<PAGE>
PIONEER TAX-FREE INCOME FUND
DEAR FELLOW SHAREOWNERS,
Pioneer Tax-Free Income Fund completed the first half of its fiscal year on June
30, 1995. During this time, your Fund successfully pursued its goal of providing
an attractive level of income free from federal taxation, consistent with
preservation of capital. This report details the Fund's performance, as well as
that of the overall bond market.
HOW YOUR FUND PERFORMED
For the semiannual period ended June 30, 1995, we report the following results
for Pioneer Tax-Free Income Fund's CLASS A SHARES:
-The Fund paid shareowners daily dividends totaling $0.334 per share during the
period. On June 30, 1995, 30-day SEC yield was 4.49%, based on a standard
formula prescribed by the Securities and Exchange Commission. Net asset value
stood at $11.96 per share, versus $11.24 six months ago. The Fund's total
return was 9.45% based on net asset value, and 4.52% based on maximum public
offering price. Total return assumes the reinvestment of distributions at net
asset value. In comparison, the Lehman Brothers Long-Term Municipal Bond Index
returned 12.47%, and the 230 general municipal bond funds tracked by Lipper
Analytical Services gained an average of 9.01%. The accompanying chart provides
your Fund's longer-term results.
-------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of June 30, 1995)
<TABLE>
<CAPTION>
NET PUBLIC
ASSET OFFERING
CLASS A SHARES VALUE PRICE*
----------------------- ----- --------
<S> <C> <C>
Life-of-Fund (1/18/77) 6.76 % 6.49%
10 Years 9.45 8.95
5 Years 8.17 7.18
1 Year 8.03 3.19
</TABLE>
-------------------------------------------------------
Pioneer Tax-Free Income Fund introduced CLASS B SHARES to investors on April 28,
1995. From that date through June 30, Class B shares achieved the following
results:
-The Fund paid shareowners daily dividends totaling $0.089 per share during the
abbreviated period. On June 30, 30-day SEC yield was 3.83%. Net asset value was
$11.91 per share on June 30, versus its opening share price of $11.81. Your
Fund's total return was 1.55% assuming shares were held throughout the
shortened period, and -2.45% assuming shares were redeemed on June 30 and the
maximum contingent deferred sales charge of 4.0% was deducted.
Because Pioneer Tax-Free Income Fund's income is free from federal taxation, it
is even more rewarding when compared with taxable income on an "after-tax"
basis. The Fund's 4.49% SEC yield on Class A shares, and 3.83% yield on Class B
shares, would be equal to these taxable yields:
<TABLE>
<CAPTION>
TAXABLE EQUIVALENT YIELD
----------------------------------
TAX BRACKET CLASS A CLASS B
---------------- ---------------- ----------------
<S> <C> <C>
39.6% 7.43% 6.34%
36.0 7.02 5.98
31.0 6.51 5.55
</TABLE>
AN OVERVIEW OF THE BOND MARKET
Bond prices have moved ahead strongly so far this year. Early in the period,
foreign central banks purchased a large volume of U.S. government bonds to help
strengthen the weak U.S. dollar. This heavy buying significantly lifted the bond
market. In addition, the Federal Reserve Board (the Fed) raised the benchmark
federal funds rate on February 1 in an attempt to slow the economy and head off
the possibility of higher inflation. Signs of an economic slowdown subsequently
appeared, and concerns
* Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of all distributions at net asset value.
Past performance does not guarantee future results. Share prices and returns
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost. A portion of income may be subject to state and local
taxes, although the Fund intends to minimize any taxable income. The Fund
currently avoids investments that are subject to the alternative minimum tax.
n
<PAGE>
over inflation and additional interest rate hikes diminished. Bond investors
showed their enthusiasm toward these trends by pushing bond prices even higher,
which caused yields -- particularly those of long-term bonds -- to drop. For
example, the interest rate on the benchmark 30-year Treasury bond stood at 7.9%
as of December 31; by the end of June, the rate had fallen to 6.6%.
The municipal bond market also fared well for the semiannual period, although
recent months (in particular, May and June) saw some setbacks. Promises of tax
reform, as well as an imposing equity market, caused municipal securities to
underperform other financial markets. The recent underperformance has made
municipals extremely inexpensive relative to Treasury securities. Of course,
this relative "cheapness," together with the demand caused by the seasonal
redemption of $35 million in municipal bonds, has presented many attractive
buying opportunities.
HOW PIONEER MANAGED YOUR INVESTMENT
Pioneer Tax-Free Income Fund pursues a high level of current income exempt from
federal income taxes. The Fund only invests in high-quality municipal bonds; as
of June 30, the Fund's portfolio had an average quality rating of AA, and
holdings were diversified among 172 issues from 38 states.
The Fund's average life shortened during the period, from just under 14 years on
December 31 to 11 years on June 30. This primarily reflects the decline in
long-term interest rates throughout much of the period. We think the shortened
average life makes sense given the current uncertainty over interest rates and
the investing climate. Of course, your management has been careful not to change
the Fund's average life too dramatically since we want to maintain the Fund's
competitive income stream.
During the period, your management selected bonds we expect will improve the
overall quality of the portfolio. We looked for issues with solid credit ratings
to give the portfolio a more conservative base. We generally avoided bonds
selling at a deep discount, focusing instead on securities with higher coupons.
By doing so, we have structured the portfolio to be less volatile than it has
been in the past, as well as less vulnerable in case interest rates reverse
direction. Along the same conservative line, we sold a number of bonds with call
provisions (which allow the issuer to call away, or redeem, a bond before its
maturity date). We think our approach over the semiannual period has kept the
Fund competitively positioned, in addition to providing an added degree of
stability.
The accompanying charts show the Fund's maturity structure and quality
distribution at the period's end.
MATURITY DISTRIBUTION
(as of June 30, 1995)
[Pie chart depicting the Fund's maturity structure.]
0-2 years - 4%
2-5 years - 16%
5-7 years - 19%
7-10 years - 20%
10-15 years - 22%
20+ years - 19%
2
<PAGE>
QUALITY DISTRIBUTION
(as of June 30, 1995)
[Pie chart depicting the Fund's quality distribution at the end of the period.]
A - 36%
AA - 28%
AAA - 36%
LOOKING AHEAD
On July 6, the Fed lowered short-term interest rates, reflecting its latest
outlook toward inflation and the economy. Only time will tell whether the
current balance of moderate economic growth and low inflation will continue for
an extended period. Nevertheless, these trends have greatly improved the
environment for bond investing so far in 1995, especially when compared to 1994.
While such widely varying results are not what we expect from bond investing,
they do demonstrate the benefit of maintaining a long-term, disciplined outlook,
rather than trying to "time" the market.
Moving into the second half of your Fund's fiscal year, we will actively monitor
events affecting the municipal market -- in particular, proposals regarding any
tax changes. Of course, until we know what form tax reform ultimately takes
(e.g., flat tax, national sales tax, consumer income tax), it is impossible to
predict an outcome. Nonetheless, we think municipal bonds will continue to have
a place for investors, especially given their lower price levels and limited
supply. We think your Fund is well positioned to benefit from these trends, and
we will continue to adjust the portfolio as necessary, emphasizing current
income and quality issues.
Please read on through the following pages, which provide the Fund's audited
Schedule of Investments and financial statements as of June 30, 1995. If you
have any questions about your investment in Pioneer Tax-Free Income Fund,
contact your investment representative, or call Pioneer at 1-800-225-6292.
Respectfully,
[Signature]
John F. Cogan, Jr.
Chairman and President,
Pioneer Tax-Free Income Fund
August 15, 1995
3
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT IN SECURITIES -- 99.1%+
ALASKA -- 0.6%
$ 2,330,000 AAA Alaska Muni Bond Bank, 7.0%, 2005.................................... $ 2,612,513
------------
ARIZONA -- 1.6%
5,000,000 AA Arizona State University Revenue, Series A, 5.5%, 2019............... $ 4,693,750
1,500,000 AAA Kyrene School District, 6.0%, 2014................................... 1,500,000
1,000,000 AAA Maricopa County Elementary School District General Obligation,
5.4%, 2011......................................................... 961,250
500,000 AAA Santa Cruz School District #1, 0%, 2006.............................. 275,000
------------
$ 7,430,000
------------
COLORADO -- 0.6%
1,500,000 AAA Adams County School District #12 General Obligation, Series A, 0%,
2009............................................................... $ 635,625
1,760,000 AAA Adams County School District #12 General Obligation, Series A, 0%,
2010............................................................... 697,400
1,250,000 AA Colorado Water Resources, 5.8%, 2012................................. 1,242,188
------------
$ 2,575,213
------------
DELAWARE -- 1.3%
1,590,000 A1(1) Dover Electric Authority Revenue, 7.0%, Prerefunded, 2000*........... $ 1,780,800
1,865,000 AAA State of Delaware Economic Development Authority Revenue, 7.3%,
2014............................................................... 2,042,175
15,000 A1(1) State of Delaware Housing Authority Revenue, 6.45%, 1995++........... 15,244
1,945,000 A1(1) State of Delaware Housing Authority Revenue, 6.45%, 2013............. 1,976,606
------------
$ 5,814,825
------------
FLORIDA -- 4.9%
5,000,000 AAA Dade County General Obligation, 12.0%, 2001.......................... $ 6,912,500
4,000,000 AAA Hillsborough County Airport Revenue, 5.75%, 2023..................... 3,615,000
5,000,000 AA- Hillsborough County Industrial Development Authority, 8.0%, 2022..... 5,837,500
2,000,000 AA Jacksonville Electric Authority Revenue, 5.5%, 2013.................. 1,902,500
4,000,000 AA+ Jacksonville Health Facilities Authority Hospital Revenue, 6.75%,
2013............................................................... 4,215,000
------------
$ 22,482,500
------------
GEORGIA -- 1.9%
2,150,000 A+ Appling County Development Authority Revenue, 7.15%, 2021............ $ 2,319,313
1,000,000 AAA Monroe County Development Authority Pollution Control Revenue,
6.8%, 2012......................................................... 1,070,000
5,300,000 AAA Monroe County Development Authority Pollution Control Revenue,
6.25%, 2019........................................................ 5,333,125
------------
$ 8,722,438
------------
IDAHO -- 0.6%
2,500,000 A(1) University of Idaho Revenue, Series B, 6.625%, 2016.................. $ 2,628,125
------------
ILLINOIS -- 10.3%
6,400,000 AA Bryant Illinois Pollution Control Revenue, 5.9%, 2023................ 6,160,000
3,700,000 AA- Chicago Gas Supply Revenue, 8.1%, 2020............................... 4,125,500
2,250,000 A2(1) Illinois Development Finance Authority, 6.75%, 2016.................. 2,303,438
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
ILLINOIS -- (CONTINUED)
$10,125,000 AA(1) Illinois Education Facilities Authority Revenue Northwestern
University,
5.375%, 2021....................................................... $ 9,239,063
1,145,000 A+ Illinois Housing Development Authority Revenue Multi-Family Housing,
Series A, 7.0%, Prerefunded, 2021*................................. 1,285,263
9,000,000 A+ Illinois Metropolitan Pier & Exposition Authority State Tax Revenue,
8.5%, 2006......................................................... 11,182,500
4,100,000 A+ Illinois Metropolitan Pier & Exposition Authority State Tax Revenue,
6.5%, 2027......................................................... 4,141,000
3,375,000 AAA Illinois Regional Transportation Authority, 6.125%, 2022............. 3,345,469
6,000,000 A+ Illinois State Toll Highway Authority Revenue, Series A, 5.75%,
2017............................................................... 5,722,500
------------
$ 47,504,733
------------
INDIANA -- 3.1%
2,000,000 A+ Fisher Economic Development Water Facilities Revenue, 7.875%, 2019... $ 2,132,500
750,000 A Indiana Bond Bank State Revolving Fund, 6.75%, 2017.................. 769,688
345,000 Aa(1) Indiana Housing Finance Authority Revenue, Series A, 8.5%, 2012...... 357,506
1,890,000 A+ Indiana State Office Building Commission Correctional Facilities
Revenue, 6.4%, 2011................................................ 1,944,338
6,055,000 A+ Indianapolis Economic Development Water Facilities Revenue, 7.875%,
2019............................................................... 6,425,869
1,400,000 A+ Indianapolis Local Public Improvement Board Revenue, 6.75%, 2014..... 1,482,250
1,000,000 A+ Lawrence Township Metropolitan School District Revenue, 6.75%,
2013............................................................... 1,085,000
------------
$ 14,197,151
------------
IOWA -- 0.4%
1,000,000 A(1) Iowa Finance Authority Revenue, 5.5%, 2009........................... $ 1,008,750
1,000,000 A(1) Iowa Finance Authority Revenue, 5.55%, 2010.......................... 1,008,750
------------
$ 2,017,500
------------
KENTUCKY -- 1.6%
2,150,000 AA Jefferson County Pollution Control Revenue, 5.625%, 2019............. $ 2,037,125
660,000 A Kenton County Airport Board Revenue, 8.75%, 2015..................... 707,850
1,095,000 AAA Kenton County Water District #1, 5.8%, 2015.......................... 1,077,206
2,010,000 AAA Kenton County Water District #1, 5.875%, 2019........................ 1,979,850
1,000,000 AAA Kentucky State Turnpike Authority of Economic Development Revenue,
5.5%, 2009......................................................... 991,250
495,000 AA- University of Kentucky Community College Building Revenue, Series I,
6.4%, 2011......................................................... 511,088
------------
$ 7,304,369
------------
LOUISIANA -- 0.7%
3,000,000 AAA New Orleans Home Mortgage Authority, 6.25%, Prerefunded, 2011*....... $ 3,116,250
------------
MASSACHUSETTS -- 2.9%
1,415,000 A+ Massachusetts Bay Transportation Authority Revenue, Series B,
5.875%, 2014....................................................... $ 1,390,238
3,000,000 AAA Massachusetts General Obligation, 6.5%, 2007......................... 3,255,000
1,000,000 AAA South Essex Massachusetts Sewer District, Series B, 6.75%, 2013...... 1,066,250
2,000,000 AAA University of Lowell Building Authority, 5.7%, 2009.................. 1,992,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MASSACHUSETTS -- (CONTINUED)
$ 1,325,000 AAA Worcester General Obligation, Series A, 6.15%, 2009.................. $ 1,364,750
1,440,000 AAA Worcester General Obligation, Series A, 6.2%, 2010................... 1,483,200
1,460,000 AAA Worcester General Obligation, Series A, 6.25%, 2011.................. 1,503,800
1,450,000 AAA Worcester General Obligation, Series A, 6.3%, 2012................... 1,491,688
------------
$ 13,547,426
------------
MICHIGAN -- 1.8%
1,250,000 A Grand Rapids Water Supply Revenue, 7.875%, Prerefunded, 1998*........ $ 1,378,125
1,425,000 AAA Greenville Public School General Obligation, 5.75%, 2015............. 1,392,938
2,000,000 AAA Lake Orion Schools General Obligation, 5.5%, 2020.................... 1,870,000
1,890,000 AAA Michigan Municipal Bond Authority Revenue, 7.8%, Prerefunded,
1998*.............................................................. 2,097,900
1,500,000 AA Walled Lake School District General Obligation, Series I, 6.5%,
2003............................................................... 1,590,000
------------
$ 8,328,963
------------
MINNESOTA -- 2.7%
2,000,000 AA+ Minnesota State Housing Finance Agency, Series H, 6.55%, 2011........ $ 2,055,000
990,000 A+ Minnesota State Housing Finance Agency, Series A, 6.9%, 2012......... 1,027,125
5,000,000 A Northern Municipal Power Agency Revenue, Series A, 7.25%,2016........ 5,368,750
3,000,000 A(1) Northfield St. Olaf College Revenue, 8.0%, Prerefunded, 1998*........ 3,318,750
1,000,000 A(1) Southern Municipal Power Agency Revenue, 5.0%, 2018.................. 871,250
------------
$ 12,640,875
------------
MISSOURI -- 0.6%
500,000 AAA Missouri Environmental Improvement and Energy Resources Authority,
6.05%, 2016........................................................ $ 505,000
2,500,000 AAA Poplar Bluff School District, 5.8%, 2011............................. 2,465,625
------------
$ 2,970,625
------------
MONTANA -- 3.7%
1,495,000 AAA Forsyth Pollution Control Revenue Washington Water Power Project,
7.125%, 2013....................................................... $ 1,597,781
2,250,000 AAA Forsyth Pollution Control Revenue Puget Sound Power & Light Project,
7.25%, 2021........................................................ 2,438,438
3,000,000 AAA Forsyth Pollution Control Revenue Puget Sound Power & Light Project,
6.8%, 2022......................................................... 3,183,750
3,250,000 AAA Forsyth Pollution Control Revenue Puget Sound Power & Light Project,
7.05%, 2021........................................................ 3,505,938
6,000,000 AAA Montana State Board of Investments Revenue Workers Compensation
Program, 6.875%, 2020.............................................. 6,435,000
------------
$ 17,160,907
------------
NEBRASKA -- 9.6%
2,500,000 AAA Clark County Airport Passenger Facility Charge Revenue, 5.75%,
2023............................................................... $ 2,306,250
7,850,000 A+ Douglas County Hospital Authority Revenue Catholic Health Facilities,
7.25%, 2021........................................................ 8,458,375
6,000,000 AAA Douglas County Hospital Authority Revenue Immanuel Medical Center,
7.0%, 2021......................................................... 6,532,500
5,000,000 A(1) Grand Island Sanitation Sewer Revenue, 6.0%, 2014.................... 5,018,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
NEBRASKA -- (CONTINUED)
$ 7,500,000 A Hastings Electric System Revenue, 6.3%, 2019......................... $ 7,575,000
1,500,000 AA+ Lincoln Electric System Revenue, 5.75%, 2016......................... 1,466,250
1,325,000 AAA Municipal Energy Agency of Nebraska Revenue, 6.0%, 2008.............. 1,373,031
1,500,000 AAA Municipal Energy Agency of Nebraska Revenue, 6.0%, Series A, 2017.... 1,501,875
1,850,000 A+ Nebraska Public Power District Revenue, 6.25%, 2022.................. 1,875,438
890,000 A+ Nebraska Public Power District Revenue, 6.125%, 2015................. 901,125
3,935,000 A+ Nebraska Public Power District Revenue, 5.75%, 2020.................. 3,812,031
2,000,000 AAA Omaha Public Power District Revenue, 6.4%, Prerefunded, 2002*........ 2,200,000
1,185,000 AA Omaha Public Power District Revenue, 6.8%, Prerefunded, 2000*........ 1,300,538
------------
$ 44,321,163
------------
NEVADA -- 1.1%
3,660,000 AAA Lyon County School District General Obligation, 6.875%, 2015**....... $ 3,884,175
1,260,000 AAA Lyon County School District General Obligation, 6.8%, 2012**......... 1,330,875
------------
$ 5,215,050
------------
NEW HAMPSHIRE -- 1.1%
5,505,000 AA+ New Hampshire Higher Education Dartmouth College Revenue,
5.375%, 2023....................................................... $ 5,023,313
------------
NEW JERSEY -- 1.2%
1,000,000 A New Jersey Economic Development Authority Revenue Natural Gas
Project, 9.0%, 2017................................................ $ 1,110,000
1,000,000 AA Rutgers State University Revenue, 6.4%, 2009......................... 1,060,000
2,985,000 AAA Rutgers State University Revenue, 8.0%, Prerefunded, 1998*........... 3,324,544
------------
$ 5,494,544
------------
NEW MEXICO -- 2.9%
5,450,000 AA Albuquerque Water & Sewer System Revenue, Series A, 6.0%,
Prerefunded, 2000*................................................. $ 5,777,000
1,000,000 A+ Albuquerque Airport Revenue, Series B, 8.75%, 2019................... 1,078,750
2,000,000 A+ Farmington Pollution Control Revenue, 7.2%, 2021..................... 2,147,500
65,000 AA New Mexico Mortgage Finance Authority, 6.85%, 1995++................. 66,950
2,180,000 AA New Mexico Mortgage Finance Authority, 6.85%, 2012................... 2,245,400
1,100,000 AA University of New Mexico Revenue, 5.0%, 2018......................... 943,250
1,200,000 AAA University of New Mexico Revenue, 6.55%, 2025........................ 1,249,500
------------
$ 13,508,350
------------
NORTH CAROLINA -- 4.3%
1,000,000 Aaa(1) Buncombe County Sewer District Revenue, 6.75%, Prerefunded, 2002*.... $ 1,132,500
4,500,000 A+ Buncombe County Sewer District Revenue, 6.75%, Prerefunded, 2002*.... 5,079,375
4,490,000 AA Charlotte-Mecklenburg Hospital Authority Revenue, 6.25%, 2020........ 4,591,025
1,250,000 AA Charlotte Law Enforcement Project, 6.1%, 2015........................ 1,270,313
1,250,000 AAA Cumberland County Civic Center Project, Series A, 6.4%, 2024......... 1,298,438
1,000,000 AAA Franklin County Certificate Participation, 6.625%, 2014.............. 1,055,000
5,980,000 A Martin County Pollution Control Authority Revenue, 5.65%, 2023....... 5,449,275
------------
$ 19,875,926
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
OHIO -- 1.4%
$ 2,000,000 AAA Hamilton City Electric System Revenue, 8.0%, Prerefunded, 1998*...... $ 2,252,500
400,000 AAA Northeast Ohio Regional Sewer District Wastewater Improvement
Revenue, 6.5%, 2016................................................ 416,500
500,000 A+ Ohio State Building Authority Revenue, 6.0%, 2008.................... 518,125
2,900,000 Aa(1) Solon School District General Obligation, 7.15%, Prerefunded,
2001*.............................................................. 3,324,125
------------
$ 6,511,250
------------
OKLAHOMA -- 2.8%
4,700,000 AAA McGee Creek Authority Water Revenue, 6.0%, 2023...................... $ 4,776,375
5,300,000 A+ Oklahoma State Turnpike Authority Revenue, 6.125%, 2020.............. 5,359,625
2,700,000 AAA Sapulpa Municipal Authority Utility Revenue, 7.4%, 2010.............. 2,949,750
------------
$ 13,085,750
------------
OREGON -- 1.8%
2,000,000 AAA Oregon Metropolitan Service District Revenue Headquarters Building,
6.75%, Prerefunded, 1999*.......................................... $ 2,200,000
1,000,000 AAA Portland Hospital Facilities Authority Revenue Legacy Health Systems,
6.625%, 2011....................................................... 1,056,250
1,000,000 A+ Portland Sewer System, Series A, 6.2%, 2012.......................... 1,023,750
550,000 AAA Portland International Airport Revenue, 6.75%, 2015.................. 590,563
3,250,000 A Washington County Unified Sewerage Agency Revenue, 6.2%, 2010........ 3,371,875
------------
$ 8,242,438
------------
PENNSYLVANIA -- 3.5%
2,400,000 AAA Berks County General Obligation, 7.25%, Prerefunded, 2000*........... $ 2,736,000
2,500,000 AAA Bucks County Water & Sewer Authority, 0.00%, 2012.................... 900,000
1,000,000 AAA Bucks County Water & Sewer Authority, 0.00%, 2013.................... 336,250
1,500,000 AAA Hempfield School District General Obligation, 5.3%, 2014............. 1,389,375
1,000,000 AA Pennsylvania Housing Finance Agency Revenue, 8.1%, 2010.............. 1,050,000
2,500,000 AAA Pennsylvania State Industrial Development Revenue, 5.5%, 2014........ 2,371,875
2,500,000 A Pennsylvania State Turnpike Commission Revenue, 6.5%, 2013........... 2,606,250
3,250,000 A Pennsylvania State University Revenue, 5.5%, 2016.................... 3,083,438
1,500,000 AAA University of Pittsburgh Capital Project, Series A, 6.125%, 2021..... 1,520,625
------------
$ 15,993,813
------------
RHODE ISLAND -- 0.2%
1,000,000 AA+ Rhode Island Housing & Mortgage Finance, 6.75%, 2017................. $ 1,025,000
------------
SOUTH CAROLINA -- 5.5%
2,400,000 A Fairfield County Pollution Control, 6.5%, 2014....................... $ 2,514,000
3,000,000 A- Richland County Solid Waste Disposal Facilities Revenue Union Camp
Project, 7.45%, 2021............................................... 3,195,000
1,000,000 AAA South Carolina Grand Strand Water & Sewer Authority, 6.375%, 2012.... 1,068,750
10,000,000 A+ South Carolina Public Service Authority Revenue,
6.625%, Prerefunded, 2002*......................................... 11,250,000
5,750,000 A+ South Carolina Public Service Authority Revenue, Series B, 7.1%,
Prerefunded, 2001*................................................. 6,547,813
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
SOUTH CAROLINA -- (CONTINUED)
$ 750,000 Aa South Carolina State Housing Finance & Development Authority Revenue,
6.2%, 2009......................................................... $ 764,063
------------
$ 25,339,626
------------
SOUTH DAKOTA -- 4.5%
500,000 A(1) Rapid City Water Revenue, 7.45%, 2010................................ $ 545,625
5,000,000 AA+ South Dakota Housing Development Authority, 6.0%, 2012............... 4,881,250
10,000,000 A+ South Dakota State Building Authority Certificate Participation,
Series A, 7.5%, 2016............................................... 10,525,000
2,000,000 AAA South Dakota State University Housing Revenue, Series A, 5.125%,
2022............................................................... 1,757,500
2,730,000 A+ South Dakota Student Loan Finance Corporation Revenue, 7.7%, 2007.... 2,893,800
------------
$ 20,603,175
------------
TENNESSEE -- 0.5%
2,360,000 AA Metropolitan Government Nashville and Davidson County General
Obligation, 5.625%, 2017........................................... $ 2,253,800
------------
TEXAS -- 4.1%
2,310,000 AAA Clear Creek Independent School District General Obligation, 0%,
2010............................................................... $ 952,875
5,000,000 AAA Clear Creek Independent School District General Obligation, 0%,
2011............................................................... 1,931,250
2,750,000 AAA Crowley School General Obligation, 5.625%, 2023...................... 2,598,750
1,400,000 AAA Dallas General Obligation, 6.125%, 2008.............................. 1,456,000
5,000,000 AAA Harris County General Obligation, 0%, 2007........................... 2,487,500
2,050,000 Aaa(1) Keller Independent School District General Obligation, 0%, 2010...... 837,938
3,000,000 AAA Texas Public Finance Authority Building Revenue, 0%, 2007............ 1,541,250
5,500,000 AAA Texas Public Finance Authority Building Revenue, 0%, 2008............ 2,633,125
2,750,000 AAA Texas Public Finance Authority Building Revenue, 0%, 2010............ 1,148,125
960,000 AA Texas State General Obligation, 6.6%, 2008........................... 1,010,400
1,075,000 AA Texas State General Obligation, 6.7%, 2009........................... 1,126,063
1,000,000 AA+ University of Texas, 5.2%, 2009...................................... 955,000
------------
$ 18,678,276
------------
UTAH -- 3.5%
45,000 AA Utah Housing Finance Agency Revenue, 8.625%, 1995++.................. $ 46,969
460,000 AA Utah Housing Finance Agency Revenue, 8.625%, 2014.................... 480,125
75,000 Aa(1) Utah Housing Finance Agency Revenue, 5.95%, 1995++................... 73,313
910,000 Aa(1) Utah Housing Finance Agency Revenue, 5.95%, 2011..................... 889,525
1,000,000 AA Utah Intermountain Power Agency Revenue, 7.5%, 2021.................. 1,075,000
1,270,000 AA- Utah Intermountain Power Agency Revenue, 5.0%, 1995++................ 1,133,475
3,010,000 AA Utah Intermountain Power Agency Revenue, 5.0%, 1995++................ 2,562,263
8,940,000 AA Utah Intermountain Power Agency Revenue, 7.75%, 2020................. 9,755,775
------------
$ 16,016,445
------------
VIRGINIA -- 3.8%
1,750,000 A+ Chesapeake Water & Sewer System Revenue, 6.5%, 2012.................. $ 1,815,625
4,685,000 A+ Chesapeake Water & Sewer System Revenue, 6.4%, 2017.................. 4,796,269
1,750,000 A(1) Harrisonburg Redevelopment & Housing Authority Revenue, 6.5%, 2014... 1,793,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (Unaudited) Value
------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
VIRGINIA -- (CONTINUED)
$ 4,715,000 AA Richmond Public Improvement General Obligation,
6.4%, Prerefunded, 2002*........................................... $ 5,245,438
1,000,000 AA Virginia State Resources Authority Water System Revenue, 5.25%,
2013............................................................... 912,500
1,255,000 AA Virginia State Resources Authority Water & Sewer System Revenue,
5.25%, 2013........................................................ 1,145,188
2,000,000 AA Virginia State Transportation Board Revenue U.S. Route 58 Corridor,
5.25%, 2012........................................................ 1,872,500
------------
$ 17,581,270
------------
WASHINGTON -- 4.3%
2,000,000 A+ Chelan County Public Utility District Revenue, 9.3%, 2062............ $ 2,195,000
3,235,000 A(1) King County Vashon Island School District General Obligation,
6.65%, 2012........................................................ 3,400,794
5,000,000 A(1) Lynnwood Water & Sewer Revenue, 7.7%, 2013........................... 5,381,250
3,500,000 A+ Snohomish County Public Utility District Revenue,
6.8%, Prerefunded, 2020*........................................... 3,924,375
1,000,000 AAA Snohomish County School District General Obligation, 5.7%, 2011...... 975,000
4,000,000 AA Washington State Public Power Supply System Revenue, Series A,
6.5%, 2015......................................................... 4,070,000
------------
$ 19,946,419
------------
WEST VIRGINIA -- 0.2%
1,000,000 AA+ West Virginia State Housing Development, 7.05%, 2024................. $ 1,027,500
------------
WISCONSIN -- 1.3%
3,600,000 AA+ Milwaukee Local District Heating Facility Revenue, 6.85%, 2021....... $ 3,802,500
1,965,000 AA Wisconsin Housing and Economic Development Authority, 6.65%, 2025.... 1,967,456
------------
$ 5,769,956
------------
WYOMING -- 2.2%
9,750,000 AA Wyoming Community Development Authority Revenue, Series B,
7.05%, 2033........................................................ $ 10,018,111
------------
TOTAL INVESTMENT IN TAX-EXEMPT BONDS
(Cost $432,517,453)(a)(b).......................................... $456,585,588
------------
TAX-EXEMPT MONEY MARKET MUTUAL FUND -- 0.9%
4,052,725 Lehman Brothers Munifund (Cost $4,052,725)........................... $ 4,052,725
------------
TOTAL INVESTMENT IN SECURITIES (Cost $436,570,178)................... $460,638,313
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
+ The concentration of securities by type of obligation / market sector is:
<TABLE>
<S> <C>
General Obligation 10.7%
Escrowed in U.S. Government Securities 15.1%
Revenue Bonds:
Education Revenue 9.4%
Water & Sewer Revenue 10.6%
Hospital Revenue 5.4%
Housing Revenue 6.5%
Miscellaneous 12.1%
Pollution Control Revenue 9.1%
Power Revenue 14.4%
Transportation Revenue 6.5%
Reserves 0.2%
<FN>
* Prerefunded bonds have been collaterized by U.S. Treasury securities which
are held in escrow and used to pay principal and interest and to retire the
bonds in full at the earliest refunding date.
** When-issued securities.
++ Entire bond, or a portion thereof, was called on July 3, 1995.
(1) Rating by Moody's.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
(a) At June 30, 1995, the net unrealized appreciation on investments based on cost for federal
income tax purposes of $432,517,453 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess of value
over tax cost................................................................................... $25,423,057
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax
cost over value................................................................................. (1,354,922)
-----------
Net unrealized appreciation..................................................................... $24,068,135
===========
(b) At December 31, 1994, the Fund had a net capital loss carryforward of $714,287 which will expire
in 2002 if not utilized.
Purchase and sales of securities (excluding temporary cash investments) for the six months ended June
30, 1995 aggregated $86,035,143 and $100,090,539, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
BALANCE SHEET
June 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment of $4,052,725)
(cost $436,570,178; see Schedule of Investments and Note 1)...................................... $460,638,313
Cash............................................................................................... 1,098,644
Receivables -
Investment securities purchased.................................................................. 5,441,694
Trust shares sold................................................................................ 194,839
Interest......................................................................................... 8,556,309
Other.............................................................................................. 38,756
------------
Total assets............................................................................... $475,968,555
------------
LIABILITIES:
Payables -
Investment securities sold....................................................................... $ 8,860,860
Trust shares repurchased......................................................................... 196,844
Dividends........................................................................................ 505,941
Accrued expenses -
Management fees (Note 2)......................................................................... 35,307
Other (Notes 2, 3 and 4)......................................................................... 391,553
------------
Total liabilities.......................................................................... $ 9,990,505
------------
NET ASSETS:
Paid-in capital (Note 1)........................................................................... $440,094,698
Accumulated distributions in excess of net investment income....................................... (349,131)
Accumulated net realized gain on investments....................................................... 2,164,348
Net unrealized gain on investments................................................................. 24,068,135
------------
Total net assets........................................................................... $465,978,050
============
NET ASSET VALUE PER SHARE:
Class A -- (based on $465,521,610 / 38,914,064 shares of beneficial interest
outstanding -- unlimited number of shares authorized with no par value).......................... $ 11.96
============
Class B -- (based on $456,440 / 38,324 shares of beneficial interest outstanding -- unlimited
number of shares authorized with no par value)................................................... $ 11.91
============
MAXIMUM OFFERING PRICE:
Class A.......................................................................................... $ 12.52
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Interest.......................................................................................... $14,869,234
-----------
EXPENSES:
Management fees (Note 2).......................................................................... $ 1,060,780
Transfer agent fees (Note 3)
Class A......................................................................................... 229,800
Class B......................................................................................... 132
Distribution fees (Note 4)
Class A......................................................................................... 576,427
Class B......................................................................................... 335
Registration fees................................................................................. 12,700
Professional fees................................................................................. 27,800
Accounting (Note 2)............................................................................... 49,665
Custodian fees.................................................................................... 29,950
Printing.......................................................................................... 9,075
Fees and expenses of nonaffiliated trustees....................................................... 15,660
Miscellaneous..................................................................................... 18,032
-----------
Total expenses.................................................................................. $ 2,030,356
-----------
Net investment income....................................................................... $12,838,878
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................................................. $ 2,878,635
Decrease in net unrealized loss on investments.................................................... 26,130,190
-----------
Net gain on investments......................................................................... $29,008,825
-----------
Net increase in net assets resulting from operations........................................ $41,847,703
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 and the Year Ended December 31, 1994
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................................................ $ 12,838,878 $ 26,381,175
Net realized gain (loss) on investments.............................................. 2,878,635 (714,287)
Increase (decrease) in net unrealized gain (loss) on investments..................... 26,130,190 (59,207,615)
------------- -------------
Net increase (decrease) in net assets resulting from operations.................... $ 41,847,703 $ (33,540,727)
------------- -------------
EQUALIZATION:
Net undistributed investment income included in price of shares sold, net of shares
repurchased (Note 1)............................................................... $ -- $ 11,837
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A ($0.33 and $0.64 per share, respectively).................................. $ (12,790,643) $ (26,474,942)
Class B ($0.09 and $0.00 per share, respectively).................................. (1,271) --
In excess of net investment income
Class A ($0.01 and $0.00 per share, respectively).................................. (349,131) (46,964)
From realized gain on investments
Class A ($0.00 and $0.00 per share, respectively).................................. -- (131,360)
------------- -------------
Decrease in net assets resulting from distributions to shareholders.................... $ (13,141,045) $ (26,653,266)
------------- -------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares....................................................... $ 13,343,005 $ 38,464,474
Net asset value of shares issued to shareholders in reinvestment of dividends.......... 9,764,705 19,611,787
Cost of shares repurchased............................................................. (38,497,585) (77,723,460)
------------- -------------
Decrease in net assets resulting from trust share transactions......................... $ (15,389,875) $ (19,647,199)
------------- -------------
Net increase (decrease) in net assets.................................................. $ 13,316,783 $ (79,829,355)
NET ASSETS:
Beginning of period.................................................................... 452,661,267 532,490,622
------------- -------------
End of period (including accumulated distributions in excess of net investment income
of $349,131 and $46,964, respectively)............................................... $ 465,978,050 $ 452,661,267
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the Six Months Ended June 30, 1995 and the Year Ended December 31, 1994
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
-------------------------- --------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................ 1,086,864 $ 12,856,284 3,231,068 $ 38,464,474
Shares issued to shareholders in reinvestment of
distributions........................................ 824,986 9,763,657 1,674,702 19,611,787
Less shares repurchased................................ (3,278,162) (38,468,778) (6,630,251) (77,723,460)
---------- ------------ ---------- ------------
Net decrease........................................... (1,366,312) $(15,848,837) (1,724,481) $(19,647,199)
========== ============ ========== ============
CLASS B*
Shares sold............................................ 40,616 $ 486,721
Shares issued to shareholders in reinvestment of
distributions........................................ 88 1,048
Less shares repurchased................................ (2,380) (28,807)
---------- ------------
Net increase........................................... 38,324 $ 458,962
========== ============
<FN>
*Class B shares were first publicly offered on April 28, 1995.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS -- SELECTED DATA FOR A SHARE OUTSTANDING
For the Periods Presented
<TABLE>
<CAPTION>
Six
Months
Ended For the Years Ended December 31,
June 30, -----------------------------------------
1995 1994 1993+ 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of period................................... $ 11.24 $ 12.68 $ 12.08 $ 11.99 $ 11.52
-------- -------- -------- -------- --------
Increase (decrease) from investment operations--
Net investment income................................................. $ 0.33 $ 0.64 $ 0.67 $ 0.71 $ 0.74
Net realized and unrealized gain(loss) on investments................. 0.73 (1.44) 0.87 0.31 0.65
-------- -------- -------- -------- --------
Total increase (decrease) from investment operations................. $ 1.06 $ (0.80) $ 1.54 $ 1.02 $ 1.39
Distribution to shareholders--
From net investment income............................................ (0.33) (0.64) (0.67) (0.71) (0.74)
In excess of net investment income.................................... (0.01) -- -- -- --
From net realized gain................................................ -- -- (0.27) (0.22) (0.18)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value............................. $ 0.72 $ (1.44) $ 0.60 $ 0.09 $ 0.47
-------- -------- -------- -------- --------
Net asset value, end of year........................................... $ 11.96 $ 11.24 $ 12.68 $ 12.08 $ 11.99
======== ======== ======== ======== ========
Total return*.......................................................... 9.45% (6.38%) 12.98% 8.73% 12.49%
Ratio of net operating expenses to average net assets.................. 0.88%** 0.91% 0.86% 0.87% 0.87%
Ratio of net investment income to average net assets................... 5.57%** 5.37% 5.37% 5.80% 6.26%
Portfolio turnover rate................................................ 38%** 55% 58% 62% 56%
Net assets, end of period (in thousands)............................... $465,522 $452,661 $532,491 $466,586 $408,990
<CAPTION>
1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C>
CLASS A
Net asset value, beginning of period................................... $ 11.47 $ 11.17 $ 10.70 $ 11.69 $ 10.81
-------- -------- -------- -------- --------
Increase (decrease) from investment operations--
Net investment income................................................. $ 0.76 $ 0.79 $ 0.80 $ 0.80 $ 0.86
Net realized and unrealized gain(loss) on investments................. 0.06 0.31 0.47 (0.98) 1.52
-------- -------- -------- -------- --------
Total increase (decrease) from investment operations................. $ 0.82 $ 1.10 $ 1.27 $ (0.18) $ 2.38
Distribution to shareholders--
From net investment income............................................ (0.76) (0.80) (0.80) (0.81) (0.86)
In excess of net investment income.................................... -- -- -- -- --
From net realized gain................................................ (0.01) -- -- -- (0.64)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value............................. $ 0.05 $ 0.30 $ 0.47 $ (0.99) $ 0.88
-------- -------- -------- -------- --------
Net asset value, end of year........................................... $ 11.52 $ 11.47 $ 11.17 $ 10.70 $ 11.69
======== ======== ======== ======== ========
Total return*.......................................................... 7.40% 10.12% 12.25% (1.56%) 22.67%
Ratio of net operating expenses to average net assets.................. 0.78% 0.63% 0.64% 0.63% 0.61%
Ratio of net investment income to average net assets................... 6.69% 6.96% 7.26% 7.24% 7.30%
Portfolio turnover rate................................................ 40% 54% 73% 89% 153%
Net assets, end of period (in thousands)............................... $362,887 $357,388 $324,116 $307,266 $307,266
<CAPTION>
1985
--------
CLASS A
Net asset value, beginning of period................................... $ 9.70
--------
Increase (decrease) from investment operations--
Net investment income................................................. $ 0.86
Net realized and unrealized gain(loss) on investments................. 1.12
--------
Total increase (decrease) from investment operations................. $ 1.98
Distribution to shareholders--
From net investment income............................................ (0.87)
In excess of net investment income.................................... --
From net realized gain................................................ --
--------
Net increase (decrease) in net asset value............................. $ 1.11
--------
Net asset value, end of year........................................... $ 10.81
========
Total return*.......................................................... 21.25%
Ratio of net operating expenses to average net assets.................. 0.64%
Ratio of net investment income to average net assets................... 8.40%
Portfolio turnover rate................................................ 258%
Net assets, end of period (in thousands)............................... $307,266
<CAPTION>
April
28,
1995
to
June 30,
1995(a)
--------
<S> <C>
CLASS B ***
Net asset value, beginning of period................................... $ 11.81
--------
Increase from investment operations:
Net investment income................................................. $ 0.09
Net realized and unrealized gain on investments....................... 0.10
--------
Total increase from investment operations......................... $ 0.19
Distribution to shareholders:
From net investment income............................................ (0.09)
--------
Net increase in net asset value........................................ $ 0.10
--------
Net asset value, end of period......................................... $ 11.91
========
Total return *......................................................... 1.55%
Ratio of net operating expenses to average net assets.................. 1.99%**
Ratio of net investment income to average net assets................... 4.14%**
Portfolio turnover rate................................................ 38%**
Net assets, end of period (in thousands)............................... $ 456
<FN>
+ Prior to the assumption of the management agreement on December 1, 1993 by
Pioneering Management Corporation, the Fund was advised by Mutual of Omaha
Fund Management Company.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at the 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.
*** Class B shares were first publicly offered on April 28, 1995.
(a) The per share data is based on average shares and average net assets
outstanding for the period presented.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. Pioneer Tax-Free Income Fund (the Fund) is a Delaware business trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management company. On December 1, 1993, Mutual of Omaha Fund Management Company
(FMC) was sold to The Pioneer Group, Inc. (PGI). Concurrent with the sale of FMC
to PGI, the Fund's shareholders approved a new investment management agreement
with Pioneering Management Corporation (PMC), a wholly owned subsidiary of PGI.
The Board of Trustees has authorized the issuance of two share classes of
the Trust, designated as Class A and Class B shares. Class B shares were first
publicly offered on April 28, 1995. Shares issued and outstanding prior to April
28, 1995 were designated as Class A shares. The shares of each class represent
an interest in the same portfolio of investments of the Trust and have equal
rights to voting, redemptions, dividends and liquidations, except that each
class of shares can bear different transfer agent and distribution fees and have
exclusive voting rights with respect to the distribution plans that have been
adopted by holders of Class A and Class B shares, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund, which are in conformity with those generally accepted in
the investment company industry.
A. Investment Securities -- Security transactions are recorded on the date
the securities are purchased or sold. Investment securities are valued based on
valuations furnished by an independent pricing service that utilizes a matrix
system. This matrix system reflects such factors as security prices, yields,
maturities and ratings, and is supplemented by dealer and exchange quotations
and fair market value information from other sources. Market discount is
accreted daily on a straight-line basis. Original issue discount is accreted
daily on a yield-to-maturity basis. Temporary cash investments are valued at
cost plus accrued interest, which approximates market value. Interest income is
recorded on the accrual basis.
Gains and losses from sales of investments are calculated on the "identified
cost" method for both financial reporting and federal income tax purposes. It is
the Fund's practice first to select for sale those securities that have the
highest cost and also qualify for long-term capital gain or loss treatment for
tax purposes.
B. Federal taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if any, to
its shareholders. Therefore, no federal tax provisions are required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or net
realized gain on investment transactions, or from capital, depending on the type
of book/tax differences that may exist.
C. Trust Shares -- The Fund records sales and repurchases of its fund shares
on the trade date. Net losses, if any, as a result of cancellations, are
absorbed by Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for
the Fund and wholly owned subsidiary of PGI. PFD earned $351,264 in underwriting
commissions on the sale of trust shares during the six months ended June 30,
1995. The Fund declares as daily dividend substantially all of its respective
net investment income. All dividends are paid on the last business day of the
month. Short-term capital gain distributions, if any, may be paid with the daily
dividends. Dividends paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, on the same day and are in the
same amount, except that Class A and Class B shares can bear different transfer
agent and distribution fees.
D. Class Allocations -- Distribution expenses are calculated based on the
average daily net asset value attributable to Class A and Class B shares of the
Fund, respectively. Sharehold-
17
n
<PAGE>
PIONEER TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1995 (Continued)
ers of Class A and Class B share all expenses and fees paid to the transfer
service organization, Pioneering Services Corporation (PSC), for its services,
which are allocated based on the number of accounts in each class and the
ratable allocation of related out-of-pocket expenses (see Note 3). Income,
common expenses and realized and unrealized gains (losses) are calculated at the
Fund level and allocated daily to each class of shares based on the respective
percentage of adjusted net assets at the beginning of the day.
E. Equalization -- Through June 30, 1994, the Fund followed the accounting
practice known as equalization by which a portion of the proceeds from sales and
costs of repurchases of fund shares, which is equivalent, on per share basis, to
the amount of undistributed net income on the date of the transaction, is
credited or charged to fund shares.
2. Pioneering Management Corporation (PMC) is the Fund's investment adviser,
manages the Fund's portfolio, and is a wholly owned subsidiary of PGI.
Management fees are calculated at the annual rates set forth below as a
percentage of average daily net assets. Such rates are effective until December
1, 1995.
<TABLE>
<CAPTION>
Net Assets Annual Fee
----------------------------------------------------------
<S> <C>
For assets up to $100,000,000................. .50%
For assets in excess of $100,000,000 to
$200,000,000................................ .48%
For assets in excess of $200,000,000 to
$300,000,000................................ .46%
For assets in excess of $300,000,000 to
$400,000,000................................ .44%
For assets in excess of $400,000,000 to
$500,000,000................................ .42%
Over $500,000,000............................. .40%
</TABLE>
In addition, under the management agreement, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Fund. Included in Accrued expenses -- Other is $4,918 in accounting
fees payable to PMC at June 30, 1995.
3. Pioneering Services Corporation (PSC), a wholly owned subsidiary of PGI,
provides substantially all transfer agent and shareholder services to the Fund,
at negotiated rates. Included in Accrued expenses -- Other is $37,975 in
transfer agent fees payable to PSC at June 30, 1995.
4. The Fund has adopted a Plan of Distribution for both Class A shares (Class A
Plan) and Class B shares (Class B Plan) in accordance with Rule 12b-1 under the
Investment Company Act of 1940 pursuant to which certain distribution fees are
paid to PFD.
Pursuant to the Class A Plan, the Fund may reimburse PFD for its actual
expenditures to finance any activities primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares.
Reimbursement for such expenditures, if any, may not exceed 0.25% of the Fund's
average daily net assets attributable to Class A shares. The Class B Plan
provides that the Fund may pay a distribution fee at an daily rate of 0.75% of
the Fund's average daily net assets attributable to Class B shares and may pay
PFD a service fee at the annual rate of 0.25% of the Fund's average daily net
assets attributable to Class B shares. Included in Accrued expenses -- Other is
$301,024 in distribution fees payable to PFD at June 30, 1995.
Class B shares that are redeemed within six years of purchase are subject to
a contingent deferred sales charge (CDSC) at declining rates beginning at 4.0%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Proceeds from the CDSC are
paid to PFD. For the six months ending June 30, 1995, no CDSC was paid to PFD.
18
n
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF PIONEER TAX-FREE INCOME FUND:
We have audited the accompanying balance sheet of Pioneer Tax-Free Income
Fund, including the schedule of investments, as of June 30, 1995, and the
related statement of operations, statements of changes in net assets and
financial highlights for the six months ended June 30, 1995 and the year ended
December 31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the nine years ended December 31,
1993 were audited by other auditors whose report dated February 22, 1994
expressed an unqualified opinion.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Tax-Free Income Fund as of June 30, 1995, the results of its operations
and the changes in its net assets for the periods presented and financial
highlights for the six months ended June 30, 1995 and the year ended December
31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 28, 1995
19
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PIONEER TAX-FREE INCOME FUND
60 State Street
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LOGO
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Boston, Massachusetts 02109
OFFICERS TRUSTEES
JOHN F. COGAN, JR. JOHN F. COGAN, JR.
Chairman and President RICHARD H. EGDAHL, M.D.
DAVID D. TRIPPLE MARGARET B. W. GRAHAM
Executive Vice President JOHN W. KENDRICK
MARK L. WINTER MARGUERITE A. PIRET
Vice President DAVID D. TRIPPLE
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Pioneer Tax-Free
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WILLIAM H. KEOUGH STEPHEN K. WEST
Treasurer JOHN WINTHROP
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Income Fund
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JOSEPH P. BARRI
Secretary
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SEMIANNUAL REPORT
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INVESTMENT ADVISER LEGAL COUNSEL
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JUNE 30, 1995
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PIONEERING MANAGEMENT HALE AND DORR
CORPORATION
PRINCIPAL UNDERWRITER SHAREHOLDER
SERVICES AND
PIONEER FUNDS TRANSFER AGENT
DISTRIBUTOR, INC.
PIONEERING SERVICES
CUSTODIAN CORPORATION
60 State Street
BROWN BROTHERS Boston, Massachusetts
HARRIMAN & CO. 02109
INDEPENDENT PUBLIC
ACCOUNTANTS
ARTHUR ANDERSEN LLP
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Please call Pioneer for information on:
Existing accounts, new accounts, prospectuses,
applications, and service forms............1-800-225-6292
Fund yields and prices.....................1-800-225-4321
Toll-free fax..............................1-800-225-4240
Retirement plans...........................1-800-622-0176
Telecommunications Device for the Deaf
(TDD)....................................1-800-225-1997
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When distributed to persons who are not shareowners of the
Fund, this report must be accompanied by an official
prospectus, which discusses the objectives, policies and
other information concerning the Fund.
0895-2636
(C)Pioneer Funds Distributor, Inc.
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