[PIONEER LOGO]
Pioneer
Tax-Free
Income
Fund
Prospectus
Class A and B Shares
April 28, 1995
(revised June 19, 1995)
The investment objective of Pioneer Tax-Free Income Fund (the "Fund") is to
seek as high a level of income exempt from regular federal income tax as
possible, consistent with preservation of capital. The Fund invests primarily
in a diversified portfolio of tax-exempt bonds.
Fund returns and share prices fluctuate and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Fund are
not deposits or obligations of, or guaranteed or endorsed by, any bank or other
depository institution, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
government agency.
This Prospectus (Part A of the Registration Statement) provides the
information about the Fund that you should consider before investing. Please
read and retain it for future reference. More information about the Fund is
included in the Statement of Additional Information (Part B of the Registration
Statement), dated April 28, 1995, which is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be obtained
free of charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109. Other
information about the Fund has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request and without charge.
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TABLE OF CONTENTS PAGE
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I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE, POLICIES AND RISKS 4
IV. MANAGEMENT OF THE FUND 6
V. FUND SHARE ALTERNATIVES 7
VI. SHARE PRICE 7
VII. HOW TO BUY FUND SHARES 7
Class A Shares 8
Class B Shares 9
VIII. HOW TO SELL FUND SHARES 10
IX. HOW TO EXCHANGE FUND SHARES 11
X. DISTRIBUTION PLANS 12
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION 12
XII. SHAREHOLDER SERVICES 13
Account and Confirmation Statements 13
Additional Investments 14
Automatic Investment Plans 14
Financial Reports and Tax Information 14
Distribution Options 14
Directed Dividends 14
Direct Deposit 14
Voluntary Tax Withholding 14
Telephone Transactions and Related Liabilities 14
FactFone(SM) 14
Telecommunications Device for the Deaf (TDD) 14
Systematic Withdrawal Plans 15
Reinstatement Privilege (Class A only) 15
XIII. THE FUND 15
XIV. INVESTMENT RESULTS 15
XV. APPENDIX 17
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The table reflects estimated annual operating expenses based on actual
expenses of the Class A shares for the fiscal year ended December 31, 1994.
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Class A Class B+
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Shareholder Transaction Expenses:
Maximum Initial Sales Charge on Purchases (as a
percentage of offering price) 4.50%(1) None
Maximum Sales Charge on Reinvestment of
Dividends None None
Maximum Deferred Sales Charge None(1) 4.00%
Redemption Fee(2) None None
Exchange Fee None None
Annual Operating Expenses
(As a Percentage of Net Assets):(3)
Management Fees 0.46% 0.46%
12b-1 Fees 0.25% 1.00%
Other Expenses (including accounting fees,
transfer agent fees, custodian fees and
printing expenses) 0.20% 0.20%
Total Operating Expenses: 0.91% 1.66%
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+ Class B shares are a new class of shares first offered on April 28, 1995.
(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge as further described under "How to
Sell Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
(3) For Class B shares, operating expenses are based on estimated expenses that
would have been incurred during the previous fiscal year had Class B shares
been outstanding.
Example:
You would pay the following dollar amounts on a $1,000 investment in the
Fund, assuming 5% annual return and redemption at the end of each of the time
periods:
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1 Year 3 Years 5 Years 10 Years
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Class A Shares $54 $73 $ 93 $152*
Class B Shares
--Assuming complete
redemption at end of
period $57 $82 $110 $177*
- --Assuming no redemption $17 $52 $ 90 $177*
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*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
The example above assumes the reinvestment of all dividends and
distributions and that the percentage amounts listed under "Annual Operating
Expenses" remain the same each year.
The example is designed for information purposes only, and should not be
considered a representation of future expenses or return. Actual Fund expenses
and return will vary from year to year and may be higher or lower than those
shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, including information regarding the basis upon which
management fees and 12b-1 fees are paid, see "Management of the Fund,"
"Distribution Plans" and "How To Buy Fund Shares" in this Prospectus and
"Management of the Fund" and "Underwriting Agreement and Distribution Plans" in
the Statement of Additional Information. The Fund's imposition of a Rule 12b-1
fee may result in long-term shareholders indirectly paying more than the
economic equivalent of the maximum sales charge permitted under the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. ("NASD").
The maximum initial sales charge is reduced on purchases of specified larger
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial sales charge.
See "How to Buy Fund Shares." No sales charge is applied to exchanges of shares
of the Fund for shares of other publicly available Pioneer mutual funds. See
"How to Exchange Fund Shares."
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II. FINANCIAL HIGHLIGHTS
The following information for the year ended December 31, 1994 has been
derived from financial statements of the Fund which have been audited by Arthur
Andersen LLP, independent public accountants, in connection with their
examination of the Fund's financial statements. Arthur Andersen LLP's report on
the Fund's financial statements as of December 31, 1994 appears in the Fund's
Annual Report which is incorporated by reference into the Statement of
Additional Information. The information for the years from 1985 through 1993
has been derived from financial statements which were audited by the Fund's
then independent public accountants, Coopers & Lybrand. Class B shares are a
new class of shares; no financial highlights exist for Class B shares. The
Annual Report includes more information about the Fund's performance and is
available free of charge by calling Shareholder Services at 1-800-225-6292.
PIONEER TAX-FREE INCOME FUND
Selected Data For a Class A Share Outstanding For The Years Presented
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For the Year Ended December 31,+
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
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Net asset value, beginning
of period $ 12.68 $ 12.08 $ 11.99 $ 11.52 $ 11.47 $ 11.17 $ 10.70 $ 11.69 $ 10.81 $ 9.70
Income from investment
operations--
Net investment income $ 0.64 $ 0.67 $ 0.71 $ 0.74 $ 0.76 $ 0.79 $ 0.80 $ 0.80 $ 0.86 $ 0.86
Net realized and
unrealized gain (loss)
on investments (1.44) 0.87 0.31 0.65 0.06 0.31 0.47 (0.98) 1.52 1.12
Total income (loss) from
investment operations $ (0.80) $ 1.54 $ 1.02 $ 1.39 $ 0.82 $ 1.10 $ 1.27 $ (0.18) $ 2.38 $ 1.98
Distribution to
shareholders from--
Net investment income (0.64) (0.67) (0.71) (0.74) (0.76) (0.80) (0.80) (0.81) (0.86) (0.87)
Net realized capital gains (0.00) (0.27) (0.22) (0.18) (0.01) 0.00 0.00 0.00 (0.64) 0.00
Net increase (decrease) in
net asset value $ (1.44) $ 0.60 $ 0.09 $ 0.47 $ 0.05 $ 0.30 $ 0.47 $ (0.99) $ 0.88 $ 1.11
Net asset value, end of
period $ 11.24 $ 12.68 $ 12.08 $ 11.99 $ 11.52 $ 11.47 $ 11.17 $ 10.70 $ 11.69 $ 10.81
Total return(1) (6.38%) 12.98% 8.73% 12.49% 7.40% 10.12% 12.25% (1.56%) 22.67% 21.25%
Ratio of net operating
expenses to average net
assets 0.91% 0.86% 0.87% 0.87% 0.78% 0.63% 0.64% 0.63% 0.61% 0.64%
Ratio of net investment
income to average net
assets 5.37% 5.37% 5.80% 6.26% 6.69% 6.96% 7.26% 7.24% 7.30% 8.40%
Portfolio turnover rate 55% 58% 62% 56% 40% 54% 73% 89% 153% 258%
Net assets end of period
(in thousands) $452,661 $532,491 $466,586 $408,990 $362,887 $357,388 $324,116 $307,266 $307,266 $307,266
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+ Prior to December 1, 1993, Mutual of Omaha Fund Management Company ("FMC")
acted as the investment adviser to the Fund.
(1) Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all dividends and distributions, the complete
redemption of the investment at net asset value at the end of each year,
and no sales charges. Total return would be reduced if sales charges were
taken into account.
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III. INVESTMENT OBJECTIVE, POLICIES AND RISKS
The investment objective of the Fund is to seek as high a level of income
exempt from regular federal income tax as possible, consistent with
preservation of capital. To achieve this objective, the Fund invests in a
diversified portfolio of obligations issued by or on behalf of states, counties
and municipalities of the United States and the authorities and political
subdivisions thereof (herein called "Tax-Exempt Bonds"), the interest on which
is excluded from gross income for federal income tax purposes, in the opinion
of counsel to the issuer of the bond. The Fund's portfolio will primarily
consist of Tax-Exempt Bonds rated at the time of purchase within the three
highest grades assigned by Moody's Investors Services, Inc. ("Moody's") (Aaa,
Aa or A) or Standard & Poor's Ratings Group ("S&P") (AAA, AA or A). Securities
in which the Fund invests may not yield as high a level of current income on a
pre-tax basis as securities subject to regular federal income tax or securities
of lower quality which generally are less liquid and have greater market risk
and price fluctuation.
The Fund may also invest in temporary investments consisting of: (1) notes
issued by or on behalf of municipal issuers backed by the U.S. government; (2)
notes of issuers having, at the time of purchase, an issue of outstanding Tax-
Exempt Bonds rated within the three highest grades of the rating services as
described above; (3) securities of other investment companies*; (4) obligations
of the U.S. government, its agencies or instrumentalities*; (5) commercial
paper rated in the highest grade by either of such rating services (Prime-I or
A-I, respectively)*; (6) bank instruments (including certificates of deposit,
time deposits and bankers' acceptances) of domestic or foreign banks with
assets of $1 billion or more*; and (7) repurchase agreements on such
securities* with banks or broker-dealers. During periods of normal market
conditions, the Fund will have at least 80% of its net assets invested in
Tax-Exempt Bonds, with up to 20% of the Fund's assets in temporary investments
or cash. When the investment adviser believes that market conditions dictate a
defensive posture, a greater percentage of the Fund's assets may be invested in
temporary investments. The asterisk (*) indicates that the income from these
securities is or may be subject to federal income tax.
The Fund may invest more than 25% of its total assets in securities,
payments on which are derived from funds provided by companies in the gas,
electric, telephone, sewer and water, public and private utility segments of
the municipal bond market. The Fund will not purchase securities if, as a
result of such transaction, more than 25% of its total assets would be invested
in any one industry. For purposes of this limitation, Tax-Exempt Bonds, except
those issued for the benefit of non-governmental users, are not considered to
be part of an industry. The Fund may invest 25% or more of its total assets in
Tax-Exempt Bonds of issuers in any one state and may invest 25% or more of its
total assets in industrial development bonds.
Investment Company Securities
The Fund may invest up to 10% of the value of its total assets in securities
of other investment companies, with up to 5% of the value of the Fund's total
assets invested in securities of any one investment company, but may not own
more than 3% of the outstanding voting securities of any one investment
company. Because investments in other investment companies involve expenses
being incurred by those companies as well as comparable expenses being incurred
by the Fund, investments in other investment companies will generally be used
only for short-term investing and only when the Fund reasonably anticipates
that the net return to the Fund's shareholders will be advantageous, as
compared to available alternatives, while maintaining the appropriate level of
liquidity. It is expected that most of such investing will be in no-load,
tax-free money market funds that invest, as far as practicable, in the same
quality of investments as the Fund may invest in directly.
Options
The Fund may write (sell) "covered" put and call options on fixed-income
securities. Call options are "covered" by the Fund when it owns the underlying
securities, or owns securities convertible into or carrying rights to acquire
such securities without payment of additional consideration, which the option
holder has the right to purchase, and put options are "covered" by the Fund
when it has established a segregated account of cash or liquid, high-grade debt
obligations sufficient to satisfy the Fund's obligation to purchase the
underlying securities. The Fund receives a premium from writing a put or call
option, which increases the Fund's gross income in the event the option expires
unexercised or is closed out at a profit. By writing a call option, the Fund
limits its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option. By writing a put
option, the Fund assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then current market
value, resulting in a capital loss unless the security subsequently appreciates
in value.
The Fund intends to write and purchase options on securities primarily for
hedging purposes and also in an effort to increase current income.
Distributions to shareholders of any gains from options transaction will be
taxable. Options on securities that are written or purchased by the Fund will
be entered into on U.S. exchanges and in the over-the-counter market.
Over-the-counter transactions involve certain risks which may not be present in
a transaction on an exchange. The staff of the SEC has taken the position that
over-the-counter options and assets used to cover over-the-counter options are
illiquid and, therefore, together with other illiquid securities, cannot exceed
15% of the Fund's net assets.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of options for
hedging purposes depends in part on the investment adviser's ability to predict
future price fluctuations and the degree of correlation between the options and
securities markets. If the investment adviser is incorrect in its determination
of the correlation between the securities or indices on which the options are
written and purchased and the securities in the Fund's investment portfolio,
the investment performance of the Fund will be less favorable than it would
have been in the
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absence of such option transactions. The Fund pays brokerage commissions or
spreads in connection with its options transactions. The writing of options
could significantly increase the Fund's portfolio turnover rate.
Futures Contracts and Options on Futures Contracts
To hedge against changes in interest rates and securities prices or for
non-hedging purposes, the Fund may purchase and sell futures contracts on fixed
income securities or indices composed of such securities, including municipal
bonds and U.S. Treasury securities, and purchase and write call and put options
on such futures contracts. The Fund may also enter into closing purchase and
sale transactions with respect to any of such contracts and options. The
futures contracts may be based on various securities (such as U.S. government
securities), securities indices and other financial instruments and indices.
The Fund will engage in futures and related options transactions only for bona
fide hedging purposes as defined in regulations of the Commodities Futures
Trading Commission or for non-hedging, speculative purposes to the extent
permitted by such regulations.
The Fund may not purchase or sell futures contracts or purchase or sell
related options for non-hedging purposes, except for closing purchase or sale
transactions, if immediately thereafter the sum of the amount of initial
margins and premiums on the Fund's outstanding non-hedging positions in futures
and related options would exceed 5% of the market value of the Fund's net
assets. Transactions in futures contracts and options on futures involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating it to purchase securities, require the Fund to segregate
assets with a value equal to the amount of the Fund's obligations. The Fund
will not enter into option transactions or futures contracts or options thereon
if immediately thereafter more than 35% of the market value of the Fund's net
assets would be represented by such instruments.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates or securities prices may result in a
poorer overall performance for the Fund than if it had not entered into any
futures contracts or options transactions. The loss incurred by the Fund in
writing options on futures is potentially unlimited and may exceed the amount
of the premium received. In the event of an imperfect correlation between a
futures position and a portfolio position which is intended to be protected,
the desired protection may not be obtained and the Fund may be exposed to risk
of loss. Perfect correlation between the Fund's futures positions and portfolio
positions may be impossible to achieve. The Fund's transactions in options and
futures contracts may be limited by the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company, and distributions to shareholders of any gains from such
transactions will be taxable.
Other Information
The yields and market values of municipal securities are determined
primarily by the general level of interest rates, the creditworthiness of the
issuers of municipal securities and economic and political conditions affecting
such issuers. Due to their tax exempt status, the yields and market prices of
municipal securities may be adversely affected by changes in tax rates and
policies, which may have less effect on the market for taxable fixed income
securities. Moreover, certain types of municipal securities, such as housing
revenue bonds, involve prepayment risks which could affect the yield on such
securities.
Investments in municipal securities are subject to the risk that the issuer
could default on its obligations. Such a default could result from the
inadequacy of the sources or revenues from which interest and principal
payments are to be made or the assets collateralizing such obligations. Revenue
bonds, including private activity bonds, are backed only by specific assets or
revenue sources and not by the full faith and credit of the governmental
issuer.
The Fund will limit portfolio turnover to the extent practicable and
consistent with its investment objective and policies. While it does not intend
to engage in short-term trading, the Fund is not precluded from taking
advantage of short-term trends and yield disparities that might occur from time
to time. A higher portfolio turnover rate (over 100%) may result in
correspondingly higher transaction costs and may increase the realization of
net short-term capital gains, distributions of which are taxable to
shareholders as ordinary income.
When Issued Securities
The Fund may also purchase and sell securities on a "when issued" and
"delayed delivery" basis. These transactions are subject to market fluctuation;
the value at the time of delivery may be more or less than the purchase price.
Since the Fund will rely on the buyer or seller, as the case may be, to
consummate the transaction, failure by the other party to complete the
transaction may result in the Fund missing the opportunity of obtaining a price
or yield considered to be advantageous. No interest accrues to the Fund prior
to delivery. When the Fund is the buyer in such a transaction, however, it will
maintain, in a segregated account with its custodian, cash, U.S. government
securities, or high-grade, liquid debt obligations having an aggregate value
equal to the amount of such purchase commitments until payment is made. The
Fund will make commitments to purchase securities on such basis only with the
intention of actually acquiring these securities, but the Fund may sell such
securities prior to the settlement date if such sales are considered to be
advisable. To the extent the Fund engages in "when issued" and "delayed
delivery" transactions, it will do so for the purpose of acquiring securities
for the Fund's portfolio consistent with the Fund's investment objective and
policies and not for the purpose of investment leverage.
Repurchase Agreements
A repurchase agreement is an instrument under which the purchaser acquires
ownership of the obligation but the seller agrees, at the time of sale, to
repurchase the obligation at a mutually agreed upon time and price. The resale
price is in excess of the purchase price and reflects an agreed upon mar-
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ket rate unrelated to the coupon rate on the purchased security. Such
transactions afford an opportunity for the Fund to invest temporarily available
cash. In the event of the insolvency of the seller, or an order to stay
execution of an agreement by a court or regulatory authority, the Fund could
incur costs before being able to sell the underlying obligations and the Fund's
realization of the underlying obligations could be delayed or limited, which
could adversely affect the price the Fund receives for such obligations. There
is also a risk that the seller may fail to repurchase the underlying
obligations in which case the Fund may incur possible disposition costs and a
loss if the proceeds of the sale of such obligations to a third party are less
than the repurchase price. To guard against these possibilities, the investment
adviser, under guidelines established by the Fund's Board of Trustees, will
evaluate the creditworthiness of the seller. The Fund will enter into
repurchase agreements only with those institutions that the investment adviser
believes present minimal credit risks and which furnish collateral at least
equal in value or market price to the amount of the repurchase obligations.
Repurchase agreements maturing in more than seven days are considered by the
Fund to be illiquid. Distributions to shareholders of income from repurchase
agreements are taxable.
Risk Factors
Because prices of securities fluctuate from day to day, the value of an
investment in the Fund will vary based upon the Fund's investment performance.
The value of your shares in the Fund may, at any time, be higher or lower than
your original cost. The Fund may invest in debt securities with varying
maturities. In general, the longer the maturity of a security, the higher the
yield and the greater the potential for price fluctuations. A decline in
interest rates generally produces an increase in the value of debt securities
in the Fund's portfolio, while an increase in interest rates usually reduces
the value of these securities.
Additional Restrictions
In addition to the investment objective and policies discussed above, the
Fund's investments are subject to other restrictions which are described in its
Statement of Additional Information. Unless otherwise stated, the Fund's
investment objective and restrictions are considered fundamental and cannot be
changed without shareholder approval. Unless expressly designated as a
fundamental policy, the Fund's investment policies may be changed without
shareholder approval by the Board of Trustees of the Fund.
IV. MANAGEMENT OF THE FUND
The Board of Trustees of the Fund has overall responsibility for management
and supervision of the Fund. There are currently eight Trustees, six of whom
are not "interested persons" of the Fund as defined in the Investment Company
Act of 1940 (the "1940 Act"). The Board meets at least quarterly. By virtue of
the functions performed by Pioneering Management Corporation ("PMC") as
investment adviser, the Fund requires no employees other than its executive
officers, all of whom receive their compensation from PMC or other sources. The
Statement of Additional Information contains the names of and general
background information regarding each Trustee and executive officer of the
Fund.
Each domestic fixed income portfolio managed by PMC, including the Fund, is
overseen by the Domestic Fixed Income Portfolio Management Committee, which
consists of PMC's most senior domestic fixed income professionals. The
committee is chaired by Mr. David Tripple, PMC's President and Chief Investment
Officer and Executive Vice President of each of the Pioneer mutual funds. Mr.
Tripple joined PMC in 1974 and has had general responsibility for PMC's
investment operations and specific portfolio assignments for over five years.
Fixed income investments at PMC, including those made on behalf of the Funds,
are under the general supervision of Mr. Sherman Russ, a Senior Vice President
of PMC. Mr. Russ joined PMC in 1983. Mr. Mark Winter, Vice President of the
Fund and PMC, is primarily responsible for the day-to-day management of the
Fund. Mr. Winter assumed responsibility for the Fund in 1986 when it was
managed by FMC. Mr. Winter joined PMC in 1993. In certain instances where the
individual named above is unavailable, primary responsibility for the
day-to-day management of the Fund may be assumed temporarily by Ms. Kathleen D.
McClaskey who joined PMC in 1986 and is a Vice President of PMC.
The Fund is managed under a contract with PMC. PMC serves as investment
adviser to the Fund and is responsible for the overall management of the Fund's
business affairs, subject only to the authority of the Fund's Board of
Trustees. PMC is a wholly owned subsidiary of The Pioneer Group, Inc. ("PGI"),
a Delaware corporation. PGI's subsidiary, Pioneer Funds Distributor, Inc.
("PFD"), is the principal underwriter of shares of the Fund. Prior to December
1, 1993, FMC acted as investment adviser and principal underwriter to the Fund.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, PMC provides the Fund with an
investment program consistent with its investment objective and policies. PMC
furnishes the Fund with office space, equipment and personnel for managing the
affairs of the Fund. PMC also pays all expenses in connection with the
management of the affairs of the Fund except (i) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of PMC or its affiliates,
office space and facilities and personnel compensation, training and benefits;
(ii) the charges and expenses of auditors; (iii) the charges and expenses of
any custodian, transfer agent, plan agent, dividend disbursing agent and
registrar appointed by the Fund; (iv) issue and transfer taxes, chargeable to
the Fund in connection with securities transactions to which the Fund is a
party; (v) insurance premiums, interest charges, dues and fees for membership
in trade associations and all taxes and corporate fees payable by the Fund to
federal, state or other governmental agencies; (vi) fees and expenses involved
in registering and maintaining registrations of the Fund and/or its shares with
the SEC, state or blue sky securities agencies and foreign countries, including
the preparation of Prospectuses and
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Statements of Additional Information for filing with the SEC; (vii) all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
distributing prospectuses, notices, proxy statements and all reports to
shareholders and to governmental agencies; (viii) charges and expenses of legal
counsel to the Fund and the Trustees; (ix) distribution fees paid by the Fund
in accordance with Rule 12b-1 promulgated by the SEC pursuant to the 1940 Act;
(x) compensation of those Trustees of the Fund who are not affiliated with or
interested persons of PMC, the Fund (other than as Trustees), PGI or PFD; (xi)
the cost of preparing and printing share certificates; and (xii) interest on
borrowed money, if any. In addition to the expenses described above, the Fund
shall pay all brokers' and underwriting commissions chargeable to the Fund in
connection with securities transactions to which the Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells
shares of the Fund or other Pioneer mutual funds. See the Statement of
Additional Information for a further description of PMC's brokerage allocation
practices.
As compensation for its management services for the Fund and certain
expenses which PMC incurs, PMC is entitled to a management fee from the Fund at
the annual rates set forth below as a percentage of average daily net assets:
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Net Assets Annual Fee
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For assets up to $250,000,000 .50%
For assets in excess of $250,000,000 to $300,000,000 .48%
Over $300,000,000 .45%
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PMC has agreed that until December 1, 1995, its fee shall not exceed the fee
that would have been payable under the prior management contract with FMC. See
the Statement of Additional Information for a discussion of the fee payable
under the prior management agreement.
For the fiscal year ended December 31, 1994, the Fund paid a management fee
of $2,266,099 to PMC.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 15% of the outstanding capital stock of PGI as of March 31, 1995.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers two Classes of shares designated as Class A and
Class B shares, as described more fully in "How to Buy Fund Shares." If you do
not specify in your instructions to the Fund which Class of shares you wish to
purchase, exchange or redeem, the Fund will assume that your instructions apply
to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares redeemed
within 12 months of purchase may be subject to a contingent deferred sales
charge ("CDSC"). Class A shares are subject to distribution and service fees at
a combined annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1.00%
of the Fund's average daily net assets attributable to Class B shares. Your
entire investment in Class B shares is available to work for you from the time
you make your investment, but the higher distribution fee paid by Class B
shares will cause your Class B shares (until conversion) to have a higher
expense ratio and to pay lower dividends, to the extent dividends are paid,
than Class A shares. Class B shares will automatically convert to Class A
shares, based on relative net asset value, eight years after the initial
purchase.
Purchasing Class A or Class B Shares. The decision as to which Class to
purchase depends on the amount you invest, the intended length of the
investment and your personal situation. If you are making an investment that
qualifies for reduced sales charges, you might consider Class A shares. If you
prefer not to pay an initial sales charge on an investment of $250,000 or less
and you plan to hold the investment for at least six years, you might consider
Class B shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer fund and shares
acquired in the exchange will continue to be subject to any CDSC applicable to
the shares of the Fund originally purchased. Shares sold outside the U.S. to
persons who are not U.S. citizens may be subject to different sales charges,
CDSCs and dealer compensation arrangements in accordance with local laws and
business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share plus the applicable sales charge. Net asset value per
share of a Class of the Fund is determined by dividing the value of its assets,
less liabilities attributable to that Class, by the number of shares of that
Class outstanding. The net asset value is computed once daily, on each day the
New York Stock Exchange (the "Exchange") is open, as of the close of regular
trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. All assets of the
Fund for which there is no other readily available valuation method are valued
at their fair value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares at the public offering price from any securities
broker-dealer which has a sales agree-
7
<PAGE>
ment with PFD. If you do not have a securities broker-dealer, please call
1-800-225-6292 for assistance.
The minimum initial investment is $1,000 for Class A and Class B shares
except as specified below. The minimum initial investment is $50 for Class A
accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B shares except that the subsequent minimum investment amount
for Class B share accounts may be as little as $50 if an automatic investment
plan is established (see "Automatic Investment Plans").
Class A Shares
You may buy Class A shares at the public offering price, that is, at the net
asset value per share next computed after receipt of a purchase order, plus a
sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a % of Dealer
Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.50% 3.63% 3.00%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more -0- -0- See below
</TABLE>
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more or for participants in certain group plans (described below)
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. See "How to Sell Fund Shares." PFD
may, in its discretion, pay a commission to broker-dealers who initiate and are
responsible for such purchases as follows: 1% on the first $1 million invested;
0.50% on the next $4 million; and 0.10% on the excess over $5 million. These
commissions will not be paid if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems
its shares within 12 months of purchase. See also "How to Sell Fund Shares." In
connection with PGI's acquisition of FMC and contingent upon the achievement of
certain sales objectives, PFD pays to Mutual of Omaha Investor Services, Inc.
50% of PFD's retention of any sales commission on sales of the Fund's Class A
shares through such dealer.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Code, although more than one beneficiary is involved.
The sales charges applicable to a current purchase of Class A shares of the
Fund by a person listed above is determined by adding the value of shares to be
purchased to the aggregate value (at the then current offering price) of shares
of any of the other Pioneer mutual funds previously purchased (except direct
purchases of Pioneer Money Market Trust's Class A shares) and then owned,
provided PFD is notified by such person or his or her broker-dealer each time a
purchase is made which would qualify. Pioneer mutual funds include all mutual
funds for which PFD serves as principal underwriter. See the "Letter of
Intention" section of the Account Application.
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing fund account; it may not be used to establish a new account. Proper
account identification will be required for each telephone purchase. A maximum
of $25,000 per account may be purchased by telephone each day. The telephone
purchase privilege is available to IRA accounts but may not be available to
other types of retirement plan accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's acceptance of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of a Fund may be sold at net asset
value per share without a sales charge to Optional Retirement Program
participants if (i) the employer has authorized a limited number of investment
company providers for the Program, (ii) all authorized investment company
providers offer their shares to Program participants at net asset value, (iii)
the employer has agreed in writing to actively promote the authorized
investment providers to Program participants and (iv) the Program provides for
a matching contribution for each participant contribution. Information about
such arrangements is available from PFD.
8
<PAGE>
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families
of any of the persons above; (f) any trust, custodian, pension, profit-sharing
or other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any of its affiliates serves as investment adviser or manager;
and (j) certain unit investment trusts. Shares so purchased are purchased for
investment purposes and may not be resold except through redemption or
repurchase by or on behalf of the Fund. The availability of this privilege is
conditioned upon the receipt by PFD of written notification of eligibility.
Class A shares of the Fund may also be sold at net asset value without a sales
charge in connection with certain reorganization, liquidation or acquisition
transactions involving other investment companies or personal holding
companies.
Reduced sales charges for Class A shares are available through an agreement
to purchase a specified quantity of Fund shares over a designated 13-month
period by completing the "Letter of Intention" section of the Account
Application. Information about the Letter of Intention procedure, including its
terms, is contained in the Statement of Additional Information. Investors who
are clients of a broker-dealer with a current sales agreement with PFD may
purchase Class A shares of the Fund at net asset value, without a sales charge,
to the extent that the purchase price is paid out of proceeds from one or more
redemptions by the investor of shares of certain other mutual funds. In order
for a purchase to qualify for this privilege, the investor must document to the
broker-dealer that the redemption occurred within the 60 days immediately
preceding the purchase of Class A shares; that the client paid a sales charge
on the original purchase of the shares redeemed; and that the mutual fund whose
shares were redeemed also offers net asset value purchases to redeeming
shareholders of any of the Pioneer funds. Further details may be obtained from
PFD.
Class B Shares
You may buy Class B shares at net asset value without the imposition of an
initial sales charge; however, Class B shares redeemed within six years of
purchase will be subject to a CDSC at the rates shown in the table below. The
charge will be assessed on the amount equal to the lesser of the current market
value or the original purchase cost of the shares being redeemed. No CDSC will
be imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B shares,
the Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
<S> <C>
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer fund will convert into Class A shares based on the date of the initial
purchase and the applicable CDSC. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the date of the
initial purchase to which such shares relate. For this purpose, Class B shares
acquired through reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures as the Trustees
may determine from time to time. The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service ("IRS"), for which the Fund is applying or an opinion of
counsel that such conversions will not constitute taxable events for federal
tax purposes. There can be no assurance that such ruling or opinion will be
available at the time any particular conversion would normally occur. The
conversion of Class B shares to Class A shares will not occur if such ruling or
opinion will be available is not available and, therefore, Class B shares would
continue to be subject to higher expenses than Class A shares for an
indeterminate period.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class B
shares and on any Class A shares subject to a CDSC may be waived or reduced for
non-retirement accounts if: (a) the redemption results from the death of all
registered owners of an account (in the case of UGMAs, UTMAs and trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed or
(b) the redemption is made in connection
9
<PAGE>
with limited automatic redemptions as set forth in "Systematic Withdrawal
Plans" (limited in any year to 10% of the value of the account in the Fund at
the time the withdrawal plan is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for retirement plan accounts if: (a) the redemption
results from the death or a total and permanent disability (as defined in
Section 72 of the Code) occurring after the purchase of the shares being
redeemed of a shareholder or participant in an employer-sponsored retirement
plan; (b) the distribution is to a participant in an Individual Retirement
Account ("IRA"), 403(b) or employer-sponsored retirement plan, is part of a
series of substantially equal payments made over the life expectancy of the
participant or the joint life expectancy of the participant and his or her
beneficiary or as scheduled periodic payments to a participant (limited in any
year to 10% of the value of the participant's account at the time the
distribution amount is established; a required minimum distribution due to the
participant's attainment of age 70-1/2 may exceed the 10% limit only if the
distribution amount is based on plan assets held by Pioneer); (c) the
distribution is from a 401(a) or 401(k) retirement plan and is a return of
excess employee deferrals or employee contributions or a qualifying hardship
distribution as defined by the Code or results from a termination of employment
(limited with respect to a termination to 10% per year of the value of the
plan's assets in the Fund as of the later of the prior December 31 or the date
the account was established unless the plan's assets are being rolled over to
or reinvested in the same class of shares of a Pioneer mutual fund subject to
the CDSC of the shares originally held); (d) the distribution is from an IRA,
403(b) or employer-sponsored retirement plan and is to be rolled over to or
reinvested in the same class of shares in a Pioneer mutual fund and which will
be subject to the applicable CDSC upon redemption; (e) the distribution is in
the form of a loan to a participant in a plan which permits loans (each
repayment of the loan will constitute a new sale which will be subject to the
applicable CDSC upon redemption); or (f) the distribution is from a qualified
defined contribution plan and represents a participant's directed transfer
(provided that this privilege has been pre-authorized through a prior agreement
with PFD regarding participant directed transfers).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for either non-retirement or retirement plan accounts if:
(a) the redemption is made by any state, county, or city, or any
instrumentality, department, authority, or agency thereof, which is prohibited
by applicable laws from paying a CDSC in connection with the acquisition of
shares of any registered investment management company; or (b) the redemption
is made pursuant to the Fund's right to liquidate or involuntarily redeem
shares in a shareholder's account.
Broker-Dealers. An order for either Class of Fund shares received by PFD
from a broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close of
regular trading on the Exchange on the day the order is received, provided the
order is received by PFD prior to PFD's close of business (usually, 5:30 p.m.
Eastern Time). It is the responsibility of broker-dealers to transmit orders so
that they will be received by PFD prior to its close of business.
General. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) fund shares on any day the Exchange is open
by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
(bullet) If you are selling shares from a retirement account, you must make
your request in writing (except for exchanges to other Pioneer
funds which can be requested by phone or in writing). Call
1-800-622-0176 for more information.
(bullet) If you are selling shares from a non-retirement account, you may
use any of the methods described below.
Your shares will be sold at the share price next calculated after your order
is received and accepted less any applicable CDSC. Sale proceeds generally will
be sent to you in cash, normally within seven days after your order is
accepted. The Fund reserves the right to withhold payment of the sale proceeds
until checks received by the Fund in payment for the shares being sold have
cleared, which may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request, signed
by all registered owners, in good order to PSC, however, you must use a written
request, including a signature guarantee, to sell your shares if any of the
following situations applies:
(bullet) you wish to sell over $50,000 worth of shares,
(bullet) your account registration or address has changed within the last 30
days,
(bullet) the check is not being mailed to the address on your account
(address of record),
(bullet) the check is not being made out to the account owners, or
(bullet) the sale proceeds are being transferred to a Pioneer account with a
different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, Pioneer will send the proceeds of the sale
to the address of record. Fiduciaries or corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good order
and accepted by PSC. Good order means that there are no outstanding claims or
requests to hold redemptions on the account, certificates are endorsed by the
record
10
<PAGE>
owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
By Telephone or by Fax. Your account is automatically authorized to have the
telephone redemption privilege unless you indicated otherwise on your Account
Application or by writing to the Fund. You may redeem up to $50,000 of your
shares by telephone or fax and receive the proceeds by check or bank wire or
electronic funds transfer. The redemption proceeds must be made payable exactly
as the account is registered. To receive the proceeds by check: the check must
be sent to the address of record which must not have changed in the last 30
days. To receive the proceeds by bank wire or by electronic funds transfer: the
proceeds must be sent to your previously designated bank address of record
which must have been properly pre-designated either on your Account Application
or on an Account Options Form and which must not have changed in the last 30
days. To redeem by fax send your redemption request to 1-800-225-4240. The
telephone redemption option is not available to retirement plan accounts. You
may always elect to deliver redemption instructions to PSC by mail. See
"Telephone Transactions and Related Liabilities" below. Telephone and fax
redemptions will be priced as described above. You are strongly urged to
consult with your financial representative prior to requesting a telephone
redemption.
Selling Shares Through Your Broker-Dealer. The Fund authorized PFD to act as
its agent in the repurchase shares of the Fund from qualified broker-dealers
and reserves the right to terminate this procedure at any time. Your
broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of the
Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value
of the account to at least the minimum required amount within six months of
notice by the Fund to you of the Fund's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer fund will continue to be subject to the CDSC until the
original 12-month period expires. However, no CDSC is payable with respect to
purchases of Class A shares by 401(a) or 401(k) retirement plans with 1,000 or
more eligible participants or with at least $10 million in plan assets.
General. Redemptions may be suspended or payment postponed during any period
in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund to fairly determine the value of
the net assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or number
of shares to be exchanged. Written exchange requests must be si gned by all
record owner(s) exactly as the shares are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to the Fund. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each voice-requested or FactFone|PS telephone
exchange request will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
account for shares of the same Class in another Pioneer account on a monthly or
quarterly basis. The accounts must have identical registrations and the
originating account must have a minimum balance of $5,000. The exchange will be
effective on the 18th day of the month.
General. Exchanges must be at least $1,000. You may exchange your investment
from one Class of Fund shares at net asset value, without a sales charge, for
shares of the same Class of any other Pioneer mutual fund. Not all Pioneer
mutual funds offer more than one Class of shares. A new Pioneer account opened
through an exchange must have a registration identical to that on the original
account.
Class A or Class B shares which would normally be subject to a CDSC upon
redemption will not be charged the applicable CDSC at the time of an exchange.
Shares acquired in
11
<PAGE>
an exchange will be subject to the CDSC of the shares originally held. For
purposes of determining the amount of any applicable CDSC, the length of time
you have owned Class B shares acquired by exchange will be measured from the
date you acquired the original shares and will not be affected by any
subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. To prevent abuse of the exchange privilege to the
detriment of other Fund shareholders, the Fund and PFD reserve the right to
limit the number and/or frequency of exchanges and/or to charge a fee for
exchanges. The exchange privilege may be changed or discontinued and may be
subject to additional limitations, including certain restriction on purchases
by market timer accounts.
X. DISTRIBUTION PLANS
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 1940 Act pursuant to which certain distribution and service fees are
paid.
Pursuant to the 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
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's daily net assets
attributable to Class A shares; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of the
Fund's Class A shares with no initial sales charge (See "How to Buy Fund
Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
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.
The Class B Plan provides that the Fund will pay a distribution fee at the
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares and will 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. The
distribution fee is intended to compensate PFD for its distribution services to
the Fund. The service fee is intended to be additional compensation for
personal services and/or account maintenance services with respect to Class B
shares. PFD also receives the proceeds of any CDSC imposed on the redemption of
Class B shares.
Commissions of 4%, equal to 3.75% of the amount invested and a first year's
service fee equal to 0.25% of the amount invested in Class B shares, are paid
to broker-dealers who have selling agreements with PFD. PFD may advance to
dealers the first year service fee at a rate up to 0.25% of the purchase price
of such shares and, as compensation therefore, PFD may retain the service fee
paid by the Fund with respect to such shares for the first year after purchase.
Dealers will become eligible for additional service fees with respect to such
shares commencing in the 13th month following the purchase. Dealers may from
time to time be required to meet certain criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under the Code so that it will
not pay federal income taxes on income and capital gains distributed to
shareholders at least annually. The Code permits tax-exempt interest received
by the Fund to flow through as tax-exempt "exempt-interest dividends" to the
Fund's shareholders, provided that the Fund qualifies as a regulated investment
company and at least 50% of the value of the total assets of the Fund at the
close of each quarter of its taxable year consists of tax-exempt obligations.
However, distributions derived from interest on certain "private activity
bonds" will be subject to the federal alternative minimum tax for individuals,
estates or trusts that are subject to such tax, and all tax exempt
distributions may result in or increase a corporate shareholder's liability for
the federal corporate alternative minimum tax.
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<PAGE>
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Fund will not be deductible for federal income tax purposes to
the extent it is deemed related to exempt-interest dividends. The Fund may not
be an appropriate investment for persons who are "substantial users" of
facilities financed by industrial revenue or private activity bonds or persons
related to substantial users. Shareholders receiving social security or certain
railroad retirement benefits may be subject to federal income tax on a portion
of such benefits as a result of receiving investment income, including
exempt-interest dividends and other distributions paid by the Fund.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed taxable ordinary income and
capital gains if it fails to meet certain distribution requirements with
respect to each calendar year. The Fund intends to make distributions in a
timely manner and accordingly does not expect to be subject to the excise tax.
Each business day the Fund declares a dividend consisting of substantially
all of the Fund's net investment income. Shareholders begin earning dividends
on the first business day following receipt of payment for purchased shares.
Shares continue to earn dividends up to and including the date of redemption.
Dividends are normally paid on the last business day of the month or shortly
thereafter. The Fund's net investment income consists of the interest income it
earns, less expenses. In computing interest income, the Fund amortizes premium
or accrues discount on long-term debt securities only to the extent required
for federal income tax purposes. The Fund will make distributions from net long
term capital gains, if any, in December. Net short-term capital gains
distributions, if any, may be paid with such dividends, and other distributions
from income and/or capital gains may also be made at such times as may be
necessary to avoid federal income or excise tax.
Unless shareholders specify otherwise, all distributions from the Fund will
be automatically reinvested in additional full and fractional shares of the
Fund. For further information on the distribution options available to
shareholders, see "Distribution Options" and "Directed Dividends" below.
The Fund's dividends from its taxable net investment income, including
taxable interest income, taxable original issue discount, market discount
income, income from securities lending and any net short-term capital gains
realized by the Fund are taxable to shareholders as ordinary income under the
Code. Dividends from the Fund's net long-term capital gains are taxable to
shareholders as long-term capital gains under the Code, regardless of a
shareholder's holding period for his Fund shares. For federal income tax
purposes, dividends are taxable as described above whether a shareholder takes
them in cash or reinvests in additional shares of the Fund.
The federal income tax status of all distributions will be reported to
shareholders annually, and taxable shareholders are required to report all
distributions, including tax-exempt distributions, on their federal income tax
returns.
The Fund's taxable dividends and other taxable distributions, and the
proceeds of redemptions, exchanges or repurchases of the Fund's shares paid to
individuals and other non-exempt payees may be subject to a 31% backup
withholding of federal income tax if the Fund is not provided with the
shareholder's correct taxpayer identification number and certification that the
number is correct and that the shareholder is not subject to such backup
withholding or if the Fund receives notice from the IRS or a broker that backup
withholding applies.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e. U.S. citizens or residents, or U.S.
corporations, partnerships, trusts or estates and who are subject to U.S.
federal income tax. A state income (and possibly local income and/or intangible
property) tax exemption is generally available to the extent the Fund's
distributions are derived from interest on (or, in the case of intangibles
taxes, the value of its assets is attributable to) certain U.S. Government
obligations and/or tax-exempt municipal obligations issued by or on behalf of
the particular state or a political subdivision thereof, provided in some
states that certain thresholds for holdings of such obligations an/or reporting
requirements are satisfied. Non-U.S. shareholders and tax-exempt shareholders
are subject to different tax treatment that is not described above. You should
consult your own tax adviser regarding this possibility and other tax
consequences under state, local and other applicable tax laws.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Pioneering Services Corporation, P.O. Box
9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the
"Custodian") serves as custodian of the Fund's portfolio securities and other
assets. The principal business address of the mutual fund division of the
Custodian is 40 Water Street, Boston, Massachusetts 02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Combined Account Statement, mailed quarterly, is available to shareholders who
have more than one Pioneer account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to shareholders
of record. Examples of services which might not be available are investment or
redemption of shares by mail, automatic reinvestment of dividends and capital
gains distributions, withdrawal plans, Letters of Intention, Rights of
Accumulation, telephone exchanges and redemptions and newsletters.
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<PAGE>
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B shares) to PSC (account number and Class of shares
should be clearly indicated). The bottom portion of a confirmation statement
may be used as a remittance slip to make additional investments. Additions to
your account, whether by check or through a Pioneer Investomatic Plan, are
invested in full and fractional shares of the Fund at the applicable offering
price in effect as of the close of the Exchange on the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized draft drawn on a checking
account. Pioneer Investomatic Plan investments are voluntary, and you may
discontinue the Plan at any time without penalty upon 30 days' written notice
to PSC. PSC acts as agent for the purchaser, the broker-dealer and PFD in
maintaining these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least semiannually.
In January of each year, the Fund will mail you information about the tax
status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value
per share, unless you indicate another option on the Account Application. Two
other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer fund account. The value of this second
account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested
dividends may be in any amount, and there are no fees or charges for this
service. Retirement plan shareholders may only direct dividends to accounts
with identical registrations, i.e., PGI IRA Cust for John Smith may only go
into another account registered PGI IRA Cust for John Smith.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your
savings, checking or NOW bank account. You may establish this service by
completing the appropriate section on the Account Application when opening a
new account or the Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or for
accounts subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to the Fund. You may purchase, sell or exchange Fund shares by
telephone. For personal assistance, call 1-800-225-6292 between 8:00 a.m. and
8:00 p.m. Eastern time on weekdays. Computer-assisted transactions are
available to shareholders who have pre-recorded certain bank information (see
FactFone|PS). You are strongly urged to consult with your financial
representative prior to requesting any telephone transaction. See "Share Price"
for more information. To confirm that each transaction instruction received by
telephone is genuine, the Fund will record each telephone transaction, require
the caller to provide the personal identification number (PIN) for the account
and send you a written confirmation of each telephone transaction. Different
procedures may apply to accounts that are registered to non-U.S. citizens or
that are held in the name of an institution or in the name of an investment
broker-dealer or other third-party. If reasonable procedures, such as those
described above, are not followed, the Fund may be liable for any loss due to
unauthorized or fraudulent instructions. The Fund may implement other
procedures from time to time. In all other cases, neither the Fund, PSC or PFD
will be responsible for the authenticity of instructions received by telephone,
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.
FactFone(SM)
FactFone is an automated inquiry and telephone transaction system available
to Pioneer shareholders by dialing 1-800-225-4321. FactFone allows you to
obtain current information on your Pioneer accounts and to inquire about the
prices and yields of all publicly available Pioneer mutual funds. In addition,
you may use FactFone to make computer-assisted telephone purchases, exchanges
and redemptions from your Pioneer accounts if you have activated your personal
identification number ("PIN"). Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone. See "How to
Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares" and
"Telephone Transactions and Related Liabilities." Call PSC for assistance.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and your own TDD keyboard equipment, you
can call our TDD number toll-free at
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<PAGE>
1-800-225-1997, weekdays from 8:30 a.m. to 5:30 p.m. Eastern Time to contact
our telephone representatives with questions about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B shares accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
checks of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly, and your periodic redemptions of shares may be taxable to
you. If you direct that withdrawal checks be paid to another person after you
have opened your account, a signature guarantee must accompany your
instructions. Purchases of Class A shares of the Fund at a time when you have a
Systematic Withdrawal Plan in effect may result in the payment of unnecessary
sales charges and may therefore be disadvantageous. You may obtain additional
information by calling PSC at 1-800-225-6292 or by referring to the Statement
of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinvestment occurs. Subject
to the provisions outlined under "How to Exchange Fund Shares" above, you may
also reinvest in Class A shares of other Pioneer mutual funds; in this case you
must meet the minimum investment requirements for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado, or earthquake.
The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended or terminated at any time by PFD or by the Fund. You may establish
the services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an
Account Options Form, which you may request by calling 1-800-225-6292.
XIII. THE FUND
The Fund, an open-end management investment company (commonly referred to as
a mutual fund), was established as a Nebraska corporation on January 19, 1968
and reorganized as a Delaware business trust on June 30, 1994. The Fund has
authorized an unlimited number of shares of beneficial interest. As an open-end
management investment company, the Fund continuously offers its shares to the
public and under normal conditions must redeem its shares upon the demand of
any shareholder at the then current net asset value per share. See "How to Sell
Fund Shares." The Fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The Fund reserves the right to create and issue additional series of shares.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Fund, or any new series, into one or
more classes. As of the date of this Prospectus, the Trustees have authorized
the issuance of two classes of shares, designated as Class A and Class B. The
shares of each class represent an interest in the same portfolio of investments
of the Fund. Each class has equal rights as to voting, redemption, dividends
and liquidation, except that each class bears different distribution and
transfer agent fees and may bear other expenses properly attributable to the
particular class. Class A and Class B shareholders have exclusive voting rights
with respect to the Rule 12b-1 distribution plans adopted by holders of those
shares in connection with the distribution of shares.
In addition to the requirements under Delaware law, the Declaration of Trust
provides that a shareholder of the Fund may bring a derivative action on behalf
of the Fund only if the following conditions are met: (a) shareholders eligible
to bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Fund, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Fund are fully-paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent
and certificates will not normally be issued. The Fund reserves the right to
charge a fee for the issuance of certificates.
XIV. INVESTMENT RESULTS
The Fund may from time to time include yield information for each Class of
Fund shares in advertisements or in information furnished generally to existing
or proposed shareholders. Whenever yield information is provided, it includes a
standardized yield calculation computed by dividing the Fund's net investment
income per share for each class of Fund shares during a base period of 30 days,
or one month, by the maximum offering price per share for each class of Fund
shares on the last day of such base period. (The Fund's net investment income
per share for each Class is determined by dividing the Fund's net investment
income for each
15
<PAGE>
Class during the base period by the Class's average number of shares entitled
to receive dividends during the base period). The Class's 30-day yield is then
"annualized" by a computation that assumes that the Class's net investment
income is earned and reinvested for a six-month period at the same rate as
during the 30-day base period and that the resulting six-month income will be
generated over an additional six months.
The Fund may also from time to time advertise its taxable equivalent yield
for each Class of Fund Shares. The Class's taxable equivalent yield is
determined by dividing that portion of the Class's yield (calculated as
described above) that is tax exempt by one minus the stated federal income tax
rate and adding the product to that portion, if any, of the Class's yield that
is not tax exempt. For a table of sample taxable equivalent yields, please see
the Appendix.
The average annual total return (for a designated period of time) on an
investment in the Fund may also be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 4.50%; for Class B shares the
calculation reflects the deduction of any applicable contingent deferred sales
charge. The periods illustrated would normally include one, five and ten years
(or since the commencement of the public offering of the shares of a Class, if
shorter) through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors. Yield and return quotations should also
be considered in relation to the risks associated with the Fund's investment
objective and policies. Yields may be affected by sinking fund call provisions
and optional redemption features of portfolio securities which may have the
effect of reducing the stated average maturity of the Fund's portfolio.
Other investments or savings vehicles and/or unmanaged market indexes,
indicators of economic activity or averages of mutual funds results may be
cited or compared with the investment results of the Fund. Rankings or listings
by magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
The Fund's yield and investment results will be calculated separately for
each class of Fund shares and will vary from time to time depending on market
conditions, the composition of the Fund's portfolio, the operating expenses of
the Fund and the expenses attributed to a particular class of Fund shares. All
quoted investment results are historical and should not be considered
representative of what an investment in the Fund may earn in any future period.
For further information about the calculation methods and uses of the Fund's
investment results, see the Statement of Additional Information.
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<PAGE>
XV. APPENDIX: Taxable Equivalent Yields*
The table below shows the approximate taxable yields which are equivalent to
hypothetical tax-exempt yields from 5% to 9% under Federal income tax laws
applicable to individuals during 1995.
<TABLE>
<CAPTION>
Taxable Yield Required To Equal A Tax Free Yield
Single Return Joint Return Tax Of:
(Taxable Income)* Rate 5% 6% 7% 8% 9%
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $23,350 Up to $39,000 15.0% 5.88 7.06 8.24 9.41 10.59
$23,351-$56,550 $39,001-$94,250 28.0% 6.94 8.33 9.72 11.11 12.50
$56,551-$117,950 $94,251-$143,600 31.0% 7.25 8.70 10.14 11.59 13.04
$117,951-$256,500 $143,60L-$256,500 36.0% 7.81 9.38 10.94 12.50 14.06
Over $256,500 Over $256,500 39.6% 8.28 9.93 11.59 13.25 14.90
</TABLE>
*Net amount subject to Federal income tax after deductions and exemptions.
Table does not reflect the effect of Deduction Limitation and Exemption
Phaseout described below** or of the alternative minimum tax, if any. Table
assumes person filing Single Return is not a married individual filing a
separate return, a surviving spouse, or a head of household.
**Deduction Limitation: Each $100 of adjusted gross income ("AGI") in excess of
$114,700 ($57,350 for marrieds filing separately) causes the loss of $3 of
itemized deductions. This limitation affects all itemized deductions other
than medical expenses, investment interest, and casualty, theft and wagering
losses. However, not more than 80% of a taxpayer's itemized deductions can be
eliminated. The threshold amounts will be adjusted for inflation from year to
year.
Exemption Phaseout: Each $2,500 or fraction thereof of AGI in excess of
$172,050 for joint filers ($114,700 for single taxpayers) causes taxpayers to
lose 2% of their personal exemptions. The threshold amounts will be adjusted
for inflation from year to year.
The following formula can be used to calculate a taxable yield
which is equivalent to the corresponding tax-free yield:
Tax Free Yield
------------------ = Taxable Equivalent Yield
1-Your Tax Bracket
For example, if you are in the 28% tax bracket and earn a tax-free
yield of 7%, the taxable equivalent yield would be 9.72%.
7% .07
------- = --- = 9.72%
1 - 28% .72
There can be no assurance that the Fund will achieve any specific tax-exempt
yield. While it is expected that a substantial portion of the interest income
distributed to investors in the Fund will be exempt from regular federal income
taxes, portions of such distributions may be subject to regular federal income
tax or federal alternative minimum tax. In addition, all or a substantial
portion of such distributions may be subject to state and local taxes.
Subsequent tax law changes could result in prospective or retroactive changes
in the tax brackets, tax rates and tax equivalent yields set forth above.
17
<PAGE>
Notes
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Pioneer Capital Growth Fund
Pioneer Europe Fund
Pioneer International Growth Fund
Pioneer Growth Shares
Pioneer Emerging Markets Fund
Pioneer Gold Shares
Pioneer India Fund
Growth and Income Funds
Pioneer Equity-Income Fund
Pioneer Winthrop Real Estate Investment Fund
Pioneer Fund
Pioneer II
Pioneer Three
Income Funds
Pioneer Short-Term Income Trust
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Income Fund
Tax-Free Income Funds
Pioneer California Double Tax-Free Fund
Pioneer Massachusetts Double Tax-Free Fund
Pioneer New York Triple Tax-Free Fund
Pioneer Tax-Free Income Fund
Pioneer Intermediate Tax-Free Fund
Money Market Funds
Pioneer Tax-Free Money Fund
Pioneer U.S. Government Money Fund
Pioneer Cash Reserves Fund
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<PAGE>
[PIONEER LOGO]
Pioneer
Tax-Free
Income
Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
MARK WINTER, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
0695-2587
(C)Pioneer Funds Distributor, Inc.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICES INFORMATION
If you would like information on the following, please call . . .
Existing and new accounts, prospectuses,
applications, service forms and
telephone transactions ........................................ 1-800-225-6292
FactFone(SM)
Automated fund yields, automated prices
and account information ........................................ 1-800-225-4321
Retirement plans ............................................... 1-800-622-0176
Toll-free fax .................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD) .................... 1-800-225-1997
20
