNICIPAL BOND FUND ---------------------------------------------------------- INVESTOR CLASS SHARES ---------------------------------------------------------- Year 1 $ 63 ---------------------------------------------------------- Year 3 $ 212 ---------------------------------------------------------- Year 5 $ 387 ---------------------------------------------------------- Year 10 $ 895 ---------------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco Municipal Bond Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the significant experience and resources of Pioneer in managing portfolios of tax exempt securities. At June 30, 2004, Pioneer Managed Portfolio of tax exempt securities with total assets of approximately $_____ billion. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including 8 the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer Municipal Bond Fund to 0.62% of average daily net assets. This expense ratio is no higher than both the gross expenses and expenses net of expense reimbursement of the Class A shares and Investor Class shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. FIFTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SIXTH, the Investor Class shares of Pioneer Municipal Bond Fund received in the Reorganization will provide Safeco Municipal Bond Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer Municipal Bond Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer Municipal Bond Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer Municipal Bond Fund and its shareholders. CAPITALIZATION The following table sets forth the capitalization of each fund, as of December 31, 2003, and the PRO FORMA combined capitalization of both funds as if the Reorganization had occurred on that date. -------------------------------------------------------------------------- SAFECO MUNICIPAL BOND PIONEER MUNICIPAL BOND FUND FUND DECEMBER 31, 2003 DECEMBER 31, 2003 -------------------------------------------------------------------------- NET ASSETS (in thousands) $ 573,084 N/A -------------------------------------------------------------------------- NET ASSET VALUE PER SHARE N/A Class A shares $ 14.45 Class B shares $ 14.42 Class C shares $ 14.42 Investor Class shares $ 14.44 -------------------------------------------------------------------------- SHARES OUTSTANDING N/A Class A shares 452,000 Class B shares 218,000 Class C shares 7,000 Investor Class shares 39,004,000 -------------------------------------------------------------------------- It is impossible to predict how many shares of Pioneer Municipal Bond Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer Municipal Bond Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer 9 Municipal Bond Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer Municipal Bond Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 10 SAFECO SMALL-CAP VALUE FUND AND PIONEER SMALL CAP VALUE FUND PROPOSAL 15 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as EXHIBIT A because they contain details that are not in the summary. COMPARISON OF SAFECO SC VALUE FUND TO THE PIONEER SC VALUE FUND
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO SC VALUE FUND PIONEER SC VALUE FUND - ----------------------------------------------------------------------------------------------------------------------------------- Business A series of Safeco Common Stock Trust, a A diversified open-end management investment company diversified open-end management investment organized as a Delaware statutory trust. company organized as a Delaware statutory trust. - ----------------------------------------------------------------------------------------------------------------------------------- Net assets as of $76.8 million $521.9 million June 30, 2004 - ----------------------------------------------------------------------------------------------------------------------------------- Investment advisers Investment adviser (until July 31, 2004): Investment adviser and portfolio managers SAM Pioneer Portfolio Manager (until July 31, 2004): Portfolio Managers: Greg Eisen Day-to-day management of the Fund's portfolio is the Assistant vice president, SAM responsibility of David M. Adams and John McPherson. Mr. Adams is a vice president of Pioneer and joined Currently Pioneer is acting as investment Pioneer in 1994. Mr. McPherson joined Pioneer in adviser to the Fund. The Portfolio Managers of 2002. the Pioneer Fund, as indicated in the next column, currently manage your Safeco Fund. - ----------------------------------------------------------------------------------------------------------------------------------- Investment objective The Fund seeks long-term growth of capital The Fund seeks long-term growth through through investing primarily in small-sized small-capitalization value companies. companies. - ----------------------------------------------------------------------------------------------------------------------------------- Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment object as described above. - ----------------------------------------------------------------------------------------------------------------------------------- Primary investments Under normal circumstances the Fund invests at Under normal market conditions, the Fund invests at least 80% of its net assets (plus any least 80% of its net assets in equity securities of borrowings for investment purposes) in equity small companies. Small companies are those with and equity-related securities of companies with market values, at the time of the investment, that do total market capitalizations at the time of the not exceed the greater of the market capitalization investment of less than $1.5 billion. of the largest company within the Russell 2000 Index. For purposes of the Fund's investment policies, equity securities include common stocks, convertible debt and other equity instruments, such as depositary receipts, warrants, rights, interest in REITs and preferred stocks. - ----------------------------------------------------------------------------------------------------------------------------------- Investment Strategies When evaluating a stock to buy for the Fund, Pioneer uses a "value" approach to select the Fund's SAM historically looked for companies having investments. Pioneer seeks securities selling at one or more of the following characteristics: substantial discounts to their underlying values and o Long-term potential for above-average or then holds these securities until the market values improving earnings growth reflect their intrinsic values. o Involvement in new or innovative products or services Pioneer evaluates a security's potential value, o A share price that represents good relative including the attractiveness of its market valuation, value as determined by price-to-earnings based on the company's assets and prospects for ratio or other commonly used valuation earnings and revenue growth. Factors Pioneer looks measures for in selecting investments include: - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO SC VALUE FUND PIONEER SC VALUE FUND - ----------------------------------------------------------------------------------------------------------------------------------- o Above average potential for earnings and revenue growth o Favorable expected returns relative to perceived risks o Management with demonstrated ability and commitment to the company o Low market valuations relative to earnings forecast, book value, cash flow and sales o Turnaround potential for companies that have been through difficult periods o Low debt levels relative to equity o Issuer's industry has strong fundamentals, such as increasing or sustainable demand and barriers to entry - ----------------------------------------------------------------------------------------------------------------------------------- Other investments The Fund may invest in securities convertible The Fund may invest up to 25% of its total assets in into common stock, but less than 35% of its REITs. total assets will be invested in such securities. The Fund may invest in securities of Canadian issuers to the same extent as securities of U.S. issuers. The Fund may invest up to 5% of its total assets in equity and debt securities of other non-U.S. issuers, including securities of emerging market issuers. The Fund may invest up to 20% of its total assets in debt securities of corporate and government issuers. The Fund may invest up to 5% of its net assets in below investment grade debt securities issued by both U.S. and non-U.S. issuers, including below investment grade convertible debt securities. - ----------------------------------------------------------------------------------------------------------------------------------- Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements. - ----------------------------------------------------------------------------------------------------------------------------------- Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ----------------------------------------------------------------------------------------------------------------------------------- Industry Concentration Each Fund may not invest more than 25% of its assets in any one industry. - ----------------------------------------------------------------------------------------------------------------------------------- Restricted and Illiquid If immediately after and as a result of such The Fund may not invest more than 15% of its net Securities action the value of the following securities, assets in securities which are illiquid and other in the aggregate, would exceed 15% of the securities which are not readily marketable. Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO SC VALUE FUND PIONEER SC VALUE FUND - ----------------------------------------------------------------------------------------------------------------------------------- Borrowing The Fund may borrow money (i) from banks or Borrow money, except the Fund may: (a) borrow from (ii) by engaging in reverse repurchase banks or through reverse repurchase agreements in an agreements. The Fund will not commit to amount up to 33 1/3% of the Fund's total assets additional securities purchases if total (including the amount borrowed); (b) to the extent outstanding borrowings are equal to 5% or more permitted by applicable law, borrow up to an of total assets. additional 5% of the Fund's assets for temporary purposes; (c) obtain such short-term credits as are necessary for the clearance of portfolio transactions; (d) purchase securities on margin to the extent permitted by applicable law; and (e) engage in transactions in mortgage dollar rolls that are accounted for as financings. - ----------------------------------------------------------------------------------------------------------------------------------- Lending The Fund may lend securities to qualified The Fund may lend portfolio securities with a value institutional investors with a value of up to that may not exceed 33 1/3% of the value of its total 33% of the Fund's total assets. assets. - ----------------------------------------------------------------------------------------------------------------------------------- Derivative instruments The Fund may write a put or call option if, as The Fund may use futures and options on securities, a result thereof, the aggregate value of the indices and currencies, forward currency exchange assets underlying all such options does not contracts and other derivatives. The Fund does not exceed 25% of the Fund's net assets. use derivatives as a primary investment technique and generally limits their use to hedging. However, the The Fund may purchase a put or call option or Fund may use derivatives for a variety of option on a futures contract if, as a result non-principal purposes, including: thereof, the aggregate premiums paid on all o As a hedge against adverse changes in stock options or options on futures contracts held by market prices, interest rates or currency the Fund do not exceed 20% of the Fund's net exchange rates assets. o As a substitute for purchasing or selling securities The Fund may enter into a futures contract or o To increase the Fund's return as a option on futures contract if, as a result non-hedging strategy that may be considered thereof, the aggregate margin deposits and speculative premiums required on all such instruments do not exceed 5% of the Fund's net assets. The Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ----------------------------------------------------------------------------------------------------------------------------------- Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ----------------------------------------------------------------------------------------------------------------------------------- BUYING, SELLING AND EXCHANGE SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Sales charges Purchases under $1,000,000 of Class A shares of The Investor Class shares of Pioneer SC Value Fund the Fund are subject to a 5.75% front-end sales you receive in the Reorganization will not be subject charge. to any sales charge. Moreover, if you own shares in your own name as of the closing of the Reorganization Contingent deferred sales charge of up to 5% if (i.e., not in the name of a broker) and maintain your you redeem Class B shares within six years of account, you may purchase Class A shares of Pioneer purchase. SC Value Fund and Class A shares of any fund in the Pioneer family of funds through such account in the Contingent deferred sales charge of 1% if you future without paying any sales charge. redeem Class C share within one year of purchase. Except as described above, Class A shares of Pioneer Tax Free Income Fund are subject to a front-end sales Purchases of Investor Class shares of the Fund charge of up to 5.75%. are not subject to a sales load. The Fund assesses a mandatory redemption fee of 2%, as a percentage of the amount redeemed or exchanged, on Class A and Investor Class shares held less than 30 days. - ----------------------------------------------------------------------------------------------------------------------------------- Management and other Safeco SC Value Fund pays an advisory fee on a The Fund pays Pioneer a management fee equal to 0.85% - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- SAFECO SC VALUE FUND PIONEER SC VALUE FUND - ----------------------------------------------------------------------------------------------------------------------------------- fees monthly basis at an annual rate as follows: of the Fund's average daily net assets. $0 - $250,000,000: 0.75 of 1% $250,000,001- $750,000,000: 0.70 of 1% During its most recent fiscal year, Pioneer SC Value $750,000,001- $1,250,000,000: 0.65 of 1% Fund paid an advisory fee at an average rate of [xx]% Over $1,250,000,000: 0.60 of 1% of average daily net assets. SAM serves as administrator and Fund accounting In addition, the fund reimburses Pioneer for certain agent for the Fund. The Fund paid SAM an fund accounting and legal expenses incurred on behalf administrative services fee of 0.05% of the of the fund and pays a separate shareholder Fund's average daily net assets up to the first servicing/transfer agency fee to PIMSS, an affiliate $200,000,000 and 0.01% of its net assets of Pioneer. thereafter, and an accounting fee of 0.04% of the Fund's average daily net assets up to the For the fiscal year ended April 1, 2004, the Fund's first $200,000,000 and 0.01% of its net assets annual operating expenses for Class A shares were thereafter. 1.66% per share. Pioneer has agreed until the second anniversary of During its most recent fiscal year, Safeco the closing of the Reorganization to limit the High-Yield Fund paid aggregate advisory and ordinary operating expenses (excluding taxes, administration fees at an average rate of 0.84% commissions, interest and extraordinary expenses) of of average daily net assets. the Investor Class to 1.15% of the average daily net assets attributable to the Investor Class. SAM had contractually agreed until April 30, 2009, to pay certain fund operating expenses (but not all of the operating expenses of the Fund) that exceeded the rate of 0.40% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class A shares, after giving effect to the expense limitation were 1.40%, and without giving effect to the expense limitation, were 1.82% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class B shares, after giving effect to the expense limitation were 2.15%, and without giving effect to the expense limitation, were 2.72% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Class C shares, after giving effect to the expense limitation were 2.15%, and without giving effect to the expense limitation, were 39.37% per share. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares, after giving effect to the expense limitation were 1.15%, and without giving effect to the expense limitation, were 1.43% per share. - ----------------------------------------------------------------------------------------------------------------------------------- Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. Pioneer Investor Class shares service (12b-1) fee will convert into Class A share after two years. Class A shares of each Fund are subject to a 12b-1 fee equal to 0.25% annually of average daily net assets. - ----------------------------------------------------------------------------------------------------------------------------------- Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD, Pioneer SC Value Fund's underwriter or through brokers, registered distributor. Existing shareholders of Safeco SC investment advisers, banks and other financial Value Fund who own shares in their own name as of the institutions that have entered into selling closing date of the Reorganization and who maintain agreements with the Fund's principal their accounts may buy shares of any fund in the underwriter, as described in the Fund's Pioneer family of funds through such accounts in the prospectus. future without paying sales charges. - -----------------------------------------------------------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------------------------------------------- Safeco SC Value Fund Pioneer SC Value Fund - ----------------------------------------------------------------------------------------------------------------------------------- Certain account transactions may be done by If the account is established in the shareholder's telephone own name, shareholders may also purchase additional shares of Pioneer SC Value Fund by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer SC Value Fund acquire through dividend reinvestment or other without incurring any fee on the exchange with the fund distributions or for Class A shares that more than 62 other Pioneer Funds. Your exchange would you have exchanged for Class A shares of be for Class A shares, which is subject to Rule 12b-1 another Fund. fees. An exchange generally is treated as a sale and a new purchase of shares for federal income tax Certain account transactions may be done by purposes. telephone. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer SC Value Fund for shares of other Pioneer Funds by telephone or online. - ----------------------------------------------------------------------------------------------------------------------------------- Selling Shares Investor Class and Class A shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. --------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer SC Value Fund by telephone or online. - -----------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. You could lose money on your investment in either Fund or not make as much as if you invested elsewhere if: o The stock market goes down (this risk may be greater in the short-term) o Small company or value stocks fall out of favor with investors o The Fund's assets remain undervalued or do not have the potential value originally expected Each Fund also has risks associated with investing in small companies. Compared to large companies, small companies, and the market for their equity securities, are likely to: o Be more sensitive to changes in the economy, earnings results and investor expectations o Have more limited product lines and capital resources o Experience sharper swings in market values o Be harder to sell at the times and prices Pioneer thins appropriate o Offer greater potential for gain and loss Investments in the Funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money by investing in either Fund. PAST PERFORMANCE Set forth below is performance information for each Fund. The bar charts show how each Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return 5 (before and after sales taxes) for each Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance before and after taxes does not indicate future results. SAFECO SC VALUE FUND - INVESTOR CLASS CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1997 23.38 1998 -21.57 1999 14.07 2000 -7.54 2001 18.20 2002 -3.76 2003 43.10 * During the period shown in the bar chart, your Fund's highest quarterly return was 27.05% for the quarter ended December 31, 1999, and the lowest quarterly return was -33.97% for the quarter ended September 30, 1998. PIONEER SC VALUE FUND - CLASS A SHARES CALENDAR YEAR TOTAL RETURNS* [THE FOLLOWING TABLE WAS DEPICTED BY A BAR GRAPH IN THE PRINTED MATERIAL.] 1998 -12.69 1999 35.96 2000 15.30 2001 13.08 2002 -12.70 2003 37.11 * During the period shown in the bar chart, Pioneer SC Value Fund's highest quarterly return was 22.18% for the quarter ended June 30, 2003, and the lowest quarterly return was -26.57% for the quarter ended September 30, 1998. 6 SAFECO SC VALUE FUND AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
SINCE 1 YEAR 5 YEARS INCEPTION(1) ------ ------- ------------ SAFECO SC VALUE FUND, CLASS A SHARES Return Before Taxes 34.45% 9.71% 8.52% Return After Taxes on Distributions (2) 34.39% 9.63% 8.14% Return After Taxes on Distributions and 22.47% 8.41% 7.26% Sale of Fund Shares (2) SAFECO SC VALUE FUND, CLASS B SHARES Return Before Taxes 36.67% 9.93% 8.69% SAFECO SC VALUE FUND, CLASS C SHARES Return Before Taxes 40.67% 10.21% 8.57% SAFECO SC VALUE FUND, INVESTOR CLASS SHARES Return Before Taxes 43.10% 11.42% 9.67% Return After Taxes on Distributions (2) 42.97% 11.28% 9.25% Return After Taxes on Distributions and 28.18% 9.90% 8.27% Sale of Fund Shares (2) RUSSELL VALUE 2000 INDEX (3) 46.02% 12.28% 13.06% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on September 30, 1996. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Russell 2000 Value Index, an unmanaged index of value stocks in the Russell 2000 Index of small-capitalization U.S. stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. PIONEER SC VALUE FUND - CLASS A SHARES AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2003
1 YEAR 5 YEARS SINCE INCEPTION (1) ------ ------- ------------------- PIONEER SC VALUE FUND, CLASS A SHARES Return Before Taxes 29.20% 14.87% 10.86% Return After Taxes on Distributions (2) 29.11% 14.61% 10.28% Return After Taxes on Distributions and 19.09% 12.99% 9.21% Sale of Fund Shares (2) RUSSELL VALUE 2000 INDEX (3) 46.03% 12.28% 11.83% (reflects no deduction for fees, expenses or taxes)
- ---------- (1) The Fund commenced operations on February 28, 1997. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRA accounts, or to investors that are tax-exempt. (3) The Russell 2000 Value Index, an unmanaged index of value stocks in the Russell 2000 Index of small-capitalization U.S. stocks, is for reference only, does not mirror the Fund's investments, and reflects no deduction for fees, expenses or taxes. Pioneer SC Value Fund's Investor Class shares will not be outstanding prior to the closing of the Reorganization and consequently have no performance history. However, the performance record of the Investor Class would be modestly higher than the performance of Class A shares due to the lower expenses applicable to the Investor Class. THE FUNDS' FEES AND EXPENSES Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the tables appearing below are based on (i) for your Fund, the expenses of your Fund for the period ended December 31, 2003 and (ii) for Pioneer SC Value 7 Fund, the expenses of Pioneer SC Value Fund for the period ended June 30, 2003. Future expenses for all share classes may be greater or less.
---------------------------------------------------------------------------------------------------------- SHAREHOLDER TRANSACTION FEES PIONEER SC (PAID DIRECTLY SAFECO SC VALUE SAFECO SC VALUE SAFECO SC VALUE SAFECO SC VALUE VALUE FROM YOUR FUND FUND FUND FUND INVESTOR INVESTMENT) CLASS A CLASS B CLASS C INVESTOR CLASS CLASS --------------------------------------------------------------------------------------------------------- Maximum sales 5.75% (6) None None None None (1) charge (load) when you buy shares as a percentage of offering price --------------------------------------------------------------------------------------------------------- Maximum deferred None 5.00%(7) 1.00%(8) None None sales charge (load) as a % of purchase price or the amount you receive when you sell shares, whichever is less --------------------------------------------------------------------------------------------------------- Redemption fees for 2.00% None None 2.00% N/A shares held less than 30 days --------------------------------------------------------------------------------------------------------- Wire redemption fee $ 20 (4) $ 20 (4) $ 20 (4) $ 20 (4) N/A --------------------------------------------------------------------------------------------------------- Annual low balance $ 12 (5) $ 12 (5) $ 12 (5) $ 12 (5) N/A fee --------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS) --------------------------------------------------------------------------------------------------------- Management fee 0.75% 0.75% 0.75% 0.75% 0.85% --------------------------------------------------------------------------------------------------------- Distribution and 0.25% 1.00% 1.00% None None service (12b-1) fee --------------------------------------------------------------------------------------------------------- Other expenses 0.82% 0.97% 37.62% 0.68% 0.51% --------------------------------------------------------------------------------------------------------- Total fund 1.82% 2.72% 39.37% 1.43% 1.36% operating expenses --------------------------------------------------------------------------------------------------------- Expense reduction 0.42% (2) 0.57% (2) 37.22% (2) 0.28% (2) 0.21% (3) --------------------------------------------------------------------------------------------------------- Net fund operating 1.40% 2.15% 2.15% 1.15% 1.15% expenses ---------------------------------------------------------------------------------------------------------
(1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer SC Value Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (I.E., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer SC Value Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco SC Value Fund to the extent the Fund's total ordinary operating expenses exceeded 0.40% of the Fund's average daily net asset value in a fiscal year. This arrangement included all fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer SC Value Fund to 1.15% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. 8 (5) A low balance fee is charged once each year in December for accounts with balances under $1,000 in your Fund. (6) Purchases of $1,000,000 or more of Class A shares of your Fund are not subject to a front-end sales charge, but a 1.00% deferred sales charge will apply to redemptions made in the first twelve months except with respect to participant-directed redemptions from qualified retirement plans. (7) The contingent deferred sales charge on Class B shares of your Fund reduces to zero after six years from purchase, and the Class B shares convert to Class A shares at that time. (8) The contingent deferred sales charge on Class C shares applies only to redemptions made in the first twelve months after purchase. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco SC Value Fund and two years for Pioneer SC Value Fund and (e) and the Investor Class shares of Pioneer SC Value Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future. ------------------------------------------------------------------- EXAMPLE ------------------------------------------------------------------- SAFECO SC VALUE FUND ------------------------------------------------------------------- CLASS A SHARES ------------------------------------------------------------------- Year 1 $ 709 ------------------------------------------------------------------- Year 3 $ 993 ------------------------------------------------------------------- Year 5 $ 1,297 ------------------------------------------------------------------- Year 10 $ 2,158 ------------------------------------------------------------------- CLASS B SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------------- Year 1 $ 718 $ 218 ------------------------------------------------------------------- Year 3 $ 973 $ 673 ------------------------------------------------------------------- Year 5 $ 1,354 $ 1,154 ------------------------------------------------------------------- Year 10 $ 2,117 $ 2,117 ------------------------------------------------------------------- CLASS C SHARES WITH REDEMPTION WITHOUT REDEMPTION ------------------------------------------------------------------- Year 1 $ 318 $ 218 ------------------------------------------------------------------- Year 3 $ 673 $ 673 ------------------------------------------------------------------- Year 5 $ 1,154 $ 1,154 ------------------------------------------------------------------- Year 10 $ 2,483 $ 2,483 ------------------------------------------------------------------- INVESTOR CLASS SHARES ------------------------------------------------------------------- Year 1 $ 117 ------------------------------------------------------------------- Year 3 $ 365 ------------------------------------------------------------------- Year 5 $ 633 ------------------------------------------------------------------- Year 10 $ 1,398 ------------------------------------------------------------------- PIONEER SC VALUE FUND ------------------------------------------------------------------- INVESTOR CLASS SHARES ------------------------------------------------------------------- Year 1 $ 117 ------------------------------------------------------------------- Year 3 $ 404 ------------------------------------------------------------------- Year 5 $ 753 ------------------------------------------------------------------- Year 10 $ 1,737 ------------------------------------------------------------------- REASONS FOR THE PROPOSED REORGANIZATION The Trustees believe that the proposed Reorganization is in the best interests of Safeco SC Value Fund. The Trustees considered the following matters, among others, in approving the proposal. FIRST, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. SECOND, the long-term investment performance of Pioneer SC Value Fund is superior to your Fund's performance, although your Fund had better performance during the most recent 12 month period. For the five year period ended June 30, 2004, Class A 9 shares of Pioneer SC Value Fund had an average annual return of [xx]% compared to an average annual of the Class A shares and Investor Class shares of [xx]% and [xx]%, respectively, during the same period. In addition, the Trustees considered the track record of Pioneer in managing equity and fixed income mutual funds. THIRD, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. FOURTH, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer SC Value Fund to 1.15% of average daily net assets. This expense ratio is no lower than both the gross expenses and expenses net of expense reimbursement of the Class A, Class B and Class C shares of your Fund and lower than the gross and the same as the net expense of your Fund's Investor Class shares. Although without the expense limitation Pioneer SC Value Fund's expenses are significantly higher than your Fund's net expenses, the trustees believe that Pioneer SC Value Fund offers the potential for lower expenses through economies of scale. FIFTH, the substantially larger size of Pioneer SC Value Fund offers greater opportunity for diversification of the investment portfolio, which should help to reduce risks. SIXTH, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. SEVENTH, the Investor Class shares of Pioneer SC Value Fund received in the Reorganization will provide Safeco SC Value Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer SC Value Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer SC Value Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer SC Value Fund and its shareholders. CERTAIN AGREEMENTS BETWEEN PIONEER AND SYMETRA Pioneer is supporting the Reorganizations because it believes that it offers favorable long-term investment performance and enhanced shareholder services to the Safeco Funds' shareholders. The Reorganizations will, by combining the assets of two mutual funds and, by being part of a family of funds with greater distribution capabilities, offer the potential for increased economies of scale. Increased economies of scale have the potential of benefiting the shareholders of your Safeco Funds and the Pioneer Funds by spreading fixed costs over a larger asset base and reducing expenses on a per share basis. There can be no assurance that such economies of scale will be realized. Pioneer will benefit from managing a larger pool of assets. Pioneer is also acquiring certain assets associated with SAM's mutual funds and institutional account advisory business. In consideration of that acquisition of these assets and certain covenants from Symetra and SAM, including their assistance in facilitating the Reorganizations and their obligation to indemnify Pioneer against liabilities with respect to the management of the Safeco Funds prior to the closing of the Reorganizations, Pioneer has agreed to pay Symetra up to $30 million. This amount is subject to downward adjustment if the net assets of the Safeco Funds that approve the Reorganizations (together with assets in certain other 10 accounts) are less than $2.6 billion. Under this agreement, Pioneer and Symetra have also agreed, among other things, that (i) once the Investor Class converts to Class A shares, PFD, the principal underwriter of the Pioneer Funds, shall make payments to Safeco Securities pursuant to a Rule 12b-1 plan equal to 0.25% of the average daily net assets attributable to accounts maintained by former shareholders of the Funds, (ii) PFD will also make additional payments out of its own resources to Safeco Securities in connection with purchases of Class A shares of the Pioneer Funds by former shareholders of the Funds; and (iii) Symetra and SAM will be subject to certain non-competition provisions. CAPITALIZATION The following table sets forth the capitalization of each Fund, as of December 31, 2003 for Safeco SC Value Fund and November 30, 2003 for Pioneer SC Value Fund. - ------------------------------------------------------------------------ SAFECO SC VALUE FUND PIONEER SC VALUE FUND DECEMBER 31, 2003 NOVEMBER 30, 2003 - ------------------------------------------------------------------------ NET ASSETS (in millions) $ 52.419 $ 391.509391 - ------------------------------------------------------------------------ NET ASSET VALUE PER SHARE Class A shares $ 18.50 $ 27.10 Class B shares $ 17.68 $ 25.75 Class C shares $ 17.68 $ 26.73 Investor Class shares $ 18.79 N/A - ------------------------------------------------------------------------ SHARES OUTSTANDING Class A shares 169,000 7,449,673 Class B shares 100,000 5,193,293 Class C shares 7,000 2,053,791 Investor Class shares 2,523,000 N/A - ------------------------------------------------------------------------ It is impossible to predict how many shares of Pioneer SC Value Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer SC Value Fund's shares that will actually be received and distributed. BOARD'S EVALUATION AND RECOMMENDATION For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer SC Value Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer SC Value Fund. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF YOUR FUND VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. 11 Safeco Tax-Free Money Market Fund and Pioneer Tax Free Money Market Fund PROPOSAL 16 Approval of Agreement and Plan of Reorganization SUMMARY The following is a summary of more complete information appearing later in this proxy statement and prospectus or incorporated herein. You should read carefully the entire proxy statement, including the form of Agreement and Plan of Reorganization attached as Exhibit A because they contain details that are not in the summary.
Comparison of Safeco TF Money Market Fund to the Pioneer TF Money Market Fund - ------------------------------------------------------------------------------------------------------------------------------------ Safeco TF Money Market Fund Pioneer TF Money Market Fund - ------------------------------------------------------------------------------------------------------------------------------------ Business A series of Safeco Money Market Trust, a A newly organized diversified open-end management diversified open-end management investment investment company organized as a Delaware statutory company organized as a Delaware statutory trust. trust. - ------------------------------------------------------------------------------------------------------------------------------------ Net assets as of $60.7 million None. The Pioneer TF Money Market Fund is newly June 30, 2004 organized and does not expect to commence investment operations until the Reorganization occurs. - ------------------------------------------------------------------------------------------------------------------------------------ Investment advisers and Investment adviser (until August 2, 2004): Investment adviser portfolio managers SAM Pioneer Portfolio Managers: Portfolio Manager: Mary Metastasio (since 1987 and until August 2, Day-to-day management of the Fund's portfolio is the 2004) responsibility of a team of fixed income portfolio managers led by Kenneth J. Taubes. Stephen C. Bauer (since 2003 and until August 2, 2004) Mr. Taubes joined Pioneer as a senior vice president CFA in 1998 and has been an investment professional since 1982. Currently Pioneer is acting as investment adviser to the Fund. The Portfolio Managers of the Pioneer Fund, as indicated in the next column, currently manages your Safeco Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Investment objective Each Fund seeks to provide as high a level of current income exempt from federal income tax as is consistent with a portfolio of high-quality, short-term municipal obligations selected on the basis of liquidity and preservation of capital. Each Fund provides written notice to shareholders at least 60 days prior to any change to its investment objective as described above. - ------------------------------------------------------------------------------------------------------------------------------------ Primary investments To achieve its investment objective, each Fund will purchase only high-quality securities having minimal credit risk with remaining maturities of 397 days or less. - ------------------------------------------------------------------------------------------------------------------------------------ Investment strategies Each Fund may purchase only high-quality securities that the investment adviser believes present minimal credit risks. To be considered high quality, a security must be rated, or the issuer must have received a rating for a comparable short-term security, in accordance with applicable rules in one of the two highest categories for short-term securities by at least two nationally recognized rating services (or by one, if one rating service has rated the security); or, if unrated, the security must be judged by the investment adviser to be of equivalent quality. Each Fund may not invest more than 5% of its total assets in second tier securities. In addition, the each Fund may not invest more than 1% of its total assets or $1 million (whichever is greater) in the second tier securities of a single issuer. Each Fund may invest in: o Variable and floating rate instruments that change interest rates periodically to keep their market value near par - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Safeco TF Money Market Fund Pioneer TF Money Market Fund - ------------------------------------------------------------------------------------------------------------------------------------ o Municipal notes that have a maturity of one year or less from the date of purchase o Put bonds, which allow the holder to redeem the issue on specified dates before maturity and receive full face value o Tax-exempt commercial paper o Restricted securities that are exempt from registration requirements and eligible for resale to qualified institutional investors, such as mutual funds under Rule 144A of Section 4(2) - ------------------------------------------------------------------------------------------------------------------------------------ Other investments Each Fund will limit its investment in municipal obligations the interest on which is payable from the revenues of similar types of projects to less than 25% of the Fund's total assets. As a matter of operating policy, "similar types of projects" may include sports, convention or trade show facilities; airports or mass transportation; sewage or solid waste disposal facilities; or air and water pollution control projects. Each Fund will limit its investment in securities whose issuers are located in the same state to less than 25% of the Fund's total assets. Each Fund may invest up to 25% of its total assets in the "first tier securities" of a single issuer for up to three business days after purchase. First tier securities are securities (1) rated in the highest short-term category by two nationally recognized statistical rating organizations (NRSROs); (2) rated in the highest short-term rating category by a single NRSRO if only that NRSRO has assigned the securities a short-term rating; or (3) unrated, but determined by SAM to be of comparable quality. Each Fund may invest in any of the following types of short-term, tax-exempt obligations: municipal notes of issuers rated, at the time of purchase, within one of the three highest grades assigned by a NRSRO; unrated municipal notes offered by issuers having outstanding municipal bonds rated within one of the three highest grades assigned by an NRSRO; notes issued by or on behalf of municipal issuers that are guaranteed by the U.S. government; tax-exempt commercial paper assigned one of the two highest grades by an NRSRO; certificates of deposit issued by banks with assets of $1,000,000,000 or more; and municipal obligations that have a maturity of one year or less from the date of purchase. - ------------------------------------------------------------------------------------------------------------------------------------ Temporary defensive The Fund may hold cash or invest in The Fund may invest all or part of its assets in strategies high-quality, short-term securities issued by securities with remaining maturities of less than one an agency or instrumentality of the U.S. year, cash equivalents or may hold cash. government, high-quality commercial paper, certificates of deposit, shares of no-load, open-end money market funds, or repurchase agreements as a temporary defensive measure when market conditions so warrant. - ------------------------------------------------------------------------------------------------------------------------------------ Diversification Each Fund is diversified for the purpose of the Investment Company Act, and each Fund is subject to diversification requirements under the Code. - ------------------------------------------------------------------------------------------------------------------------------------ Industry concentration Each Fund will not make investments that will result in the concentration (as that term may be defined in the Investment Company Act, any rule or order thereunder, or SEC staff interpretation thereof) of its investments in the securities of issuers primarily engaged in the same industry, provided that this restriction does not limit the Fund from investing in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, or governmental issuers of special or general tax-exempt securities, or certain bank instruments issued by domestic banks. - ------------------------------------------------------------------------------------------------------------------------------------ Restricted and illiquid If immediately after and as a result of such action the value of the following securities, in the securities aggregate, would exceed 10% of the Fund's net assets, the Fund will not (i) purchase securities for which there is no readily available market, (ii) purchase time deposits maturing in more than seven days, (iii) purchase over-the-counter (OTC) options or hold assets set aside to cover OTC options written by the Fund, (iv) enter into repurchase agreements maturing in more than seven days, or (v) invest in interests in real estate investment trusts which are not readily marketable or interests in real estate limited partnerships which are not listed or traded on the NASDAQ Stock Market. - ------------------------------------------------------------------------------------------------------------------------------------ Borrowing Each Fund may borrow money (i) from banks or (ii) by engaging in reverse repurchase agreements. The Fund will not commit to additional securities purchases if total outstanding borrowings are equal to 5% or more of total assets. - ------------------------------------------------------------------------------------------------------------------------------------ Lending Each Fund may lend securities to qualified institutional investors with a value of up to 33% of the Fund's total assets. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ Safeco TF Money Market Fund Pioneer TF Money Market Fund - ------------------------------------------------------------------------------------------------------------------------------------ Derivative instruments Each Fund may not purchase securities on margin. However, the Fund may (i) obtain short-term credits as necessary to clear its purchases and sales of securities, and (ii) make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments. - ------------------------------------------------------------------------------------------------------------------------------------ Other investment As described above, the Funds have substantially similar principal investment strategies and policies. policies and Certain of the non-principal investment policies and restrictions are different. For a more complete restrictions discussion of each Fund's other investment policies and fundamental and non-fundamental investment restrictions, see the SAI. - ------------------------------------------------------------------------------------------------------------------------------------ Buying, Selling and Exchanging Shares - ------------------------------------------------------------------------------------------------------------------------------------ Sales charges A contingent deferred sales charge may apply if The Investor Class shares of Pioneer TF Money Market you redeem Class B shares that were purchased Fund you receive in the Reorganization will not be by exchange from another fund. subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the A contingent deferred sales charge of 1% if you Reorganization (i.e., not in the name of a broker) redeem Class C shares within one year of and maintain your account, you may purchase Class A purchase, and the shares were purchased by shares of Pioneer TF Money Market Fund and Class A exchange from another fund. shares of any fund in the Pioneer family of funds through such account in the future without paying any Purchases of Investor Class shares of the Fund sales charge. are not subject to a sales load. In general, Class A shares of Pioneer TF Money Market The Fund assesses a mandatory redemption fee of Fund are not subject to a front-end sales charge. 2%, as a percentage of the amount redeemed or exchanged, on Investor Class shares held less than 30 days. - ------------------------------------------------------------------------------------------------------------------------------------ Management and other Safeco TF Money Market Fund pays advisory Pioneer TF Money Market Fund pays Pioneer a fees fee on a monthly basis at an annual rate as management fee equal to 0.40% of the Fund's average follows: daily net assets. $0 - $250,000,000: 0.50 of 1% $250,000,001 - $750,000,000: 0.45 of 1% In addition, the Fund reimburses Pioneer for certain $750,000,001 - $1,250,000,000: 0.40 of 1% Fund accounting and legal expenses incurred on behalf Over $1,250,000,000: 0.35 of 1% of the Fund and pays a separate shareholder servicing/transfer agency fee to PIMSS, an affiliate SAM serves as administrator and Fund accounting of Pioneer. agent for the Fund. The Fund pays SAM an administrative services fee of 0.05% of the Pioneer has agreed until the second anniversary of Fund's average daily net assets up to the first the closing of the Reorganization to limit the $200,000,000 and 0.01% of its net assets ordinary operating expenses (excluding taxes, thereafter, and an accounting fee of 0.04% of commissions, interest and extraordinary expenses) of the Fund's average daily net assets up to the the Investor Class to 0.65% of the average daily net first $200,000,000 and 0.01% of its net assets assets attributable to the Investor Class. thereafter. During its most recent fiscal year, Safeco TF Money Market Fund paid aggregate advisory and administration fees at an average rate of 0.59% of average daily net assets. SAM had contractually agreed until April 30, 2009, to pay certain Fund operating expenses (but not all of the operating expenses of the Fund) that exceeded the rate of 0.30% per annum of the Fund's average daily net assets. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. For the fiscal year ended December 31, 2003, the Fund's annual operating expenses for Investor Class shares were 0.74%. - ------------------------------------------------------------------------------------------------------------------------------------ Distribution and Investor class shares of each Fund are not subject to a Rule 12b-1 fee. service (12b-1) fee - ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------ Safeco TF Money Market Fund Pioneer TF Money Market Fund - ------------------------------------------------------------------------------------------------------------------------------------ Buying shares You may buy shares of the Fund directly through You may buy shares from any investment firm that has Safeco Securities, Inc., the Fund's principal a sales agreement with PFD. Existing shareholders of underwriter or through brokers, registered Safeco TF Money Market Fund who own shares in their investment advisers, banks and other financial own name as of the closing date of the Reorganization institutions that have entered into selling and who maintain their accounts may buy shares of any agreements with the Fund's principal fund in the Pioneer family of funds through such underwriter, as described in the Fund's accounts in the future without paying sales charges. prospectus. If the account is established in the shareholder's own Certain account transactions may be name, shareholders may also purchase additional shares done by telephone of Pioneer TF Money Market Fund by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------ Exchange privilege There are no sales charges on shares you You may exchange shares of Pioneer TF Money Market acquire through dividend reinvestment or other Fund without incurring any fee on the exchange with fund distributions. the more than 62 other Pioneer Funds. Your exchange would be for Class A shares, which would be subject to Certain account transactions may be done by a Rule 12b-1 fee. An exchange generally is treated as a telephone. sale and a new purchase of shares for federal income tax purposes. If the account is established in the shareholder's own name, shareholders may also exchange shares of Pioneer TF Money Market Fund for shares of other Pioneer Funds by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------ Selling shares Investor Class shares will be sold at net asset value per share next calculated after the Fund receives your request in good order. ---------------------------------------------------------------------------------------------------------- You may sell your shares by contacting the Fund Normally, your investment firm will send your request directly in writing or by contacting a to sell shares to PIMSS. You can also sell your financial intermediary as described in the shares by contacting the Fund directly if your Fund's prospectus. account is registered in your name. If the account is established in the shareholder's own name, shareholders may also redeem shares of Pioneer TF Money Market Fund by telephone or online. - ------------------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Funds Because each Fund has a similar investment objective, primary investment policies and strategies, the Funds are subject to the same principal risks. Even though each Fund seeks to maintain a $1 share price, you could lose money on your investment or either Fund could fail to generate high current income if: o Interest rates go up, causing the value of the Fund's investments to decline o The issuer of a security owned by the Fund defaults on its obligation to pay principal and/or interest or has its credit rating downgraded o The investment adviser's judgment about the credit quality, attractiveness or relative value of a particular security proves to be incorrect Investing in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers. These risks may include: o Inadequate financial information o Smaller, less liquid and more volatile markets o Political and economic upheavals Past Performance Set forth below is performance information for Safeco TF Money Market Fund. The bar charts show how Safeco TF Money Market Fund's total return (not including any deduction for sales charges) has varied from year to year for each full calendar year. The tables show average annual total return (before and after sales taxes) for Safeco TF Money Market Fund over time for each class of shares (including deductions for sales charges) compared with a broad-based securities market index. Past performance 4 before and after taxes does not indicate future results. Pioneer TF Money Market Fund has not commenced investment operations. Safeco TF Money Market Fund - Investor Class Calendar Year Total Returns* [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART IN THE PRINTED DOCUMENT.]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2.45 3.54 3.07 3.12 3.07 2.77 3.52 2.34 0.97 0.51
*During the period shown in the bar chart, your Fund's highest quarterly return was 0.94% for the quarter ended June 30, 2000, and the lowest quarterly return was 0.10% for the quarter ended September 30, 2003. Safeco TF Money Market Fund Average Annual Total Returns as of December 31, 2003
1 Year 5 Years 10 Years (1) ------ ------- --------- Safeco TF Money Market Fund, Investor Class Shares Return Before Taxes 0.51% 2.02% 2.53%
- -------------------- (1) The Fund commenced operations on [ ]. The Funds' Fees and Expenses Shareholders of both Funds pay various fees and expenses, either directly or indirectly. The tables below show the fees and expenses that you would pay if you were to buy and hold shares of each Fund. The expenses in the table appearing below are based on (i) for your Fund, the expenses of your Fund for its fiscal year ended December 31, 2003 and (ii) for the Pioneer TF Money Market Fund, the estimated annual expenses of the Pioneer TF Money Market Fund. The Pioneer TF Money Market Fund's actual expenses may be greater or less.
------------------------------------------------------------------------------------------------ Safeco TF Money Pioneer TF Money Shareholder transaction fees (paid directly from Market Fund Market Fund your investment) Investor Class Investor Class ------------------------------------------------------------------------------------------------ Maximum sales charge (load) when you buy shares as a None None(1) percentage of offering price ------------------------------------------------------------------------------------------------ Maximum deferred sales charge (load) as a % of None None purchase price or the amount you receive when you sell shares, whichever is less ------------------------------------------------------------------------------------------------ Redemption fees for shares held less than 30 days None N/A ------------------------------------------------------------------------------------------------ Wire redemption fee $20(4) N/A ------------------------------------------------------------------------------------------------ Annual low balance fee $12(5) N/A ------------------------------------------------------------------------------------------------ Annual fund operating expenses (deducted from fund assets) (as a % of average net assets) ------------------------------------------------------------------------------------------------ Management fee 0.50% 0.40% ------------------------------------------------------------------------------------------------ Distribution and service (12b-1) fee None None ------------------------------------------------------------------------------------------------ Other expenses 0.24% 0.41% ------------------------------------------------------------------------------------------------ Total fund operating expenses 0.74% 0.81% ------------------------------------------------------------------------------------------------ Expense reduction N/A 0.16%(3) ------------------------------------------------------------------------------------------------ Net fund operating expenses 0.74% 0.65% ------------------------------------------------------------------------------------------------
5 (1) No sales load will apply to shares received in the Reorganization by shareholders of your Fund who become shareholders of record of Pioneer TF Money Market Fund through the Reorganization. In addition, shareholders of your Fund who own shares in their own name (i.e., not in the name of a broker or other intermediary) and maintain such account as of the closing of the Reorganization may purchase Class A Shares of Pioneer TF Money Market Fund or of any fund in the Pioneer family of funds through such account in the future without paying this sales charge. (2) As described above, SAM had contractually agreed to reimburse Safeco TF Money Market Fund to the extent the Fund's total ordinary operating expenses exceeded 0.30% of the Fund's average daily net asset value in a fiscal year. This arrangement included all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. (3) Pioneer has agreed that through the second anniversary of the closing of the Reorganization, Pioneer will limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class shares of Pioneer TF Money Market Fund to 0.65% of average daily net assets. (4) There is a higher charge for international wire redemptions, which may vary by country or dollar amount. (5) A low balance fee is charged once in year in December for accounts with balances under $1,000 in your Fund. (6) A contingent deferred sales charge may apply if you redeem Class B shares of your Fund that were purchased by exchange from another fund. (7) A 1.00% contingent deferred sales charge may apply if, within the first twelve months of the initial purchase, you redeem Class C shares that were purchased by exchange from another fund. The hypothetical example below helps you compare the cost of investing in each Fund. It assumes that: (a) you invest $10,000 in each Fund for the time periods shown, (b) you reinvest all dividends and distributions, (c) your investment has a 5% return each year, (d) each Fund's gross operating expenses remain the same, (e) the expense limitations are in effect for five years for Safeco TF Money Market Fund and two years for Pioneer TF Money Market Fund and (f) and the Investor Class shares of Pioneer TF Money Market Fund convert to Class A shares after two years. The examples are for comparison purposes only and are not a representation of either Fund's actual expenses or returns, either past or future.
---------------------------------------------------------- Example ---------------------------------------------------------- Safeco TF Money Market Fund ---------------------------------------------------------- Investor Class Shares ---------------------------------------------------------- Year 1 $76 ---------------------------------------------------------- Year 3 $237 ---------------------------------------------------------- Year 5 $411 ---------------------------------------------------------- Year 10 $918 ---------------------------------------------------------- Pioneer TF Money Market Fund ---------------------------------------------------------- Investor Class Shares ---------------------------------------------------------- Year 1 $66 ---------------------------------------------------------- Year 3 $226 ---------------------------------------------------------- Year 5 $418 ---------------------------------------------------------- Year 10 $979 ----------------------------------------------------------
Reasons for the Proposed Reorganization The Trustees believe that the proposed Reorganization is in the best interests of Safeco TF Money Market Fund. The Trustees considered the following matters, among others, in approving the proposal. 6 First, SAM, the investment adviser to the Fund until August 2, 2004, was acquired by Symetra. Symetra informed the Trustees that it did not intend to continue to provide investment advisory services to the Safeco Funds. Consequently, a change in your Fund's investment management was necessary. Second, the resources of Pioneer. At June 30, 2004, Pioneer managed over 62 investment companies and accounts with approximately $35 billion in assets. Pioneer is part of the global asset management group of UniCredito Italiano S.p.A., one of the largest banking groups in Italy, providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management by UniCredito Italiano S.p.A. were approximately $151 billion worldwide. Shareholders of your Fund would become part of a significantly larger family of funds that offers a more diverse array of investment options and enhanced shareholder account options. The Pioneer family of mutual funds offers over 62 funds, including domestic and international equity and fixed income funds and a money market fund that will be available to your Fund's shareholders through exchanges. In addition, Pioneer offers shareholders additional options for their accounts, including the ability to transact and exchange shares over the telephone or online and the ability to access account values and transaction history in all of the shareholder's direct accounts in the Pioneer Funds over the telephone or online. Third, Pioneer has experience in many other money market and tax free portfolios. At June 30, 2004, Pioneer managed portfolios investing in tax exempt securities with aggregate assets of $__ billion and money market portfolios with assets of $__ million. Fourth, Pioneer and its affiliates have greater potential for increasing the size of your Fund due to Pioneer's experience in distributing mutual funds through a broader range of distribution channels than currently available to your Fund. Over the long-term, if this potential for a larger asset base is realized, it is expected to increase the portfolio management options available to the Fund. Fifth, Pioneer's commitment until the second anniversary of the Reorganization to limit the ordinary operating expenses (excluding taxes, commissions, interest and extraordinary expenses) of the Investor Class of Pioneer TF Money Market Fund to 0.67% of average daily net assets. This expense ratio is no higher than both the gross expenses and expenses net of expense reimbursement of the Investor Class shares of your Fund. Although you will experience higher expenses once the Investor Class shares convert to Class A shares after two years, your expenses will remain the same until the second anniversary of the Reorganization. Sixth, shareholders who own shares in their name as of the closing of the Reorganization (i.e., not in the name of a broker) and maintain their account may purchase additional Class A shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund or purchase Class A share of another Pioneer Fund without paying any sales charge. Seventh, the Investor Class shares of Pioneer TF Money Market Fund received in the Reorganization will provide Safeco TF Money Market Fund shareholders with exposure to substantially the same investment product as they currently have. Pioneer and Symetra will pay all out of pocket expenses of the Safeco Funds and the Pioneer Funds associated with the Reorganizations, including, but not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including this joint Proxy Statement/Prospectus, and any filings with the SEC and other governmental authorities in connection with the Reorganizations; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Reorganizations; (3) the legal fees and expenses incurred by the Safeco Funds in connection with the Reorganizations; and (4) the Trustee fees and out of pocket expenses incurred as a result of the Reorganizations. The Trustees considered that Pioneer and Symetra will benefit from the Reorganization. See "Certain Agreements between Pioneer and Symetra." The board of trustees of Pioneer TF Money Market Fund also considered that the Reorganization presents an excellent opportunity for the Pioneer TF Money Market Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to Pioneer TF Money Market Fund and its shareholders. Capitalization The following table sets forth the capitalization of each Fund, as of December 31, 2003.
------------------------------------------------------------------------------------ Safeco TF Money Market Fund Pioneer TF Money Market December 31, 2003 Fund December 31, 2003 ------------------------------------------------------------------------------------ Net Assets (in thousands) $67,128 N/A ------------------------------------------------------------------------------------ Net Asset Value Per Share Investor Class shares $1.00 N/A ------------------------------------------------------------------------------------ Shares Outstanding Investor Class shares 67,128,000 N/A ------------------------------------------------------------------------------------
7 It is impossible to predict how many shares of Pioneer TF Money Market Fund will actually be received and distributed by your Fund on the Reorganization date. The table should not be relied upon to determine the amount of Pioneer TF Money Market Fund's shares that will actually be received and distributed. Board's Evaluation and Recommendation For the reasons described above, the Trustees, including the Independent Trustees, approved the Reorganization. In particular, the Trustees determined that the Reorganization is in the best interests of your Fund. Similarly, the board of trustees of Pioneer TF Money Market Fund, including its Independent Trustees, approved the Reorganization. They also determined that the Reorganization is in the best interests of Pioneer TF Money Market Fund. The Trustees recommend that the shareholders of your Fund vote FOR the proposal to approve the Agreement and Plan of Reorganization. 8 TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION THE REORGANIZATIONS o Each Reorganization is scheduled to occur as of 4:00 p.m., Eastern time, on [ ], 2004, unless your Safeco Fund and the corresponding Pioneer Fund agree in writing to a later date. Each Safeco Fund will transfer all of its assets to the corresponding Pioneer Fund. The corresponding Pioneer Fund will assume your Safeco Fund's liabilities that are included in the calculation of your Safeco Fund's net assets value at the closing of the Reorganization. The net asset value of both Funds will be computed as of 4:00 p.m., Eastern time, on the closing date of the Reorganization. o Each corresponding Pioneer Fund will issue to the corresponding Safeco Fund Investor Class shares with an aggregate net asset value equal to the net assets attributable to the corresponding Safeco Fund's shares. These shares will immediately be distributed to your Safeco Fund's shareholders in proportion to the relative net asset value of their holdings of your Safeco Fund's shares on the Reorganization Date. As a result, each Safeco Fund's shareholders will end up as Investor Class shareholders of the corresponding Pioneer Fund. o After the distribution of shares, your Safeco Fund will be liquidated and dissolved. o Each Reorganization is not intended to result in income, gain or loss being recognized for federal income tax purposes and will not take place unless both Funds receive a satisfactory opinion concerning the tax consequences of the reorganization from Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the Pioneer Funds. AGREEMENT AND PLAN OF REORGANIZATION The shareholders of each Safeco Fund are being asked to approve an Agreement and Plan of Reorganization (the "Plan"), the form of which is attached as EXHIBIT A. The description of the Plan contained herein is qualified in its entirety by the attached copy. CONDITIONS TO CLOSING EACH REORGANIZATION. The obligation of each Pioneer Fund to consummate each reorganization is subject to the satisfaction of certain conditions, including your Safeco Fund's performance of all of its obligations under the Plan, the receipt of certain documents and financial statements from your Safeco Fund and the receipt of all consents, orders and permits necessary to consummate the Reorganization (see Sections 7 and 8 of the Plan, attached as EXHIBIT A). The obligations of both Funds are subject to the approval of the Plan by the necessary vote of the outstanding shares of your Safeco Fund, in accordance with the provisions of your Trust's trust instrument and by-laws. The Funds' obligations are also subject to the receipt of a favorable opinion of Wilmer Cutler Pickering Hale and Dorr LLP as to the federal income tax consequences of each reorganization. (see Section 8.5 of the Plan, attached as EXHIBIT A). TERMINATION OF AGREEMENT. The board of either a Safeco Fund or the corresponding Pioneer Fund may terminate the Plan (even if the shareholders of your Safeco Fund have already approved it) at any time before the Reorganization Date, if that board believes in good faith that proceeding with the Reorganization would no longer be in the best interests of shareholders. TAX STATUS OF EACH REORGANIZATION Each Reorganization is not intended to result in income, gain or loss being recognized for United States federal income tax purposes and will not take place unless both Funds involved in the Reorganization receive a satisfactory opinion from Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the Pioneer Funds, substantially to the effect that each Reorganization will be a "reorganization" within the meaning of Section 368(a) of the Code. As a result, for federal income tax purposes: o No gain or loss will be recognized by your Safeco Fund upon (1) the transfer of all of its assets to the Pioneer Fund as described in this Proxy Statement Prospectus or (2) the distribution by your Safeco Fund of Pioneer Fund shares to your Safeco Fund's shareholders; o No gain or loss will be recognized by the Pioneer Fund upon the receipt of your Safeco Fund's assets solely in exchange for the issuance of Pioneer Fund shares to your Safeco Fund and the assumption of your Safeco Fund's liabilities by the corresponding Pioneer Fund; 10 o The basis of the assets of your Safeco Fund acquired by the corresponding Pioneer Fund will be the same as the basis of those assets in the hands of your Safeco Fund immediately before the transfer; o The tax holding period of the assets of your Safeco Fund in the hands of the corresponding Pioneer Fund will include your Safeco Fund's tax holding period for those assets; o You will not recognize gain or loss upon the exchange of your shares of your Safeco Fund solely for the Pioneer Fund shares as part of the Reorganization; o The basis of the Pioneer Fund shares received by you in the reorganization will be the same as the basis of your shares of your Safeco Fund surrendered in exchange; and o The tax holding period of the Pioneer Fund shares you receive will include the tax holding period of the shares of your Safeco Fund surrendered in the exchange, provided that you held the shares of your Safeco Fund as capital assets on the date of the exchange. In rendering such opinions, counsel shall rely upon, among other things, reasonable assumptions as well as representations of your Safeco Fund and the Pioneer Fund. No tax ruling has been or will be received from the Internal Revenue Service ("IRS") in connection with the Reorganizations. An opinion of counsel is not binding on the IRS or a court, and no assurance can be given that the IRS would not assert, or a court would not sustain, a contrary position. You should consult your tax adviser for the particular tax consequences to you of the transaction, including the applicability of any state, local or foreign tax laws. 11 9 PROPOSALS 17(a)-(p) APPROVAL OF APPOINTMENT OF PIONEER AS INVESTMENT ADVISER BACKGROUND Having determined to recommend the Reorganizations, the Trustees elected to appoint Pioneer as investment adviser to each Fund until the closing of the Reorganization given that Symetra had indicated that it did not wish to continue to offer investment advisory services to the Safeco Funds. Your approval of Pioneer will constitute approval of an interim advisory agreement between your Safeco Fund and Pioneer. In the event that the interim advisory contract is approved but the Reorganization is not approved, the interim advisory contract would continue in effect for an indefinite period. The fee under the interim agreement is the same as the fee under the current advisory agreement. INTERIM ADVISORY AGREEMENT Under the Investment Company Act, shareholders must approve any new investment adviser to the Funds. However, Rule 15a-4 under the Investment Company Act permits your trustees to appoint an adviser on an interim basis without prior shareholder approval if the new adviser agrees to provide such services on the same terms as the previous adviser and approval of the new adviser is submitted to shareholders within 150 days. Because Pioneer will be making the payment to Symetra discussed under "Background to the Reorganizations", any fees that Pioneer would be entitled to under the interim advisory agreement will be held in escrow until shareholders approval is obtained. If Pioneer is not approved as investment adviser to a Fund, Pioneer will not receive the fee under the current investment advisory agreement with SAM but instead would be paid a fee based upon Pioneer's cost in managing the Fund. During this period prior to the meeting, the Funds would be managed as separate Fund and will not be combined with a Pioneer Fund. During this period, you also will not be able to exchange your shares in a Fund for shares of a Pioneer Fund. If the appointment of Pioneer as interim investment adviser is not approved by December [ ], 2004, Pioneer will no longer provide advisory services to the Funds, unless an extension of the 150 day period is permitted by a Rule or independent position of the staff of the SEC. If both the Reorganization and appointment of Pioneer are approved, the interim agreement will continue in effect until the closing of the Reorganization, even if that occurs after December [ ], 2004. The interim agreement incorporates the terms of the existing advisory agreements with SAM, which are discussed below. The form of interim agreement is attached as Exhibit B. SAFECO ADVISORY AGREEMENT The following is a summary of the material terms of the Funds' existing investment advisory agreement with SAM (the "Safeco Advisory Agreement"). SERVICES. Under the terms of the Safeco Advisory Agreement, SAM manages the Funds' investments, subject to the supervision of the board of trustees. At its expense, SAM provides office space and all necessary office facilities, equipment and personnel for managing the investments of the Funds. COMPENSATION. As compensation under the Safeco Advisory Agreement, each Safeco Fund pays SAM a monthly advisory fee at an annual rate as listed in the below table of the Fund's average daily net assets. In addition, SAM has agreed to reimburse each Fund to the extent a Fund's total annual expenses, other than taxes, interest and extraordinary litigation expenses, during any of the Fund's fiscal years, exceed 0.40% (0.30% for Safeco Money Market Fund and Safeco Tax-Free Money Market Fund) of its average daily net asset value in such year. This arrangement includes all Fund operating expenses except management fees, Rule 12b-1 fees, brokerage commissions, taxes, interest, and extraordinary expenses. This limitation cannot be changed without shareholder approval. Brokers' commissions and other charges relative to the purchase and sale of portfolio securities are not regarded as expenses. 12
------------------------------------------------------------------------------- FUND NET ASSETS ANNUAL FEE ------------------------------------------------------------------------------- SAFECO BALANCED FUND, $0 - $250,000,000 0.70 of 1% SAFECO CORE EQUITY $250,000,0001 - FUND, SAFECO GROWTH $750,000,000 0.65 of 1% OPPORTUNITIES FUND, $750,000,001 SAFECO LARGE-CAP $1,250,000,000 0.60 of 1% VALUE FUND, SAFECO Over $1,250,000,000 0.55 of 1% MULTI-CAP CORE FUND ------------------------------------------------------------------------------- SAFECO CALIFORNIA TAX- $0 - $250,000,000 0.50 of 1% FREE INCOME FUND, $250,000,0001 - SAFECO INTERMEDIATE- $750,000,000 0.45 of 1% TERM MUNICIPAL BOND Over $750,000,000 0.40 of 1% FUND, SAFECO MUNICIPAL BOND FUND ------------------------------------------------------------------------------- SAFECO HIGH-YIELD $0 - $250,000,000 0.65 of 1% BOND FUND $250,000,0001 - $750,000,000 0.55 of 1% Over $750,000,000 0.50 of 1% ------------------------------------------------------------------------------- SAFECO INTERMEDIATE- $0 - $750,000,000 0.50 of 1% TERM BOND FUND $750,000,001 $1,250,000,000 0.45 of 1% Over $1,250,000,000 0.40 of 1% ------------------------------------------------------------------------------- SAFECO INTERMEDIATE- $0 - $250,000,000 0.55 of 1% TERM U.S. GOVERNMENT $250,000,0001 - FUND $750,000,000 0.50 of 1% $750,000,001 $1,250,000,000 0.45 of 1% Over $1,250,000,000 0.40 of 1% ------------------------------------------------------------------------------- SAFECO INTERNATIONAL $0 - $250,000,000 1.00 of 1% STOCK FUND $250,000,0001 - $750,000,000 0.90 of 1% Over $750,000,000 0.80 of 1% ------------------------------------------------------------------------------- SAFECO LARGE-CAP $0 - $250,000,000 0.80 of 1% GROWTH FUND $250,000,0001 - $750,000,000 0.75 of 1% $750,000,001 $1,250,000,000 0.70 of 1% Over $1,250,000,000 0.65 of 1% ------------------------------------------------------------------------------- SAFECO MONEY MARKET $0 - $250,000,000 0.50 of 1% FUND, SAFECO TAX-FREE $250,000,0001 - MONEY MARKET FUND $750,000,000 0.45 of 1% $750,000,001 $1,250,000,000 0.40 of 1% Over $1,250,000,000 0.35 of 1% ------------------------------------------------------------------------------- SAFECO SMALL-CAP $0 - $250,000,000 0.75 of 1% VALUE FUND $250,000,0001 - $750,000,000 0.70 of 1% $750,000,001 $1,250,000,000 0.65 of 1% Over $1,250,000,000 0.60 of 1%
In addition to the management fee, your Safeco Fund pays SAM, in its capacity as administrator and fund accounting agent an administrative services fee of 0.05% of your Safeco Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets thereafter, and an accounting fee of 0.04% of the Fund's average daily net assets up to the first $200,000,000 and 0.01% of its net assets thereafter. 13 The table below shows gross advisory fees paid by each Fund and any expense reimbursements by SAM during the fiscal year ended December 31, 2003: --------------------------------------------------------------- (In Thousands) --------------------------------------------------------------- SAFECO BALANCED FUND Advisory Fee $ 124 Reimbursement $ 79 --------------------------------------------------------------- SAFECO CALIFORNIA TAX-FREE INCOME FUND Advisory Fee $ 458 Reimbursement $ 109 --------------------------------------------------------------- SAFECO CORE EQUITY FUND Advisory Fee $ 4,663 Reimbursement $ 353 --------------------------------------------------------------- SAFECO GROWTH OPPORTUNITIES FUND Advisory Fee $ 3,156 Reimbursement $ 499 --------------------------------------------------------------- SAFECO HIGH-YIELD BOND FUND Advisory Fee $ 266 Reimbursement $ 152 --------------------------------------------------------------- SAFECO INTERMEDIATE-TERM BOND FUND Advisory Fee $ 52 Reimbursement $ 99 --------------------------------------------------------------- SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND Advisory Fee $ 84 Reimbursement $ 103 --------------------------------------------------------------- SAFECO INTERMEDIATE-TERM U.S. GOVERNMENT FUND Advisory Fee $ 332 Reimbursement $ 135 --------------------------------------------------------------- SAFECO INTERNATIONAL STOCK FUND Advisory Fee $ 256 Reimbursement $ 235 --------------------------------------------------------------- SAFECO LARGE-CAP GROWTH FUND Advisory Fee $ 40 Reimbursement $ 70 --------------------------------------------------------------- SAFECO LARGE-CAP VALUE FUND Advisory Fee $ 965 Reimbursement $ 58 --------------------------------------------------------------- SAFECO MULTI-CAP CORE FUND Advisory Fee $ 523 Reimbursement $ 122 --------------------------------------------------------------- SAFECO MONEY MARKET FUND Advisory Fee $ 1,960 Reimbursement $ 32 --------------------------------------------------------------- SAFECO MUNICIPAL BOND FUND Advisory Fee $ 2,720 Reimbursement $ 10 --------------------------------------------------------------- SAFECO SMALL-CAP VALUE FUND Advisory Fee $ 345 Reimbursement $ 149 --------------------------------------------------------------- SAFECO TAX-FREE MONEY MARKET FUND Advisory Fee $ 364 Reimbursement $ 70 --------------------------------------------------------------- 14 TERM. The Safeco Advisory Agreement continues in effect for successive annual periods, subject to the annual approval of its continuance as described below under "Termination, Continuance and Amendment." LIMITATION OF LIABILITY. The Safeco Advisory Agreement provides that SAM shall not be subject to liability to the Funds or to any shareholder of the Funds for any loss suffered by Fund or its shareholders from or as a consequence of any act or omission of SAM, or of any of the partners, employees or agents of SAM in connection with or pursuant to the agreement, except by reason of willful misfeasance, bad faith or gross negligence on the part of SAM in the performance of its duties or by reason of reckless disregard by SAM of its obligations and duties under the agreement. TERMINATION, CONTINUANCE AND AMENDMENT. The Safeco Advisory Agreement continues from year to year subject to approval of its continuance at least annually by the vote of (1) a majority of your Safeco Fund's independent trustees, in each case cast in person at a meeting called for the purpose of voting on such approval or (2) a majority of the outstanding voting securities (as that phrase is defined in Section 2(a)(42) of the Investment Company Act) of each Fund. The contract may be terminated at any time without penalty on 60 days' written notice by the trustees, by a vote of a majority of the Fund's outstanding voting securities, or by SAM. The contract terminates automatically in the event of its assignment. VOTING RIGHTS AND REQUIRED VOTE Each share of your Safeco Fund is entitled to one vote and each fractional share shall be entitled to a proportionate fractional vote. A quorum is required to conduct business at the Meeting. With respect to each Safeco Fund, the presence in person or by proxy of a majority of shareholders entitled to cast votes at the Meeting will constitute a quorum. A favorable vote of a "majority of the outstanding voting securities" of the applicable Fund is required to approve each Proposal. Under the Investment company Act, majority of the outstanding voting securities means the affirmative vote of the lesser of (i) 50% or more of the shares of the applicable Fund represented at the meeting, if at least 67% of all outstanding shares of the fund are represented at the meeting, or (ii) 50% or more of the outstanding shares of the fund entitled to vote at the meeting.
- ---------------------------------------------------------------------------------------------------------------------------- SHARES QUORUM VOTING - ---------------------------------------------------------------------------------------------------------------------------- In General All shares "present" in Shares "present" in person will be voted in person at the Meeting. person or by proxy are Shares present by proxy will be voted in accordance with counted towards a quorum. instructions. - ---------------------------------------------------------------------------------------------------------------------------- Broker Non-Vote (where the Considered "present" at Broker non-votes do not count as a vote "for" and effectively underlying holder has not Meeting for purposes of result in a vote "against" Proposals 1-16, and Proposal 17 if voted and the broker does quorum. less than 67% of the outstanding shares are present at the Meeting not have discretionary authority to vote the shares) - ---------------------------------------------------------------------------------------------------------------------------- Proxy with No Voting Considered "present" at Voted "for" the proposal. Instruction (other than Meeting for purposes of Broker Non-Vote) quorum. - ---------------------------------------------------------------------------------------------------------------------------- Vote to Abstain Considered "present" at Abstentions do not constitute a vote "for" and effectively result Meeting for purposes of in a vote "against" Proposals 1-16, and Proposal 17 if less than quorum. 67% of the outstanding shares are present at the Meeting. - ----------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS INVESTMENT ADVISER Pioneer serves as the investment adviser to each Pioneer Fund. Pioneer is an indirect, wholly owned subsidiary of UniCredito Italiano S.p.A., one of the largest banking groups in Italy. Pioneer is part of the global asset management group providing investment management and financial services to mutual funds, institutional and other clients. As of June 30, 2004, assets under management were approximately $150 billion worldwide, including over $35 billion in assets under management by Pioneer. Pioneer's main office is at 60 State Street, Boston, Massachusetts 02109. Pioneer's U.S. mutual fund investment history includes creating one of the first mutual funds in 1928. The board of trustees of the Pioneer Funds is responsible for overseeing the performance of each of Pioneer Fund's investment adviser and subadviser and determining whether to approve and renew the fund's investment management agreement and the sub-advisory agreements. Pioneer has received an order (the "Exemptive Order") from the SEC that permits Pioneer, subject to the approval of the Pioneer Funds' board of trustees, to hire and terminate a subadviser or to materially modify an existing subadvisory agreement for a Pioneer Fund without shareholder approval. Pioneer retains the ultimate responsibility to oversee and recommend the hiring, termination and replacement of any subadviser. To the extent that the SEC adopts a rule that would supersede the Exemptive 15 Order, Pioneer and the Pioneer Funds intend to rely on such rule to permit Pioneer, subject to the approval of the Pioneer Funds' board of trustees and any other applicable conditions of the rule, to hire and terminate a subadviser or to materially modify an existing subadvisory agreement for a Pioneer Fund without shareholder approval. BUYING, EXCHANGING AND SELLING SHARES OF THE PIONEER FUNDS NET ASSET VALUE. Each Pioneer Fund's net asset value is the value of its portfolio of securities plus any other assets minus its operating expenses and any other liabilities. Each Fund calculates a net asset value for each class of shares every day the New York Stock Exchange is open when regular trading closes (normally 4:00 p.m. Eastern time). Each Pioneer Fund generally values its portfolio securities using closing market prices or readily available market quotations. When closing market prices or market quotations are not available or are considered by Pioneer to be unreliable, a Pioneer Fund may use a security's fair value. Fair value is the valuation of a security determined on the basis of factors other than market value in accordance with procedures approved by the Pioneer Funds' trustees. Each Pioneer Fund also may use the fair value of a security, including a non-U.S. security, when Pioneer determines that the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security due to factors affecting one or more relevant securities markets or the specific issuer. The use of fair value pricing by a Pioneer Fund may cause the net asset value of its shares to differ from the net asset value that would be calculated using closing market prices. International securities markets may be open on days when the U.S. markets are closed. For this reason, the value of any international securities owned by a Pioneer Fund could change on a day you cannot buy or sell shares of the fund. Each Pioneer Fund may use a pricing service or a pricing matrix to value some of its assets. Debt securities with remaining maturities of 60 days or less are valued at amortized cost, which is a method of determining a security's fair value. The Pioneer International Equity Fund primarily invests in securities of non-U.S. issuers and the markets for these securities generally close prior to the time the fund determines its net asset value. However, the value of these securities continues to be influenced by changes in the global markets. Consequently, the fund's trustees have determined to use the fair value of these securities as of the time the fund determines its net asset value, based upon data from a pricing service. On a daily basis, the pricing service recommends changes, based upon a proprietary model, to the closing market prices of each non-U.S. security held by the fund to reflect the security's fair value at the time the fund determines its net asset value. The fund applies these recommendations in accordance with procedures approved by the trustees. A security's fair value determined in this manner may differ from the security's closing market price on the date the fund determines its net asset value or the opening price of the security on the next business day. The fund's use of this method may significantly affect its net asset value compared to the net asset value that would have been determined using closing market prices. The fund also may take other factors influencing specific markets or issuers into consideration in determining the fair value of a non-U.S. security. You buy or sell shares at the share price. When you buy Class A shares, you pay an initial sales charge unless you qualify for a waiver or reduced sales charge. The Class A Shares of the Pioneer Funds you receive in the reorganizations will not be subject to any sales charge. Moreover, if you own shares in your own name as of the closing of the reorganizations (i.e., not in the name of a broker) and maintain your account, you may purchase additional Class A Shares of the corresponding Pioneer Fund through such account in the future or may exchange those shares for Class A shares of another Pioneer Fund without paying any sales charge. OPENING YOUR ACCOUNT. If your shares are held in your investment firm's name, the options and services available to you may be different from those described herein or in the Pioneer Fund's prospectus. Ask your investment professional for more information. If you invest in a Pioneer Fund through investment professionals or other financial intermediaries, including wrap programs and fund supermarkets, additional conditions may apply to your investment in a Pioneer Fund, and the investment professional or intermediary may charge you a transaction-based or other fee for its services. These conditions and fees are in addition to those imposed by the Pioneer Fund and its affiliates. You should ask your investment professional or financial intermediary about its services and any applicable fees. ACCOUNT OPTIONS. Use your account application to select options and privileges for your account. You can change your selections at any time by sending a completed account options form to the transfer agent. You may be required to obtain a signature guarantee to make certain changes to an existing account. Call or write to the Pioneer Funds' transfer agent for account applications, account options forms and other account information: PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC. P.O. Box 55014 Boston, Massachusetts 02205-5014 Telephone 1-800-225-6292 16 TELEPHONE TRANSACTION PRIVILEGES. If your account is registered in your name, you can buy, exchange or sell shares of the Pioneer Funds by telephone. If you do not want your account to have telephone transaction privileges, you must indicate that choice on your account application or by writing to the transfer agent. When you request a telephone transaction the transfer agent will try to confirm that the request is genuine. The transfer agent records the call, requires the caller to provide the personal identification number for the account and sends you a written confirmation. Each Pioneer Fund may implement other confirmation procedures from time to time. Different procedures may apply if you have a non-U.S. account or if your account is registered in the name of an institution, broker-dealer or other third party. ONLINE TRANSACTION PRIVILEGES. If your account is registered in your name, you may be able to buy, exchange or sell fund shares online. Your investment firm may also be able to buy, exchange or sell your Safeco Fund shares online. To establish online transaction privileges complete an account options form, write to the transfer agent or complete the online authorization screen on: www.pioneerfunds.com. To use online transactions, you must read and agree to the terms of an online transaction agreement available on the Pioneer website. When you or your investment firm requests an online transaction the transfer agent electronically records the transaction, requires an authorizing password and sends a written confirmation. The Pioneer Funds may implement other procedures from time to time. Different procedures may apply if you have a non-U.S. account or if your account is registered in the name of an institution, broker-dealer or other third party. You may not be able to use the online transaction privilege for certain types of accounts, including most retirement accounts. SHARE PRICE. If you place an order with your investment firm before the New York Stock Exchange closes and your investment firm submits the order to PFD prior to PFD's close of business (usually 5:30 p.m. Eastern time), your share price will be calculated that day. Otherwise, your price per share will be calculated at the close of the New York Stock Exchange after the distributor receives your order. Your investment firm is responsible for submitting your order to the distributor. BUYING PIONEER FUND SHARES. You may buy shares of each Pioneer Fund from any investment firm that has a sales agreement with PFD. If you do not have an investment firm, please call 1-800-225-6292 for information on how to locate an investment professional in your area. You can buy shares of the Pioneer Funds at the offering price. The distributor may reject any order until it has confirmed the order in writing and received payment. The fund reserves the right to stop offering any class of shares. MINIMUM INVESTMENT AMOUNTS. Your initial investment must be at least $1,000. Additional investments must be at least $100 for Class A shares. You may qualify for lower initial or subsequent investment minimums if you are opening a retirement plan account, establishing an automatic investment plan or placing your trade through your investment firm. The minimum investment amount does not apply for purposes of the reorganization. EXCHANGING PIONEER FUND SHARES. You may exchange your shares in a Pioneer Fund for shares of the same class of another Pioneer mutual fund. Your exchange request must be for at least $1,000 unless the fund you are exchanging into has a different minimum. Each Pioneer Fund allows you to exchange your shares at net asset value without charging you either an initial or contingent deferred sales charge at the time of the exchange. Shares you acquire as part of an exchange will continue to be subject to any contingent deferred sales charge that applies to the shares you originally purchased. When you ultimately sell your shares, the date of your original purchase will determine your contingent deferred sales charge. Before you request an exchange, consider each Fund's investment objective and policy as described in each fund's prospectus. SELLING PIONEER FUND SHARES. Your shares will be sold at net asset value per share next calculated after the Pioneer Fund, or authorized agent, and as a broker-dealer, receives your request in good order. If the shares you are selling are subject to a deferred sales charge, it will be deducted from the sale proceeds. Each Pioneer Fund generally will send your sale proceeds by check, bank wire or electronic funds transfer. Normally you will be paid within seven days. If you are selling shares from a non-retirement account or certain IRAs, you may use any of the methods described below. If you are selling shares from a retirement account other than an IRA, you must make your request in writing. You may have to pay federal income taxes on a sale or an exchange. 17 Good Order means that: o You have provided adequate instructions o There are no outstanding claims against your account o There are no transaction limitations on your account o If you have any Pioneer Fund share certificates, you submit them and they are signed by each record owner exactly as the shares are registered o Your request includes a signature guarantee if you: o Are selling over $100,000 or exchanging over $500,000 worth of shares o Changed your account registration or address within the last 30 days o Instruct the transfer agent to mail the check to an address different from the one on your account o Want the check paid to someone other than the account owner(s) o Are transferring the sale proceeds to a Pioneer mutual fund account with a different registration BUYING, EXCHANGING AND SELLING PIONEER FUND SHARES
- --------------------------------------------------------------------------------------------------------------- BUYING SHARES EXCHANGING SHARES - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- THROUGH YOUR INVESTMENT FIRM Normally, your investment firm will Normally, your investment firm will send send your purchase request to the your exchange request to the Pioneer Pioneer Funds' transfer agent. Fund's transfer agent. CONSULT YOUR CONSULT YOUR INVESTMENT PROFESSIONAL INVESTMENT PROFESSIONAL FOR MORE FOR MORE INFORMATION. Your INFORMATION ABOUT EXCHANGING YOUR SHARES. investment firm may receive a commission from the distributor for your purchase of fund shares. The distributor or its affiliates may pay additional compensation, out of their own assets, to certain investment firms or their affiliates based on objective criteria established by the distributor. - --------------------------------------------------------------------------------------------------------------- BY PHONE OR ONLINE YOU CAN USE THE TELEPHONE OR ONLINE After you establish your Pioneer Fund PURCHASE PRIVILEGE IF you have an account, YOU CAN EXCHANGE FUND SHARES BY existing non-retirement account or PHONE OR ONLINE IF: certain IRAs. You can purchase additional fund shares by phone if: o You are exchanging into an existing account or using the exchange to o You established your bank establish a new account, provided the account of record at new account has a registration identical least 30 days ago to the original account o Your bank information has o The fund into which you not changed for at least are exchanging offers the 30 days same class of shares o You are not purchasing more o You are not exchanging more than $25,000 worth of shares than $500,000 worth of shares per account per day per account per day o You can provide the proper You can provide the proper account account identification identification information information When you request a telephone or online purchase, the transfer agent will electronically debit the amount of the purchase from your bank account of record. The transfer agent will purchase Pioneer Fund shares for the amount of the debit at the offering price determined after the transfer agent receives your - ---------------------------------------------------------------------------------------------------------------
18 - --------------------------------------------------------------------------------------------------------------- telephone or online purchase instruction and good funds. It usually takes three business days for the transfer agent to receive notification from your bank that good funds are available in the amount of your investment. - --------------------------------------------------------------------------------------------------------------- IN WRITING, BY MAIL OR BY You can purchase Pioneer Fund shares You can exchange fund shares by MAILING FAX for an existing fund account by OR FAXING A LETTER OF INSTRUCTION TO THE MAILING A CHECK TO THE TRANSFER TRANSFER AGENT. You can exchange Pioneer AGENT. Make your check payable to Fund shares directly through the Pioneer the Pioneer Fund. Neither initial Fund only if your account is registered nor subsequent investments should be in your name. However, you may not fax made by third party check. Your an exchange request for more than check must be in U.S. dollars and $500,000. Include in your letter: drawn on a U.S. bank. Include in your purchase request the fund's o The name, social security name, the account number and the number and signature of name or names in the account all registered owners registration. o A signature guarantee for each registered owner if the amount of the exchange is more than $500,000 o The name of the fund out of which you are exchanging and the name of the fund into which you are exchanging o The class of shares you are exchanging The dollar amount or number of shares your are exchanging - ---------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------- SELLING SHARES HOW TO CONTACT PIONEER - --------------------------------------------------------------------------------------------------------------------- Normally, your investment firm will send your request to BY PHONE sell shares to the Pioneer Funds' transfer agent. CONSULT For information or to request a telephone transaction YOUR INVESTMENT PROFESSIONAL FOR MORE INFORMATION. Each between 8:00 a.m. and 7:00 p.m. (Eastern time) by Pioneer Fund has authorized PFD to act as its agent in the speaking with a shareholder services representative repurchase of Pioneer Fund shares from qualified call 1-800-225-6292 investment firms. Each Pioneer Fund reserves the right to terminate this procedure at any time. To request a transaction using FactFoneSM call 1-800-225-4321 - --------------------------------- YOU MAY SELL UP TO $100,000 PER ACCOUNT PER DAY BY PHONE OR ONLINE. You may sell Pioneer Fund shares held in a Telecommunications Device for the Deaf (TDD) retirement plan account by phone only if your account is 1-800-225-1997 an eligible IRA (tax penalties may apply). You may not sell your shares by phone or online if you have changed BY MAIL your address (for checks) or your bank information (for Send your written instructions to: wires and transfers) in the last 30 days. PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC. P.O. Box 55014 Boston, Massachusetts 02205-5014 You may receive your sale proceeds: o By check, provided the check is made payable exactly BY FAX as your account is registered Fax your exchange and sale requests to: 1-800-225-4240 o By bank wire or by electronic funds transfer, provided the sale proceeds are being sent to your bank address of record ---------------------------------------- - ---------------------------------------------------------------------------------------------------------------------
19 - --------------------------------------------------------------------------------------------------------------------- - -------------------------------------------- EXCHANGE PRIVILEGE You can sell some or all of your Pioneer Fund shares by You may make up to four exchange redemptions of Safeco WRITING DIRECTLY TO THE PIONEER FUND only if your account Fund account number, the class of shares to be $25,000 or is registered in your name. Include in your request your more per account per calendar year out of sold, the name, your social security number, the fund's name, your dollar amount or number of shares to be sold and the any other applicable requirements as described below. The fund. transfer agent will send the sale proceeds to your address of record unless you provide other instructions. EXCESSIVE TRADING Your request must be signed by all registered owners and be in good order. You may not sell more than $100,000 per The fund discourages excessive and/or trading practices, account per day by fax. such as market timing, that may disrupt portfolio management strategies and harm fund request until it is received in performance. These practices consist of: o Selling shares purchased within the preceding 90 days; o Two or more purchases and redemptions in any 90-day period; or o Any other series of transactions indicative of a timing pattern If we identify an account that engages in such activity, the fund and the distributor reserve the right to refuse or restrict any purchase order (including exchanges) for that account and other accounts under common ownership or control. - ---------------------------------------------------------------------------------------------------------------------
PIONEER FUND SHAREHOLDER ACCOUNT POLICIES SIGNATURE GUARANTEES AND OTHER REQUIREMENTS. You are required to obtain a signature guarantee when you are: o Requesting certain types of exchanges or sales of Pioneer Fund shares o Redeeming shares for which you hold a share certificate o Requesting certain types of changes for your existing account You can obtain a signature guarantee from most broker-dealers, banks, credit unions (if authorized under state law) and federal savings and loan associations. You cannot obtain a signature guarantee from a notary public. All Pioneer funds will accept only medallion signature guarantees. A medallion signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency, savings association, or other financial institution that is participating in a medallion program recognized by the Securities Transfer Association. Signature guarantees from financial institutions that are not participating in one of these programs are not accepted. Fiduciaries and corporations are required to submit additional documents to sell Pioneer Fund shares. EXCHANGE LIMITATION. You may only make up to four exchange redemptions of $25,000 or more per account per calendar year out of a fund. Each fund's exchange limitation is intended to discourage short-term trading in fund shares. Short-term trading can increase the expenses incurred by the fund and make portfolio management less efficient. In determining whether the exchange redemption limit has been reached, Pioneer may aggregate a series of exchanges (each valued at less than $25,000) and/or fund accounts that appear to be under common ownership or control. Pioneer may view accounts for which one person gives instructions or accounts that act on advice provided by a single source to be under common control. The exchange limitation does not apply to automatic exchange transactions or to exchanges made by participants in employer-sponsored retirement plans qualified under Section 401(a) of the Internal Revenue Code. While financial intermediaries that maintain omnibus accounts that invest in the fund are requested to apply the exchange limitation policy to shareholders who hold shares through such accounts, we do not impose the exchange limitation policy at the level of the omnibus account and are not able to monitor compliance by the financial intermediary with this policy. REDEMPTION FEE. Pioneer International Equity Fund has adopted a redemption fee on short term holdings of the fund's shares. If you sell or exchange shares within 30 days of any purchase of fund shares, the fund will apply a 2% fee to the entire amount of your sales proceeds. The fund's redemption fee is intended to discourage short-term trading in fund shares. Short-term trading can increase the expenses incurred by the fund and make portfolio management less efficient. 20 EXCESSIVE TRADING. The fund discourages excessive and short-term trading practices, such as market timing, that may disrupt portfolio management strategies and harm fund performance. Although there is no generally applied standard in the marketplace as to what level of trading activity is excessive, we may consider trading in the fund's shares to be excessive if: o You sell shares within a short period of time after the shares were purchased; o You make two or more purchases and redemptions within a short period of time; o You enter into a series of transactions that is indicative of a timing pattern or strategy; or o We reasonably believe that you have engaged in such practices in connection with other mutual funds. We monitor selected trades on a daily basis in an effort to detect excessive short-term trading. If we determine that an investor or a client of a broker has engaged in excessive short-term trading that we believe may be harmful to the fund, we will ask the investor or broker to cease such activity and we will refuse to process purchase orders (including purchases by exchange) of such investor, broker or accounts that we believe are under their control. In determining whether to take such actions, we seek to act in a manner that is consistent with the best interests of the fund's shareholders. We also limit the number of exchanges of $25,000 or more in any calendar year. While we use our reasonable efforts to detect excessive trading activity, there can be no assurance that our efforts will be successful or that market timers will not employ tactics designed to evade detection. Frequently, fund shares are held through omnibus accounts maintained by financial intermediaries such as brokers and retirement plan administrators where the holdings of multiple shareholders, such as all the clients of a particular broker, are aggregated. Our ability to monitor trading practices by investors purchasing shares through omnibus accounts is limited and dependent upon the cooperation of the financial intermediary in observing the fund's policies. MINIMUM ACCOUNT SIZE. Each Pioneer Fund requires that you maintain a minimum account value of $500. If you hold less than the minimum in your account because you have sold or exchanged some of your shares, the Pioneer Fund will notify you of its intent to sell your shares and close your account. You may avoid this by increasing the value of your account to at least the minimum within six months of the notice from the fund. TELEPHONE ACCESS. You may have difficulty contacting the Pioneer Fund by telephone during times of market volatility or disruption in telephone service. If you are unable to reach the Pioneer Fund by telephone, you should communicate with the fund in writing. SHARE CERTIFICATES. Normally, your shares will remain on deposit with the transfer agent and certificates will not be issued. If you are legally required to obtain a certificate, you may request one for your Class A shares only. A fee may be charged for this service. OTHER POLICIES. Each Pioneer Fund may suspend transactions in shares when trading on the New York Stock Exchange is closed or restricted, when an emergency exists that makes it impracticable for the fund to sell or value its portfolio securities or with the permission of the Securities and Exchange Commission. Each Pioneer Fund or PFD may revise, suspend or terminate the account options and services available to shareholders at any time. Each Pioneer Fund reserves the right to redeem in kind by delivering portfolio securities to a redeeming shareholder, provided that the Pioneer Fund must pay redemptions in cash if a shareholder's aggregate redemptions in a 90 day period are less than $250,000 or 1% of the fund's net assets. DIVIDENDS AND CAPITAL GAINS Each Pioneer Fund generally pays any distributions of net short- and long-term capital gains and dividends from any net investment income at least annually. Each Pioneer Fund may also pay dividends and capital gain distributions at other times if necessary for the fund to avoid U.S. federal income or excise tax. If you invest in a Pioneer Fund close to the time that the fund makes a distribution, generally you will pay a higher price per share and you will pay taxes on the amount of the distribution whether you reinvest the distribution or receive it as cash. TAXES For U.S. federal income tax purposes, distributions from each Pioneer Fund's net long-term capital gains (if any) are considered long-term capital gains and may be taxable to you at different maximum rates depending upon their source and other factors. 21 Short-term capital gain distributions are taxable as ordinary income. Dividends (other than exempt-interest dividends) are taxable either as ordinary income or, if so designated by the fund and certain other conditions, including holding period requirements, are met by the fund and the shareholder, as "qualified dividend income" taxable to individual shareholders at the maximum 15% U.S. federal tax rate. Dividends and distributions generally are taxable, whether you take payment in cash or reinvest them to buy additional Pioneer Fund shares. When you sell or exchange Pioneer Fund shares you will generally recognize a capital gain or capital loss in an amount equal to the difference between the net amount of sale proceeds (or, in the case of an exchange, the fair market value of the shares) that you receive and your tax basis for the shares that you sell or exchange. In January of each year each Pioneer Fund will mail to you information about your dividends, distributions and any shares you sold in the previous calendar year. You must provide your social security number or other taxpayer identification number to the fund along with the certifications required by the Internal Revenue Service when you open an account. If you do not or if it is otherwise legally required to do so, the Pioneer Fund will withhold 28% "backup withholding" tax from your dividends and distributions, sale proceeds and any other payments to you. You should ask your tax adviser about any federal, state and foreign tax considerations, including possible additional withholding taxes for non-U.S. shareholders. You may also consult the "Tax Status" section of each Pioneer Fund's statement of additional information for a more detailed discussion of U.S. federal income tax considerations, including qualified dividend income considerations that may affect the Pioneer Fund and its shareowners. PIONEER FUNDS' CLASS A RULE 12B-1 PLANS As described above, each Pioneer Fund has adopted a Rule 12b-1 plan for its Class A shares (the "Class A Plans" or the "Plans"). Because the 12b-1 fees payable under each Plan are an ongoing expense, over time they may increase the cost of your investment and your shares may cost more than shares that are not subject to a distribution or service fee or sales charge. COMPENSATION AND SERVICES. Each Class A Plan is a reimbursement plan, and distribution expenses of PFD are expected to substantially exceed the distribution fees paid by the fund in a given year. Pursuant to each Class A Plan the fund reimburses PFD for its actual expenditures to finance any activity primarily intended to result in the sale of Class A shares or to provide services to holders of Class A shares, provided the categories of expenses for which reimbursement is made are approved by the board of trustees. The expenses of the fund pursuant to the Class A Plan are accrued daily at a rate which may not exceed the annual rate of 0.25% of the fund's average daily net assets attributable to Class A shares. TRUSTEE APPROVAL AND OVERSIGHT. Each Plan was last approved by the board of trustees of each Pioneer Fund, including a majority of the independent trustees, by votes cast in person at meetings called for the purpose of voting on the Plan on December 6, 2003. Pursuant to the Plan, at least quarterly, PFD will provide each fund with a written report of the amounts expended under the Plan and the purpose for which these expenditures were made. The trustees review these reports on a quarterly basis to determine their continued appropriateness. TERM, TERMINATION AND AMENDMENT. Each Plan's adoption, terms, continuance and termination are governed by Rule 12b-1 under the 1940 Act. The board of trustees believes that there is a reasonable likelihood that the Plans will benefit each fund and its current and future shareholders. The Plans may not be amended to increase materially the annual percentage limitation of average net assets which may be spent for the services described therein without approval of the shareholders of the fund affected thereby, and material amendments of the Plans must also be approved by the trustees as provided in Rule 12b-1. FINANCIAL HIGHLIGHTS The following tables show the financial performance of each Pioneer Fund for the past five fiscal years and, if applicable, for any recent semi-annual period (or the period during which each Pioneer Fund has been in operation, if less than five years). Certain information reflects financial results for a single Pioneer Fund share. "Total return" shows how much an investment in a Fund would have increased or decreased during each period, assuming you had reinvested all dividends and other distributions. In the case of each Pioneer Fund, each fiscal year ended on or after the fiscal year ended June 30,2002 has been audited by Ernst & Young LLP, each Pioneer Fund's independent registered public accounting firm, as stated in their reports incorporated by reference in this registration statement. For fiscal years prior to the fiscal year ended June 30,2002, the financial statements of each Pioneer Fund was audited by Arthur Anderson LLP. The information for any semi-annual period has not been audited. 22 PIONEER BALANCED FUND FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 12/31/03 12/31/02 12/31/01(A) 12/31/00 12/31/99 --------- --------- ------------ --------- --------- CLASS A Net asset value, beginning of period $ 8.29 $ 9.46 $ 9.94 $ 9.73 $ 9.74 --------- --------- --------- --------- --------- Increase (decrease) from investment operations: Net investment income $ 0.12 $ 0.11 $ 0.19 $ 0.30 $ 0.31 Net realized and unrealized gain (loss) on investments 1.20 (1.17) (0.47) 0.22 (0.01) --------- --------- --------- --------- --------- Net increase (decrease) from investment operations $ 1.32 $ (1.06) $ (0.28) $ 0.52 $ 0.30 Distributions to shareowners: Net investment income (0.14) (0.11) (0.20) (0.31) (0.31) Net increase (decrease) in net asset value $ 1.18 $ (1.17) $ (0.48) $ 0.21 $ (0.01) Net asset value, end of period $ 9.47 $ 8.29 $ 9.46 $ 9.94 $ 9.73 ========= ========= ========= ========= ========= Total return* 15.99% (11.20)% (2.87)% 5.38% 3.15% Ratio of net expenses to average net assets+ 1.38% 1.41% 1.31% 1.23% 1.23% Ratio of net investment income to average net assets+ 1.25% 1.19% 1.97% 2.96% 3.21% Portfolio turnover rate 44% 180% 133% 17% 46% Net assets, end of period (in thousands) $ 107,265 $ 106,734 $ 141,746 $ 162,855 $ 214,866 Ratios with reductions for fees paid indirectly: Net expenses 1.38% 1.41% 1.30% 1.20% 1.21% Net investment income 1.25% 1.19% 1.98% 2.99% 3.23%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. + Ratios with no reduction for fees paid indirectly. (a) At January 1, 2001, the Fund began accreting discounts and amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001 was to decrease net investment income by less than one cent per share, increase net realized and unrealized gain (loss) by less than one cent per share and decrease the ratio of net investment income to average net assets assuming reduction for fees paid indirectly from 2.02% to 1.98%. Per share ratios and supplemental data for periods prior to January 1, 2002, have not been restated to reflect this change in presentation. 23 PIONEER FUND FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 ----------- ----------- ----------- ----------- ----------- CLASS A Net asset value, beginning of period $ 30.76 $ 38.87 $ 44.26 $ 47.60 $ 43.30 ----------- ----------- ----------- ----------- ----------- Increase (decrease) from investment operations: Net investment income $ 0.28 $ 0.27 $ 0.18 $ 0.16 $ 0.18 Net realized and unrealized gain (loss) on investments and foreign currency transactions 7.24 (8.12) (5.11) (0.14) 6.51 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) from investment operations $ 7.52 $ (7.85) $ (4.93) $ 0.02 $ 6.69 Distributions to shareowners: Net investment income $ (0.28) $ (0.26) $ (0.16) $ (0.12) $ (0.17) Net realized gain -- -- (0.30) (3.24) (2.22) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net asset value $ 7.24 $ (8.11) $ (5.39) $ (3.34) $ 4.30 ----------- ----------- ----------- ----------- ----------- Net asset value, end of period $ 38.00 $ 30.76 $ 38.87 $ 44.26 $ 47.60 ----------- ----------- ----------- ----------- ----------- Total return* 24.58% (20.26)% (11.13)% 0.12% 15.63% Ratio of net expenses to average net assets+ 1.09% 1.11% 1.14% 1.11% 1.10% Ratio of net investment income to average net assets+ 0.86% 0.75% 0.43% 0.31% 0.39% Portfolio turnover rate 6% 7% 6% 20% 10% Net assets, end of period (in thousands) $ 5,370,888 $ 4,584,649 $ 6,140,520 $ 6,645,954 $ 6,638,130 Ratios with reductions for fees paid indirectly: Net expenses 1.09% 1.10% 1.13% 1.09% 1.09% Net investment income 0.86% 0.76% 0.44% 0.33% 0.40%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. + Ratios with no reduction for fees paid indirectly. 24 PIONEER HIGH YIELD FUND FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED YEAR ENDED 4/30/04 10/31/03 10/31/02 ---------------- ----------- ----------- (UNAUDITED) CLASS A Net asset value, beginning of period $ 11.59 $ 9.14 $ 10.41 ----------- ----------- ----------- Increase (decrease) from investment operations: Net investment income $ 0.35 $ 0.80 $ 0.96 Net realized and unrealized gain (loss) on investments 0.17 2.45 (1.24) ----------- ----------- ----------- Net increase (decrease) from investment Operations $ 0.52 $ 3.25 $ (0.28) Distributions to shareowners: Net investment income (0.37) (0.79) (0.99) Net realized gain (0.01) (0.01) -- ----------- ----------- ----------- Net increase (decrease) in net asset value $ 0.14 $ 2.45 $ (1.27) ----------- ----------- ----------- Net asset value, end of period $ 11.73 $ 11.59 $ 9.14 ----------- ----------- ----------- Total return* 4.43% 36.83% (3.53)% =========== =========== =========== Ratio of net expenses to average net assets 1.02%**+ 1.06%+ 1.03%+ Ratio of net investment income to average net assets 5.87%**+ 7.30%+ 9.20%+ Portfolio turnover rate 54%** 38% 29% Net assets, end of period (in thousands) $ 3,660,416 $ 3,268,359 $ 1,260,074 Ratios with no waiver of management fees by PIM and no reduction for fees paid indirectly: Net expenses 1.02%** 1.06% 1.10% Net investment income 5.87%** 7.30% 9.13% Ratios with waiver of management fees by PIM and reduction for fees paid indirectly: Net expenses 1.02%** 1.06% 1.03% Net investment income 5.87%** 7.30% 9.20%
25 PIONEER BOND FUND FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED 12/31/03 6/30/03 ----------- ---------- (UNAUDITED) CLASS A Net asset value, beginning of period $ 9.41 $ 8.89 ----------- ---------- Increase from investment operations: Net investment income $ 0.20 $ 0.45 Net realized and unrealized gain (loss) on investments -- 0.53 ----------- ---------- Net increase from investment operations $ 0.20 $ 0.98 Distributions to shareowners: Net investment income (0.27) (0.46) ----------- ---------- Net increase (decrease) in net asset value $ (0.07) $ 0.52 ----------- ---------- Net asset value, end of period $ 9.34 $ 9.41 ----------- ---------- Total return* 2.23% 11.38% Ratio of net expenses to average net assets+ 1.18%** 1.20% Ratio of net investment income to average net assets+ 4.29%** 5.02% Portfolio turnover rate 72%** 48% Net assets, end of period (in thousands) $ 164,866 $ 183,338 Ratios with reductions for fees paid indirectly: Net expenses 1.18%** 1.20% Net investment income 4.29%** 5.02%
26 PIONEER TAX FREE INCOME FUND FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 ---------- ---------- ---------- ---------- ---------- CLASS A Net asset value, beginning of period $ 11.61 $ 11.47 $ 11.70 $ 10.98 $ 12.02 --------- --------- --------- --------- --------- Increase (decrease) from investment operations: Net investment income $ 0.56 $ 0.56 $ 0.53 $ 0.52 $ 0.51 Net realized and unrealized gain (loss) on investments 0.09 0.23 (0.05) 0.72 (1.02) --------- --------- --------- --------- --------- Net increase (decrease) from investment operations $ 0.65 $ 0.79 $ 0.48 $ 1.24 $ (0.51) Distributions to shareowners: Net investment income (0.56) (0.57) (0.53) (0.52) (0.51) In excess of net investment income -- -- -- (0.00)(a) -- Net realized gain -- (0.08) (0.18) -- (0.02) --------- --------- --------- --------- --------- Net increase (decrease) in net asset value $ 0.09 $ 0.14 $ (0.23) $ 0.72 $ (1.04) Net asset value, end of period $ 11.70 $ 11.61 $ 11.47 $ 11.70 $ 10.98 ========== ========== ========== ========== ========== Total return* 5.80% 7.07% 4.13% 11.63% (4.29)% Ratio of net expenses to average net assets+ 0.93% 0.93% 0.92% 0.95% 0.93% Ratio of net investment income to average net assets+ 4.88% 4.83% 4.49% 4.62% 4.43% Portfolio turnover rate 80% 161% 92% 14% 24% Net assets, end of period (in thousands) $ 326,173 $ 343,872 $ 333,867 $ 341,179 $ 368,559 Ratios with reductions for fees paid indirectly: Net expenses 0.93% 0.92% 0.91% 0.91% 0.92% Net investment income 4.88% 4.84% 4.50% 4.66% 4.44%
(a) Amount rounds to less than one cent per share * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. + Ratios with no reduction for fees paid indirectly. 27 PIONEER AMERICA INCOME TRUST FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01(A) 12/31/00 12/31/99 ---------- ---------- ----------- ------------ ---------- CLASS A Net asset value, beginning of period $ 10.27 $ 9.79 $ 9.76 $ 9.30 $ 10.10 --------- --------- --------- -------- --------- Increase from investment operations: Net investment income $ 0.28 $ 0.40 $ 0.52 $ 0.58 $ 0.55 Net realized and unrealized gain (loss) on investments (0.13) 0.54 0.05 0.46 (0.80) Net increase (decrease) from investment operations $ 0.15 $ 0.94 $ 0.57 $ 1.04 $ (0.25) Distributions to shareowners: Net investment income (0.47) (0.46) (0.51) (0.58) (0.55) Net realized gain -- -- (0.03) -- -- --------- --------- --------- -------- --------- Net increase (decrease) in net asset value $ (0.32) $ 0.48 $ 0.03 $ 0.46 $ (0.80) --------- --------- --------- -------- --------- Net asset value, end of period $ 9.95 $ 10.27 $ 9.79 $ 9.76 $ 9.30 ========= ========= ========= ======== ========= Total return* 1.47% 9.78% 5.92% 11.58% (2.52)% Ratio of net expenses to average net assets+ 1.10% 1.00% 1.01% 1.04% 1.01% Ratio of net investment income to average net assets+ 2.85% 4.17% 5.14% 6.09% 5.63% Portfolio turnover rate 66% 76% 72% 56% 72% Net assets, end of period (in thousands) $ 153,939 $ 164,393 $ 115,998 $ 96,068 $ 111,262 Ratios with no waiver of management fees by PIM and no reductions for fees paid indirectly: Net expenses 1.12% 1.08% 1.12% 1.16% 1.14% Net investment income 2.83% 4.09% 5.03% 5.97% 5.50% Ratios with waiver of management fees by PIM and reductions for fees paid indirectly: Net expenses 1.10% 1.00% 1.00% 1.00% 1.00% Net investment income 2.85% 4.18% 5.15% 6.13% 5.64%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. + Ratios with no reduction for fees paid indirectly. (a) On January 1, 2001, the Trust began accreting discounts and amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001, was to decrease net investment income by $0.02 per share, increase net realized and unrealized gain (loss) by $0.02 per share and decrease the ratio of net investment income to average net assets assuming waiver of management fees by PIM and reduction for fees paid indirectly from 5.35% to 5.15%. Per share ratios and supplemental data for periods prior to January 1, 2001, have not been restated to reflect this change in presentation. 28 PIONEER INTERNATIONAL EQUITY FUND FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/04 3/31/03 3/31/02 3/31/01 3/31/00 ---------- ---------- ---------- ---------- ---------- CLASS A Net asset value, beginning of period $ 11.64 $ 15.94 $ 16.81 $ 27.50 $ 18.55 ------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.10 $ 0.05 $ (0.06) $ (0.16) $ (0.06) Net realized and unrealized gain (loss) on investments and foreign currency transactions 5.81 (4.35) (0.78) (9.25) 9.09 Net increase (decrease) from investment operations $ 5.91 $ (4.30) $ (0.84) $ (9.41) $ 9.03 Distributions to shareowners: Net investment income -- -- -- -- (0.08) Net realized gain -- -- (0.03) (1.28) -- ------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 5.91 $ (4.30) $ (0.87) $ (10.69) $ 8.95 ------- -------- -------- -------- -------- Net asset value, end of period $ 17.55 $ 11.64 $ 15.94 $ 16.81 $ 27.50 ======= ======== ======== ======== ======== Total return(*) 50.77% (26.98)% (4.98)% (34.95)% 48.70% Ratio of net expenses to average net assets(+) 1.75% 1.76% 1.75% 1.77% 1.76% Ratio of net investment income (loss) to average net assets(+) 0.67% 0.30% (0.35)% (0.75)% (0.23)% Portfolio turnover rate 169% 45% 77% 50% 59% Net assets, end of period (in thousands) $ 18,345 $ 11,578 $ 16,455 $ 20,689 $ 41,276 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 2.80% 2.94% 2.68% 2.12% 2.10% Net investment loss (0.38)% (0.88)% (1.28)% (1.10)% (0.57)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.75% 1.75% 1.75% 1.75% 1.75% Net investment income (loss) 0.67% 0.31% (0.35)% (0.73)% (0.22)%
(*) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. (+) Ratios with no reduction for fees paid indirectly. 29 PIONEER GROWTH SHARES FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02(A) 12/31/01 12/31/00 12/31/99 CLASS A Net asset value, beginning of period $ 9.05 $ 13.90 $ 17.21 $ 20.16 $ 20.34 -------- --------- --------- ----------- ----------- Increase (decrease) from investment operations: Net investment loss $ (0.04) $ (0.04) $ (0.04) $ (0.09) $ (0.09) Net realized and unrealized gain (loss) on investments 2.41 (4.81) (3.27) (1.81) 1.59 -------- --------- --------- ----------- ----------- Net increase (decrease) from investment operations $ 2.37 $ (4.85) $ (3.31) $ (1.90) $ 1.50 Distributions to shareowners: Net realized gain -- -- -- (1.05) (1.68) -------- --------- --------- ----------- ----------- Net increase (decrease) in net asset value $ 2.37 $ (4.85) $ (3.31) $ (2.95) $ (0.18) -------- --------- --------- ----------- ----------- Net asset value, end of period $ 11.42 $ 9.05 $ 13.90 $ 17.21 $ 20.16 ======== ========= ========= =========== =========== Total return(*) 26.19% (34.89)% (19.23)% (9.57)% 7.40% Ratio of net expenses to average net assets(+) 1.45% 1.39% 1.18% 1.22% 1.02% Ratio of net investment loss to average net assets(+) (0.42)% (0.39)% (0.29)% (0.60)% (0.41)% Portfolio turnover rate 47% 88% 111% 58% 48% Net assets, end of period (in thousands) $ 516,234 $ 452,070 $ 836,149 $ 1,197,025 $ 1,935,072 Ratios with reductions for fees paid indirectly: Net expenses 1.45% 1.38% 1.16% 1.19% 1.00% Net investment loss (0.42)% (0.38)% (0.27)% (0.57)% (0.39)%
(a) The per share data presented above is based upon the average shares outstanding for the year presented. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. + Ratio with no reduction for fees paid indirectly. 30 PIONEER VALUE FUND FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/04 9/30/03 9/30/02 9/30/01 9/30/00 9/30/99 ----------- ----------- -------------- ----------- ----------- ------------ CLASS A Net asset value, beginning of period $ 16.25 $ 15.29 $ 19.12 $ 22.67 $ 20.16 $ 18.32 ----------- ----------- -------------- ----------- ----------- ----------- Increase (decrease) from investment operations: Net investment income $ 0.07 $ 0.11 $ 0.15 $ 0.17 $ 0.20 $ 0.21 Net realized and unrealized gain (loss) on investments and foreign currency transactions 2.52 3.20 (3.17) (2.05) 3.0 21.97 ----------- ----------- -------------- ----------- ----------- ----------- Net increase (decrease) from investment operations $ 2.59 $ 3.31 $ (3.02) $ (1.88) $ 3.22 $ 2.18 Distributions to shareowners: Net investment income (0.08) (0.24) (0.09) (0.14) (0.20) (0.19) Net realized gain (0.04) (2.11) (0.72) (1.53) (0.51) (0.15) ----------- ----------- -------------- ----------- ----------- ----------- Net increase (decrease) in net asset value $ 2.47 $ 0.96 $ (3.83) $ (3.55) $ 2.51 $ 1.84 Net asset value, end of period $ 18.72 $ 16.25 $ 15.29 $ 19.12 $ 22.67 $ 20.16 ----------- ----------- -------------- ----------- ----------- ----------- Total return(*) 15.98% 22.94% (16.78)% (8.88)% 16.29% 11.86% Ratio of net expenses to average net assets+1.06%(**) 1.19% 1.16% 1.01% 0.96% 0.96% Ratio of net investment income to average net assets(+) 0.70%** 0.85% 0.74% 0.76% 0.81% 0.93% Portfolio turnover rate 35%** 40% 61% 3% 3% 12% Net assets, end of period (in thousands) $ 3,843,212 $ 3,424,962 $ 3,016,623 $ 3,885,560 $ 4,614,739 $ 5,125,858 Ratios assuming reduction for fees paid indirectly: Net expenses 1.06%** 1.19% 1.16% 0.99% 0.94% 0.95% Net investment income 0.70%** 0.85% 0.74% 0.78% 0.83% 0.94%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. + Ratios assuming no reduction for fees paid indirectly. ** Annualized. 31 PIONEER CASH RESERVES FUND FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED 12/31/03 12/31/02 ---------- ---------- CLASS A Net asset value, beginning of period $ 1.00 $ 1.00 ---------- ---------- Increase (decrease) from investment operations: Net investment income $ 0.003 $ 0.01 Distributions to shareowners: Net investment income (0.003) (0.01) ---------- ---------- Net asset value, end of period $ 1.00 $ 1.00 ---------- ---------- Total return(*) 0.26% 1.15% Ratio of net expenses to average net assets +1.00% 0.76% Ratio of net investment income to average net assets +0.26% 1.18% Net assets, end of period (in thousands) $ 227,052 $ 268,861 Ratios with no waiver of management fees and assumption of expenses by PIM and no reductions for fees paid indirectly: Net expenses 1.06% 0.93% Net investment income 0.20% 1.01% Ratios with waiver of management fees and assumption of expenses by PIM and reductions for fees paid indirectly: Net expenses 0.99% 0.75% Net investment income 0.27% 1.19%
32 PIONEER MID CAP VALUE FUND FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 4/30/04 10/31/03 10/31/02 10/31/01 10/31/00 10/31/99 ----------- ----------- ---------- ---------- ---------- ----------- (UNAUDITED) CLASS A Net asset value, beginning of period $ 22.25 $ 16.93 $ 19.29 $ 20.83 $ 19.90 $ 19.02 ----------- ----------- --------- --------- --------- ----------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.01 $ 0.04 $ (0.02) $ (0.01) $ 0.11 $ 0.12 Net realized and unrealized gain (loss) on investments 2.03 5.28 (0.97) 0.34 3.46 1.70 ----------- ----------- --------- --------- --------- ----------- Net increase (decrease) from investment operations $ 2.04 $ 5.32 $ (0.99) $ 0.33 $ 3.57 $ 1.82 Distributions to shareowners: Net investment income (0.03) -- -- -- -- (0.02) Net realized gain (0.49) -- (1.37) (1.87) (2.64) (0.92) ----------- ----------- --------- --------- --------- ----------- Net increase (decrease) in net asset value 1.52 $ 5.32 $ (2.36) $ (1.54) $ 0.93 $ 0.88 ----------- ----------- --------- --------- --------- ----------- Net asset value, end of period $ 23.77 $ 22.25 $ 16.93 $ 19.29 $ 20.83 $ 19.90 =========== =========== ========= ========= ========= =========== Total return* 9.37% 31.42% (5.99)% 1.85% 20.00% 10.02% Ratio of net expenses to average net assets+ 1.19%**(a) 1.37% 1.30% 1.24% 1.13% 1.18% Ratio of net investment income (loss) to average net assets+ 0.08%**(a) 0.24% (0.09)% 0.01% 0.27% 0.37% Portfolio turnover rate 46%** 58% 65% 95% 70% 75% Net assets, end of period (in thousands) $ 1,363,097 $ 1,208,400 $ 890,856 $ 921,310 $ 945,583 $ 1,067,562 Ratios with reduction for fees paid indirectly: Net expenses 1.19%**(a) 1.37% 1.30% 1.22% 1.11% 1.16% Net investment income (loss) 0.08%**(a) 0.24% (0.09)% 0.03% 0.29% 0.39%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios with no reduction for fees paid indirectly. (a) In the absence of the negative printing fees in the statement of operations, which relates to a change in estimate for printing fees in the period ended October 31, 2003, the gross expense ratio and net investment income ratio to average net assets would have been 1.20% and 0.07%, respectively. 33 PIONEER SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/04 11/30/03 11/30/02 11/30/01 11/30/00 11/30/99 ---------- ---------- ---------- ---------- ---------- ---------- CLASS A Net asset value, beginning of period $ 27.10 $ 21.51 $ 22.46 $ 20.10 $ 17.40 $ 13.85 --------- --------- --------- -------- -------- -------- Increase (decrease) from investment operations: Net investment loss $ (0.07) $ (0.07) $ (0.24) $ (0.09) $ (0.12) $ (0.08) Net realized and unrealized gain (loss) on investments and futures contracts 2.67 5.78 (0.69) 3.29 3.13 3.63 --------- --------- --------- -------- -------- -------- Net increase (decrease) from investment operations $ 2.60 $ 5.71 $ (0.93) $ 3.20 $ .01 $ 3.55 Distributions to shareowners: Net realized gain -- (0.12) (0.02) (0.84) (0.31) -- --------- --------- --------- -------- -------- -------- Net increase (decrease) in net asset value $ 2.60 $ 5.59 $ (0.95) $ 2.36 $ 2.70 $ 3.55 --------- --------- --------- -------- -------- -------- Net asset value, end of period $ 29.70 $ 27.10 $ 21.51 $ 22.46 $ 20.10 $ 17.40 ========= ========= ========= ======== ======== ======== Total return* 9.59% 26.56% (4.16)% 15.92% 17.26% 25.63% Ratio of net expenses to average net assets+ 1.51%** 1.66% 1.65% 1.79% 1.72% 2.02% Ratio of net investment loss to average * net assets+ (0.50)%* (0.32)% (0.49)% (0.33)% (0.27)% (0.71)% Portfolio turnover rate 31%** 37% 31% 49% 61% 78% Net assets, end of period (in thousands) $ 256,248 $ 201,892 $ 139,170 $ 73,855 $ 58,323 $ 33,714 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.51%** 1.66% 1.65% 1.79% 1.72% 2.02% Net investment loss (0.50)%** (0.32)% (0.49)% (0.33)% (0.27)% (0.71)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.51%** 1.65% 1.63% 1.76% 1.69% 1.98% Net investment loss (0.50)%** (0.31)% (0.47)% (0.30)% (0.24)% (0.67)%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized + Ratios with no reduction for fees paid indirectly. 34 INFORMATION CONCERNING THE MEETING SOLICITATION OF PROXIES In addition to the mailing of these proxy materials, proxies may be solicited by telephone, by fax or in person by the trustees, officers and employees of your Safeco Fund; by personnel of your Safeco Fund, Pioneer Funds' investment adviser, Pioneer, their transfer agent, PIMSS, or by broker-dealer firms. [ ] has been retained to provide proxy solicitation services to the Funds at a cost of approximately $[_____]. Pioneer and Symetra will bear the cost of such solicitation. REVOKING PROXIES A Safeco Fund shareholder signing and returning a proxy has the power to revoke it at any time before it is exercised: o by filing a written notice of revocation with your Safeco Fund's transfer agent, Safeco Services Corporation, at [ ], or o by returning a duly executed proxy with a later date before the time of the Meeting, or o if a shareholder has executed a proxy but is present at the Meeting and wishes to vote in person, by notifying the secretary of your Safeco Fund (without complying with any formalities) at any time before it is voted. Being present at the Meeting alone does NOT revoke a previously executed and returned proxy. OUTSTANDING SHARES AND QUORUM Only shareholders of record on [ ], 2004 (the "record date") are entitled to notice of and to vote at the Meetings. The presence in person or by proxy by one-third of the outstanding shares entitled to cast votes at the Meeting will constitute a quorum. As of the record date, the following number of shares of each Safeco Fund were outstanding. - ------------------------------------------------------------- FUND SHARE OUTSTANDING - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- - ------------------------------------------------------------- OTHER BUSINESS Your Fund's board of trustees knows of no business to be presented for consideration at the Meetings other than Proposals 1-17. If other business is properly brought before a Meeting, proxies will be voted according to the best judgment of the persons named as proxies. 35 ADJOURNMENTS If, by the time scheduled for a Meeting, a quorum of shareholders of a Fund is not present or if a quorum is present but sufficient votes "for" the proposals have not been received, the persons named as proxies may propose the Meeting with respect to one or more of the Funds to another date and time, and the Meeting may be held as adjourned within a reasonable time after the date set for the original Meeting for that Fund without further notice. Any such adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the Meeting to be adjourned. The persons named as proxies will vote all proxies in favor of the adjournment that voted in favor of the proposal or that abstained. They will vote against such adjournment those proxies required to be voted against the proposal. Broker non-votes will be disregarded in the vote for adjournment. If the adjournment requires setting a new record date or the adjournment is for more than 120 days of the original Meeting (in which case the board of trustees of your Safeco Fund will set a new record date), your Safeco Fund will give notice of the adjourned meeting to its shareholders. TELEPHONE VOTING In addition to soliciting proxies by mail, by fax or in person, your Safeco Fund may also arrange to have votes recorded by telephone by officers and employees of your Safeco Fund or by personnel of the adviser or transfer agent or a third party solicitation firm. The telephone voting procedure is designed to verify a shareholder's identity, to allow a shareholder to authorize the voting of shares in accordance with the shareholder's instructions and to confirm that the voting instructions have been properly recorded. If these procedures were subject to a successful legal challenge, these telephone votes would not be counted at the Meeting. Your Fund has not obtained an opinion of counsel about telephone voting, but is currently not aware of any challenge. o A shareholder will be called on a recorded line at the telephone number in the Fund's account records and will be asked to provide the shareholder's social security number or other identifying information. o The shareholder will then be given an opportunity to authorize proxies to vote his or her shares at the Meeting in accordance with the shareholder's instructions. o To ensure that the shareholder's instructions have been recorded correctly, the shareholder will also receive a confirmation of the voting instructions by mail. o A toll-free number will be available in case the voting information contained in the confirmation is incorrect. o If the shareholder decides after voting by telephone to attend the Meeting, the shareholder can revoke the proxy at that time and vote the shares at the Meeting. INTERNET VOTING You will also have the opportunity to submit your voting instructions via the Internet by utilizing a program provided through a vendor. Voting via the Internet will not affect your right to vote in person if you decide to attend the Meeting. Do not mail the proxy card if you are voting via the Internet. To vote via the Internet, you will need the "control number" that appears on your proxy card. These Internet voting procedures are designed to authenticate shareholder identities, to allow shareholders give their voting instructions, and to confirm that shareholders instructions have been recorded properly. If you are voting via the Internet you should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that must be borne by you. o Read the proxy statement and have your proxy card at hand. o Go to the Web site listed on your proxy card. o Enter control number found on your proxy card. o Follow the simple instructions on the Web site. Please call [__________________] us at [1-800-________] if you have any problems. o To insure that your instructions have been recorded correctly you will receive a confirmation of your voting instructions immediately after your submission and also by e-mail if chosen.] 36 SHAREHOLDERS' PROPOSALS Your Fund is not required, and does not intend, to hold meetings of shareholders each year. Instead, meetings will be held only when and if required. Any shareholders desiring to present a proposal for consideration at the next meeting for shareholders must submit the proposal in writing, so that it is received by the your Safeco Fund at [ ] within a reasonable time before any meeting. If the reorganization is completed, your Safeco Fund will not hold another shareholder meeting. APPRAISAL RIGHTS If the reorganization of your Safeco Fund is approved at the Meeting, shareholders of your Safeco Fund will not have the right to dissent and obtain payment of the fair value of their shares because the exercise of appraisal rights is subject to the forward pricing requirements of Rule 22c-1 under the Investment Company Act, which supersede state law. Shareholders of your Safeco Funds, however, have the right to redeem their Fund shares until the closing date of the reorganizations. After the reorganization, shareholders of your Safeco Funds will hold shares of the Pioneer Funds which may also be redeemed at net asset value subject to deferred sales charges (if any). OWNERSHIP OF SHARES OF THE FUNDS To the knowledge of your Safeco Fund, as of [ ], 2004, the following persons owned of record or beneficially 5% or more of the outstanding shares of each of the Safeco Funds.
- ----------------------------------------------------------------------------------- FUND/CLASS SHAREHOLDER NAME AND ADDRESS ACTUAL PERCENTAGE OWNED - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - ----------------------------------------------------------------------------------- % - -----------------------------------------------------------------------------------
As of December 31, 2003, the trustees and officers of your Safeco Fund, as a group, owned in the aggregate less than 1% of the outstanding shares of your Safeco Fund. As of December 31, 2003, the trustees and officers of each Pioneer Fund owned less than 1% of the outstanding shares of the Pioneer Fund. EXPERTS Safeco Funds The financial statements and financial highlights of each Safeco Fund incorporated by reference in the respective Safeco Trust's Annual Report at and for the year ended December 31, 2003, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon incorporated by reference into this registration statement. Such financial statements and financial highlights are incorporated herein by reference in reliance on such reports given the authority of such firm as experts in accounting and auditing. Pioneer Funds The financial statements and financial highlights of each Pioneer Fund incorporated by reference in the respective Pioneer Fund's Annual Report at for the year ended December 31, 2003, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon incorporated by reference into this registration statement. Such financial statements and financial highlights are incorporated herein by reference in reliance on such reports given the authority of such firm as experts in accounting and auditing. 37 AVAILABLE INFORMATION The Safeco Funds and the Pioneer Funds are subject to the informational requirements of the Securities Exchange Act of 1934 and the Investment Company Act and file reports, proxy statements and other information with the Securities and Exchange Commission. These reports, proxy statements and other information filed by the Funds can be inspected and copied (for a duplication fee) at the public reference facilities of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. Copies of these materials can also be obtained by mail from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, copies of these documents may be viewed on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. 38 ANNEX A - Agreement and Plan of Reorganization [THIS IS THE FORM OF AGREEMENT AND PLAN OF REORGANIZATION FOR THOSE REORGANIZATIONS INTENDED TO QUALIFY AS UNDER SUBSECTIONS (C), (D) OR (F) OF SECTION 368(A)(1) OF THE INTERNAL REVENUE CODE. REVISIONS TO THIS FORM OF AGREEMENT AND THE TAX REPRESENTATION CERTIFICATES ATTACHED TO THIS AGREEMENT WILL NEED TO BE MADE FOR THE VARIABLE CONTRACT FUND REORGANIZATIONS AND THE TAX REPRESENTATION CERTIFICATES ALSO WILL NEED TO BE REVISED FOR THOSE REORGANIZATIONS INTENDED TO QUALIFY UNDER SUBSECTIONS (C) OR (D) OF SECTION 368(A)(1)] AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made this day of August, 2004, by and between [Pioneer Trust], a [Delaware statutory] [Massachusetts business] trust (the "ACQUIRING TRUST") on behalf of its series [name of Pioneer Fund] (the "ACQUIRING FUND"), with its principal place of business at 60 State Street, Boston, Massachusetts 02109, and [Safeco Trust], a Delaware statutory trust (the "SAFECO TRUST"), on behalf of [name of Safeco Fund] (the "ACQUIRED FUND"), a series of the Safeco Trust with its principal place of business at . The Acquiring Fund and the Acquired Fund are sometimes referred to collectively herein as the "FUNDS" and individually as a "FUND." This Agreement is intended to be and is adopted as a plan of "reorganization" as such term is used in Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "CODE"). The reorganization (the "REORGANIZATION") will consist of (1) the transfer of all of the assets of the Acquired Fund to the Acquiring Fund in exchange solely for (A) the issuance of Investor Class shares of beneficial interest of the Acquiring Fund (collectively, the "ACQUIRING FUND SHARES" and each, an "ACQUIRING FUND SHARE") to the Acquired Fund, and (B) the assumption by the Acquiring Fund of the liabilities of the Acquired Fund that are included in the calculation of net asset value ("NAV") on the Closing Date (the "CLOSING DATE") set forth below (collectively, the "ASSUMED LIABILITIES"), and (2) the distribution by the Acquired Fund, on or promptly after the Closing Date as provided herein, of the Acquiring Fund Shares to the shareholders of the Acquired Fund in liquidation and dissolution of the Acquired Fund, all upon the terms and conditions hereinafter set forth in this Agreement. WHEREAS, the Acquiring Trust and the Safeco Trust are each registered investment companies classified as management companies of the open-end type. WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial interest. WHEREAS, the Board of Trustees of the Safeco Trust has determined that the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares, and the assumption of the Assumed Liabilities of the Acquired Fund by the Acquiring Fund, are in the best interests of the Acquired Fund shareholders and are not dilutive of the interests of the shareholders of the Acquired Fund. WHEREAS, the Board of Trustees of the Acquiring Trust has determined that the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares, and the assumption of the Assumed Liabilities of the Acquired Fund by the Acquiring Fund, are in the best interests of the Acquiring Fund shareholders and are not dilutive of the interests of the shareholders of the Acquiring Fund. NOW, THEREFORE, in consideration of the premises of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows: 1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND TERMINATION OF THE ACQUIRED FUND. 1.1 Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund will transfer all of its assets as set forth in Paragraph 1.2 (the "ACQUIRED ASSETS") to the Acquiring Fund free and clear of all liens and encumbrances (other than those arising under the Securities Act of 1933, as amended (the "SECURITIES ACT"), liens for taxes not yet due and contractual restrictions on the transfer of the Acquired Assets) and the Acquiring Fund agrees in exchange therefor: (i) to issue to the Acquired Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, with an aggregate NAV determined in the manner set forth in Paragraph 2.2 equal to the NAV of the Acquired Fund; and (ii) to assume the Assumed Liabilities, as set forth in Paragraph 1.3. Such transactions shall take place at the Closing (as defined in Paragraph 3.1 below). 1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's property, including, without limitation, all portfolio securities and instruments, dividends and interest receivables, cash, goodwill, contractual rights of the Acquired Fund or the Safeco Trust in respect of the Acquired Fund, all other intangible property owned by the Acquired Fund, originals or copies of all 39 books and records of the Acquired Fund, and all other assets of the Acquired Fund on the Closing Date. The Acquiring Trust and the Acquiring Fund shall also be entitled to receive (or to the extent agreed upon between the Safeco Trust and the Acquiring Fund, be provided access to) copies of all records that the Safeco Trust is required to maintain under the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"), and the rules of the Securities and Exchange Commission (the "COMMISSION") thereunder to the extent such records pertain to the Acquired Fund. (b) The Acquired Fund has provided the Acquiring Fund with a list of all of the Acquired Fund's securities and other assets as of the date of execution of this Agreement, and the Acquiring Fund has provided the Acquired Fund with a copy of the current fundamental investment policies and restrictions and fair value procedures applicable to the Acquiring Fund. The Acquired Fund reserves the right to sell any of such securities or other assets before the Closing Date (except to the extent sales may be limited by representations of the Acquired Fund contained herein and made in connection with the issuance of the tax opinion provided for in Paragraph 8.5 hereof). 1.3 The Acquired Fund will endeavor to discharge all of its known liabilities and obligations that are or will become due prior to the Closing. The Acquiring Fund shall assume all of the Assumed Liabilities at the Closing. 1.4 On or as soon after the Closing Date as is conveniently practicable (the "LIQUIDATION DATE"), the Safeco Trust shall liquidate the Acquired Fund and distribute pro rata to its shareholders of record, determined as of the close of regular trading on the New York Stock Exchange on the Closing Date (the "ACQUIRED FUND SHAREHOLDERS"), the Acquiring Fund Shares received by the Acquired Fund pursuant to Paragraph 1.1 hereof. Each Acquired Fund Shareholder shall receive such number of Acquiring Fund Shares that have an aggregate NAV per share equal to the aggregate NAV per share of the shares of beneficial interest of the Acquired Fund (the "ACQUIRED FUND SHARES") held of record by such Acquired Fund Shareholder on the Closing Date. Such liquidation and distribution will be accomplished by the Safeco Trust instructing the Acquiring Fund to transfer the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund established and maintained by the Acquiring Fund's transfer agent in the names of the Acquired Fund Shareholders and representing the respective pro rata number of the Acquiring Fund Shares due the Acquired Fund Shareholders. The Safeco Trust shall promptly provide the Acquiring Trust with evidence of such liquidation and distribution. All issued and outstanding Acquired Fund Shares will simultaneously be cancelled on the books of the Acquired Fund and the Acquired Fund will be dissolved. The Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares in connection with such exchange. 1.5 Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent for its Investor Class shares. The Acquired Fund Shareholders holding certificates representing their ownership of Acquired Fund Shares shall surrender such certificates or deliver an affidavit with respect to lost certificates in such form and accompanied by such surety bonds as the Acquired Fund may require (collectively, an "AFFIDAVIT"), to Pioneer Investment Management Shareholder Services, Inc. prior to the Closing Date. Any Acquired Fund Share certificate that remains outstanding on the Closing Date shall be deemed to be cancelled, shall no longer evidence ownership of the Acquired Fund Shares, but shall evidence ownership of Acquiring Fund Shares as determined in accordance with Paragraph 1.4. Unless and until any such certificate shall be so surrendered or an Affidavit relating thereto shall be delivered by an Acquired Fund Shareholder, dividends and other distributions payable by the Acquiring Fund subsequent to the Liquidation Date with respect to Acquiring Fund Shares shall be paid to such Acquired Fund Shareholder, but such Acquired Fund Shareholder may not redeem or transfer Acquiring Fund Shares received in the Reorganization. 1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a name other than the registered holder of the Acquired Fund Shares on the books of the Acquired Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred. 1.7 Any reporting responsibility of the Safeco Trust with respect to the Acquired Fund for taxable periods ending on or before the Closing Date, including, but not limited to, the responsibility for filing of regulatory reports, Tax Returns (as defined in Paragraph 4.1), or other documents with the Commission, any state securities commissions, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Safeco Trust. 2. VALUATION 2.1 The NAV of the Acquiring Fund Shares and the NAV (as computed below) of the Acquired Fund shall, in each case, be determined as of the close of business (4:00 p.m., Boston time) on the Closing Date (the "VALUATION TIME"). The NAV of each Acquiring Fund Share shall be computed by Pioneer Investment Management, Inc. (the "ACQUIRING FUND ADVISER") in the manner set forth in the Acquiring Fund's Declaration of Trust (the "DECLARATION"), or By-Laws, and the Acquiring Fund's then-current prospectus and statement of additional information; provided, however, if the Acquiring Fund has no assets as of the Closing Date (other than a nominal amount of assets attributable to the shares issued to the Acquiring Fund Adviser, or its affiliate, as the initial shareholder of the Acquiring Fund), the NAV of each Acquiring Fund Share shall be the same as the NAV of each share of the Acquired Fund. The NAV of the Acquired Assets shall be computed by Safeco Asset Management, Inc. (the "ACQUIRED FUND ADMINISTRATOR") by calculating the value of the Acquired Assets and by subtracting therefrom the amount of 40 the liabilities of the Acquired Fund on the Closing Date included on the face of the Statement of Assets and Liabilities of the Acquired Fund delivered pursuant to Paragraph 5.7 (the "STATEMENT OF ASSETS AND LIABILITIES"), said assets and liabilities to be valued in the manner set forth in the Acquired Fund's then current prospectus and statement of additional information. The Acquiring Fund Adviser shall confirm the NAV of the Acquired Assets. 2.2 The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for the Acquired Assets and the assumption of the Assumed Liabilities shall be determined by the Acquiring Fund Adviser by dividing the NAV of the Acquired Fund, as determined in accordance with Paragraph 2.1, by the NAV of each Acquiring Fund Share, as determined in accordance with Paragraph 2.1. 2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring Fund Adviser and the Acquired Fund Administrator, respectively, to deliver a copy of its valuation report to the other party at Closing. All computations of value shall be made by the Acquiring Fund Adviser and the Acquired Fund Administrator in accordance with its regular practice as pricing agent for the Acquiring Fund and the Acquired Fund, respectively. 3. CLOSING AND CLOSING DATE 3.1 The Closing Date shall be , 2004, or such later date as the parties may agree to in writing. All acts necessary to consummation the Reorganizations (the "CLOSING") shall be deemed to take place simultaneously as of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The Closing shall be held at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, or at such other place as the parties may agree. 3.2 Portfolio securities that are held other than in book-entry form in the name of State Street Bank and Trust Company (the "ACQUIRED FUND CUSTODIAN") as record holder for the Acquired Fund shall be presented by the Acquired Fund to Brown Brothers Harriman & Co. (the "ACQUIRING FUND CUSTODIAN") for examination no later than three business days preceding the Closing Date. Portfolio securities which are not held in book-entry form shall be delivered by the Acquired Fund to the Acquiring Fund Custodian for the account of the Acquiring Fund on the Closing Date, duly endorsed in proper form for transfer, in such condition as to constitute good delivery thereof in accordance with the custom of brokers, and shall be accompanied by all necessary federal and state stock transfer stamps or a check for the appropriate purchase price thereof. Portfolio securities held of record by the Acquired Fund Custodian in book-entry form on behalf of the Acquired Fund shall be delivered by the Acquired Fund Custodian through the Depository Trust Company to the Acquiring Fund Custodian and by the Acquiring Fund Custodian recording the transfer of beneficial ownership thereof to the Acquiring Fund on the Acquiring Fund Custodian's records. Any cash shall be delivered by the Acquired Fund Custodian transmitting immediately available funds by wire transfer to the Acquiring Fund Custodian the cash balances maintained by the Acquired Fund Custodian and the Acquiring Fund Custodian crediting such amount to the account of the Acquiring Fund. 3.3 The Acquiring Fund Custodian shall deliver within one business day after the Closing a certificate of an authorized officer stating that: (a) the Acquired Assets have been delivered in proper form to the Acquiring Fund on the Closing Date, and (b) all necessary transfer taxes including all applicable federal and state stock transfer stamps, if any, have been paid, or provision for payment has been made in conjunction with the delivery of portfolio securities as part of the Acquired Assets. 3.4 In the event that on the Closing Date (a) the New York Stock Exchange is closed to trading or trading thereon shall be restricted, or (b) trading or the reporting of trading on such exchange or elsewhere is disrupted so that accurate appraisal of the NAV of the Acquiring Fund Shares or the Acquired Assets pursuant to Paragraph 2.1 is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. 3.5 The Acquired Fund shall deliver at the Closing a list of the names, addresses, federal taxpayer identification numbers and backup withholding and nonresident alien withholding status and certificates of the Acquired Fund Shareholders and the number and percentage ownership of outstanding Acquired Fund Shares owned by each such Acquired Fund Shareholder as of the Valuation Time, certified by the President or a Secretary of the Safeco Trust and its Treasurer, Secretary or other authorized officer (the "SHAREHOLDER LIST") as being an accurate record of the information (a) provided by the Acquired Fund Shareholders, (b) provided by the Acquired Fund Custodian, or (c) derived from the Safeco Trust's records by such officers or one of the Safeco Trust's service providers. The Acquiring Fund shall issue and deliver to the Acquired Fund a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date, or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, stock certificates, receipts or other documents as such other party or its counsel may reasonably request. 41 4. REPRESENTATIONS AND WARRANTIES 4.1 Except as set forth on Schedule 4.1 hereto, the Safeco Trust, on behalf of the Acquired Fund, represents, warrants and covenants to the Acquiring Fund, which representations, warranties and covenants will be true and correct on the date hereof and on the Closing Date as though made on and as of the Closing Date, as follows: (a) The Acquired Fund is a series of the Safeco Trust. The Safeco Trust is a statutory trust validly existing and in good standing under the laws of the State of Delaware and has the power to own all of its properties and assets and, subject to approval by the Acquired Fund's shareholders, to perform its obligations under this Agreement. The Acquired Fund is not required to qualify to do business in any jurisdiction in which it is not so qualified or where failure to qualify would subject it to any material liability or disability. Each of the Safeco Trust and the Acquired Fund has all necessary federal, state and local authorizations to own all of its properties and assets and to carry on its business as now being conducted; (b) The Safeco Trust is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the Investment Company Act is in full force and effect. (c) The Safeco Trust is not in violation of, and the execution and delivery of this Agreement and the performance of its obligations under this Agreement in respect of the Acquired Fund will not result in a violation of, any provision of the Safeco Trust's Trust Instrument or By-Laws or any material agreement, indenture, instrument, contract, lease or other undertaking with respect to the Acquired Fund to which the Safeco Trust is a party or by which the Acquired Fund or any of its assets are bound; (d) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Acquired Fund or any of the Acquired Fund's properties or assets. The Acquired Fund knows of no facts which might form the basis for the institution of such proceedings. Neither the Safeco Trust nor the Acquired Fund is a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially adversely affects the Acquired Fund's business or its ability to consummate the transactions contemplated herein or would be binding upon the Acquiring Fund as the successor to the Acquired Fund; (e) The Acquired Fund has no material contracts or other commitments (other than this Agreement or agreements for the purchase and sale of securities entered into in the ordinary course of business and consistent with its obligations under this Agreement) which will not be terminated at or prior to the Closing Date and no such termination will result in liability to the Acquired Fund (or the Acquiring Fund); (f) The statement of assets and liabilities of the Acquired Fund, and the related statements of operations and changes in net assets as of and for the most recent fiscal year have been audited by Ernst & Young LLP, independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles ("GAAP") consistently applied and fairly reflect, in all material respects, the financial condition of the Acquired Fund as of such date and the results of its operations for the period then ended, and all known liabilities, whether actual or contingent, of the Acquired Fund as of the date thereof are disclosed therein. Except for the Assumed Liabilities, the Acquired Fund will not have any known or contingent liabilities on the Closing Date. No significant deficiency, material weakness, fraud, significant change or other factor that could significantly affect the internal controls of the Acquired Fund has been disclosed or is required to be disclosed in the Acquired Fund's reports on Form N-CSR to enable the chief executive officer and chief financial officer or other officers of the Acquired Fund to make the certifications required by the Sarbanes-Oxley Act, and no deficiency, weakness, fraud, change, event or other factor exists that will be required to be disclosed in the Acquiring Fund's Form N-CSR after the Closing Date; (g) Since [most recent fiscal year end], except as specifically disclosed in the Acquired Fund's prospectus, its statement of additional information as in effect on the date of this Agreement, or in its semi-annual report for the period ended [ ], there has not been any material adverse change in the Acquired Fund's financial condition, assets, liabilities, business or prospects, or any incurrence by the Acquired Fund of indebtedness, except for normal contractual obligations incurred in the ordinary course of business or in connection with the settlement of purchases and sales of portfolio securities. For the purposes of this subparagraph (g) (but not for any other purpose of this Agreement), a decline in NAV per Acquired Fund Share arising out of its normal investment operations or a decline in market values of securities in the Acquired Fund's portfolio or a decline in net assets of the Acquired Fund as a result of redemptions shall not constitute a material adverse change; (h) (A) For each taxable year of its operation since its inception, the Acquired Fund has met, and for the current taxable year will meet, the requirements of Subchapter M of the Code for qualification. The Acquired Fund has elected to be treated as such and will qualify as such as of the Closing Date and will satisfy the diversification requirements of Section 851(b)(3) of the Code without regard to the last sentence of Section 851(d) of the Code. The Acquired Fund has not taken any action, 42 caused any action to be taken or caused any action to fail to be taken which action or failure could cause the Acquired Fund to fail to qualify as a regulated investment company under the Code; (B) Within the times and in the manner prescribed by law, the Acquired Fund has properly filed on a timely basis all Tax Returns (as defined below) that it was required to file, and all such Tax Returns were complete and accurate in all respects. The Acquired Fund has not been informed by any jurisdiction that the jurisdiction believes that the Acquired Fund was required to file any Tax Return that was not filed; and the Acquired Fund does not know of any basis upon which a jurisdiction could assert such a position; (C) The Acquired Fund has timely paid, in the manner prescribed by law, all Taxes (as defined below), which were due and payable or which were claimed to be due; (D) All Tax Returns filed by the Acquired Fund constitute complete and accurate reports of the respective Tax liabilities and all attributes of the Acquired Fund or, in the case of information returns and payee statements, the amounts required to be reported, and accurately set forth all items required to be included or reflected in such returns; (E) The Acquired Fund has not waived or extended any applicable statute of limitations relating to the assessment or collection of Taxes; (F) The Acquired Fund has not been notified that any examinations of the Tax Returns of the Acquired Fund are currently in progress or threatened, and no deficiencies have been asserted or assessed against the Acquired Fund as a result of any audit by the Internal Revenue Service or any state, local or foreign taxing authority, and, to its knowledge, no such deficiency has been proposed or threatened; (G) The Acquired Fund has no actual or potential liability for any Tax obligation of any taxpayer other than itself. Acquired Fund is not and has never been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns. The Acquired Fund is not a party to any Tax allocation, sharing, or indemnification agreement; (H) The unpaid Taxes of the Acquired Fund for tax periods through the Closing Date do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Statement of Assets and Liabilities, rather than in any notes thereto (the "TAX RESERVES"). All Taxes that the Acquired Fund is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been timely paid to the proper governmental agency; (I) The Acquired Fund has delivered to the Acquiring Fund or made available to the Acquiring Fund complete and accurate copies of all Tax Returns of the Acquired Fund, together with all related examination reports and statements of deficiency for all periods not closed under the applicable statutes of limitations and complete and correct copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents submitted by, received by or agreed to by or on behalf of the Acquired Fund. The Acquired Fund has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code; (J) The Acquired Fund has not undergone, has not agreed to undergo, and is not required to undergo (nor will it be required as a result of the transactions contemplated in this Agreement to undergo) a change in its method of accounting resulting in an adjustment to its taxable income pursuant to Section 481 of the Code. The Acquired Fund will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (ii) "closing agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iv) prepaid amount received on or prior to the Closing Date; (K) The Acquired Fund has not taken or agreed to take any action, and is not aware of any agreement, plan or other circumstance, that is inconsistent with the representations set forth in ANNEX B; (L) There are (and as of immediately following the Closing there will be) no liens on the assets of the Acquired Fund relating to or attributable to Taxes, except for Taxes not yet due and payable; 43 (M) The Tax bases of the assets of the Acquired Fund are accurately reflected on the Acquired Fund's Tax books and records; (N) The Acquired Fund has not incurred (or been allocated) an "overall foreign loss" as defined in Section 904(f)(2) of the Code which has not been previously recaptured in full as provided in Sections 904(f)(2) and/or 904(f)(3) of the Code; (O) The Acquired Fund is not a party to a gain recognition agreement under Section 367 of the Code; (P) The Acquired Fund does not own any interest in an entity that is characterized as a partnership for income tax purposes; (Q) The Acquired Fund's Tax attributes are not limited under the Code (including but not limited to any capital loss carry forward limitations under Sections 382 or 383 of the Code and the Treasury Regulations thereunder) or comparable provisions of state law, except as set forth on Schedule 4.1; and (R) For purposes of this Agreement, "TAXES" or "TAX" shall mean all taxes, charges, fees, levies or other similar assessments or liabilities, including without limitation income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, withholding, employment, unemployment, insurance, social security, business license, business organization, environmental, workers compensation, payroll, profits, license, lease, service, service use, severance, stamp, occupation, windfall profits, customs, duties, franchise and other taxes imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof; and "TAX RETURNS" shall mean all reports, returns, declarations, statements or other information required to be supplied to a governmental or regulatory authority or agency, or to any other person, in connection with Taxes and any associated schedules or work papers produced in connection with such items. (i) All issued and outstanding Acquired Fund Shares are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and nonassessable by the Acquired Fund. All of the issued and outstanding Acquired Fund Shares will, at the time of Closing, be held of record by the persons and in the amounts set forth in the Shareholder List submitted to the Acquiring Fund pursuant to Paragraph 3.5 hereof. The Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of its Acquired Fund Shares, nor is there outstanding any security convertible into any of its Acquired Fund Shares; (j) At the Closing Date, the Acquired Fund will have good and marketable title to the Acquired Assets, and full right, power and authority to sell, assign, transfer and deliver the Acquired Assets to the Acquiring Fund, and, upon delivery and payment for the Acquired Assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, except such restrictions as might arise under the Securities Act; (k) The Safeco Trust has the trust power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Safeco Trust's Board of Trustees, and, subject to the approval of the Acquired Fund's shareholders, assuming due authorization, execution and delivery by the Acquiring Fund, this Agreement will constitute a valid and binding obligation of the Acquired Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (l) The information to be furnished by the Acquired Fund to the Acquiring Fund for use in applications for orders, registration statements, proxy materials and other documents which may be necessary in connection with the transactions contemplated hereby and any information necessary to compute the total return of the Acquired Fund shall be accurate and complete and shall comply in all material respects with federal securities and other laws and regulations applicable thereto; (m) The information included in the proxy statement (the "PROXY STATEMENT") forming part of the Acquiring Fund's Registration Statement on Form N-14 filed in connection with this Agreement (the "REGISTRATION STATEMENT") that has been furnished in writing by the Acquired Fund to the Acquiring Fund for inclusion in the Registration Statement, on the effective date of that Registration Statement and on the Closing Date, will conform in all material respects to the applicable requirements of the Securities Act, the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the Investment Company Act and the rules and regulations of the Commission thereunder and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; 44 (n) Upon the effectiveness of the Registration Statement, no consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Safeco Trust or the Acquired Fund of the transactions contemplated by this Agreement; (o) All of the issued and outstanding Acquired Fund Shares have been offered for sale and sold in conformity with all applicable federal and state securities laws, except as may have been previously disclosed in writing to the Acquiring Fund; (p) The prospectus and statement of additional information of the Acquired Fund, each dated [ ] (collectively, the "ACQUIRED FUND PROSPECTUS"), and any amendments or supplements thereto, furnished to the Acquiring Fund, did not as of their dates or the dates of their distribution to the public contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which such statements were made, not misleading; (q) The Acquired Fund currently complies in all material respects with, and since its organization has complied in all material respects with, the requirements of, and the rules and regulations under, the Investment Company Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all other applicable federal and state laws or regulations. The Acquired Fund currently complies in all material respects with, and since its organization has complied in all material respects with, all investment objectives, policies, guidelines and restrictions and any compliance procedures established by the Safeco Trust with respect to the Acquired Fund. All advertising and sales material used by the Acquired Fund complies in all material respects with and has complied in all material respects with the applicable requirements of the Securities Act, the Investment Company Act, the rules and regulations of the Commission, and, to the extent applicable, the Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD") and any applicable state regulatory authority. All registration statements, prospectuses, reports, proxy materials or other filings required to be made or filed with the Commission, the NASD or any state securities authorities by the Acquired Fund have been duly filed and have been approved or declared effective, if such approval or declaration of effectiveness is required by law. Such registration statements, prospectuses, reports, proxy materials and other filings under the Securities Act, the Exchange Act and the Investment Company Act (i) are or were in compliance in all material respects with the requirements of all applicable statutes and the rules and regulations thereunder and (ii) do not or did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not false or misleading; (r) [F Reorg only][The Acquired Fund has previously provided to the Acquiring Fund (and at the Closing will provide an update through the Closing Date of such information) data which supports a calculation of the Acquired Fund's total return for all periods since the organization of the Acquired Fund. Such data has been prepared in accordance in all material respects with the requirements of the Investment Company Act and the regulations thereunder and the rules of the NASD;] (s) Neither the Acquired Fund nor, to the knowledge of the Acquired Fund, any "affiliated person" of the Acquired Fund has been convicted of any felony or misdemeanor, described in Section 9(a)(1) of the Investment Company Act, nor, to the knowledge of the Acquired Fund, has any affiliated person of the Acquired Fund been the subject, or presently is the subject, of any proceeding or investigation with respect to any disqualification that would be a basis for denial, suspension or revocation of registration as an investment adviser under Section 203(e) of the Investment Advisers Act of 1940, as amended (the "INVESTMENT ADVISERS ACT"), or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the Exchange Act, or for disqualification as an investment adviser, employee, officer or director of an investment company under Section 9 of the Investment Company Act; and (t) The Acquired Fund tax representation certificate to be delivered by the Acquired Fund to the Acquiring Fund and Wilmer Cutler Pickering Hale and Dorr LLP at the Closing pursuant to Paragraph 7.4 (the "ACQUIRED FUND TAX REPRESENTATION CERTIFICATE") will not on the Closing Date contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. 4.2 Except as set forth on Schedule 4.2 hereto, the Acquiring Trust, on behalf of the Acquiring Fund, represents, warrants and covenants to the Acquired Fund, which representations, warranties and covenants will be true and correct on the date hereof and on the Closing Date as though made on and as of the Closing Date, as follows: (a) The Acquiring Fund is a series of the Acquiring Trust. The Acquiring Trust is a [statutory][business] trust duly organized, validly existing and in good standing under the laws of the [State of Delaware][Commonwealth of Massachusetts]. The Acquiring Trust has the power to own all of its properties and assets and to perform the obligations under this Agreement. The Acquiring Fund is not required to qualify to do business in any jurisdiction in which it is not so qualified or where failure to qualify would subject it to any material liability or disability. Each of the Acquiring Trust and the Acquiring Fund has all necessary federal, state and local authorizations to own all of its properties and assets and to carry on its business as now being conducted; 45 (b) The Acquiring Trust is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the Investment Company Act is in full force and effect; (c) The Acquiring Fund's registration statement on Form N-1A that will be in effect on the Closing Date, and the prospectus and statement of additional information of the Acquiring Fund included therein, will conform in all material respects with the applicable requirements of the Securities Act and the Investment Company Act and the rules and regulations of the Commission thereunder, and did not as of the effective date thereof and will not as of the Closing Date contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; (d) The Registration Statement, the Proxy Statement and statement of additional information with respect to the Acquiring Fund, each dated [ ], 2004, and any amendments or supplements thereto in effect on or prior to the Closing Date included in the Registration Statement (other than written information furnished in writting by the Acquired Fund for inclusion therein, as covered by the Acquired Fund's warranty in Paragraph 4.1(m) hereof) will conform in all material respects to the applicable requirements of the Securities Act and the Investment Company Act and the rules and regulations of the Commission thereunder. Neither the Registration Statement nor the Proxy Statement (other than written information furnished by the Acquired Fund for inclusion therein, as covered by the Acquired Fund's warranty in Paragraph 4.1(m) hereof) includes or will include any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (e) The Acquiring Trust is not in violation of, and the execution and delivery of this Agreement and performance of its obligations under this Agreement will not result in a violation of, any provisions of the Declaration or by-laws of the Acquiring Trust or any material agreement, indenture, instrument, contract, lease or other undertaking with respect to the Acquiring Fund to which the Acquiring Trust is a party or by which the Acquiring Fund or any of its assets is bound; (f) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or threatened against the Acquiring Fund or any of the Acquiring Fund's properties or assets. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings. Neither the Acquiring Trust nor the Acquiring Fund is a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially adversely affects the Acquiring Fund's business or its ability to consummate the transactions contemplated herein; (g) The statement of assets and liabilities of the Acquiring Fund, and the related statements of operations and changes in net assets as of and for the period ended [most fiscal year end] have been audited by Ernst & Young LLP, independent registered public accounting firm, and are in accordance with GAAP consistently applied and fairly reflect, in all material respects, the financial condition of the Acquiring Fund as of such date and the results of its operations for the period then ended, and all known liabilities, whether actual or contingent, of the Acquiring Fund as of the date thereof are disclosed therein; (h) Since [most recent fiscal year end], except as specifically disclosed in the Acquiring Fund's prospectus, its statement of additional information as in effect on the date of this Agreement, or in its semi-annual report for the period ended [ ], there has not been any material adverse change in the Acquiring Fund's financial condition, assets, liabilities, business or prospects, or any incurrence by the Acquiring Fund of indebtedness, except for normal contractual obligations incurred in the ordinary course of business or in connection with the settlement of purchases and sales of portfolio securities. For the purposes of this subparagraph (h) (but not for any other purpose of this Agreement), a decline in NAV per Acquiring Fund's shares arising out of its normal investment operations or a decline in market values of securities in the Acquiring Fund's portfolio or a decline in net assets of the Acquiring Fund as a result of redemptions shall not constitute a material adverse change; (i) [FOR THE "F" REORGS REPLACE REP BELOW FOR "C" OR "D" REORGS WITH THE FOLLOWING: "THE ACQUIRING FUND INTENDS TO ELECT TO QUALIFY AS A REGULATED INVESTMENT COMPANY UNDER SECTION 851 OF THE CODE AND WILL MEET ON THE CLOSING DATE THE REQUIREMENTS OF SUBCHAPTER M OF THE CODE FOR QUALIFICATION AND TREATMENT AS A REGULATED INVESTMENT COMPANY. [ FOR "C" OR "D" REORGS: For each taxable year of its operation since its inception (including the current taxable year), the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company and has elected to be treated as such and will qualify as such as of the Closing Date and will satisfy the diversification requirements of Section 851(b)(3) of the Code without regard to the last sentence of Section 851(d) of the Code[refer to 817 REQUIREMENTS in case of variable contract funds]. ] The Acquiring Fund has not taken any action, caused any action to be taken or caused any action to fail to be taken which action or failure could cause the Acquiring Fund to fail to qualify as a regulated investment company under the Code. (B) Within the times and in the manner prescribed by law, the Acquiring Fund has properly filed on a timely basis all Tax Returns (as defined below) that it was required to file, and all such Tax Returns were complete and accurate in all 46 respects. The Acquiring Fund has not been informed by any jurisdiction that the jurisdiction believes that the Acquiring Fund was required to file any Tax Return that was not filed; and the Acquiring Fund does not know of any basis upon which a jurisdiction could assert such a position; (C) The Acquiring Fund has timely paid, in the manner prescribed by law, all Taxes (as defined below), which were due and payable or which were claimed to be due; (D) All Tax Returns filed by the Acquiring Fund constitute complete and accurate reports of the respective liabilities for Taxes and all attributes of the Acquiring Fund or, in the case of information returns and payee statements, the amounts required to be reported, and accurately set forth all items required to be included or reflected in such returns; (E) The Acquiring Fund has not waived or extended any applicable statute of limitations relating to the assessment or collection of Taxes; (F) The Acquiring Fund has not been notified that any examinations of the Tax Returns of the Acquiring Fund are currently in progress or threatened, and no deficiencies have been asserted or assessed against the Acquiring Fund as a result of any audit by the Internal Revenue Service or any state, local or foreign taxing authority, and, to its knowledge, no such deficiency has been proposed or threatened; (G) The Acquiring Fund has no actual or potential liability for any Tax obligation of any taxpayer other than itself. Acquiring Fund is not and has never been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns. The Acquiring Fund is not a party to any Tax allocation, sharing, or indemnification agreement; (H) The Acquiring Fund has delivered to the Acquired Fund or made available to the Acquired Fund complete and accurate copies of all Tax Returns of the Acquiring Fund, together with all related examination reports and statements of deficiency for all periods not closed under the applicable statutes of limitations and complete and correct copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents submitted by, received by or agreed to by or on behalf of the Acquiring Fund. The Acquiring Fund has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code; (I) The Acquiring Fund has not undergone, has not agreed to undergo, and is not required to undergo (nor will it be required as a result of the transactions contemplated in this Agreement to undergo) a change in its method of accounting resulting in an adjustment to its taxable income pursuant to Section 481 of the Code. The Acquiring Fund will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (ii) "closing agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iv) prepaid amount received on or prior to the Closing Date; (J) The Acquiring Fund has not taken or agreed to take any action, and is not aware of any agreement, plan or other circumstance, that is inconsistent with the representations set forth in ANNEX A; (K) The Acquiring Fund has not incurred (or been allocated) an "overall foreign loss" as defined in Section 904(f)(2) of the Code which has not been previously recaptured in full as provided in Sections 904(f)(2) and/or 904(f)(3) of the Code; (L) The Acquiring Fund is not a party to a gain recognition agreement under Section 367 of the Code; and (M) The Acquiring Fund's Tax attributes are not limited under the Code (including but not limited to any capital loss carry forward limitations under Sections 382 or 383 of the Code and the Treasury Regulations thereunder) or comparable provisions of state law, except as set forth on Schedule 4.1 (j) The Acquiring Fund currently complies in all material respects with the requirements of, and the rules and regulations under, the Investment Company Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all other applicable federal and state laws or regulations. The Acquiring Fund currently complies in all material respects with, and since its organization has complied in all material respects with, all investment objectives, policies, guidelines and restrictions and any compliance 47 procedures established by the Acquiring Trust with respect to the Acquiring Fund. All advertising and sales material used by the Acquiring Fund complies in all material respects with and has complied in all material respects with the applicable requirements of the Securities Act, the Investment Company Act, the rules and regulations of the Commission, and, to the extent applicable, the Conduct Rules of the NASD and any applicable state regulatory authority. All registration statements, prospectuses, reports, proxy materials or other filings required to be made or filed with the Commission, the NASD or any state securities authorities by the Acquiring Fund have been duly filed and have been approved or declared effective, if such approval or declaration of effectiveness is required by law. Such registration statements, prospectuses, reports, proxy materials and other filings under the Securities Act, the Exchange Act and the Investment Company Act (i) are or were in compliance in all material respects with the requirements of all applicable statutes and the rules and regulations thereunder and (ii) do not or did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not false or misleading; (k) The authorized capital of the Acquiring Fund consists of an unlimited number of shares of beneficial interest, no par value per share. As of the Closing Date, the Acquiring Fund will be authorized to issue an unlimited number of shares of beneficial interest, no par value per share. The Acquiring Fund Shares to be issued and delivered to the Acquired Fund for the account of the Acquired Fund Shareholders pursuant to the terms of this Agreement will have been duly authorized on the Closing Date and, when so issued and delivered, will be duly and validly issued, fully paid and non-assessable. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any Acquiring Fund shares, nor is there outstanding any security convertible into any Acquiring Fund shares; (l) The Acquiring Trust has the trust power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Acquiring Trust's Board of Trustees, and, assuming due authorization, execution and delivery by the Acquired Fund, this Agreement will constitute a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity principles; (m) The information to be furnished in writting by the Acquiring Fund or the Acquiring Fund Adviser for use in applications for orders, registration statements, proxy materials and other documents which may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto or the requirements of any form for which its use is intended, and shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the information provided not misleading; (n) No consent, approval, authorization or order of or filing with any court or governmental authority is required for the execution of this Agreement or the consummation of the transactions contemplated by the Agreement by the Acquiring Fund, except for the registration of the Acquiring Fund Shares under the Securities Act and the Investment Company Act; (o) All of the issued and outstanding Acquiring Fund Shares have been offered for sale and sold in conformity with all applicable federal and state securities laws, except as may have been previously disclosed in writing to the Acquiring Fund; (p) The prospectus and statement of additional information of the Acquiring Fund, each dated [ ] (collectively, the "ACQUIRING FUND PROSPECTUS"), and any amendments or supplements thereto, furnished to the Acquired Fund, did not as of their dates or the dates of their distribution to the public contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which such statements were made, not misleading; (q) Neither the Acquiring Fund nor, to the knowledge of the Acquiring Fund, any "affiliated person" of the Acquiring Fund has been convicted of any felony or misdemeanor, described in Section 9(a)(1) of the Investment Company Act, nor, to the knowledge of the Acquiring Fund, has any affiliated person of the Acquiring Fund been the subject, or presently is the subject, of any proceeding or investigation with respect to any disqualification that would be a basis for denial, suspension or revocation of registration as an investment adviser under Section 203(e) of the Investment Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the Exchange Act, or for disqualification as an investment adviser, employee, officer or director of an investment company under Section 9 of the Investment Company Act; and (r) The Acquiring Fund tax representation certificate to be delivered by the Acquiring Fund to the Acquired Fund and Wilmer Cutler Pickering Hale and Dorr LLP at Closing pursuant to Section 6.3 (the "ACQUIRING FUND TAX REPRESENTATION Certificate") will not on the Closing Date contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. 48 5. COVENANTS OF EACH OF THE ACQUIRING FUND AND THE ACQUIRED FUND 5.1 The Acquired Fund will operate the Acquired Fund's business in the ordinary course of business between the date hereof and the Closing Date. It is understood that such ordinary course of business will include the declaration and payment of customary dividends and other distributions and any other dividends and other distributions necessary or advisable (except to the extent dividends or other distributions that are not customary may be limited by representations made in connection with the issuance of the tax opinion described in Paragraph 8.5 hereof), in each case payable either in cash or in additional shares. 5.2 The Safeco Trust will call a special meeting of theAcquired Fund's shareholders to consider approval of this Agreement and act upon the matters set forth in the Proxy Statement. 5.3 The Acquiring Fund will prepare the notice of meeting, form of proxy and Proxy Statement (collectively, "PROXY MATERIALS") to be used in connection with such meeting, and will promptly prepare and file with the Commission the Registration Statement. The Safeco Trust will provide the Acquiring Fund with information reasonably requested for the preparation of the Registration Statement in compliance with the Securities Act, the Exchange Act, and the Investment Company Act. 5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired by the Acquired Fund for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement. 5.5 The Acquired Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requires concerning the beneficial ownership of the Acquired Fund Shares. 5.6 Subject to the provisions of this Agreement, each Fund will take, or cause to be taken, all actions, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate the transactions contemplated by this Agreement. 5.7 The Acquired Fund shall furnish to the Acquiring Fund on the Closing Date the Statement of Assets and Liabilities of the Acquired Fund as of the Closing Date setting forth the NAV (as computed pursuant to Paragraph 2.1) of the Acquired Fund as of the Valuation Time, which statement shall be prepared in accordance with GAAP consistently applied and certified by the Safeco Trust's Treasurer or Assistant Treasurer. As promptly as practicable, but in any case within 30 days after the Closing Date, the Safeco Trust shall furnish to the Acquiring Trust, in such form as is reasonably satisfactory to the Acquiring Trust, a statement of the earnings and profits of the Acquired Fund for federal income tax purposes, and of any capital loss carryovers and other items that will be carried over to the Acquiring Fund under the Code, and which statement will be certified by the Treasurer of the Safeco Trust. 5.8 Neither Fund shall take any action that is inconsistent with the representations set forth in, with respect to the Acquired Fund, the Acquired Fund Tax Representation Certificate and, with respect to the Acquiring Fund, the Acquiring Fund Tax Representation Certificate. 5.9 From and after the date of this Agreement and until the Closing Date, each of the Funds and the Safeco Trust and the Acquiring Trust shall use its commercially reasonable efforts to cause the Reorganization to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act could prevent the Reorganization from qualifying as a reorganization under the provisions of Section 368(a) of the Code. The parties hereby adopt this Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the income tax regulations promulgated under the Code. Unless otherwise required pursuant to a "determination" within the meaning of Section 1313(a) of the Code, the parties hereto shall treat and report the transactions contemplated hereby as a reorganization within the meaning of Section 368(a)(1)[INSERT (F), (C) OR (D), AS APPLICABLE] of the Code and shall not take any position inconsistent with such treatment. 5.10 From and after the date of this Agreement and through the time of the Closing on the Closing Date, the each Fund shall use its commercially reasonable efforts to cause it to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act could prevent it from qualifying as a regulated investment company under the provisions of Subchapter M of the Code. 5.11 Each of the Acquired Fund and the Acquiring Fund shall prepare, or cause to be prepared all Tax Returns of the Acquired Fund or the Acquiring Fund, as the case may be, for taxable periods that end on or before the Closing Date and shall timely file, or cause to be timely filed, all such Tax Returns. The Acquired Fund and the Acquiring Fund shall make any payments of Taxes required to be made by such Fund with respect to any such Tax Returns. 49 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND The obligations of the Acquired Fund to complete the transactions provided for herein shall be, at its election, subject to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions, unless waived by the Acquired Fund in writing: 6.1 All representations and warranties by the Acquiring Trust on behalf of the Acquiring Fund contained in this Agreement shall be true and correct as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date; 6.2 The Acquiring Fund shall have delivered to the Acquired Fund a certificate executed in its name by the Acquiring Trust's President or Vice President and its Treasurer or Assistant Treasurer, in form and substance satisfactory to the Acquired Fund and dated as of the Closing Date, to the effect that the representations and warranties of the Acquiring Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, that each of the conditions to closing in this Paragraph 6 have been met, and as to such other matters as the Acquired Fund shall reasonably request; 6.3 The Acquiring Fund shall have delivered to the Acquired Fund and Wilmer Cutler Pickering Hale and Dorr LLP an Acquiring Fund Tax Representation Certificate, satisfactory to the Acquired Fund and Wilmer Cutler Pickering Hale and Dorr LLP, substantially in the form attached to this Agreement as ANNEX A, concerning certain tax-related matters with respect to the Acquiring Fund; 6.4 The Acquired Fund shall have received at the Closing a favorable opinion of Wilmer Cutler Pickering Hale and Dorr LLP, dated as of the Closing Date, in a form reasonably satisfactory to Acquired Fund; and 6.5 The Board of Trustees of the Acquiring Trust shall have approved this Agreement and the transactions contemplated hereby. 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND The obligations of the Acquiring Fund to complete the transactions provided for herein shall be, at its election, subject to the performance by the Acquired Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following further conditions, unless waived by the Acquiring Fund in writing: 7.1 All representations and warranties of the Safeco Trust on behalf of the Acquired Fund contained in this Agreement shall be true and correct as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date; 7.2 The Safeco Trust shall have delivered to the Acquiring Fund the Statement of Assets and Liabilities of the Acquired Fund pursuant to Paragraph 5.7, together with a list of its portfolio securities showing the federal income tax bases and holding periods of such securities, as of the Closing Date, certified by the Safeco Trust's Treasurer or Assistant Treasurer; 7.3 The Acquired Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate of the Safeco Trust on behalf of the Acquired Fund by its President or Secretary and a Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory to the Acquiring Fund and dated as of the Closing Date, to the effect that the representations and warranties of the Acquired Fund contained in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, that each of the conditions to closing in this Section 7 have been met, and as to such other matters as the Acquiring Fund shall reasonably request; 7.4 The Acquired Fund shall have delivered to the Acquiring Fund and Wilmer Cutler Pickering Hale and Dorr LLP an Acquired Fund Tax Representation Certificate, satisfactory to the Acquiring Fund and Wilmer Cutler Pickering Hale and Dorr LLP, substantially in the form attached to this Agreement as ANNEX B, concerning certain tax-related matters with respect to the Acquired Fund; and 7.5 The Acquiring Fund shall have received at the Closing a favorable opinion of Kirpatrick & Lockhart dated as of the Closing Date, in a form reasonably satisfactory to Acquiring Fund; and 7.6 With respect to the Acquired Fund, the Board of Directors of the Safeco Trust shall have determined that the Reorganization is in the best interests of the Acquired Fund and, based upon such determination, shall have approved this Agreement and the transactions contemplated hereby. 50 8. FURTHER CONDITIONS PRECEDENT If any of the conditions set forth below do not exist on or before the Closing Date with respect to either party hereto, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement: 8.1 The Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the Acquired Fund's shareholders in accordance with the provisions of the Acquired Trust's Instrument of Trust and By-Laws, and certified copies of the resolutions evidencing such approval by the Acquired Fund's shareholders shall have been delivered by the Acquired Fund to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither party hereto may waive the conditions set forth in this Paragraph 8.1; 8.2 On the Closing Date, no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein; 8.3 All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the Commission and of state Blue Sky and securities authorities) deemed necessary by either party hereto to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of either party hereto, provided that either party may waive any such conditions for itself; 8.4 The Acquiring Trust's Registration Statement on Form N-14 shall have become effective under the Securities Act and no stop orders suspending the effectiveness of such Registration Statements shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the Securities Act; 8.5 The parties shall have received an opinion of Wilmer Cutler Pickering Hale and Dorr LLP, satisfactory to the Safeco Trust and the Acquiring Trust and subject to customary assumptions and qualifications, substantially to the effect that for federal income tax purposes the acquisition by the Acquiring Fund of the Acquired Assets solely in exchange for the issuance of Acquiring Fund Shares to the Acquired Fund and the assumption of the Assumed Liabilities by the Acquiring Fund, followed by the distribution by the Acquired Fund, in liquidation of the Acquired Fund, of Acquiring Fund Shares to the Acquired Fund Shareholders in exchange for their shares of common stock of the Acquired Fund and the termination of the Acquired Fund, will constitute a "reorganization" within the meaning of Section 368(a) of the Code. [FOR "C OR "D" REORG ONLY: "AND;"] [FOR "C" OR "D" REORG ONLY: 8.6 THE ACQUIRED FUND SHALL HAVE DISTRIBUTED TO ITS SHAREHOLDERS, IN A DISTRIBUTION OR DISTRIBUTIONS QUALIFYING FOR THE DEDUCTION FOR DIVIDENDS PAID UNDER SECTION 561 OF THE CODE, ALL OF ITS INVESTMENT COMPANY TAXABLE INCOME (AS DEFINED IN SECTION 852(B)(2) OF THE CODE DETERMINED WITHOUT REGARD TO SECTION 852(B)(2)(D) OF THE CODE) FOR ITS TAXABLE YEAR ENDING ON THE CLOSING DATE, ALL OF THE EXCESS OF (I) ITS INTEREST INCOME EXCLUDABLE FROM GROSS INCOME UNDER SECTION 103(A) OF THE CODE OVER (II) ITS DEDUCTIONS DISALLOWED UNDER SECTION 265 AND 171(A)(2) OF THE CODE FOR ITS TAXABLE YEAR ENDING ON THE CLOSING DATE, AND ALL OF ITS NET CAPITAL GAIN (AS SUCH TERM IS USED IN SECTIONS 852(B)(3)(A) AND (C) OF THE CODE), AFTER REDUCTION BY ANY AVAILABLE CAPITAL LOSS CARRYFORWARD, FOR ITS TAXABLE YEAR ENDING ON THE CLOSING DATE.] 9. BROKERAGE FEES AND EXPENSES 9.1 Each party hereto represents and warrants to the other party hereto that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein. 9.2 The parties have been informed by Occum Acquisition Corp and Pioneer Investment Management, Inc. that they will pay all expenses of the Acquired Fund and the Acquiring Fund associated with the preparation, printing and mailing of any and all shareholder notices, communications, proxy statements, and necessary filings with the SEC or any other governmental authority in connection with the transactions contemplated by this Agreement. Except for the foregoing, the Acquiring Fund and the Acquired Fund shall each bear its own expenses in connection with the transactions contemplated by this Agreement. 10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES 10.1 The Acquiring Fund and the Acquired Fund each agree that neither party has made any representation, warranty or covenant not set forth herein or referred to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes the entire agreement between the parties. 51 10.2 The representations and warranties contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall not survive the consummation of the transactions contemplated hereunder. 11. TERMINATION 11.1 This Agreement may be terminated by the mutual agreement of the Acquiring Trust and the Acquired Trust. In addition, either party may at its option terminate this Agreement at or prior to the Closing Date: (a) because of a material breach by the other of any representation, warranty, covenant or agreement contained herein to be performed at or prior to the Closing Date; (b) because of a condition herein expressed to be precedent to the obligations of the terminating party which has not been met and which reasonably appears will not or cannot be met; (c) by resolution of the Acquiring Fund's Board of Trustees if circumstances should develop that, in the good faith opinion of such Board, make proceeding with the Agreement not in the best interests of the Acquiring Fund's shareholders; (d) by resolution of the Safeco Trust's Board of Trustees if circumstances should develop that, in the good faith opinion of such Board, make proceeding with the Agreement not in the best interests of the Acquired Fund's shareholders; or (e) if the transactions contemplated by this Agreement shall not have occurred on or prior to [ ] or such other date as the parties may mutually agree upon in writing. 11.2 In the event of any such termination, there shall be no liability for damages on the part of the Acquiring Fund, the Acquiring Trust, the Safeco Trust or the Acquired Fund, or the directors, trustees or officers of the Safeco Trust, or the Acquired Trust, but, subject to Paragraph 9.2, each party shall bear the expenses incurred by it incidental to the preparation and carrying out of this Agreement. 12. AMENDMENTS This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the authorized officers of the Acquired Trust and the Acquiring Trust; provided, however, that following the meeting of the Acquired Fund's shareholders called by the Acquired Trust pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the effect of changing the provisions regarding the method for determining the number of Acquiring Fund' Shares to be received by the Acquired Fund Shareholders under this Agreement to the detriment of the Acquired Fund's shareholders without their further approval; provided that nothing contained in this Section 12 shall be construed to prohibit the parties from amending this Agreement to change the Closing Date. 13. NOTICES Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by prepaid telegraph, telecopy or certified mail addressed to the Acquired Fund, c/o ; with copies to: ., and the Acquiring Fund c/o Pioneer Investment Management, Inc., 60 State Street, Boston, Massachusetts 02109, Attention: Dorothy E. Bourassa, Esq., with copies to Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, Attention: David C. Phelan. 14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT 14.1 The article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 14.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. 14.3 This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. 14.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by either party without the prior written consent of the other party hereto. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, or other entity, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. 52 14.5 It is expressly agreed that the obligations of the Acquiring Trust and the Safeco Trust shall not be binding upon any of their respective directors, trustees, shareholders, nominees, officers, agents or employees personally, but bind only to the property of the Acquiring Fund or the Acquired Fund, as the case may be, as provided in the trust instruments of the Acquiring Trust and the Instrument of Trust of the Safeco Trust, respectively. The execution and delivery of this Agreement have been authorized by the trustees of the Acquiring Trust and the directors of the Safeco Trust and this Agreement has been executed by authorized officers of the Acquiring Trust and the Safeco Trust, acting as such, and neither such authorization by such trustees or directors nor such execution and delivery by such officers shall be deemed to have been made by any of them individually or to imposed any liability on any of them personally, but shall bind only the property of the Acquiring Fund and the Acquired Fund, as the case may be, as provided in the trust instruments of the Acquiring Trust and the Instrument of Trust of the Safeco Trust, respectively. 53 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first set forth above by its President or Vice President and attested by its Secretary or Assistant Secretary. Attest: [Safeco Trust] on behalf of [Safeco Fund] By: By: ------------------------------- ------------------------------- Name: Name: Title: Secretary Title: President [PIONEER TRUST] on behalf of Attest: [Pioneer Fund] By: By: ---------------------- ---------------------- Name: Name: Title: Title: 54 Annex A TAX REPRESENTATION CERTIFICATE OF [PIONEER TRUST ON BEHALF OF PIONEER FUND] This certificate is being delivered in connection with the transaction, to be effected pursuant to the Agreement and Plan of Reorganization made as of , 2004 between [Pioneer Trust], a Delaware statutory Trust (the "Acquiring Trust") on behalf of its series [Pioneer Fund] ("Acquiring Fund") and [Safeco Trust]., a Delaware statutory trust, on behalf of [Safeco Fund] ("Acquired Fund") (the "Agreement"). Pursuant to the Agreement, Acquiring Fund will acquire all of the assets of Acquired Fund in exchange solely for (i) the assumption by Acquiring Fund of the liabilities of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the issuance of shares of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund and the termination of Acquired Fund (the foregoing together constituting the "transaction"). The undersigned officer of Acquiring Trust, after consulting with its counsel, auditors and tax advisers regarding the meaning of and factual support for the following representations on behalf of Acquiring Fund, hereby certifies and represents that the following statements are true, complete and correct and will be true, complete and correct on the date of the transaction and thereafter as relevant. Unless otherwise indicated, all capitalized terms used but not defined herein shall have the meaning ascribed to them in the Agreement. 1. Acquiring TRUST is a [statutory][business] trust established under the laws of the [State of Delaware][Commonwealth of Massachusetts], and Acquiring Fund is, and has been at all times, treated as a separate corporation for federal income tax purposes. Acquiring Fund was newly organized solely for the purpose of effecting the transaction and continuing thereafter to operate as a regulated investment company. Prior to the transaction, Acquiring Fund did not and will not engage in any business activities. There shall be no issued and outstanding shares of Acquiring Fund prior to the Closing Date other than those issued to Pioneer Investment Management, Inc. or one of its affiliates in connection with the creation of Acquiring Fund. 2. Neither Acquiring Fund nor any person treated as related to Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) nor any partnership of which Acquiring Fund or any such related person is a partner has any plan or intention to redeem or otherwise acquire any of the Acquiring Fund Shares received by shareholders of Acquired Fund in the transaction except in the ordinary course of Acquiring Fund's business in connection with its legal obligation under Section 22(e) of the Investment Company Act of 1940, as amended (the "1940 Act"), as a series of a registered open-end investment company to redeem its own shares. 3. After the transaction, Acquiring Fund will continue the historic business (as defined in Treas. Reg. 1.368-1(d)(2) of Acquired Fund or will use a significant portion of the historic business assets (as defined in Treas. Reg. 1.368-1(d)(3)acquired from Acquired Fund in the ordinary course of a business. 4. Acquiring Fund has no plan or intention to sell or otherwise dispose of any assets of Acquired Fund acquired in the transaction, except for dispositions made in the ordinary course of its business or to maintain its qualification as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended ("the "Code"). 5. Any expenses of Acquired Fund incurred in connection with the transaction which are paid or assumed by Acquiring Fund will be expenses of Acquired Fund solely and directly related to the transaction in accordance with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquiring Fund will not pay or assume expenses, if any, incurred by any Acquired Fund Shareholders in connection with the transaction. 6. There is no, and never has been any, indebtedness between Acquiring Fund and Acquired Fund. 7. Acquiring Fund will properly elect to be treated as a regulated investment company under Subchapter M of the Code and will qualify for the special tax treatment afforded regulated investment companies under Subchapter M of the Code for all taxable years ending after the date of the transaction. 8. Acquiring Fund meets the requirements of a regulated investment company in Section 368(a)(2)(F) of the Code. 9. Acquiring Fund is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code. 10. Acquiring Fund does not now own and has never owned, directly or indirectly, any shares of Acquired Fund. 55 11. As of the date of the transaction, the fair market value of the Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of Acquired Fund will be approximately equal to the fair market value of the assets of Acquired Fund received by Acquiring Fund, minus the Assumed Liabilities assumed by Acquiring Fund. Acquiring Fund will not furnish any consideration in connection with the acquisition of Acquired Fund's assets other than the assumption of such Assumed Liabilities and the issuance of such Acquiring Fund Shares. 12. Immediately following the transaction, Acquired Fund shareholders will own all of the outstanding Acquiring Fund Shares, other than those issued to Pioneer Investment Management, Inc. or one of its affiliates in connection with the creation of the Acquiring Fund, and will own such shares solely by reason of their ownership of the Acquired Fund Shares immediately prior to the transaction. Acquiring Fund has no plan or intention to issue as part of the transaction any shares of Acquiring Fund other than the Acquiring Fund Shares issued in exchange for Acquired Fund assets. 13. The transaction is being undertaken for valid and substantive business purposes, including facilitating the Acquired Fund becoming a member of the Pioneer family of mutual funds, which, in the long term, is intended to result in lower expenses and increased assets. 14. No Acquired Fund shareholder is acting as agent for Acquiring Fund in connection with the transaction or approval thereof. Acquiring Fund will not reimburse any Acquired Fund shareholder for Acquired Fund Shares such shareholder may have purchased or for other obligations such shareholder may have incurred. 15. Acquiring Fund has no outstanding warrants, options, convertible securities or any other type of right pursuant to which any person could acquire stock in the Acquiring Fund. * * * * * The undersigned officer of Acquiring Trust is authorized to make all of the representations set forth herein, and the undersigned is authorized to execute this certificate on behalf of Acquiring Fund. The undersigned recognizes that Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the foregoing representations in evaluating the United States federal income tax consequences of the transaction and rendering its opinion pursuant to Section 8.5 of the Agreement. If, prior to the date of the transaction, any of the representations set forth herein ceases to be accurate, the undersigned agrees to deliver to Wilmer Cutler Pickering Hale and Dorr LLP immediately a written notice to that effect. [PIONEER TRUST] ON BEHALF OF [PIONEER FUND] By: --------------------------- Name: ----------------- Title: ------------------------ Dated: 56 Annex B TAX REPRESENTATION CERTIFICATE OF [SAFECO TRUST] ON BEHALF OF [SAFECO FUND] This certificate is being delivered in connection with the transaction to be effected pursuant to the Agreement and Plan of Reorganization made as of , 2004 between [Pioneer Trust], a Delaware statutory Trust on behalf of its series, [Pioneer Fund] ("Acquiring Fund") and [Safeco Trust]., a Delaware statutory trust ("SAFECO TRUST"), on behalf of [Safeco Fund] ("Acquired Fund") (the "Agreement"). Pursuant to the Agreement, Acquiring Fund will acquire all of the assets of Acquired Fund in exchange solely for (i) the assumption by Acquiring Fund of the liabilities of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the issuance of shares of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund and the termination of Acquired Fund (the foregoing together constituting the "transaction"). The undersigned officer of the Safeco Trust, after consulting with its counsel, auditors and tax advisers regarding the meaning of and factual support for the following representations, on behalf of Acquired Fund, hereby certifies and represents that the following statements are true, complete and correct and will be true, complete and correct on the date of the transaction and thereafter as relevant. Unless otherwise indicated, all capitalized terms used but not defined herein shall have the meaning ascribed to them in the Agreement. 1. Acquired Fund is a series of the Safeco Trust, a statutory trust organized under the laws of the state of Delaware, and Acquired Fund is, and has been at all times, treated as a separate corporation for federal income tax purposes. 2. As of the date of the transaction, the fair market value of the Acquiring Fund Shares received by each shareholder that holds shares of Acquired Fund (the "Acquired Fund Shares") will be approximately equal to the fair market value of the Acquired Fund Shares with respect to which such Acquiring Fund Shares are received, and the aggregate consideration received by Acquired Fund shareholders in exchange for their Acquired Fund Shares will be approximately equal to the fair market value of all of the outstanding Acquired Fund Shares immediately prior to the transaction. No property other than Acquiring Fund Shares will be distributed to shareholders of Acquired Fund in exchange for their Acquired Fund Shares, nor will any such shareholder receive cash or other property as part of the transaction. 3. Neither Acquired Fund nor any person "related" to Acquired Fund (as defined in Treasury Regulation Section 1.368-1(e)(3)) nor any partnership in which Acquired Fund or any such related person is a partner has redeemed, acquired or otherwise made any distributions with respect to any shares of the Acquired Fund as part of the transaction, or otherwise pursuant to a plan of which the transaction is a part, other than redemptions and distributions made in the ordinary course of Acquired Fund's business as a series of an open-end investment company. To the best knowledge of management of Acquired Fund, there is no plan or intention on the part of shareholders of Acquired Fund to engage in any transaction with Acquired Fund, the Acquiring Fund, or any person treated as related to Acquired Fund or Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) or any partnership in which Acquired Fund, Acquiring Fund, or any person treated as related to Acquired Fund or Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) is a partner involving the sale, redemption or exchange of any of the Acquired Fund Shares or any of the Acquiring Fund Shares to be received in the transaction, as the case may be, other than in the ordinary course of Acquired Fund's business as a series of an open-end investment company. 4. In the transaction, Acquired Fund will transfer its assets and Assumed Liabilities to Acquiring Fund such that immediately following the transfer, Acquiring Fund will possess all of the same assets and liabilities (other than any liabilities not included in Assumed Liabilities) as were possessed by Acquired Fund immediately prior to the transaction, except for assets used to pay expenses incurred in connection with the transaction and assets distributed to shareholders in redemption of their shares immediately preceding, or in contemplation of, the transaction (other than redemptions and distributions made in the ordinary course of Acquired Fund's business as an open-end investment company) which assets, constitute less than 1% of the net assets of Acquired Fund. 5. As of the date of the transaction, the fair market value of the Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of Acquired Fund will be approximately equal to the fair market value of the assets of Acquired Fund received by Acquiring Fund, minus the Assumed Liabilities. Acquired Fund will not receive any consideration from Acquiring Fund in connection with the acquisition of Acquired Fund's assets other than the assumption of such Assumed Liabilities and the issuance of such Acquiring Fund Shares. 57 6. The Assumed Liabilities assumed by Acquiring Fund plus the Assumed Liabilities, if any, to which the transferred assets are subject were incurred by Acquired Fund in the ordinary course of its business. Acquired Fund is not aware of any liabilities of any kind other than the Acquired Fund Liabilities assumed by the Acquiring Fund. 7. As or the Closing Date, the adjusted basis and the fair market value of the Acquired Fund assets transferred to Acquiring Fund will equal or exceed the Assumed Liabilities within the meaning of Section 357(d) of the Internal Revenue Code of 1986, as amended (the "Code"). 8. Acquired Fund currently conducts its historic business within the meaning of Treasury Regulation section 1.368-1(d)(2), which provides that, in general, a corporation's historic business is the business it has conducted most recently, but does not include a business that the corporation enters into as part of a plan of reorganization. The Acquired Fund assets transferred to Acquiring Fund will be Acquired Fund's historic business assets within the meaning of Treasury Regulation section 1.368-1(d)(3), which provides that a corporation's historic business assets are the assets used in its historic business. 9. Acquired Fund will distribute to its shareholders the Acquiring Fund Shares it receives, and its other properties, if any, pursuant to the transaction and will be liquidated promptly thereafter. 10. The expenses of Acquired Fund incurred by it in connection with the transaction which are to be assumed by Acquiring Fund, if any, will be only such expenses that are solely and directly related to the transaction in accordance with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquired Fund will not pay any expenses incurred by its shareholders in connection with the transaction. 11. There is no, and never has been any, indebtedness between Acquiring Fund and Acquired Fund. 12. Acquired Fund has properly elected to be treated as a regulated investment company under Subchapter M of the Code, has qualified for the special tax treatment afforded regulated investment companies under Subchapter M of the Code for each taxable year since inception, and qualifies as such as of the time of the Closing on the Closing Date. 13. Acquired Fund meets the requirements of a regulated investment company in Section 368(a)(2)(F) of the Code. 14. Acquired Fund is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code. 15. Acquired Fund does not pay compensation to any shareholder-employee. 16. Immediately following the transaction, Acquired Fund Shareholders will own all of the outstanding Acquiring Fund Shares issued to Acquired Fund pursuant to the transaction and will own such shares solely by reason of their ownership of the Acquired Fund Shares immediately prior to the transaction. 17. Acquired Fund shareholders will not have dissenters' or appraisal rights in the transaction. 18. The transaction is being undertaken for valid and substantial business purposes, including facilitating the Acquired Fund becoming a member of the Pioneer family of mutual funds, which, in the long term, is intended to result in lower expenses and increased assets. 19. Acquired Fund has no outstanding warrants, options, convertible securities or any other type of right pursuant to which any person could acquire stock in the Acquired Fund. * * * * * 58 The undersigned officer of the Safeco Trust is authorized to make all of the representations set forth herein, and the undersigned is authorized to execute this certificate on behalf of Acquired Fund. The undersigned recognizes that Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the foregoing representations in evaluating the United States federal income tax consequences of the transaction and rendering its opinion pursuant to Section 8.5 of the Agreement. If, prior to the date of the transaction, any of the representations set forth herein ceases to be accurate, the undersigned agrees to deliver to Wilmer Cutler Pickering Hale and Dorr LLP immediately a written notice to that effect. SAFECO TRUST, ON BEHALF OF [SAFECO FUND} By: ------------------------------------ Name: -------------------------- Title: -------------------------- Dated:
59 ANNEX B - Form of Interim Advisory Agreement AGREEMENT dated as of August 2, 2004, between Pioneer Investment Management, Inc. ("Pioneer"), a Delaware corporation and a member of the UniCreditio Italiano Banking Group, Register of Banking Groups, and [SAFECO TRUST], a Delaware statutory trust (the "Trust"), on behalf of its series [SAFECO FUNDS] (the "Fund"). Whereas, Safeco Asset Management Company has acted as investment advisor to the Fund pursuant to an Investment Advisory Agreement dated (the "Prior Agreement"). Whereas, the Prior Agreement has been approved by the Board of Trustees of the Trust and the shareholders of the Fund. Whereas, the Prior Agreement is being terminated as a result of assignment. Whereas, the Board of Trustees has determined to appoint Pioneer as investment adviser to the Fund. Whereas, this Agreement is being entered into in reliance upon Rule 15a-4 under the Investment Company Act of 1940, as amended (the "Investment Company Act"). Now therefore the Trust and Pioneer agree as follow: Section 1. The Trust appoints Pioneer as investment adviser of the Funds for the period and on the terms set forth herein. Pioneer accepts such appointment. Section 2. Pioneer and the Trust, on behalf of the Fund, hereby agree that the provisions of the Prior Agreement (other than as to the term of the Prior Agreement, the identity of the Adviser and the use of the "Safeco" name) are incorporated herein by reference and made a part hereof as if references to the Adviser were to Pioneer. Without limiting the forgoing, Pioneer shall be entitled to the fee for its services provided for in the Prior Agreement from (but exclusive of) the date hereof until the termination of this Agreement, except as provided in Section 3 below. Section 3. In the event that this Agreement is not approved by a majority of the Trust's outstanding voting securities (as such term is used in the Investment Company Act), Pioneer shall be entitled to a fee equal to the cost to Pioneer of performing its services under this Agreement in lieu of the fee provided for in Section 2. For purposes of this Agreement, Pioneer's costs in providing the services under this Agreement shall be equal to the pro rata portion of Pioneer's expenses for the term of this Agreement attributable to its investment company advisory business, calculated as follows: Pioneer cost in providing investment advisory services to its investment companies of the same type (i.e., domestic equity, international, fixed income, money market) multiplied by a fraction the numerator of which shall be the average daily net assets of the Fund during the term of this Agreement and the denominator of which shall be the average month end net assets under Pioneer's management of all of its investment company clients. Section 4. The compensation earned by Pioneer under Section 2 of this Agreement shall be held in an interest bearing escrow account with the Fund's custodian. If a majority of the outstanding voting securities approves this Agreement prior to the end of its term, the amount in the escrow account (including any interest earned) shall be paid to Pioneer. If a majority of the outstanding voting securities do not approve this Agreement prior to the end of its term, Pioneer shall be entitled to be paid, out of the escrow account the lesser of (i) the amount in the escrow account (including any interest earned on that amount while in escrow) and (ii) the fee provided for in Section 3 (plus any interest on that amount while in escrow), with any remaining amount in the escrow account being returned to the Fund. Section 5. This Agreement shall become effective on August 2, 2004. Unless terminated as provided below, this Agreement shall remain in full force and effect until the earliest of (i) the closing of the reorganization of the Fund into [name of Pioneer Fund], (ii) approval of a Management Contract between the Fund and Pioneer and (iii) a date that is the later of 150 days after the date of the termination of the Prior Agreement or such later date as may be consistent with a rule or interpretive position (formal or informal) of the staff of the Securities and Exchange Commission. This Agreement may be terminated at any time without payment of penalty by vote of the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund. Pioneer may terminate this Agreement at any time without payment of any penalty on not less than 60 days written notice to the Fund. This Agreement shall automatically terminate upon its assignment as defined in the Investment Company Act. In witness whereof, the parties hereto have executed this Agreement as the2ndt day of August 2004. 60 [SAFECO TRUST] By: ------------------------------------------------ Its: ----------------------------------------------- PIONEER INVESTMENT MANAGEMENT, INC. By: ------------------------------------------------ Its: -----------------------------------------------
61 ANNEX C - ADDITIONAL INFORMATION PERTAINING TO PIONEER OWNERSHIP OF PIONEER. Pioneer is an indirect, wholly owned subsidiary of UniCredito Italiano. PORTFOLIO TRANSACTION POLICIES All orders for the purchase or sale of portfolio securities are placed on behalf of each fund by Pioneer pursuant to authority contained in the fund's management contract. Pioneer seeks to obtain the best execution on portfolio trades. The price of securities and any commission rate paid are always factors, but frequently not the only factors, in judging best execution. In selecting brokers or dealers, Pioneer considers various relevant factors, including, but not limited to, the size and type of the transaction; the nature and character of the markets for the security to be purchased or sold; the execution efficiency, settlement capability and financial condition of the dealer; the dealer's execution services rendered on a continuing basis; and the reasonableness of any dealer spreads. Transactions in non-U.S. equity securities are executed by broker-dealers in non-U.S. countries in which commission rates may not be negotiable (as such rates are in the U.S.). Pioneer may select broker-dealers that provide brokerage and/or research services to a fund and/or other investment companies or other accounts managed by Pioneer. In addition, consistent with Section 28(e) of the Exchange Act, if Pioneer determines in good faith that the amount of commissions charged by a broker-dealer is reasonable in relation to the value of the brokerage and research services provided by such broker, the fund may pay commissions to such broker-dealer in an amount greater than the amount another firm may charge. Such services may include advice concerning the value of securities; the advisability of investing in, purchasing or selling securities; the availability of securities or the purchasers or sellers of securities; providing stock quotation services, credit rating service information and comparative fund statistics; furnishing analyses, electronic information services, manuals and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and performance of accounts and particular investment decisions; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). Pioneer maintains a listing of broker-dealers who provide such services on a regular basis. However, because many transactions on behalf of a fund and other investment companies or accounts managed by Pioneer are placed with broker-dealers (including broker-dealers on the listing) without regard to the furnishing of such services, it is not possible to estimate the proportion of such transactions directed to such dealers solely because such services were provided. Pioneer believes that no exact dollar value can be calculated for such services. The research received from broker-dealers may be useful to Pioneer in rendering investment management services to any of the funds as well as other investment companies or other accounts managed by Pioneer, although not all such research may be useful to any of the funds. Conversely, such information provided by brokers or dealers who have executed transaction orders on behalf of such other accounts may be useful to Pioneer in carrying out its obligations to any of the funds. The receipt of such research has not reduced Pioneer's normal independent research activities; however, it enables Pioneer to avoid the additional expenses which might otherwise be incurred if it were to attempt to develop comparable information through its own staff. In circumstances where two or more broker-dealers offer comparable prices and executions, preference may be given to a broker-dealer which has sold shares of a fund as well as shares of other investment companies managed by Pioneer. This policy does not imply a commitment to execute all portfolio transactions through all broker-dealers that sell shares of the fund. None of the funds used any brokers affiliated with Pioneer during its most recently completed fiscal year in connection with its portfolio transactions. SIMILAR FUNDS Pioneer serves as the investment adviser to each fund in the Pioneer Family of Funds. The following table identifies other funds in the Pioneer Family of Funds that have similar investment objectives to the Funds described in this proxy statement and provides other information regarding the similar funds.
- ------------------------------------------------------------------------------------------------------------- Pioneer Fund Amount of Management Net assets of Fund as of Management fee rate (as Fees waived or expenses June 30, 2004 a percentage of average reimbursed daily net assets - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------
62 PIONEER AMERICA INCOME TRUST STATEMENT OF ADDITIONAL INFORMATION __________, 2004 This Statement of Additional Information is not a Prospectus. It should be read in conjunction with the related Proxy Statement and Prospectus (also dated _________, 2004) which covers Investor Class shares of Pioneer America Income Trust to be issued in exchange for shares of Safeco Intermediate-Term U.S. Government Fund, a series of Safeco Taxable Bond Trust. Please retain this Statement of Additional Information for further reference. The Prospectus is available to you free of charge (please call [1-800-407-7298]). INTRODUCTION................................................................2 EXHIBITS....................................................................2 ADDITIONAL INFORMATION ABOUT PIONEER AMERICA INCOME TRUST...................2 FUND HISTORY...........................................................2 DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS.......................2 MANAGEMENT OF THE FUND.................................................3 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES....................3 INVESTMENT ADVISORY AND OTHER SERVICES.................................3 BROKERAGE ALLOCATION AND OTHER PRACTICES...............................3 CAPITAL STOCK AND OTHER SECURITIES.....................................3 PURCHASE, REDEMPTION AND PRICING OF SHARES.............................3 TAXATION OF THE FUND...................................................3 UNDERWRITERS...........................................................3 CALCULATION OF PERFORMANCE DATA........................................3 FINANCIAL STATEMENTS...................................................3
INTRODUCTION This Statement of Additional Information is intended to supplement the information provided in a Proxy Statement and Prospectus dated _______, 2004 (the "Proxy Statement and Prospectus") relating to the proposed reorganization of Safeco Intermediate-Term U.S. Government Fund, a series of Safeco Taxable Bond Trust, into Pioneer America Income Trust and in connection with the solicitation by the management of Safeco Taxable Bond Trust of proxies to be voted at the Meeting of Shareholders of Safeco Intermediate-Term U.S. Government Fund to be held on __________, 2004. EXHIBITS AND DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated herein by reference, unless otherwise indicated. Shareholders will receive a copy of each document that is incorporated by reference upon any request to receive a copy of this Statement of Additional Information. 1. Pioneer America Income Trust's statement of additional information for Class A, B, C and R shares, dated April 30, 2004 (the "SAI") (File No. 33-20795), as filed with the Securities and Exchange Commission on April 29, 2004 (Accession No. 0001016964-04-000116) is incorporated herein by reference. 2. Pioneer America Income Trust's Annual Report for the fiscal year ended December 31, 2003 (File No. 811-05516), as filed with the Securities and Exchange Commission on March 5, 2004 (Accession No. 0000812195-04-000009) is incorporated herein by reference. 3. [Pioneer America Income Trust's Semi-Annual Report for the period ended June 30, 2004] [To be filed] 4. Safeco Taxable Bond Trust's statement of additional information, dated April 30, 2004 (File No. 33-22132), as filed with the Securities and Exchange Commission on April 29, 2004 (Accession No. 0001193125-04-072468) is incorporated herein by reference. 5. Safeco Intermediate-Term U.S. Government Fund's Annual Report for the fiscal year ended December 31, 2003 (File No. 811-05574), as filed with the Securities and Exchange Commission on February 26, 2004 (Accession No. 0001193125-04-030227) is incorporated herein by reference. 6. [Safeco Intermediate-Term U.S. Government Fund's Semi-Annual Report for the period ended June 30, 2004] [To be filed] 8. [Pro forma financial statements for the combined Pioneer America Income Trust and Safeco Intermediate-Term U.S. Government Fund as of June 30, 2004] [To be filed] ADDITIONAL INFORMATION ABOUT PIONEER AMERICA INCOME TRUST FUND HISTORY For additional information about Pioneer America Income Trust generally and its history, see "Fund History" in the SAI. DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS -2- For additional information about Pioneer America Income Trust's investment objective, policies, risks and restrictions, see "Investment Policies, Risks and Restrictions" in the SAI. MANAGEMENT OF THE FUND For additional information about Pioneer America Income Trust's Board of Trustees and officers, see "Trustees and Officers" in the SAI. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES For additional information, see "Annual Fee, Expense and Other Information - - Share ownership." INVESTMENT ADVISORY AND OTHER SERVICES For additional information, see "Investment Adviser," "Shareholder Servicing/Transfer Agent," "Custodian" and "Independent Auditors" in Pioneer America Income Trust's SAI. BROKERAGE ALLOCATION AND OTHER PRACTICES For additional information about the Pioneer America Income Trust's brokerage allocation practices, see "Portfolio Transactions" in the SAI. CAPITAL STOCK AND OTHER SECURITIES For additional information about the voting rights and other characteristics of shares of beneficial interest of Pioneer America Income Trust, see "Description of Shares" in the SAI. PURCHASE, REDEMPTION AND PRICING OF SHARES For additional information about purchase, redemption and pricing of shares of Pioneer America Income Trust, see "Sales Charges," "Redeeming Shares," "Telephone and Online Transactions" and "Pricing of Shares" in the SAI. TAXATION OF THE FUND For additional information about tax matters related to an investment in Pioneer America Income Trust, see "Tax Status" in the SAI. UNDERWRITERS For additional information about the Pioneer America Income Trust's principal underwriter and distribution plans, see "Principal Underwriter and Distribution Plans" and "Sales Charges" in the SAI. CALCULATION OF PERFORMANCE DATA For additional information about the investment performance of Pioneer America Income Trust, see "Investment Results" in the SAI. FINANCIAL STATEMENTS For additional information, see "Financial Statements" in Pioneer America Income Trust's SAI. [Pro Forma Financial Statements to be filed by amendment.] -3- PART C OTHER INFORMATION PIONEER AMERICA INCOME TRUST ITEM 15. INDEMNIFICATION No change from the information set forth in Item 25 of the most recently filed Registration Statement of Pioneer America Income Trust (the "Registrant") on Form N-1A under the Securities Act of 1933 and the Investment Company Act of 1940 (File Nos. 33-20795 and 811-05516), as filed with the Securities and Exchange Commission on April 29, 2004 (Accession No. 0001016964-04-000116), which information is incorporated herein by reference. (1)(a) Amended and Restated Declaration of Trust (1) (1)(b) Amendment to Amended and Restated Declaration of Trust to (*) establish Investor Class Shares (2) By-Laws (2) (3) Not applicable (4) Form of Agreement and Plan of Reorganization (5) (5) Reference is made to Exhibits (1) and (2) hereof (6)(a) Management Contract (3) (6)(b) Expense Limitation Agreement (*) (7) Underwriting Agreement with Pioneer Funds Distributor, Inc. (3) (8) Not applicable (9) Custodian Agreement with Brown Brothers Harriman & Co. (4) (10) Multiple Class Plan Pursuant to Rule 18f-3 (*) (11) Opinion of Counsel (legality of securities being offered) (*) (12) Form of opinion as to tax matters and consent (*) (13)(a) Investment Company Service Agreement with Pioneering Services Corporation (4)
(13)(b) Administration Agreement with Pioneer Investment Management, Inc. (4) (14) Consents of Independent Registered Public Accounting Firm (*) (15) Not applicable (16) Powers of Attorney (4) (17)(a) Code of Ethics (4) (17)(b) Form of Proxy Card (*) (1) Previously filed. Incorporated herein by reference from the exhibits filed with Post-Effective Amendment No. 9 to the Registrant's Registration Statement on Form N-1A (File Nos. 33-20795; 811-05516), as filed with the Securities and Exchange Commission on April 27, 1995 (Accession no. 0000831120-95-000006). (2) Previously filed. Incorporated herein by reference from the exhibits filed with Post-Effective Amendment No. 10 to the Registrant's Registration Statement on Form N-1A (File Nos. 33-20795; 811-05516), as filed with the Securities and Exchange Commission on April 22, 1996 (Accession no. 0000831120-96-000005). (3) Previously filed. Incorporated herein by reference from the exhibits filed with Post-Effective Amendment No. 19 to the Registrant's Registration Statement on Form N-1A (File Nos. 33-20795; 811-05516), as filed with the Securities and Exchange Commission on May 1, 2002 (Accession no. 0000831120-02-000041). (4) Previously filed. Incorporated herein by reference from the exhibits filed with Post-Effective Amendment No. 22 to the Registrant's Registration Statement on Form N-1A (File Nos. 33-20795; 811-05516), as filed with the Securities and Exchange Commission on April 29, 2004 (Accession no. 0001016964-04-000116). (5) Filed herewith as Exhibit A to the Proxy Statement and Prospectus included as Part A of this Registration Statement. (*) Filed herewith.
ITEM 17. UNDERTAKINGS. (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is part of this Registration Statement by any person or party which is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form N-14 has been signed on behalf of the Registrant, in the City of Boston and the Commonwealth of Massachusetts, on the 20th day of August, 2004. Pioneer America Income Trust By: /s/ Osbert M. Hood -------------------------------------------- Osbert M. Hood Executive Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date * Chairman of the Board, Trustee, August 20, 2004 - --------------------------- and President John F. Cogan, Jr. * Chief Financial Officer and August 20, 2004 - --------------------------- Treasurer Vincent Nave * - --------------------------- Mary K. Bush Trustee * - --------------------------- Richard H. Egdahl Trustee * - --------------------------- Margaret B.W. Graham Trustee /s/ Osbert M. Hood - --------------------------- Osbert M. Hood Trustee * - --------------------------- Marguerite A. Piret Trustee * - --------------------------- Steven K. West Trustee * - --------------------------- John Winthrop Trustee * By: /s/ Osbert M. Hood August 20, 2004 -------------------------------------------- Osbert M. Hood, Attorney-in-Fact
EXHIBIT INDEX The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description (1)(b) Amendment to Amended and Restated Declaration of Trust to establish Investor Class Shares (6)(b) Expense Limitation Agreement (10) Multiple Class Plan Pursuant to Rule 18f-3 (11) Opinion of Counsel (12) Form of Opinion as to Tax Matters and Consent (14) Consents of Independent Registered Public Accounting Firm (17)(b) Form of Proxy Card
EX-99.(1)(B) 3 ex99_1b.txt PIONEER AMERICA INCOME TRUST, A MASSACHUSETTS BUSINESS TRUST AMENDMENT TO THE AGREEMENT AND DECLARATION OF TRUST OF PIONEER AMERICA INCOME TRUST, A MASSACHUSETTS BUSINESS TRUST The undersigned, being at least a majority of the Trustees of Pioneer America Income Trust, a Massachusetts business trust (the "Trust"), do hereby amend the Agreement and Declaration of Trust, dated March 18, 1988, as amended (the "Declaration"), as follows, such amendment to be effective on the date hereof: Pursuant to Article IX, Section 8 of the Declaration, Trustees hereby establish one additional class of shares of the Trust, which shall be designated Investor Class Shares. IN WITNESS WHEREOF, the undersigned being all the Trustees of the Trust have executed this instrument as of this 3rd day of August, 2004. /s/ John F. Cogan, Jr /s/ Osbert M. Hood - ------------------------------------- ------------------------------------- John F. Cogan, Jr Osbert M. Hood /s/ Mary K. Bush /s/ Marguerite A. Piret - ------------------------------------- ------------------------------------- Mary K. Bush Marguerite A. Piret /s/ Richard H. Egdahl, M.D. /s/ Stephen K. West - ------------------------------------- ------------------------------------- Richard H. Egdahl, M.D. Stephen K. West /s/ Margaret B.W. Graham /s/ John Winthrop - ------------------------------------- ------------------------------------- Margaret B.W. Graham John Winthrop The address of each Trustee is: c/o Pioneer Investment Management, Inc 60 State Street, Boston, Massachusetts 02109 EX-99.(6)(B) 4 ex99_6b.txt Expense Limit and Reimbursement Agreement Expense Limit and Reimbursement Agreement made as of August 3, 2004, between Pioneer Investment Management, Inc. (PIM) and the investment companies and series thereof listed on Annex A (each a "Fund"). Whereas PIM wishes to reduce the expenses of the Investor Class shares or Class I shares of each Fund until the end of the month of the second anniversary of the reorganization relating to the initial issuance of Investor Class shares or Class I shares of such Fund; and Whereas each Fund wishes to have PIM enter into such an agreement; Now therefore the parties agree as follows: Section 1. PIM agrees, until the end of the month of the second anniversary of the reorganization relating to the initial issuance of Investor Class shares or Class I shares of a Fund, to limit such Fund's ordinary operating expenses (other than extraordinary expenses, such as litigation, taxes, brokerage commissions, etc.) attributable to the Investor Class shares or Class I shares (the "Expense Limitation") to the percentage listed for such Fund on Annex A. Such limitation shall be made by waiving transfer agency fees and/or reimbursing expenses attributable to Investor Class shares or Class I shares. In the event that the waiver of transfer agency fees and expenses is not sufficient, PIM shall waive other fees and/or reimburse the Fund for the Fund's other ordinary operating expenses (other than extraordinary expenses, such as litigation, taxes, brokerage commissions, etc) so that the Expense Limitation is satisfied with respect to Investor Class shares or Class I shares, as the case may be. Section 2. PIM may not terminate or modify the duration or amount of this Expense Limitation Agreement. PIM may otherwise modify this Agreement with the approval of the Board of Trustees of each Fund. Section 3. PIM shall keep a record of the amount of expenses that it waived or reimbursed pursuant to Section 1 hereof ("Prior Expenses"). If at any future date the total expenses of a Fund attributable to Investor Class shares or Class I shares, as the case may be, are less than the Expense Limitation, PIM shall be entitled to be reimbursed for such Prior Expenses attributable to Investor Class shares or Class I shares, provided that such reimbursement does not cause the Fund's Investor Class or Class I share expenses to exceed the Expense Limitation. PIM shall also be entitled to reimbursement of the corresponding Prior Expenses attributable to any other authorized class of shares. If the Fund's Investor Class or Class I expenses subsequently exceed the Expense Limitation, the reimbursement of Prior Expenses shall be suspended and, if subsequent reimbursement of Prior Expenses shall be resumed to the extent that Investor Class or Class I expenses do not exceed the Expense Limitation, the Expense Limitation shall be applied. Notwithstanding anything in this Section 3 to the contrary, the Fund shall not reimburse PIM for any Prior Expense pursuant to this Section 3 more than three (3) years after the expense was incurred. Section 4. It is not intended by PIM or the Fund that the reimbursement agreement in Section 3 shall be an obligation of a Fund unless and until the total expenses of such Fund -1- attributable to the Investor Class shares or Class I shares, as the case may be, are less than the Expense Limitation. PIM understands that such total expenses may never be reduced to such level and there is no assurance that the Prior Expenses shall be reimbursed. In addition, each Fund shall have the right to terminate this Agreement, including its obligation to reimburse Prior Expenses, at any time upon notice to PIM. This Agreement automatically terminates without obligation by the Fund upon termination of the Management Contract between PIM and the Fund. Section 5. This Agreement shall be governed by the laws of the State of Delaware. In witness whereof, the parties hereto have caused this Agreement to be signed as of the 3rd day of August, 2004. Each Fund listed on Annex A PIONEER INVESTMENT MANAGEMENT, INC. By: /s/ Osbert M. Hood By: /s/ Dorothy E. Bourassa --------------------------------------- -------------------------------- Osbert M. Hood Dorothy E. Bourassa Executive Vice President Secretary
-2- Annex A
- --------------------------------------------------------------------- Acquiring Fund Class of Expense Limitation Shares (Investor class) for initial two years - --------------------------------------------------------------------- Pioneer International Investor Class 1.40% Equity Fund - --------------------------------------------------------------------- Pioneer Balanced Fund Investor Class 1.10% - --------------------------------------------------------------------- Pioneer Fund Investor Class 1.02% - --------------------------------------------------------------------- Pioneer Growth Shares Investor Class 1.15% - --------------------------------------------------------------------- Pioneer Value Fund Investor Class 1.10% - --------------------------------------------------------------------- Pioneer Small Cap Value Investor Class 1.15% Fund - --------------------------------------------------------------------- Pioneer Bond Fund Investor Class 0.74% - --------------------------------------------------------------------- Pioneer Tax Free Income Investor Class 0.70% Fund - --------------------------------------------------------------------- Pioneer America Income Investor Class 0.74% Trust - --------------------------------------------------------------------- Pioneer High Yield Fund Investor Class 0.90% - --------------------------------------------------------------------- Pioneer Cash Reserves Investor Class 0.71% Fund - --------------------------------------------------------------------- Pioneer Tax Free Money Investor Class 0.65% Market Fund - --------------------------------------------------------------------- Pioneer Growth Investor Class 1.05% Opportunities Fund - --------------------------------------------------------------------- Pioneer Mid Cap Value Investor Class 1.10% Fund - --------------------------------------------------------------------- Pioneer California Tax Investor Class 0.63% Free Income Fund - --------------------------------------------------------------------- Pioneer Municipal Bond Investor Class 0.62% Fund - ---------------------------------------------------------------------
-3-
- --------------------------------------------------------------------- Acquiring Fund Class of Expense limitation for Shares initial two years - --------------------------------------------------------------------- Pioneer Fund VCT Class I 0.80% Portfolio - --------------------------------------------------------------------- Pioneer Small Cap Value Class I 1.01% II VCT Portfolio - --------------------------------------------------------------------- Pioneer Bond VCT Class I 0.89% Portfolio - --------------------------------------------------------------------- Pioneer Money Market Class I 0.90% VCT Portfolio - --------------------------------------------------------------------- Pioneer Mid Cap VCT Class I 0.88% Portfolio - --------------------------------------------------------------------- Pioneer Growth Class I 0.79% Opportunities VCT Portfolio - ---------------------------------------------------------------------
-4- EX-99.(10) 5 ex99_10.txt PIONEER AMERICA INCOME TRUST Multiple Class Plan Pursuant to Rule 18f-3 Class A Shares, Class B Shares, Class C Shares, Class R Shares and Investor Class Shares August 3, 2004 Each class of shares of Pioneer America Income Trust, a Massachusetts business trust (the "Trust") will have the same relative rights and privileges and be subject to the same sales charges, fees and expenses, except as set forth below. The Board of Trustees may determine in the future that other distribution arrangements, allocations of expenses (whether ordinary or extraordinary) or services to be provided to a class of shares are appropriate and amend this Multiple Class Plan accordingly without the approval of shareholders of any class. Except as set forth in the Trust's prospectus(es), shares may be exchanged only for shares of the same class of another Pioneer mutual fund. Article I. Class A Shares Class A Shares are sold at net asset value per share and subject to the initial sales charge schedule or contingent deferred sales charge ("CDSC") and minimum purchase requirements as set forth in the Trust's prospectus. Class A Shares shall be entitled to the shareholder services set forth from time to time in the Trust's prospectus with respect to Class A Shares. Class A Shares are subject to fees calculated as a stated percentage of the net assets attributable to Class A Shares under the Trust's Class A Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The Class A Shareholders have exclusive voting rights, if any, with respect to the Trust's Class A Rule 12b-1 Distribution Plan. Transfer agency fees are allocated to Class A Shares on a per account basis except to the extent, if any, such an allocation would cause the Trust to fail to satisfy any requirement necessary to obtain or rely on a private letter ruling from the Internal Revenue Service ("IRS") relating to the issuance of multiple classes of shares. Class A Shares shall bear the costs and expenses associated with conducting a shareholder meeting for matters relating to Class A Shares. The initial purchase date for Class A Shares acquired through (i) reinvestment of dividends on Class A Shares or (ii) exchange from another Pioneer mutual fund will be deemed to be the date on which the original Class A Shares were purchased. Article II. Class B Shares Class B Shares are sold at net asset value per share without the imposition of an initial sales charge. However, Class B Shares redeemed within a specified number of years of purchase will be subject to a CDSC as set forth in the Trust's prospectus. Class B Shares are sold subject to the minimum purchase requirements set forth in the Trust's prospectus. Class B Shares shall be entitled to the shareholder services set forth from time to time in the Trust's prospectus with respect to Class B Shares. Class B Shares are subject to fees calculated as a stated percentage of the net assets attributable to Class B Shares under the Class B Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The Class B Shareholders of the Trust have exclusive voting rights, if any, with respect to the Trust's Class B Rule 12b-1 Distribution Plan. Transfer agency fees are allocated to Class B Shares on a per account basis except to the extent, if any, such an allocation would cause the Trust to fail to satisfy any requirement necessary to obtain or rely on a private letter ruling from the IRS relating to the issuance of multiple classes of shares. Class B Shares shall bear the costs and expenses associated with conducting a shareholder meeting for matters relating to Class B Shares. Class B Shares will automatically convert to Class A Shares of the Trust at the end of a specified number of years after the initial purchase date of Class B Shares, except as provided in the Trust's prospectus. Such conversion will occur at the relative net asset value per share of each class without the imposition of any sales charge, fee or other charge. The conversion of Class B Shares to Class A Shares may be suspended if it is determined that the conversion constitutes or is likely to constitute a taxable event under federal income tax laws. The initial purchase date for Class B Shares acquired through (i) reinvestment of dividends on Class B Shares or (ii) exchange from another Pioneer mutual fund will be deemed to be the date on which the original Class B Shares were purchased. Article III. Class C Shares Class C Shares are sold at net asset value per share without the imposition of an initial sales charge. Class C Shares redeemed within one (1) year of purchase will be subject to a CDSC as set forth in the Trust's prospectus. Class C Shares are sold subject to the minimum purchase requirements set forth in the Trust's prospectus. Class C Shares shall be entitled to the shareholder services set forth from time to time in the Trust's prospectus with respect to Class C Shares. Class C Shares are subject to fees calculated as a stated percentage of the net assets attributable to Class C Shares under the Class C Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The Class C Shareholders of the Trust have exclusive voting rights, if any, with respect to the Trust's Class C Rule 12b-1 Distribution Plan. Transfer agency fees are allocated to Class C Shares on a per account basis except to the extent, if any, such an allocation would cause the Trust to fail to satisfy any requirement necessary to obtain or rely on a private letter ruling from the IRS relating to the issuance of multiple classes of shares. Class C Shares shall bear the costs and expenses associated with conducting a shareholder meeting for matters relating to Class C Shares. The initial purchase date for Class C Shares acquired through (i) reinvestment of dividends on Class C Shares or (ii) exchange from another Pioneer mutual fund will be deemed to be the date on which the original Class C Shares were purchased. Article IV. Class R Shares Class R Shares are sold at net asset value per share without an initial sales charge. Class R Shares redeemed within eighteen (18) months of purchase will be subject to a CDSC as set forth in the Trust's prospectus. Class R Shares are sold to retirement plans that meet the eligibility requirements for Class R Shares set forth in the Trust's prospectus. Class R Shares shall be entitled to the shareholder services set forth from time to time in the Trust's prospectus with respect to Class R Shares. Class R Shares are subject to fees calculated as a stated 2 percentage of the net assets attributable to Class R Shares under the Class R Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The Class R Shareholders of the Trust have exclusive voting rights, if any, with respect to the Trust's Class R Rule 12b-1 Distribution Plan. Transfer agency fees are allocated to Class R Shares on a per account basis except to the extent, if any, such an allocation would cause the Trust to fail to satisfy any requirement necessary to obtain or rely on a private letter ruling from the IRS relating to the issuance of multiple classes of shares. Class R Shares shall bear the costs and expenses associated with conducting a shareholder meeting for matters relating to Class R Shares. The initial purchase date for Class R Shares acquired through (i) reinvestment of dividends on Class R Shares or (ii) exchange from another Pioneer mutual fund will be deemed to be the date on which the original Class R Shares were purchased. Article V. Investor Class Investor Class Shares are only issued in connection with reorganizations of other investment companies, or series thereof, into the Trust or upon reinvestment of dividends on Investor Class Shares. Investor Class Shares shall be entitled to the shareholder services set forth from time to time in the Trust's prospectus with respect to Investor Class Shares. Investor Class Shares are not subject to a Rule 12b-1 Distribution Plan. Transfer agency fees are allocated to Investor Class Shares on a per account basis except to the extent, if any, such an allocation would cause the Trust to fail to satisfy any requirement necessary to obtain or rely on a private letter ruling from the IRS relating to the issuance of multiple classes of shares. Investor Class 3 Shares shall bear the costs and expenses associated with conducting a shareholder meeting for matters relating to Investor Class Shares. Investor Class Shares will automatically convert to Class A Shares of the Trust on the second anniversary of the closing of the issuance of such Investor Class Shares. Such conversion will occur at the relative net asset value per share of each class without the imposition of any sales charge, fee or other charge. The conversion of Investor Class Shares to Class A Shares may be suspended if it is determined that the conversion constitutes or is likely to constitute a taxable event under federal income tax laws. The initial purchase date for Investor Class Shares acquired through (i) reinvestment of dividends on Class Shares or (ii) exchange from another Pioneer mutual fund will be deemed to be the date on which the original Investor Class Shares were issued. Article VI. Approval by Board of Trustees This Multiple Class Plan shall not take effect until it has been approved by the vote of a majority (or whatever greater percentage may, from time to time, be required under Rule 18f-3 under the Act) of (a) all of the Trustees of the Trust and (b) those of the Trustees who are not "interested persons" (as such term may be from time to time defined under the Act) of the Trust. Article VII. Amendments No material amendment to this Multiple Class Plan shall be effective unless it is approved by the Board of Trustees of the Trust in the same manner as is provided for approval of this Multiple Class Plan in Article VI. 4 EX-99.(11) 6 ex99_11.txt [WILMER CUTLER PICKERING HALE AND DORR LLP LOGO] August 18, 2004 60 STATE STREET BOSTON, MA 02109 Pioneer America Income Trust + 1 617-526-6000 60 State Street + 1 617-526-5000 fax Boston, Massachusetts 02109 wilmerhale.com Ladies and Gentlemen: Pioneer America Income Trust (the "Fund") was established as a Massachusetts business trust under an Agreement and Declaration of Trust dated March 18, 1988, as amended from time to time (the "Declaration of Trust"). The beneficial interests thereunder are represented by transferable shares of beneficial interest, no par value. The Trustees have the powers set forth in the Declaration of Trust, subject to the terms, provisions and conditions therein provided. Pursuant to Article V, Section 2 of the Declaration of Trust, the number of shares of beneficial interest authorized to be issued under the Declaration of Trust is unlimited and the Trustees are authorized to divide the shares into one or more series of shares and one or more classes thereof as they deem necessary or desirable. Pursuant to Article V, Sections 2 and 3 of the Declaration of Trust, the Trustees are empowered in their discretion to issue shares of any series for such amount and type of consideration, including cash or securities, and on such terms as the Trustees may authorize, all without action or approval of the shareholders. As of the date of this opinion, the Trustees have established one additional class of shares of the Fund, designated as Investor Class shares. We have examined the Declaration of Trust and By-Laws, each as amended from time to time, of the Fund, and such other documents as we have deemed necessary or appropriate for the purposes of this opinion, including, but not limited to, originals, or copies certified or otherwise identified to our satisfaction, of such documents, Fund records and other instruments. In our examination of the above documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as certified of photostatic copies. Our opinions below are qualified to the extent that they may be subject to or affected by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the rights and remedies of creditors generally, (ii) statutory or decisional law concerning recourse by creditors to security in the absence of notice or hearing and (iii) duties and standards imposed on creditors and parties to contracts, including, without limitation, requirements of good faith, reasonableness and fair dealing. Further, we do not express any opinion as to (i) the availability of the remedy of specific performance or any other equitable remedy upon breach of any provision of any agreement whether applied by a court of law or equity, (ii) the successful assertion of any equitable defense, or (iii) the right of any party to enforce the indemnification or contribution provisions of any agreement. BALTIMORE BERLIN BOSTON BRUSSELS LONDON MUNICH NEW YORK NORTHERN VIRGINIA OXFORD PRINCETON WALTHAM WASHINGTON Pioneer America Income Trust August 18, 2004 Page 2 In rendering the opinion below, insofar as it relates to the good standing and valid existence of the Fund, we have relied solely on a certificate of the Secretary of the Commonwealth of Massachusetts, dated as of a recent date, and such opinion is limited accordingly and is rendered as of the date of such certificate. This opinion is limited to the laws of the Commonwealth of Massachusetts relating to business trusts, and we express no opinion with respect to the laws of any other jurisdiction or to any other laws of the Commonwealth of Massachusetts. Further, we express no opinion as to compliance with any state or federal securities laws, including the securities laws of the Commonwealth of Massachusetts. Our opinion below, as it relates to the non-assessability of the shares of the Fund, is qualified to the extent that, under Massachusetts law, shareholders of a Massachusetts business trust may be held personally liable for the obligations of the Fund. However, the Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund. Also, the Declaration of Trust provides for indemnification out of Fund property for all loss and expense of any shareholder held personally liable for the obligations of the Fund. Subject to the foregoing, we are of the opinion that the Fund is a duly organized and validly existing business trust in good standing under the laws of the Commonwealth of Massachusetts and that the Investor Class shares of the Fund, when issued in accordance with the terms, conditions, requirements and procedures set forth in the Declaration of Trust, the Fund's Registration Statement on Form N-1A, will be validly issued, fully paid and non-assessable shares of beneficial interest, subject to compliance with the Securities Act of 1933, as amended (the "Securities Act"), the Investment Company Act of 1940, as amended, and the applicable state laws regulating the sale of securities. Please note that we are opining only as to the matters expressly set forth herein, and no opinion should be inferred as to any other matters. This opinion is based upon currently existing statutes, rules, regulations and judicial decisions, and we disclaim any obligation to advise you of any change in any of these sources of law or subsequent legal or factual developments which might affect any matters or opinions set forth herein. We hereby consent to the filing of this opinion with the Securities and Exchange Commission (the "Commission") as an exhibit to the Fund's Registration Statement in accordance with the requirements of Form N-1A and Form N-14 under the Securities Act. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission. Very truly yours, /s/ WILMER CUTLER PICKERING HALE AND DORR LLP EX-99.(12) 7 ex99_12.txt [LETTERHEAD] [HALE AND DORR LLP LOGO] COUNSELLORS AT LAW www.haledorr.com 60 STATE STREET o BOSTON, MA 02109 617-526-6000 o FAX 617-526-5000 DRAFT OF AUGUST 17, 2004 __________, 2004 [Pioneer Fund] [Safeco Fund] Ladies and Gentlemen: This opinion is being delivered to you in connection with the Agreement and Plan of Reorganization (the "Agreement") made as of _______, 2004 by and between [Pioneer Trust], a [Delaware statutory][Massachusetts business] trust, on behalf of its series, [Pioneer Fund] ("Acquiring Fund") and [Safeco Trust] on behalf of its series, [Safeco Fund] ("Acquired Fund"). Pursuant to the Agreement, Acquiring Fund will acquire all of the assets of Acquired Fund in exchange solely for (i) the assumption by Acquiring Fund of all of the Assumed Liabilities, as defined in the Agreement (the "Acquired Fund Liabilities"), and (ii) the issuance of [Investor Class][Class I] shares of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund and the termination of Acquired Fund (the foregoing together constituting the "Transaction"). All section references, unless otherwise indicated, are to the United States Internal Revenue Code of 1986, as amended (the "Code"). In rendering this opinion, we have examined and relied upon (i) the prospectus for Acquiring Fund dated ______; (ii) the statement of additional information for Acquiring Fund dated ________; (iii) the prospectus for Acquired Fund dated ___________; (iv) the statement of additional information for Acquired Fund dated ____________; (v) the Notice of Meeting of Shareholders Scheduled for __________ and the accompanying proxy statement and prospectus on Form N-14 (the "Proxy Statement"); (vi) the Agreement; (vii) the tax representation certificates delivered pursuant to the Agreement and relevant to this opinion (the "Representation Certificates"); and (viii) such other documents as we deemed necessary or relevant to our analysis. In our examination of documents, we have assumed the authenticity of original documents, the accuracy of copies, the genuineness of signatures, and the legal capacity of signatories. We have assumed that all parties to the Agreement and to any other documents examined by us have acted, and will act, in accordance with the terms of such Agreement and documents and that the BOSTON LONDON MUNICH NEW YORK OXFORD PRINCETON RESTON WALTHAM WASHINGTON - -------------------------------------------------------------------------------- HALE AND DORR LLP IS A MASSACHUSETTS LIMITED LIABILITY PARTNERSHIP [Pioneer Fund] [Safeco Fund] ________, 2004 Page 2 Transaction will be consummated pursuant to the terms and conditions set forth in the Agreement without the waiver or modification of any such terms and conditions. Furthermore, we have assumed that all representations contained in the Agreement, as well as those representations contained in the Representation Certificates are, on the date hereof, and will be, at the consummation of the Transaction, true and complete in all material respects, and that any representation made in any of the documents referred to herein "to the knowledge and belief" (or similar qualification) of any person or party is, and at the consummation of the Transaction will be, correct without such qualification. We have also assumed that as to all matters for which a person or entity has represented that such person is not a party to, does not have, or is not aware of any plan, intention, understanding, or agreement, there is no such plan, intention, understanding, or agreement. We have not attempted to verify independently any of the above assumptions or representations. The conclusions expressed herein represent our judgment regarding the proper treatment of the Transaction under the income tax laws of the United States based upon the Code, case law, Treasury Regulations, and the rulings and other pronouncements of the Internal Revenue Service (the "Service") in effect on the date of this opinion. No assurances can be given that such laws will not be amended or otherwise changed after the consummation of the Transaction or that such changes will not affect the conclusions expressed herein. Nevertheless, we undertake no responsibility to advise you of any developments after the consummation of the Transaction in the application or interpretation of the income tax laws of the United States. Our opinion represents our best judgment regarding how a court would decide if presented with the issues addressed herein and is not binding upon the Service or any court. Moreover, our opinion does not provide any assurance that a position taken in reliance on such opinion will not be challenged by the Service and does not constitute any representation or warranty that such position, if so challenged, will not be rejected by a court. This opinion addresses only the specific United States federal income tax consequences of the Transaction set forth below, and does not address any other federal, state, local, or foreign income, estate, gift, transfer, sales, or other tax consequences that may result from the Transaction or any other action (including any action taken in connection with the Transaction). On the basis of and subject to the foregoing and in reliance upon the representations, facts and assumptions described above, we are of the opinion that the acquisition by Acquiring Fund of the assets of Acquired Fund solely in exchange for the issuance of Acquiring Fund Shares to Acquired Fund and the assumption of the Acquired Fund Liabilities by Acquiring Fund, followed by the distribution by Acquired Fund, in liquidation of Acquired Fund, of Acquiring Fund Shares to Acquired Fund shareholders in exchange for their Acquired Fund Shares and the termination of Acquired Fund, will constitute a "reorganization" within the meaning of Section 368(a) of the Code. No opinion is expressed or implied regarding the tax consequences of any other aspects of the Transaction except as expressly set forth above. [Pioneer Fund] [Safeco Fund] ________, 2004 Page 3 This opinion is being delivered to you solely in connection with the closing condition set forth in Section [8.5] of the Agreement. This opinion is intended solely for the benefit of you and the shareholders of the Acquired Fund and it may not be relied upon for any other purpose or by any other person or entity, and may not be made available to any other person or entity without our prior written consent. Very truly yours, WILMER CUTLER PICKERING HALE AND DORR LLP By: __________________________ EX-99.(14) 8 ex99_14.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our firm under the caption "Experts - Safeco Funds", in the Combined Proxy Statement (of Safeco Common Stock Trust, Safeco Taxable Bond Trust, Safeco Tax-Exempt Bond Trust, Safeco Managed Bond Trust and Safeco Money Market Trust) and Prospectus for Investor Class Shares of Pioneer America Income Trust, and to the incorporation by reference of our report dated January 30, 2004, with respect to the financial statements and financial highlights of Safeco Intermediate-Term U.S. Government Fund included in the Safeco Taxable Bond Trust Annual Report for the year ended December 31, 2003, in the Combined Proxy Statement and Prospectus included in this Registration Statement on Form N-14 of the Pioneer America Income Trust. We further consent to the reference to us under the heading "Representations and Warranties" (paragraph 4.1(f)) in the Agreement and Plan of Reorganization included as Annex A to the Combined Proxy Statement and Prospectus. We also consent to the references to our firm under the captions "Independent Auditors" and "Financial Statements" in the Safeco Taxable Bond Trust Statement of Additional Information, and to the incorporation by reference of our report, dated January 30, 2004, on the financial statements and financial highlights of Safeco Intermediate-Term U.S. Government Fund included in the Safeco Taxable Bond Trust Annual Report for the year ended December 31, 2003, in Post-Effective Amendment No. 31 to the Registration Statement (Form N-1A, File Nos. 33-22132/811-5574), as filed with the Securities and Exchange Commission on April 29, 2004 (Accession No. 0001193125-04-072468), which is incorporated by reference into the Combined Proxy Statement and Prospectus of the Pioneer America Income Trust. Seattle, Washington August 18, 2004 /s/ ERNST & YOUNG LLP CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the references to our firm under the captions "Financial Highlights" and "Experts - Pioneer Funds", in the Combined Proxy Statements (of Safeco Common Stock Trust, Safeco Taxable Bond Trust, Safeco Tax-Exempt Bond Trust, Safeco Managed Bond Trust and Safeco Money Market Trust) and to the incorporation by reference of our report dated February 17, 2004, with respect to the financial statements and financial highlights of Pioneer America Income Trust, included in the Annual Report to the Shareowners for the year ended December 31, 2003, in the Combined Proxy Statements and Prospectus included in this Registration Statement on Form N-14 of the Pioneer America Income Trust. We further consent to the reference to us under the heading "Representations and Warranties" (paragraph 4.2(g)) in the Agreement and Plan of Reorganization included as Annex A to the Combined Proxy Statements and Prospectus. We also consent to the references to our firm under the captions "Independent Auditors" and "Financial Statements" in the Pioneer America Income Trust Class A, Class B, Class C and Class R Shares Statement of Additional Information, and to the incorporation by reference of our report, dated February 17, 2004, on the financial statements and financial highlights of Pioneer America Income Trust included in the Annual Report to the Shareowners for the year ended December 31, 2003, in Post-Effective Amendment No. 22 to the Registration Statement (Form N-1A, File Nos. 33-20795; 811-05516), as filed with the Securities and Exchange Commission on April 29, 2004 (Accession No. 0001016964-04-000116), which is incorporated by reference into the Combined Proxy Statements and Prospectus included in this Registration Statement on Form N-14 of the Pioneer America Income Trust. /s/ ERNST & YOUNG LLP Boston, Massachusetts August 18, 2004 EX-99.(17)(B) 9 ex99_17b.txt SAFECO TAXABLE BOND TRUST SAFECO INTERMEDIATE-TERM U.S. GOVERNMENT FUND SPECIAL MEETING OF SHAREHOLDERS - [ ], 2004 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF SAFECO TAXABLE BOND TRUST (THE "TRUST"), ON BEHALF OF ITS SERIES, SAFECO INTERMEDIATE-TERM U.S. GOVERNMENT FUND (the "fund") and relates to proposals with respect to the fund. The undersigned hereby appoints [ ] and [ ] or either of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the special meeting of the shareholders of the fund to be held at 2 Union Square, 25th Floor, Seattle, Washington 98101, on [ ], 2004, at [ ] [a/p].m., local time, and any adjournment or postponement thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the notice of the special meeting of shareholders and of the accompanying proxy statement and prospectus and revokes any proxy previously given with respect to such meeting. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE OF THIS CARD. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" PROPOSALS 8 AND 17 AND IN THE DISCRETION OF THE ABOVE-NAMED PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. Date , 2004 PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE --------------------------------------------- Signature(s) (Title(s) if applicable) NOTE: Signature(s) should agree with the name(s) printed herein. If joint owners, each holder should sign this proxy. When signing as attorney, executor, administrator, trustee or guardian, please give your full name as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. YOUR VOTE IS IMPORTANT. PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW This proxy will be voted "For" Proposals 8 and 17 if no specification is made below. For shareholders of Safeco Intermediate-Term U.S. Government Fund: YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 8. (1) FOR [ ] AGAINST [ ] ABSTAIN [ ] YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 17. (2) FOR [ ] AGAINST [ ] ABSTAIN [ ] (3) To vote and otherwise represent the above-signed shareholder(s) on any other matter that may properly come before the meeting or any adjournment or postponement thereof. WE NEED YOUR VOTE BEFORE __________, 2004. PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD. THANK YOU FOR YOUR TIME -----END PRIVACY-ENHANCED MESSAGE-----