April 3, 1995
SUPPLEMENT
to the prospectuses for:
<TABLE>
<CAPTION>
<S> <C>
Pioneer Fund April 29, 1994 (revised October 28, 1994)
Pioneer Growth Shares July 1, 1994
Pioneer Winthrop Real Estate Investment Fund October 28, 1994 (revised February 8, 1995)
Pioneer Income Fund July 1, 1994
Pioneer America Income Trust April 29, 1994 (revised July 1, 1994)
Pioneer Intermediate Tax-Free Fund April 29, 1994
Pioneer Tax-Free Income Fund July 1, 1994
</TABLE>
How to Buy Fund Shares
In addition to the exceptions listed in each FundOs prospectus, 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 company providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution.
0495-2418
(C) Pioneer Funds Distributor, Inc.
<PAGE>
[Pioneer logo]
Pioneer
Tax-Free
Income
Fund
Prospectus
July 1, 1994
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 July 1, 1994, 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.
TABLE OF CONTENTS PAGE
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE AND POLICIES 4
IV. MANAGEMENT OF THE FUND 6
V. DISTRIBUTION PLAN 7
VI. INFORMATION ABOUT FUND SHARES 7
How to Purchase Shares 7
Net Asset Value and Pricing of Orders 8
Dividends, Distributions and Taxation 9
Redemptions and Repurchases 10
VII. SHAREHOLDER SERVICES 11
Account and Confirmation Statements 11
Additional Investments 11
Automatic Investment Plans 11
Financial Reports and Tax Information 12
Distribution Options 12
Directed Dividends 12
Direct Deposit 12
Voluntary Tax Withholding 12
Exchange Privilege 12
Telephone Transactions and Related
Liabilities 12
Telecommunications Device for the Deaf (TDD) 13
Retirement Plans 13
Systematic Withdrawal Plans 13
Reinstatement Privilege 13
VIII. INVESTMENT RESULTS 13
IX. SHARES OF THE FUND 14
X. APPENDIX 15
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.
<PAGE>
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 expenses based on actual expenses for the fiscal
year ended December 31, 1993, adjusted to reflect certain changes resulting
from, among others, the approval of new management agreements with Pioneering
Management Corporation, expressed as a percentage of average net assets of the
Fund.
Tax-Free
Fund
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases(1) 4.50%
Maximum Sales Charge on Reinvestment of Dividends None
Deferred Sales Charge(1) None
Redemption Fee(2) None
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.46%
12b-1 Fees 0.25%
Other Expenses
(including printing expenses and transfer agent,
professional and registration fees) 0.15%
Total Operating Expenses 0.86%
(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans ("Group Plans") are not subject to an initial sales charge. A
contingent deferred sales charge of 1% may, however, be charged on redemptions
by such accounts of shares held less than one year, as further described under
"How to Purchase Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international bank wire transfers of redemption proceeds.
Example:
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return with or without redemption at the end of each time period.
Tax-Free
Fund
1 Year $ 53
3 Years* $ 71
5 Years* $ 91
10 Years* $146
*These are cumulative totals, the average annual fees and expenses paid over a
10-year period would be approximately $14.60 per year.
The example above assumes 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 informational purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return 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, see "Management of the Fund," "Distribution Plan" and "How To
Purchase Shares" in this Prospectus and "Management of the Fund" and
"Underwriting Agreement and Distribution Plan" in the Statement of Additional
Information. Because of the 12b-1 fee, a long-term investor over time may pay
more than the economic equivalent of the maximum initial sales charge permitted
under the Rules of Fair Practice of the National Association of Securities
Dealers, Inc.
The maximum sales charge is reduced on purchases of specified amounts and the
value of shares owned in other Pioneer mutual funds is taken into account in
determining the applicable sales charge. See "How to Purchase Shares." No sales
charge is applied to exchanges of shares of the Fund for shares of other
publicly available mutual funds in the Pioneer complex. See "Exchange
Privilege."
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements which have
been audited by the Funds' then independent public accountants, Coopers &
Lybrand. The independent public accountants' report on the Fund's financial
statement as of December 31, 1993 appears in the Fund's Annual Report
incorporated by reference into the Fund's Statement of Additional Information.
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 Share Outstanding For The Years Presented
<TABLE>
<CAPTION>
For the Year Ended December 31,
1993 1992 1991 1990 1989 1988 1987
1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C>
Net asset value,
beginning of
period $ 12.08 $ 11.99 $ 11.52 $ 11.47 $ 11.17 $ 10.70 $ 11.69 $
10.81 $ 9.70 $ 9.71
Income from
investment
operations--
Net investment
income $ 0.67 $ 0.71 $ 0.74 $ 0.76 $ 0.79 $ 0.80 $ 0.80 $
0.86 $ 0.86 $ 0.88
Net realized
and unrealized
gain (loss) on
investments 0.87 0.31 0.65 0.06 0.31 0.47 (0.98)
1.52 1.12 (0.02)
Total income
(loss) from
investment
operations $ 1.54 $ 1.02 $ 1.39 $ 0.82 $ 1.10 $ 1.27 $ (0.18) $
2.38 $ 1.98 $ 0.86
Distribution to
shareholders
from--
Net investment
income (0.67) (0.71) (0.74) (0.76) (0.80) (0.80) (0.81)
(0.86) (0.87) (0.87)
Net realized
capital gains (0.27) (0.22) (0.18) (0.01) 0.00 0.00 0.00
(0.64) 0.00 0.00
Net increase
(decrease) in
net asset value $ 0.60 $ 0.09 $ 0.47 $ 0.05 $ 0.30 $ 0.47 $ (0.99) $
0.88 $ 1.11 $ (0.01)
Net asset value,
end of period $ 12.68 $ 12.08 $ 11.99 $ 11.52 $ 11.47 $ 11.17 $ 10.70 $
11.69 $ 10.81 $ 9.70
Total return(1) 12.98% 8.73% 12.49% 7.40% 10.12% 12.25% (1.56%)
22.67% 21.25% 9.42%
Ratio of net
operating
expenses to
average net
assets 0.86% 0.87% 0.87% 0.78% 0.63% 0.64% 0.63%
0.61% 0.64% 0.67%
Ratio of net
investment
income to
average net
assets 5.37% 5.80% 6.26% 6.69% 6.96% 7.26% 7.24%
7.30% 8.40% 9.22%
Portfolio
turnover rate 58% 62% 56% 40% 54% 73% 89%
153% 258% 123%
Net assets end
of period
(in thousands) $532,491 $466,586 $408,990 $362,887 $357,388 $324,116 $307,266
$252,116 $166,040 $119,035
</TABLE>
(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.
<PAGE>
III. INVESTMENT OBJECTIVE AND POLICIES
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 exempt from regular Federal
income tax, 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 interest from these securities
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
<PAGE>
Fund will be less favorable than it would have been in the 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 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 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 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
<PAGE>
mutually agreed upon time and price. The resale price is in excess of the
purchase price and reflects an agreed upon market 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.
Price Fluctuation
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 portfolio managed by PMC, including the Fund, is overseen by an Investment
Committee (either the Equity Committee or the Fixed-Income Committee), both of
which consist of PMC's most senior investment professionals. Both Committees are
chaired by Mr. David Tripple, PMC's President and Chief Investment Officer and
Executive Vice President of the Fund. 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 Fund,
are under the general supervision of Mr. Sherman Russ, Vice President of PMC
and the Fund. Mr. Russ joined PMC in 1983. Mr. Mark Winter 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 Mutual of Omaha
Fund Management Company ("FMC") (which was acquired by The Pioneer Group,
Inc. in 1993). 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 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) insur-
<PAGE>
ance 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 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.
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:
Net Assets Annual Fee
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%
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.
The prior management agreement with FMC was in effect until December 1, 1993 and
provided for compensation to FMC at different rates than are set forth above.
For the fiscal year ended December 31, 1993, the Fund paid management fees as
follows: from January 1, 1993 to November 30, 1993, $2,111,066 to FMC; from
December 1, 1993 to December 31, 1993, $205,922 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, 1994.
V. DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution (the "Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution fees are paid to
PFD. As required by Rule 12b-1, the Plan was approved by a majority of the
outstanding shares held by the shareholders of the Fund and by the Trustees,
including a majority of the Trustees who are not "interested persons" of the
Fund.
Pursuant to the Plan, the Fund reimburses PFD for its actual expenditures to
finance any activity primarily intended to result in the sale of shares of the
Fund or to provide services to shareholders of the Fund, 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 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 average daily net assets; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of the
Fund's shares with no initial sales charge (see "How to Purchase Shares"); and
(iii) reimbursement to PFD for expenses incurred in providing services to
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 Plan are accrued daily and may not
exceed 0.25% of average daily net assets. Distribution expenses of PFD are
expected to substantially exceed the distribution fees paid by the Fund in a
given year. The Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the Fund is first invoiced for an expense. The
limited carryover provision in the Plan may result in an expense invoiced to a
Fund in one fiscal year being paid in the subsequent fiscal year and thus being
treated for purposes of calculating the maximum expenditures of the Fund as
having been incurred in the subsequent fiscal year. In the event of termination
or non-continuance of the Plan, the Fund has 12 months to reimburse any expense
which is incurred prior to such termination or non-continuance, provided that
payments by the Fund during such 12-month period shall not exceed 0.25% of the
Fund's average net daily assets during such period. The 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.
VI. INFORMATION ABOUT FUND SHARES
HOW TO PURCHASE SHARES
You may purchase shares of the Fund at the public offering price from any
securities broker-dealer having a sales agreement with PFD. The minimum initial
investment is $1,000, except for accounts being established to utilize monthly
bank drafts, government allotments and other similar automatic investment plans.
The minimum investment for such plans, as well as all other subsequent additions
to an account, is $50. Separate minimum investment requirements apply to
retirement plans. No sales charge or mini-
<PAGE>
mum investment requirements apply to the reinvestment of dividends or
capital gains distributions.
The public offering price of shares of the Fund is the net asset value per share
next computed after receipt of a purchase order, plus a sales charge as follows:
Sales Charge as a % of Dealer
Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
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
No sales charge is payable at the time of purchase on investments of $1,000,000
or more or on purchases by certain Group Plans, but for such investments a
contingent deferred sales charge of 1% is imposed in the event of certain
redemption transactions within one year of purchase. See "Redemptions and
Repurchases" below. 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 shall not be payable if the purchaser
is affiliated with the broker-dealer or if the purchase represents the
reinvestment of a redemption made during the previous twelve calendar months. In
connection with PGI's acquisition of FMC, PFD pays to a dealer previously
affiliated with FMC 50% of PFD's retention of any sales commission on sales of
the Fund's shares through such dealer contingent upon the achievement of certain
sales objectives.
The schedule of sales charges above is applicable to purchases of shares of the
Fund by (i) an individual, (ii) an individual, 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 Internal Revenue Code of 1986, as amended (the "Code"), although more
than one beneficiary is involved.
The sales charge applicable to a current purchase of 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 current offering price) of shares of any of the other
Pioneer mutual funds previously purchased 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 and which are subject to an initial
sales charge. For example, a person investing $5,000 in the Fund who currently
owns shares of other Pioneer funds with a value of $100,000 would pay a sales
charge of 3.50% of the offering price of the new investment.
Sales charges may also be reduced through an agreement to purchase a specified
quantity of shares over a designated thirteen-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.
Shares of the Fund may be sold at a reduced or eliminated sales charge to
certain Group Plans under which a sponsoring organization makes recommendations
to, permits group solicitation of, or otherwise facilitates purchases by, its
employees, members or participants. Information about such arrangements is
available from PFD.
Shares of the Fund may also be sold at net asset value per share without a sales
charge to: (a) current or former Directors, 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 only and may not be resold except through redemption or
repurchase by or on behalf of the Fund. The availability of this privilege
depends upon the receipt by PFD of written notification of eligibility. 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.
Investors who are clients of a broker-dealer with a current sales agreement with
PFD may purchase 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 60 days immediately preceding
the purchase of shares of the Fund; 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 mutual funds. Further details may be obtained from PFD.
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.
NET ASSET VALUE AND PRICING OF ORDERS
Shares of the Fund are sold at the public offering price, which is the net asset
value per share plus the applicable sales charge, if any. Net asset value per
share of the Fund is
<PAGE>
determined by dividing the value of its assets, less liabilities, by the number
of shares 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 in accordance with procedures established
by the Trustees.
An order for shares received by a broker-dealer prior to the close of regular
trading on the Exchange (currently 4:00 p.m. Eastern Time) is confirmed at the
offering price 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 (normally 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. An order received by a broker-dealer following the close
of regular trading on the Exchange will be confirmed at the offering price as of
the close of regular trading on the Exchange on the next trading day.
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.
DIVIDENDS, DISTRIBUTIONS AND TAXATION
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.
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 by the end of the calendar
year. The Fund intends to make distributions in a timely manner and accordingly
does not expect to be subject to the excise tax.
The Fund's dividends from its taxable net investment income, including taxable
interest income and original issue discount, market discount, income from
securities lending, certain net realized foreign exchange gains, 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 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
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.
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.
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 will be subject to a 31% backup federal
withholding 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. It is possible that many states will exempt from
personal income tax that portion of the Fund's dividends attributable to
interest received by the Fund from certain U.S. Government obligations and
obligations of the particular state. You should consult your own tax adviser
regarding this possibility and other tax consequences under state, local and
other applicable tax laws.
Dividends and Distributions
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
<PAGE>
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 realized 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 of dividends and 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.
REDEMPTIONS AND REPURCHASES
Redemptions by Mail
As a shareholder, you have the right to offer your shares for redemption by
delivering to Pioneering Services Corporation ("PSC") a written request for
redemption in proper form and, if applicable, your share certificates properly
endorsed and in good order for transfer. Redemptions will be made in cash at the
net asset value per share next determined following receipt by PSC of all
necessary documents subject in certain cases to the contingent deferred sales
charge described below.
Good order means that there are no outstanding claims or requests to hold
redemptions on the account, the certificates are endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) are guaranteed by any
of the following eligible guarantor institutions: (i) all brokers, dealers,
municipal securities dealers and/or brokers, government securities dealers
and/or brokers, who are members of a clearing agency or whose net capital
exceeds $100,000; (ii) all banks; (iii) all credit unions; (iv) all savings
associations, including all savings and loan associations; (v) all national
securities exchanges, registered securities associations, and all clearing
agencies; and (vi) all trust companies. In addition, in some cases (involving
fiduciary or corporate transactions), good order may require the furnishing of
additional documents.
Signature guarantees will be waived for redemption requests of $50,000 or less,
provided that the record holder executes the redemption request, payment is
directed to the record holder at the address of record, and the address has not
changed in the previous 30 days. You cannot provide a signature guarantee by
facsimile ("fax"). Payment normally will be made within seven days after receipt
of these documents. The Fund reserves the right to withhold payment until checks
received in payment of shares purchased have cleared, which may take up to 15
calendar days from the purchase date. For additional information about the
necessary documentation for redemption by mail, call PSC at 1-800-225-6292.
Redemption by Telephone or Fax
Your account is automatically authorized to have the telephone redemption
privilege unless you indicated otherwise on your Account Application or by
writing to PSC. Proper account identification will be required for each
telephone redemption. The telephone redemption option is not available to
retirement plan accounts. A maximum of $50,000 may be redeemed by telephone or
fax and the proceeds may be received by check or by bank wire. To receive the
proceeds by check: the check must be made payable exactly as the account is
registered and 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: the wire
must be sent to the bank wire 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. You may always elect to deliver redemption
instructions to PSC by mail. See "Telephone Transactions and Related
Liabilities" below. Telephone redemptions will be priced as described above.
Additional Conditions of Redemption
For the convenience of shareholders, the Fund has authorized PFD to act as its
agent in the repurchase of its shares. The Fund reserves the right to terminate
this procedure at any time. Offers to sell shares to the Fund may be
communicated to PFD by wire or telephone by broker-dealers for their customers.
The Fund's practice will be to repurchase shares offered to it at the net asset
value per share determined as of the close of business of the Exchange on the
day the offer for repurchase is received and accepted by the broker-dealer if
the offer is received by PFD before PFD's close of business on that day.
Shareholders whose accounts are registered in the name of a broker, dealer or
other financial institution must contact a representative of the institution
holding the shares to arrange for a redemption.
A broker-dealer which receives an offer for repurchase is responsible for the
prompt transmittal of such offer to PFD. Payment of the repurchase proceeds will
be made in cash to the broker-dealer placing the order. Except for certain large
accounts subject to a contingent deferred sales charge (as described below),
neither the Fund nor PFD charges any fee or commission upon such repurchase
which is then settled as an ordinary transaction with the broker-dealer (which
may make a charge to the shareholder for this service) delivering the shares
repurchased. Payment will be made within seven days of the receipt by PSC of
valid instructions, including validly endorsed certificates, if appropriate, in
good order as described above.
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 upon the market value
of the portfolio at the time of redemption or repurchase. Redemptions and
repurchases are potentially taxable transactions to shareholders.
Redemption 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.
Purchases of Fund shares of $1,000,000 or more, and purchases by participants in
a Group Plan which have not been subject to a sales charge, may be subject to a
contin-
<PAGE>
gent deferred sales charge upon redemption or repurchase. A contingent deferred
sales charge is payable 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. In determining
whether a contingent deferred sales charge is payable, and, if so, the amount of
the charge, it is assumed that shares purchased with reinvested dividends and
capital gain distributions and then such other shares which are held the longest
will be the first redeemed.
Waiver or Reduction of Contingent Deferred Sales Charge
The CDSC on any 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,
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 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 any 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 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 (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; (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 any 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 contingent
deferred sales charge 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.
Shares subject to the contingent deferred sales charge which are exchanged into
another Pioneer fund will continue to be subject to the contingent deferred
sales charge until the original 12-month period expires.
VII. 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
principal offices are located at 60 State Street, Boston, Massachusetts 02109,
and inquiries to PSC should be mailed to Shareholder Services, 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. 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 the
details of transactions are sent to shareholders as transactions occur. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
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, newsletters and other informational
mailings.
Additional Investments
You may add to your account by sending a check ($50 minimum) to PSC (account
number 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 offering
price in effect as of the close of regular trading on 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 or through a Pioneer Investomatic Plan (formerly
called Bank Service Plan). A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a preauthorized draft drawn on a checking
account. Pioneer Investomatic Plan investments are voluntary and you may
discontinue the plan with-
<PAGE>
out 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 semi-annually. In
January of each year, the Fund will mail you information about the tax status of
dividends and other distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at net asset value per share, unless
you indicate another option on your Account Application.
Two other available options are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and distributions in
cash. The two options are not available, however, with respect to retirement
plans or an account with a net asset value of less than $500. Changes in the
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 e.g., 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 your Account Application when opening a new account or an
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 distribution paid from your account (before any reinvestment) and forward
the amount withheld to the Internal Revenue Service as a credit against your
federal income taxes. This option is not available for retirement plan accounts
or for accounts subject to backup withholding.
Exchange Privilege
You may exchange your shares of the Fund at net asset value, without a sales
charge, for shares of other Pioneer funds which do not offer different classes
of shares or for the Class A shares of those Pioneer funds that offer more than
one class of shares. There are currently no fees or sales charges on such an
exchange. The exchange privilege is available only in those states where
exchanges can legally be made.
Exchanges must be at least $1,000. A new Pioneer account opened through an
exchange must have a registration identical to that on the original account. PSC
will process exchanges only after receiving an exchange request in proper form.
Shares of the Fund acquired through exchange of shares subject to a contingent
deferred sales charge will be subject to such charge, if applicable, upon
redemption.
Written Exchanges. If the exchange request is in writing, it must be signed by
all record owner(s) exactly as the shares are registered. If your original
account includes a Pioneer Investomatic or Systematic Withdrawal Plan and you
open a new account by exchange, you should specify whether the plans should
continue in your new account or remain with your original account.
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 PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. All telephone exchange requests will be recorded.
Automatic Exchange. You may automatically exchange shares from one Pioneer
account to another Pioneer account on a regular schedule, either monthly or
quarterly. The accounts must have identical registrations and the originating
account must have a minimum balance of $5,000. The exchange will occur on the
18th day of each month.
If an exchange request is received by PSC before 4:00 p.m. Eastern Time (or
before the time that the Exchange closes for regular trading on that day, if
different), the exchange will be effective on that day if the requirements above
have been met. If the exchange request is received after this time, the exchange
will be effective on the following business day.
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. For federal and (generally) state income tax purposes, an exchange
represents a sale of the shares exchanged and a purchase of shares in another
fund. Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the cost basis of these shares and the timing of the transaction,
and special tax rules may apply.
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.
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 PSC. You may sell or exchange your Fund shares by telephone by
calling 1-800-225-6292 between 8:00 a.m. and 8:00 p.m. Eastern Time on
weekdays. See "Net Asset Value and Pricing of Orders" for more information. To
confirm that each transaction instruction received by telephone is genuine, the
Fund will record
<PAGE>
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.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and you own TDD keyboard equipment, you can
call PSC's TDD number toll-free at 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.
Retirement Plans
Although the Fund is not appropriate for retirement plan investments, you may
contact the Retirement Plans Department of PSC at 1-800-622-0176 for information
on retirement plans for business, Simplified Employee Pension Plans, Individual
Retirement Accounts (IRAs), and Section 403(b) retirement plans for employees of
certain non-profit organizations and public school systems, all of which are
available in conjunction with investments in the Funds. Separate applications
are required.
Systematic Withdrawal Plans
If the shares in your account have a total value of at least $10,000 you may
establish a Systematic Withdrawal Plan with respect to the Fund providing for
fixed payments at regular intervals. Periodic checks of $50 or more will be sent
to you monthly or quarterly and your periodic redemptions of shares may be
taxable to you. You may also direct that withdrawal checks be paid to another
person, although if you make this designation after you have opened your
account, a signature guarantee must accompany your instructions. Purchases of
shares of the Fund at a time when you have a Systematic Withdrawal Plan in
effect with respect to the Fund 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 Fund's Statement of Additional Information.
Reinstatement Privilege
If you redeem all or part of your shares of the Fund, you may reinvest all or
part of the redemption proceeds without a sales commission in 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 shares of the Fund 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. Subject to the provisions outlined under "Exchange Privilege" above, you
may also reinvest in any 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 filling out an Account Options
Form, which you may request by calling 1-800-225-6292.
VIII. INVESTMENT RESULTS
The Fund may from time to time include yield information 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 during a base
period of 30 days, or one month, by the maximum offering price per share of the
Fund on the last day of such base period. (The Fund's net investment income per
share is determined by dividing the Fund's net investment income during the base
period by the average number of shares of the Fund entitled to receive dividends
during the base period). The Fund's 30-day yield is then "annualized" by a
computation that assumes that the Fund'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. The
Fund's taxable equivalent yield is determined by dividing that portion of the
Fund'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 Fund's yield that is not tax exempt. For a table of sample taxable
equivalent yields, please see the Appendix.
The Fund may also include in advertisements, and furnish to existing or
prospective shareholders, information concerning the average annual total return
on an investment in the Fund for a designated period of time. Whenever this
information is provided, it includes a standardized calculation of average
annual total return computed by determining the average annual compounded rate
of return that would cause a hypo-
<PAGE>
thetical investment (after deduction of the maximum sales charge) made on the
first day of the designated period (assuming all dividends and distributions are
reinvested) to equal the resulting net asset value of such hypothetical
investment on the last day of the designated period. The periods illustrated
would normally include one, five and ten years.These standardized calculations
do not reflect the impact of federal or state income taxes.
The foregoing computation method is prescribed for advertising and other
communications subject to SEC Rule 482. Communications not subject to this rule
may contain one or more additional measures of investment results, computation
methods 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. 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 average annual total return quotations of the Fund do not take into
account any required payments for federal or state income taxes.
The Fund's investment results will vary from time to time depending on market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. Therefore, any prior investment results of the Fund should not be
considered representative of what an investment in the Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing performance
information regarding the Fund to information published for other investment
companies, investment vehicles, and unmanaged indexes. Yield and return
quotations should also be considered relative 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. At any time in the future, yields and return quotations may be higher
or lower than past yields or return quotations and there can be no assurance
that any historical yield or return quotation will continue in the future.
The Fund may also include comparative performance information in advertising or
marketing the Fund's shares. This performance information may include rankings
or listing by magazines, newspapers, or independent statistical or ratings
services, such as Lipper Analytical Services, Inc. and Ibbotson Associates.
For more information about the calculation methods used to compute the Fund's
investment results, see the Statement of Additional Information.
IX. SHARES OF THE FUND
The Fund, an open-end diversified investment management company, was established
as a Nebraska corporation on October 19, 1976 and reorganized as a Delaware
business trust on June 30, 1994.
The Trustees are responsible for the overall management and supervision of its
affairs. Each share represents an equal proportionate interest in the Fund with
each other share. Shares entitle their holders to one vote per share in the
election of Trustees and other matters submitted to shareholders. Shares have
noncumulative voting rights, do not have preemptive or subscription rights and
are transferable.The Trustees are empowered, without shareholder approval, by
the Agreement and Declaration of Trust (the "Declaration of Trust") and By-Laws
to create additional series of shares and to classify and reclassify any new or
existing series of shares into one or more classes.
The Declaration of Trust permits the issuance of series of shares in addition to
the Fund which would represent interests in separate portfolios of investments.
No series would be entitled to share in the assets of any other series or be
liable for the expenses or liabilities of any other series. The Fund is
authorized, but does not currently intend to, issue multiple classes of its
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 to
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.
The Fund does not intend to hold annual shareholder meetings. Shareholders have
certain rights, as set forth in the Declaration of Trust, including the right to
call a meeting of shareholders for the purpose of voting on the removal of one
or more Trustees. Such removal can be effected upon the action of two-thirds of
the outstanding shares of the Fund.
<PAGE>
X. 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 1994.
<TABLE>
<CAPTION>
Taxable Yield Required
Single Return Joint Return Tax To Equal A Tax Free Yield Of:
(Taxable Income)* Rate 5% 6% 7% 8% 9%
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $22,750 Up to $38,000 15.0% 5.88 7.06 8.24 9.41 10.59
$22,751-$55,100 $38,001-$91,850 28.0% 6.94 8.33 9.72 11.11 12.50
$55,101-$115,000 $91,851-$140,000 31.0% 7.25 8.70 10.14 11.59 13.04
$115,001-$250,000 $140,001-$250,000 36.0% 7.81 9.38 10.94 12.50 14.06
Over $250,000 Over $250,000 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
$111,800 ($55,900 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 $167,700
for joint filers ($111,800 for single taxpayers) causes taxpayers to lose 2% of
their personal exemptions. The threshold amounts will be adjusted for inflation
from year to year.
Some tax brackets and the threshold amounts will be adjusted for inflation in
1994.
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.
<PAGE>
[Back cover]
[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
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 & CO.
LEGAL COUNSEL
HALE AND DORR
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: (617) 742-7825
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
Automated fund yields, 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
0794-1960
(C)Pioneer Funds Distributor, Inc.
