File Nos. 2-62436
811-02864
As Filed with the Securities and Exchange Commission on October , 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_X__/
Pre-Effective Amendment No. ___ /____/
Post-Effective Amendment No. 26 /_X__/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 25 /_X _/
(Check appropriate box or boxes)
PIONEER BOND FUND
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP,
60 State Street, Boston, MA
02109 (Name and address of
agent for service)
It is proposed that this filing will become effective (check appropriate box)
_ _ immediately upon filing pursuant to paragraph (b)
_X_ on October 28, 1998 pursuant to paragraph (b)
_ 60 days after filing pursuant to paragraph (a)(1)
_ _ on [date] pursuant to paragraph (a)(1) of Rule 485
<PAGE>
PIONEER BOND FUND
CLASS A, CLASS B AND CLASS C SHARES
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
1. Cover Page............................Prospectus - Cover Page
2. Synopsis..............................Prospectus - Expense Information
3. Condensed Financial Information.......Prospectus - Financial Highlights
4. General Description of Registrant.....Prospectus - Investment Objectives
and Policies; Management of the Fund;
The Fund
5. Management of the Fund................Prospectus - Management of the Fund
6. Capital Stock and Other Securities....Prospectus - Investment Objectives
and Policies; The Fund
7. Purchase of Securities Being Offered..Prospectus - Fund Share Alternatives;
How to Buy Fund Shares; Shareholder
Services; Distribution Plans
8. Redemption or Repurchase..............Prospectus - Fund Share Alternatives;
How to Sell Fund Shares; Shareholder
Services
9. Pending Legal Proceedings.............Not Applicable
10. Cover Page............................Statement of Additional Information
- Cover Page
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
11. Table of Contents.....................Statement of Additional Information
- Cover Page
12. General Information and History.......Statement of Additional Information
- Cover Page; Description of Shares
13. Investment Objectives and Policies....Statement of Additional Information
- Investment Policies and Restrictions
14. Management of the Fund................Statement of Additional Information
- Management of the Fund; Investment
Adviser
15. Control Persons and Principal Holders
of Securities.....................Statement of Additional Information
- Management of the Fund
16. Investment Advisory and Other
Services..........................Statement of Additional Information
- Management of the Fund; Investment
Adviser; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Independent Public Accountants
17. Brokerage Allocation and Other
Practices.........................Statement of Additional Information
- Portfolio Transactions
18. Capital Stock and Other Securities....Statement of Additional Information
- Description of Shares; Certain
Liabilities
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
19. Purchase Redemption and Pricing of
Securities Being Offered..........Statement of Additional Information
- Determination of Net Asset Value;
Systematic Withdrawal Plan; Letter
of Intention
20. Tax Status............................Statement of Additional Information
- Tax Status
21. Underwriters..........................Statement of Additional Information
- Principal Underwriter; Underwriting
Agreement and Distribution Plans
22. Calculation of Performance Data.......Statement of Additional Information
- Investment Results
23. Financial Statements..................Statement of Additional Information
- Financial Statements
<PAGE>
Pioneer [PIONEER LOGO]
Bond
Fund
Class A, Class B and Class C Shares
Prospectus
October 28, 1998
Pioneer Bond Fund (the "Fund") seeks current income from a high quality
portfolio with due regard to preservation of capital and prudent investment
risk. Consistent therewith, the Fund also seeks to maintain dividend payments at
a relatively stable level. At least 85% of the Fund's total assets must be
invested in debt securities issued or guaranteed by the United States ("U.S.")
Government or its agencies or instrumentalities, debt securities (including
convertible securities) rated within the three highest grades by the major
recognized bond services and comparably rated commercial paper and cash and cash
equivalents. The Fund may invest the balance (up to 15%) of its total assets in
debt securities that are rated in the fourth highest grade by the major
recognized bond services and in commercial paper that is of comparable quality.
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
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 provides the information about the Fund that you should
know before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information also dated October 28, 1998, as supplemented or revised from time to
time, which is incorporated into this Prospectus by reference. 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 by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
--------------------------------------------------------------
<S> <C> <C>
I. EXPENSE INFORMATION ................................... 2
II. FINANCIAL HIGHLIGHTS .................................. 2
III. INVESTMENT OBJECTIVES AND POLICIES .................... 4
IV. MANAGEMENT OF THE FUND ................................ 5
V. FUND SHARE ALTERNATIVES ............................... 6
VI. SHARE PRICE ........................................... 7
VII. HOW TO BUY FUND SHARES ................................ 7
VIII. HOW TO SELL FUND SHARES ............................... 11
IX. HOW TO EXCHANGE FUND SHARES ........................... 12
X. DISTRIBUTION PLANS .................................... 13
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ................. 13
XII. SHAREHOLDER SERVICES .................................. 14
Account and Confirmation Statements .................. 14
Additional Investments ............................... 14
Automatic Investment Plans ........................... 14
Financial Reports and Tax Information ................ 15
Distribution Options ................................. 15
Directed Dividends ................................... 15
Direct Deposit ....................................... 15
Voluntary Tax Withholding ............................ 15
Telephone Transactions ............................... 15
FactFoneSM ........................................... 15
Retirement Plans ..................................... 16
Telecommunications Device for the Deaf (TDD) ......... 16
Systematic Withdrawal Plans .......................... 16
Reinstatement Privilege (Class A Shares Only) ........ 16
XIII. THE FUND .............................................. 16
XIV. INVESTMENT RESULTS .................................... 16
</TABLE>
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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 annual operating expenses based upon actual expenses
incurred for the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
Class A Class B Class C
------------ ------------ ----------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Initial Sales Charge on
Purchases (as a percentage of
offering price) ...................... 4.50%(1) None None
Maximum Sales Charge on
Reinvestment of Dividends ............ None None None
Maximum Deferred Sales Charge (as
a percentage of purchase price
or redemption proceeds, as
applicable) .......................... None(1) 4.00% 1.00%
Redemption Fee2 ....................... None None None
Exchange Fee .......................... None None None
Annual Operating Expenses (as a percentage
of average net assets):
Management Fee ........................ 0.50% 0.50% 0.50%
12b-1 Fees ............................ 0.25% 1.00% 1.00%
Other Expenses (including accounting
and transfer agent fees, custodian
fees and printing expenses)3 ......... 0.43% 0.48% 0.40%
------ ----- -----
Total Operating Expenses ............... 1.18% 1.98% 1.90%
====== ===== =====
</TABLE>
- --------------------
1 Purchases of $1 million or more and certain purchases by participants in a
group plan are not subject to an initial sales charge but may be subject to a
contingent deferred sales charge ("CDSC") as further described under "How to
Sell Fund Shares."
2 Separate fees (currently $10 and $20, respectively) apply to U.S. and
international wire transfers of redemption proceeds.
3 Expenses do not reflect reductions of certain third-party brokerage/service
and expense offset arrangements. Because of these arrangements, "Total
Operating Expenses" were 1.17%, 1.97% and 1.89% for Class A, Class B and
Class C shares, respectively, for the fiscal year ended June 30, 1998.
Example:
You would pay the following expenses on a $1,000 investment, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "Annual Operating Expenses" remain the same each year.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Class A Shares $56 $81 $107 $182
Class B Shares*
- Assuming complete
redemption at end of
period $60 $92 $127 $210
- Assuming no
redemption $20 $62 $107 $210
Class C shares**
- Assuming complete
redemption at end of
period $29 $60 $103 $222
- Assuming no
redemption $19 $60 $103 $222
</TABLE>
- --------------------
* Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
** Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
The example is designed for information purposes only, and should not be
considered a representation of past or 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, Rule 12b-1 fees and
other expenses of the Fund, 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 payment of a Rule 12b-1 fee may result in long-term
shareholders paying more than the economic equivalent of the maximum sales
charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
amounts of Class A shares and the value of Class A 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 other publicly available Pioneer mutual funds. See "How to Exchange
Fund Shares."
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of June 30, 1998 appears in the Fund's Annual Report
which is incorporated by reference into the Statement of Additional Information.
The information listed below should be read in conjunction with those financial
statements. 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.
2
<PAGE>
PIONEER BOND FUND
Selected Data for a Class A Share Outstanding For Each Period:
<TABLE>
<CAPTION>
For the Year Ended June 30,
---------------------------------------------------
1998 1997 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period ............................. $ 9.07 $ 9.08 $ 9.35 $ 9.04
------- ------- ------- -------
Increase (decrease) from investment
operations:
Net investment income .............. $ 0.59 $ 0.63 $ 0.64 $ 0.68
Net realized and unrealized gain
(loss) on investments ............. 0.30 (0.01) (0.27) 0.31
------- ------- ------- -------
Net increase (decrease) from
investment operations ............ $ 0.89 $ 0.62 $ 0.37 $ 0.99
Distributions to shareholders:
Net investment income .............. (0.59) (0.63) (0.64) (0.68)
------- ------- ------- --------
Net increase (decrease) in net
asset value ........................ $ 0.30 $ (0.01) $ (0.27) $ 0.31
------- ------- ------- --------
Net asset value, end of period ...... $ 9.37 $ 9.07 $ 9.08 $ 9.35
======= ======= ======= ========
Total return* ....................... 10.04% 7.09% 4.02% 11.48%
Ratio of net expenses to average
net assets ......................... 1.18%+ 1.14%+ 1.19%+ 1.14%
Ratios/Supplemental Data
Ratio of net investment income to
average net assets ................. 6.34%+ 6.97%+ 6.80%+ 7.55%
Portfolio turnover rate ............. 44% 48% 39% 37%
Net assets, end of period
(in thousands) ..................... $114,326 $98,310 $101,957 $110,158
Ratios assuming reduction for
fees paid indirectly:
Net expenses ....................... 1.17% 1.12% 1.18% --
Net investment income (loss) ....... 6.35% 6.99% 6.81% --
<CAPTION>
For the Year Ended June 30,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................. $ 9.81 $ 9.37 $ 8.99 $ 8.92 $ 9.18 $ 9.04
------- ------- ------- ------- ------- -------
Increase (decrease) from investment
operations:
Net investment income .............. $ 0.67 $ 0.70 $ 0.74 $ 0.79 $ 0.81 $ 0.81
Net realized and unrealized gain
(loss) on investments ............. (0.77) 0.44 0.39 0.07 (0.26) 0.14
------- ------- ------- ------- ------- -------
Net increase (decrease) from
investment operations ............ $ (0.10) $ 1.14 $ 1.13 $ 0.86 $ 0.55 $ 0.95
Distributions to shareholders:
Net investment income .............. (0.67) (0.70) (0.75) (0.79) (0.81) (0.81)
------- ------- ------- ------ ------ ------
Net increase (decrease) in net
asset value ........................ $ (0.77) $ 0.44 $ 0.38 $ 0.07 $(0.26) $ 0.14
------- ------- ------- ------ ------ ------
Net asset value, end of period ...... $ 9.04 $ 9.81 $ 9.37 $ 8.99 $ 8.92 $ 9.18
======= ======= ======= ====== ====== ======
Total return* ....................... (1.26)% 12.67% 13.03% 10.13% 6.24% 11.17%
Ratio of net expenses to average
net assets ......................... 1.05% 1.10% 1.09% 1.02% 0.88% 0.86%
Ratios/Supplemental Data
Ratio of net investment income to
average net assets ................. 6.93% 7.37% 8.04% 8.82% 9.01% 8.99%
Portfolio turnover rate ............. 39% 37% 17% 20% 34% 34%
Net assets, end of period
(in thousands) ..................... $106,659 $112,900 $102,503 $76,476 $74,137 $64,261
Ratios assuming reduction for
fees paid indirectly:
Net expenses ....................... -- -- -- -- -- --
Net investment income (loss) ....... -- -- -- -- -- --
</TABLE>
Selected Data for a Class B Share Outstanding For Each Period:
<TABLE>
<CAPTION>
For the Year
Ended June 30,
-------------------------------------------------
1998 1997 1996 1995
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................ $ 9.03 $ 9.02 $ 9.31 $ 9.02
------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income .......................................... $ 0.51 $ 0.56 $ 0.57 $ 0.60
Net realized and unrealized gain (loss) on investments ......... 0.31 (0.01) (0.28) 0.31
------- ------- ------- ------
Net increase (decrease) from investment operations ............ $ 0.82 $ 0.55 $ 0.29 $ 0.91
Distributions to shareholders:
Net investment income .......................................... (0.52) (0.54) (0.57) (0.62)
In excess of net investment income ............................. -- -- (0.01) --
------- ------- ------- -------
Net increase (decrease) in net asset value ...................... $ 0.30 $ 0.01 $ (0.29) $ 0.29
------- ------- ------- -------
Net asset value, end of period .................................. $ 9.33 $ 9.03 $ 9.02 $ 9.31
======= ======= ======= =======
Total return* ................................................... 9.21% 6.24% 3.15% 10.57%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ..................... 1.98%+ 1.97%+ 1.96%+ 1.97%
Ratio of net investment income to average net assets ............ 5.52%+ 6.12%+ 6.01%+ 6.60%
Portfolio turnover rate ......................................... 44% 48% 39% 37%
Net assets, end of period (in thousands) ........................ $30,888 $20,104 $14,843 $ 7,338
Ratios assuming reduction for fees paid indirectly:
Net expenses ................................................... 1.97% 1.96% 1.94% --
Net investment income (loss) ................................... 5.53% 6.13% 6.03% --
<CAPTION>
April 4, 1994
to June 30, 1994
-----------------
<S> <C>
Net asset value, beginning of period ............................ $ 9.23
--------
Increase (decrease) from investment operations:
Net investment income .......................................... $ 0.14
Net realized and unrealized gain (loss) on investments ......... (0.21)
---------
Net increase (decrease) from investment operations ............ $ (0.07)
Distributions to shareholders:
Net investment income .......................................... (0.14)
In excess of net investment income ............................. --
---------
Net increase (decrease) in net asset value ...................... $ (0.21)
---------
Net asset value, end of period .................................. $ 9.02
=========
Total return* ................................................... (0.73)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ..................... 1.92%**
Ratio of net investment income to average net assets ............ 6.09%**
Portfolio turnover rate ......................................... 39%
Net assets, end of period (in thousands) ........................ $ 1,212
Ratios assuming reduction for fees paid indirectly:
Net expenses ................................................... --
Net investment income (loss) ................................... --
</TABLE>
- ----------------------
+Ratio assuming no reduction for fees paid indirectly.
*Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
Total return would be reduced if sales charges were taken into account.
**Annualized.
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
PIONEER BOND FUND
Selected Data for a Class C Share Outstanding For Each Period:
<TABLE>
<CAPTION>
For the Year
Ended June 30, January 31, 1996
--------------------------- to
1998 1997 June 30, 1996
------------ ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................ $ 9.02 $ 9.02 $ 9.54
------ ------ ------
Increase (decrease) from investment operations:
Net investment income .......................................... $ 0.52 $ 0.54 $ 0.23
Net realized and unrealized gain (loss) on investments ......... 0.29 -- (0.52)
------ ------ ------
Net increase (decrease) from investment operations ............ $ 0.81 $ 0.54 (0.29)
Distributions to shareholders:
Net investment income .......................................... (0.52) (0.54) (0.22)
In excess of net investment income ............................. -- -- (0.01)
------ ------ ------
Net increase (decrease) in net asset value ...................... $ 0.29 $ -- $(0.52)
------ ------ ------
Net asset value, end of period .................................. $ 9.31 $ 9.02 $ 9.02
====== ====== ======
Total return* ................................................... 9.12% 6.13% (3.00)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ..................... 1.90%+ 2.05%+ 2.18%**+
Ratio of net investment income to average net assets ............ 5.58%+ 5.83%+ 5.79%**+
Portfolio turnover rate ......................................... 44% 48% 39%
Net assets, end of period (in thousands) ........................ $8,515 $4,588 $ 343
Ratios assuming a reduction for fees paid indirectly:
Net expenses ................................................... 1.89% 1.92% 2.13%**
Net investment income (loss) ................................... 5.59% 5.96% 5.84%**
</TABLE>
- ------------------------------------------------
+Ratio assuming no reduction for fees paid indirectly. *Assumes initial
investment at net asset value at the beginning of each period, reinvestment of
all distributions, the complete redemption of the investment at net asset
value at the end of each period and no sales charges. Total return would be
reduced if sales charges were taken into account.
**Annualized.
- ------------------------------------------------
III. INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary objective is to provide current income from a high
quality portfolio with due regard to preservation of capital and prudent
investment risk. The Fund has a secondary objective of maintaining a relatively
stable level of dividends; however, the level of dividends will be maintained
only if consistent with preserving the high quality of the Fund's portfolio.
At least 85% of the Fund's total assets must be invested in (a) debt
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, (b) investment-grade securities, that is, debt securities,
including convertible securities, that are rated "A" or higher by the major
recognized bond services (for a description of ratings see the Appendix to the
Statement of Additional Information), and comparably rated commercial paper and
(c) cash and cash equivalents (such as certificates of deposit, repurchase
agreements maturing in one week or less and bankers' acceptances).
The Fund may also invest up to 15% of its total assets in debt securities,
including convertible securities, which are rated in the fourth highest grade by
the major recognized bond services and commercial paper which is comparable.
Securities in the fourth highest grade (i.e., rated Baa by Moody's Investor
Services, Inc. or BBB by Standard & Poor's Ratings Group) are considered medium
grade, neither highly protected nor poorly secured, with some elements of
uncertainty over any great length of time and certain speculative
characteristics as well.
None of the Fund's portfolio may be invested in debt securities which are
rated below the fourth highest grade or are unrated, except that the Fund may
hold debt securities the ratings of which are reduced subsequent to purchase.
The Fund may not invest in preferred or common stocks.
The Fund may invest in the following mortgage-backed securities.
Collateralized mortgage obligations ("CMOs") are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payments of principal and interest on the mortgages are passed to a special
purpose entity, then through to the holders of the CMOs on the same schedule as
they are received, although certain classes of CMOs have priority over others
with respect to the receipt of prepayments on the mortgages. Therefore,
depending on the type of CMOs in which the Fund invests, the investment may be
subject to a greater or lesser risk of prepayment than other types of
mortgage-related securities. A real estate mortgage investment conduit ("REMIC")
is a form of CMO that qualifies for special tax treatment under the Internal
Revenue Code of 1986, as amended (the "Code"). The Fund may acquire "regular"
interests in REMICs but does not intend, under current tax law, to acquire
residual interests in REMICs. Mortgage-backed securities are derivative
securities and provide for payments based on or derived from the performance of
the underlying mortgage
4
<PAGE>
assets. Risks associated with mortgage-backed securities include the failure of
a counter-party to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. When interest rates decline, the
value of an investment in debt obligations can be expected to rise. Conversely,
when interest rates rise the value of an investment in debt obligations can be
expected to decline. Like other debt obligations, when interest rates rise the
value of a mortgage-backed security generally will decline; however, when
interest rates are declining, the value of mortgage-backed securities with
prepayment features may not increase as much as that of other debt obligations.
Mortgage-backed securities may be less effective than traditional debt
obligations of similar maturity at maintaining yields during periods of
declining interest rates.
Not more than 15% of the Fund's assets may be invested in foreign
securities and not more than 5% of its total assets may be invested in foreign
securities that are not listed on a recognized foreign or domestic exchange,
provided that purchases of Canadian securities are not subject to the
limitations in this paragraph. Investments in foreign securities may be subject
to risks including, but not limited to, foreign taxes and restrictions,
illiquidity and fluctuations in currency values. In addition, the financial
information available on issuers of foreign debt securities is frequently not as
accurate or complete as would be available for a comparable domestic issuer. See
"Other Policies and Risks" in the Statement of Additional Information.
The Fund's portfolio will be managed by purchasing and selling securities,
as well as holding selected securities to maturity. The Fund's investment
manager, Pioneering Management Corporation ("PMC"), employs "cycle analysis" in
the management of the Fund's portfolio. Cycle analysis is the process of
analyzing the business and credit cycles of the economy to identify and monitor
trends in interest rates and to identify debt securities with characteristics
most likely to meet the Fund's objectives at given stages in the cycles. Relying
on analysis of economic indicators, as well as price, yield and maturity data of
individual securities, this process requires ongoing adjustments to the
portfolio based on the relative values or maturities of individual debt
securities or changes in the creditworthiness or overall investment merit of an
issue.
Any such change in the portfolio may result in increases or decreases in
the Fund's current income available for distribution to shareholders and in its
holding of debt securities which sell at moderate to substantial premiums or
discounts from face value. If the Fund's expectations of changes in interest
rates or its evaluation of the normal yield relationships between two securities
prove to be incorrect, the Fund's income, net asset value and potential capital
gain may be reduced or its potential capital loss may be increased. An increase
in interest rates will generally reduce the value of portfolio investments (and,
therefore, the net asset value of the shares of the Fund), and a decline in
interest rates will generally increase their value.
It is the policy of the Fund not to engage in trading for short-term
profits. The Fund will engage in portfolio trading if it believes a transaction
net of costs (including custodian's fees) will contribute to the achievement of
its investment objective. See "Financial Highlights" for actual portfolio
turnover rates.
The foregoing objectives and investment policies (other than the discussion
of "cycle analysis") may not be changed without shareholder approval. Government
securities include U.S. Treasury obligations such as bills, bonds and notes
which principally differ in their interest rates, maturities and times of
issuance, and obligations issued or guaranteed by U.S. Government agencies or
instrumentalities supported by the full faith and credit of the U.S. Treasury
(securities of the Government National Mortgage Association, "GNMA"), the
authority of the U.S. Government to purchase certain obligations of the issuer
(securities of the Federal National Mortgage Association, "FNMA"), the limited
authority of the issuer to borrow from the U.S. Treasury (securities of the
Student Loan Marketing Association) or only the credit of the issuer. No
assurance can be given that the U.S. Government will provide financial support
to U.S. Government agencies or instrumentalities in the future, other than as
set forth above, since it is not legally obligated to do so. Interest payments
of U.S. Treasury obligations are generally fixed. Other investment policies and
restrictions on investment are described in the Statement of Additional
Information, including a policy on lending portfolio securities. Since all
investments are subject to inherent market risks and fluctuations in value due
to earnings, economic conditions and other factors, the Fund, of course, cannot
assure that its investment objectives will be achieved.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. The Board meets at least quarterly. By virtue of the
functions performed by 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 name
and general background of each Trustee and executive officer of the Fund.
Ms. Theresa A. Hamacher, chief investment officer of PMC, has general
responsibility for PMC's investment operations. Ms. Hamacher joined PMC in 1997
and has been an investment professional since 1984. Mr. David Tripple, who
formerly served as chief investment officer, continues as president of PMC and
executive vice president of all the Pioneer mutual funds.
Sherman B. Russ and Kenneth J. Taubes are jointly responsible for
overseeing PMC's U.S. and global fixed income team. Mr. Russ, senior vice
president of PMC, joined PMC in 1983 and has been an investment professional
since 1962. Mr. Taubes joined PMC as a vice president in September 1998 and has
been an investment professional since 1989. Prior to joining PMC, Mr. Taubes
had served since 1991 as a senior vice president and senior portfolio manager
for several Putnam institutional accounts and mutual funds.
Day-to-day management of the Fund has been the responsibility of Mr. Russ,
a vice president of the Fund, since March 1988.
5
<PAGE>
Investment advisory services are provided to the Fund by PMC pursuant to a
management contract between PMC and the Fund. PMC is responsible for the
overall management of the Fund's business affairs, subject only to the
authority of the Board of Trustees. PMC is a wholly-owned subsidiary of The
Pioneer Group, Inc. ("PGI"), a Delaware corporation. Pioneer Funds Distributor,
Inc. ("PFD"), an indirect wholly owned subsidiary of PGI, is the principal
underwriter of shares of 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. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Fund, PMC assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. PMC pays all the ordinary operating
expenses, including executive salaries and the rental of certain office space,
related to its services for the Fund with the exception of the following which
are to be paid by the Fund: (a) 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; (b) the
charges and expenses of auditors; (c) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed by
the Fund; (d) issue and transfer taxes, chargeable to the Fund in connection
with securities transactions to which the Fund is a party; (e) 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
government agencies; (f) 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;
(g) 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; (h) charges and expenses
of legal counsel to the Fund and to the Trustees; (i) distribution fees paid by
the Fund in accordance with Rule 12b-1 promulgated by the SEC pursuant to the
Investment Company Act of 1940, as amended (the "1940 Act"); (j) 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; (k) the cost of preparing
and printing share certificates; and (l) 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 in which 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 any Pioneer mutual fund or other funds for which PMC or any other
affiliate or subsidiary serves as investment adviser or manager. See the
Statement of Additional Information for a further description of PMC's brokerage
allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 0.50% per annum of the
Fund's average daily net assets. The fee is normally computed daily and paid
monthly. See "Expense Information" in this Prospectus and "Investment Adviser"
in the Statement of Additional Information.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman and a
Director of PMC and PFD, and President and a Director of PGI, owned
approximately 14% of the outstanding capital stock of PGI as of the date of this
Prospectus.
Certain information technology experts currently predict the possibility of
a widespread failure of computer systems and certain other equipment which will
be triggered on or after certain dates--primarily January 1, 2000--due to a
systemic inability to process date-related information. This scenario, commonly
known as the "Year 2000 Problem," could have an adverse impact on individuals
and businesses, including the Fund and other mutual funds and financial
organizations. PMC and its affiliates are taking steps believed to be adequate
to address the Year 2000 Problem with respect to the systems and equipment
controlled by the Fund's investment adviser, broker-dealer and transfer agent.
In addition, other entities providing services to the Fund and its shareholders
are being asked to provide assurances that they have undertaken similar measures
with respect to their systems and equipment. Although PMC is not expecting any
adverse impact to it or its clients from the Year 2000 Problem, it cannot
provide complete assurances that its efforts or the efforts of its key vendors
will be successful.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C 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 CDSC. Class A shares are
subject to distribution
6
<PAGE>
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% 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.
Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
Selecting a Class of 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. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers and 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 mutual 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. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of regular trading on the Exchange. The values of such securities used
in computing the net asset value of the Fund's shares are determined as of such
times. Foreign currency exchange rates are also generally determined prior to
the close of regular trading on the Exchange. Occasionally, events which affect
the values of such securities and such exchange rates may occur between the
times at which they are determined and the close of regular trading on the
Exchange and will therefore not be reflected in the computation of the Fund's
net asset value. If events materially affecting the value of such securities
occur during such period, then these securities may be valued at their fair
value as determined in good faith by the Trustees. All assets of the Fund for
which there is no other readily available valuation method are valued at fair
value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares from any securities broker-dealer which has a sales
agreement with PFD. If you do not have a securities broker-dealer, please call
1-800-225-6292. Shares will be purchased at the public offering price, that is,
the net asset value per share, plus any applicable sales charge, next computed
after receipt of a purchase order, except as set forth below.
The minimum initial investment is $1,000 for Class A, Class B and Class C
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 charge or
minimum requirements applies to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as $50
if an automatic investment plan is established (see "Automatic Investment
Plans").
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional
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<PAGE>
shares for an existing Pioneer mutual 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 Individual
Retirement Accounts ("IRAs") 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 receipt 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" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including 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>
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 charge 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 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. At the sole discretion of
PFD, holdings of funds domiciled outside the U.S., but which are managed by
affiliates of PMC, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or for purchases by 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 $5
million invested; 0.50% on the next $45 million; and 0.25% on the excess over
$50 million. 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." 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. In
connection with PGI's acquisition of Mutual of Omaha Fund Management Company and
contingent upon the achievement of certain sales objectives, PFD may pay 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. From time
to time, PFD may elect to reallow the entire initial sales charge to
participating dealers for all Class A sales with respect to which orders are
placed during a particular period. Dealers to whom substantially the entire
sales charge is reallowed may be deemed to be underwriters under the federal
securities laws.
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 the Fund may be sold at net asset
value per share without a sales charge to 401(k) retirement plans with 100 or
more participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
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 or 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 foregoing persons; (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 affiliate 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
8
<PAGE>
by or on behalf of the Fund. The availability of this privilege is conditioned
on the receipt by PFD of written notification of eligibility. Class A shares of
the Fund may be sold at net asset value per share without a sales charge to
Optional Retirement Program (the "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. Shares of the Fund may also be issued 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 are available for purchases of $100,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made pursuant
to an LOI may be included if the LOI is submitted to PSC within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the Fund and all other
Pioneer mutual funds held of record as of the date of your LOI in the amount
used to determine the applicable sales charge for the Class A shares to be
purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PSC, registered in your name, until the terms of the
LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request or PFD will
direct PSC to liquidate sufficient shares from your escrow account to cover the
amount due. See the Statement of Additional Information for more information.
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 Class A 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.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order 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
made after September 30, 1998, all payments during a month will be aggregated
and deemed to have been made on the first day of that month. For the purpose of
determining the number of years from the time of any purchase made prior to
October 1, 1998, all payments during a calendar 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.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
<TABLE>
<CAPTION>
Year Since CDSC as a % 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
beginning of the month (or the calendar quarter for purchases made prior to
October 1, 1998) 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 mutual 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 (the
9
<PAGE>
"IRS"), which the Fund has obtained, 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 will continue to be in effect 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 is not available and,
therefore, Class B shares would continue to be subject to higher expenses than
Class A shares for an indeterminate period.
Class C Shares
You may buy Class C shares at net asset value per share next computed after
receipt of a purchase order without the imposition of an initial sales charge;
however, Class C shares redeemed within one year of purchase will be subject to
a CDSC of 1%. 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. Class C shares do not convert to any
other class of Fund shares.
For the purpose of determining the number of years from the time of any
purchase made after September 30, 1998, all payments during a month will be
aggregated and deemed to have been made on the first day of that month. For the
purpose of determining the number of years from the time of any purchase made
prior to October 1, 1998, all payments during a calendar quarter will be
aggregated and deemed to have been made on the first day of that quarter. As a
result, you will pay the lowest possible CDSC.
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 C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares 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 an UGMA, an UTMA or a trust account, 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 Class B shares 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 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 701/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held in Pioneer mutual funds); (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 C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account); (b)
if 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; (c) if the distribution 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 (d) if the
distribution is to a participant in an employer-sponsored retirement plan and is
(i) a return of excess employee deferrals or contributions, (ii) a qualifying
hardship distribution as defined by the Code, (iii) from a termination of
employment, (iv) in the form of a loan to a participant in a plan which permits
loans, or (v) 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 the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
Broker-Dealers. An order for any class of Fund shares received by a
broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that
10
<PAGE>
class as determined at the close of regular trading on the Exchange on the day
the order is received, provided the order is received 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. PFD or its affiliates may provide additional compensation
to certain dealers or such dealers' affiliates based on certain objective
criteria established from time to time by PFD. All such payments are made out of
PFD's or the affiliate's own assets. These payments will not change the price an
investor will pay for shares or the amount that the Fund will receive from such
sale.
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:
o If you are selling shares from a retirement account, other than an IRA, you
must make your request in writing (except for exchanges to other Pioneer
mutual funds which can be requested by phone or in writing). Call
1-800-622-0176 for more information.
o If you are selling shares from a non-retirement account or an IRA, 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 in good order less any applicable CDSC. Sale proceeds
generally will be sent to you by check, bank wire, or electronic funds transfer
normally within seven days after your order is received in good order. 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 always 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 applies:
o you wish to sell over $100,000 worth of shares,
o your account registration or address has changed within the last 30 days,
o the check is not being mailed to the address on your account (address of
record),
o the check is not being made out to the account owners, or
o the sale proceeds are being transferred to a Pioneer mutual fund 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 meet any other applicable requirements as described
below. Unless instructed otherwise, PSC will send the proceeds of the sale to
the address of record. Fiduciaries and 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 by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any certificates are endorsed by the record
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 indicate 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, except IRAs. A maximum of $100,000 per account per
day may be redeemed by telephone or fax and the proceeds may be received by
check or by bank wire or electronic funds transfer. 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 or by electronic funds
transfer: the proceeds must be sent to your 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" 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 has authorized PFD to
act as its agent in the repurchase of 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.
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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 million 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 mutual fund will continue to be subject to the CDSC until
the original 12-month period expires. However, no CDSC is payable upon
redemption with respect to Class A shares purchased 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 signed 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 indicate 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. Each telephone exchange request, whether by voice or by
FactFoneSM, will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same class in another Pioneer mutual fund
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 day of the month designated on your
Account Application or Account Options Form.
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 mutual
fund account opened through an exchange must have a registration identical to
that on the original account.
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 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 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. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
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X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service fees
are paid to PFD.
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
does not provide for the carryover of reimbursable expenses beyond twelve months
from the time the Fund is first invoiced for an expense. The limited carryover
provision in the Class A Plan may result in an expense invoiced to the 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 Class A Plan, the Fund has twelve months to reimburse any
expense which it incurs prior to such termination or non-continuance, provided
that payments by the Fund during such twelve-month period shall not exceed 0.25%
of the Fund's average daily net assets during such period. 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 Class A shareholders of the Fund.
Both the Class B and the Class C Plans provide 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 the applicable class of 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 that class of 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 or Class C shares. PFD also
receives the proceeds of any CDSC imposed on the redemption of Class B or Class
C shares.
Commissions of 4% of the amount invested in Class B shares, equal to 3.75%
of the amount invested and a first year's service fee equal to 0.25% of the
amount invested, are paid to broker-dealers who have sales 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.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have sales
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. Commencing in the 13th month following
the purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with PFD's
approval, to waive its right to receive the commission normally paid at the time
of sale, PFD may cause all or a portion of the distribution fees described above
to be paid to the broker-dealer.
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 or Class C 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 Subchapter M of the Code so
that it will not pay federal income tax on income and capital gains distributed
to shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed 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.
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Each business day the Fund declares a dividend consisting of substantially
all of its net investment income (earned interest income less expenses). Shares
being purchased will 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. Distributions from net
short-term capital gains, if any, may be paid with such dividends. The Fund's
policy is to make distributions from net long-term capital gains, if any, in
December. Dividends from income and/or capital gains may also be paid at such
other times as may be necessary for the Fund to avoid federal income or excise
tax.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described below
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. See "Distribution
Options" and "Directed Dividends."
Generally, dividends from the Fund's net investment income, income from
securities lending, market discount income, certain net realized foreign
exchange gains, and net short-term capital gains are taxable as ordinary income
under the Code, and dividends from the Fund's net long-term capital gains are
taxable as long-term capital gains.
The Fund's dividends and distributions will not qualify for any
dividends-received deduction available to corporate shareholders.
The Fund may be subject to foreign withholding taxes or other foreign taxes
on income (possibly including, in some cases, capital gains) on certain foreign
investments, which will reduce the yield on or return from those investments.
The Fund anticipates that it generally will not qualify to pass such taxes
through to its shareholders, who will generally neither treat such taxes as
additional income nor be entitled to any associated foreign tax credits or
deductions.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other non-exempt
payees will be subject to 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 such withholding applies. Please refer to the Account
Application for additional information.
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 intangible
property taxes, the value of its shares is attributable to) certain U.S.
Government obligations, provided in some states that certain concentration,
designation, reporting or other requirements are satisfied. The Fund will not
attempt to and may not satisfy all such requirements in all states. Non-U.S.
shareholders and tax-exempt shareholders are subject to tax treatment that is
not described above. Shareholders should consult their own tax advisors
regarding state, local and other applicable tax laws, including the effect of
recent federal tax legislation, in their particular circumstances.
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 Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers
Harriman & Co. (the "Custodian") serves as the custodian of the Fund's
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 the
details of transactions are sent to shareholders quarterly for dividend
reinvestment and Automatic Investment Plan transactions and more frequently for
other types of transactions. The Pioneer Combined Account Statement, mailed
quarterly, is available to all shareholders who have more than one Pioneer
mutual fund 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 that might not be available are purchases,
exchanges or redemption of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, newsletters,
Letters of Intent or rights of accumulation.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and Class C 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 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, payroll
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deduction or through a Pioneer Investomatic Plan. A Pioneer Investomatic Plan
provides for a monthly or quarterly investment by means of a preauthorized
electronic funds transfer from your bank account. Pioneer Investomatic Plan
investments are voluntary, and you may discontinue your Plan or change your plan
elections for the dollar amount, frequency or investment date by calling PSC at
1-800-225-6292, or by sending a written request to Shareholder Services,
Pioneering Services Corporation, P.O. Box 9014, Boston, Massachusetts
02205-9014. A change to your bank information must be made in writing on an
Account Options Form. You should allow up to five business days for PSC to make
changes to an established plan. 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 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.
If you elect to receive either dividends or dividends and capital gains in
cash and a distribution check issued to you is returned by the U.S. Postal
Service as not deliverable or a distribution check remains uncashed for six
months or more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutual
fund account invested in a second Pioneer mutual 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. There are no fees or charges for this
service. Retirement plan shareholders may only direct dividends to accounts with
identical registrations.
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
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange Fund
Shares" for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 9:00 p.m. Eastern time on weekdays. Computer-assisted
transactions are available to shareholders who have pre-recorded certain bank
information (see FactFoneSM). You are strongly urged to consult with your
financial representative prior to requesting any telephone transaction.
To confirm that each transaction instruction received by telephone is
genuine, PSC 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.
FactFoneSM
FactFoneSM is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFoneSM allows
you to obtain current information on your Pioneer mutual fund accounts and to
inquire about the prices and yields of all publicly available Pioneer mutual
funds. In addition, you may use FactFoneSM to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer mutual fund accounts if
you have activated your 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 FactFoneSM. See
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"How to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund
Shares" and "Telephone Transactions." Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to tax-deferred retirement plans for individuals,
businesses and tax-exempt organizations. The Account Application accompanying
this Prospectus should not be used to establish any of these plans. Separate
applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our 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.
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 and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information. Periodic
payments 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. Payments can be made either by check or electronic transfer to a bank
account designated by you. You may also direct that withdrawal payments 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 Class A shares of the Fund at a time when you have a SWP 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 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 reinstatement occurs. In addition, if a redemption resulted
in a loss and an investment is made in shares of the Fund within 30 days before
or after the redemption, you may not be able to recognize the loss for federal
income tax purposes. 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 requirement 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 obtain by calling 1-800-225-6292.
XIII. THE FUND
The Fund is an open-end diversified management investment company (commonly
referred to as a mutual fund) organized as a Massachusetts corporation on August
16, 1978 and reorganized as a Massachusetts business trust on December 31, 1985.
The Fund will recognize stock certificates representing shares of Pioneer Bond
Fund, Inc. issued prior to its reorganization as a Massachusetts business trust
as evidence of ownership of an equivalent number of shares of beneficial
interest. Any shareholder desiring to surrender a stock certificate to the Fund
for a share certificate representing an equivalent number of shares of
beneficial interest may do so by making a written request for the exchange to
PSC. The request must be accompanied by the surrendered stock certificate which
must be endorsed on the back exactly in the manner as the certificate is
registered.
The Fund has authorized an unlimited number of shares of beneficial
interest and the Trustees are authorized to create additional series of the
Fund. The Fund is not required to hold annual meetings, although special
meetings may be called for the purposes of electing or removing Trustees,
changing fundamental investment restrictions or approving a management contract.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Fund, or any new series of the Fund,
into one or more classes. As of the date of this Prospectus, the Trustees have
authorized the issuance of three classes of shares, designated Class A, Class B
and Class C. 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, Class B and Class C 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.
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 Class A shares certificates; certificates will not be
issued for Class B or Class C shares.
XIV. INVESTMENT RESULTS
The Fund may from time to time include yield information in advertisements
or in information furnished generally to exist-
16
<PAGE>
ing or prospective shareholders. Yield information is computed in accordance
with the SEC's standardized yield formula. The calculation for all Classes is
computed by dividing the net investment income per share of a Class during a
base period of 30 days, or one month, by the maximum offering price per share of
the applicable Class of the Fund on the last day of such base period. The
resulting "30-day yield" is then annualized as described below. Net investment
income per share of a Class is determined by dividing the Fund's net investment
income attributable to a Class during the base period by the average number of
shares of that Class of the Fund. The 30-day yield is then "annualized" by a
computation that assumes that the net investment income per share of a Class 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 average annual total return (for a designated period of time) on an
investment in the Fund may 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 and Class C shares
the calculation reflects the deduction of any applicable CDSC. 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.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual fund results may be cited
or compared with the investment performance of the Fund. The Fund may also
include securities industry or comparative performance information generally and
in advertising or materials marketing the Fund's shares. Such performance
information may include rankings or listings by magazines, newspapers or
independent statistical or ratings services, such as Lipper Analytical Services,
Inc. or Ibbotson Associates.
The Fund's investment results will be calculated separately for each class
of shares and vary from time to time depending on market conditions, the
composition of the Fund's portfolio, operating expenses of the Fund and expenses
attributed to a specific class of 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.
17
<PAGE>
Notes
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Global/International
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
Pioneer Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust
Tax-Exempt*
Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
Money Market Fund
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
19
<PAGE>
[PIONEER LOGO]
Pioneer
Bond Fund
60 State Street
Boston, Massachusetts
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
SHERMAN B. RUSS, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DOOR LLP
PRINICPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications and 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
Visit our website.................................www.pioneerfunds.com
1098-5715
[copyright] Pioneer Funds Distributor, Inc.
PIONEER BOND FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
October 28, 1998
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the prospectus dated October 28, 1998, as
supplemented or revised from time to time (the "Prospectus") of Pioneer Bond
Fund (the "Fund"). A copy of the Prospectus can 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. The most recent Annual Report
to Shareholders is attached to this Statement of Additional Information and is
hereby incorporated in this Statement of Additional Information by reference.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions....................................2
2. Management of the Fund..................................................6
3. Investment Adviser.....................................................10
4. Underwriting Agreement and Distribution Plans..........................10
5. Shareholder Servicing/Transfer Agent...................................14
6. Custodian..............................................................15
7. Principal Underwriter..................................................15
8. Independent Public Accountants.........................................15
9. Portfolio Transactions.................................................15
10. Tax Status............................................................17
11. Description of Shares.................................................20
12. Certain Liabilities...................................................20
13. Determination of Net Asset Value......................................21
14. Systematic Withdrawal Plan............................................22
15. Letter of Intent......................................................22
16. Investment Results....................................................22
17. Financial Statements..................................................26
Appendix A -- Description of Short-Term Debt and Corporate Bond Ratings...27
Appendix B - Performance Statistics.......................................32
Appendix C - Other Pioneer Information....................................47
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's Prospectus presents the investment objectives and the
principal investment policies of the Fund. Additional investment policies and a
further description of some of the policies described in the Prospectus appear
below. Capitalized terms not otherwise defined herein have the meaning given to
them in the Prospectus.
The following policies and restrictions set forth under "Investment
Restrictions" supplement those discussed in the Prospectus. Except with respect
to the policy on borrowing described below, whenever an investment policy or
restriction states a maximum percentage of the Fund's assets that may be
invested in any security or presents a policy regarding quality standards, this
standard or other restrictions shall be determined immediately after and as a
result of the Fund's investment. Accordingly, any later increase or decrease
resulting from a change in values, net assets or other circumstances will not be
considered in determining whether the investment complies with the Fund's
investment objectives and policies, other than the policy on borrowing.
Lending of Portfolio Securities
The Fund may lend portfolio securities to member firms of the Exchange,
under agreements which would require that the loans be secured continuously by
collateral in cash, cash equivalents or U.S. Treasury bills maintained on a
current basis at an amount at least equal to the market value of the securities
loaned. The Fund would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and would also receive
compensation based on investment of the collateral. The Fund would not, however,
have the right to vote any securities having voting rights during the existence
of the loan, but would call the loan in anticipation of an important vote to be
taken among holders of the securities or of the giving or withholding of their
consent on a material matter affecting the investment.
As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Fund will lend portfolio securities only to
firms which have been approved in advance by the Fund's Board of Trustees, which
will monitor the creditworthiness of any such firms. At no time would the value
of the securities loaned exceed 30% of the value of the Fund's total assets. The
Fund did not lend portfolio securities during the last fiscal year and has no
present intention to engage in any material securities lending in the future.
When Issued Securities
The Fund may also purchase and sell securities on a "when issued" and
"delayed delivery" basis. These transactions arise when securities are purchased
or sold by the Fund with payment and delivery taking place in the future. These
transactions are subject to market fluctuation and 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 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.
Mortgage-Backed Securities
Multiple-Class Pass-through Securities and Collateralized Mortgage Obligations
The Fund may invest in collateralized mortgage obligations ("CMOs") and
real estate mortgage investment conduit ("REMIC") pass-through or participation
certificates, which may be issued by, among others, U.S. Government agencies and
instrumentalities as well as private lenders. CMOs and REMIC certificates are
issued in multiple classes and the principal of and interest on the mortgage
assets may be allocated among the several classes of CMOs or REMIC certificates
in various ways. Each class of CMOs or REMIC certificates, often referred to as
a "tranche," is issued at a specific adjustable or fixed interest rate and must
be fully retired no later than its final distribution date. Generally, interest
is paid or accrues on all classes of CMOs or REMIC certificates on a monthly
basis. Typically, CMOs are collateralized by certificates of the Government
National Mortgage Association, the Federal National Mortgage Association, or the
Federal Home Loan Mortgage Corporation but also may be collateralized by other
mortgage assets such as whole loans or private mortgage pass-through securities.
Debt service on CMOs is provided from payments of principal and interest on
collateral of mortgaged assets and any reinvestment income thereon.
Risk Factors Associated with Mortgaged-Backed Securities
The value of an investment in fixed rate obligations can be expected to
rise as interest rates decline and decline as interest rates rise. In contrast,
as interest rates on adjustable rate mortgage loans are reset periodically,
yields on investments in such loans will gradually align themselves to reflect
changes in market interest rates, causing the value of such investments to
fluctuate less dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.
The yield characteristics of Mortgage-Backed Securities, such as those
in which the Fund may invest, differ from those of traditional fixed income
securities. The major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of interest rates, and
the possibility that prepayments of principal may be made substantially earlier
than their final distribution dates. Prepayment rates are influenced by changes
in current interest rates and a variety of economic, geographic, social and
other factors and cannot be predicted with certainty. Both adjustable rate
mortgage loans and fixed rate mortgage loans may be subject to a greater rate of
principal prepayment in a declining interest rate environment and to a lesser
rate of principal prepayments in an increasing interest rate environment. Under
certain interest rate and prepayment rate scenarios, the Fund may fail to recoup
fully its investment in Mortgage-Backed Securities notwithstanding any direct or
indirect governmental or agency guarantee. When the Fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may receive a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. Government securities as a means of "locking
in" interest rates.
Investment Restrictions
Fundamental Investment Restrictions. The Fund has adopted certain
fundamental investment restrictions which may not be changed without the
affirmative vote of the holders of a majority of the Fund's outstanding voting
securities. As used in the Prospectus and this Statement of Additional
Information, such approval means the approval of the lesser of (i) the holders
of 67% or more of the shares represented at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (ii)
the holders of more than 50% of the outstanding shares.
The Fund may not:
(1) purchase any security (other than securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities) if,
immediately after and as a result of such investment, (a) more than 5% of the
value of the Fund's total assets would be invested in securities of the issuer;
(b) the Fund would hold more than 10% of the voting securities of the issuer; or
(c) more than 25% of the value of the Fund's assets would be invested in a
single industry (each of the electric utility, natural gas utility, and
telephone industries shall be considered as a separate industry for this
purpose);
(2) buy or sell real estate in the ordinary course of its
business; provided, however, the Fund may invest in readily marketable debt
securities secured by real estate or interests therein or issued by companies,
including real estate investment trusts, which invest in real estate or
interests therein;
(3) buy or sell commodities or commodity contracts except
interest rate futures contracts, options on securities, securities indices,
currency and other financial instruments, futures contracts on securities,
securities indices, currency and other financial instruments and options on such
futures contracts, forward foreign currency exchange contracts, forward
commitments, securities index put or call warrants, interest rate swaps, caps
and floors and repurchase agreements entered into in accordance with the Fund's
investment policies;
(4) underwrite any issue of securities;
(5) make loans in an aggregate amount in excess of 10% of the
value of the Fund's total assets, taken at the time any loan is made, provided
that (i) the purchase of debt securities pursuant to the Fund's investment
objectives shall not be deemed loans for the purposes of this restriction, (ii)
loans of portfolio securities as described, from time to time, under "Lending of
Portfolio Securities" shall be made only in accordance with the terms and
conditions therein set forth and (iii) in seeking a return on temporarily
available cash, the Fund may engage in repurchase transactions maturing in one
week or less and involving obligations of the U.S. Government, its agencies or
instrumentalities;
(6) sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(7) purchase securities on margin;
(8) borrow money, except that, as a temporary measure for
extraordinary or emergency purposes and not for investment purposes, the Fund
may borrow up to 5% of the value of its total assets at the time of the
borrowing; or
(9) mortgage, pledge, or hypothecate any of its assets.
Non-fundamental Investment Restrictions. The following restriction has
been designated as non-fundamental and may be changed by a vote of the Fund's
Board of Trustees without approval of shareholders.
The Fund may not:
invest in companies for the purpose of exercising control or
management.
It is the policy of the Fund not to concentrate its investments in
securities of companies in any particular industry or group of industries. In
the opinion of the staff of SEC, investments are concentrated in a particular
industry if such investments aggregate 25% or more of the Fund's total assets.
The Fund has agreed to abide by the foregoing non- fundamental policy which it
will not change without the affirmative vote of a majority of the Fund's
outstanding shares of beneficial interest.
In connection with the offering of its shares in various states, as a
matter of non-fundamental investment policy, the Fund has agreed not to invest
in puts, calls, straddles, spreads or any combination thereof, in oil, gas or
other mineral leases, exploration or development programs, or in real estate
limited partnerships.
Other Policies and Risks
The Fund may invest up to 15% of its assets in foreign securities and
up to 5% of its assets in foreign securities which are not listed on a
recognized foreign or domestic exchange, provided that purchases of Canadian
securities are not subject to the limitations in this paragraph. Investing in
securities of foreign companies and countries involves certain considerations
and risks which are not typically associated with investing in U.S. government
securities and those of domestic companies. Foreign companies are not generally
subject to uniform accounting, auditing and financial standards and requirements
comparable to those applicable to U.S. companies. There may also be less
government supervision and regulation of foreign securities exchanges, brokers
and listed companies than exists in the United States.
The Fund's interest income and, in some cases, capital gains from
foreign securities may be subject to withholding and other foreign taxes which
may decrease the net return on such investments as compared to the Fund's return
from investments in obligations issued by the U.S. government or by domestic
companies. In addition, there may be the possibility of expropriations,
confiscatory taxation, political, economic or social instability or diplomatic
developments which could affect assets of the Fund held in foreign countries.
The value of foreign securities may be adversely affected by fluctuations in the
relative rates of exchange between the currencies of different nations and by
exchange control regulations. There may be less publicly available information
about foreign companies and governments compared to reports and ratings
published about U.S. companies. Foreign securities markets have substantially
less volume than domestic markets and securities of some foreign companies are
less liquid and more volatile than securities of comparable U.S. companies.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of 1940 Act.
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee,
DOB: June 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, Trustee, DOB: April 1948
4201 Cathedral Avenue, NW, Washington, DC 20016
President, Bush & Co., an international financial advisory firm;
Director and/or Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc. (not-for-profit educational organization), Small
Enterprise Assistance Fund and Wilberforce University; Advisory Board Member,
Washington Mutual Investors Fund, a registered investment company; and Trustee
of all the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Road, Boston, MA 02215
Alexander Graham Bell Professor of Health Care
Entrepreneurship, Boston University; Professor of Management, Boston University
School of Management; Professor of Public Health, Boston University School of
Public Health; Professor of Surgery, Boston University School of Medicine;
University Professor, Boston University; Director, Boston University Health
Policy Institute and Boston University Program for Health Care Entrepreneurship;
Director, CORE (management of workers' compensation and disability costs -
Nasdaq National Market); Director, WellSpace (provider of complementary health
care); Trustee, Boston Medical Center; Honorary Trustee, Franciscan Children's
Hospital; and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: May 1947
The Keep, P.O. Box 110, Little Deer Isle, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager
of Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Trustee, DOB: July 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
and Trustee of all of the Pioneer mutual funds, except Pioneer Variable
Contracts Trust.
MARGUERITE A. PIRET, Trustee, DOB: May 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: February 1944
Executive Vice President and a Director of PGI; President and a
Director of PMC; Director of PFD, PCC, PIntl, First Russia, Omega, Pioneer SBIC
Corporation ("Pioneer SBIC"), PMIL, Pioneer Global Equity Fund Plc, Pioneer
Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund
Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund
Plc; and Executive Vice President and Trustee of all of the Pioneer mutual
funds.
STEPHEN K. WEST, Trustee, DOB: September 1928
125 Broad Street, New York, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Trustee, The Winthrop
Focus Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, Trustee, DOB: June 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm);
Director of NUI Corp. (energy sales, services and distribution); and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, Treasurer, DOB: April 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of
all of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, Assistant Treasurer, DOB: June 1956
Manager of Business Planning and Internal Audit of PMC since September
1996; Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
<PAGE>
ROBERT P. NAULT, Assistant Secretary, DOB: March 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP
prior to 1995.
SHERMAN B. RUSS, Vice President, DOB: July 1937
Senior Vice President of PMC; Vice President of Pioneer Money Market
Trust, Pioneer America Income Trust and Pioneer Interest Shares.
The Fund's Declaration of Trust (the "Declaration of Trust") provides
that the holders of two-thirds of its outstanding shares may vote to remove a
Trustee of the Fund at any meeting of shareholders. See "Description of Shares"
below. The business address of all officers is 60 State Street, Boston,
Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to
the public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer World Equity Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer Indo-Asia Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Independence Fund PMC Note 1
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 2
Pioneer Variable Contracts Trust PMC Note 3
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of eight separate portfolios designed to
provide investment vehicles for the variable annuity and
variable life insurance contracts of various insurance
companies or for certain qualified pension plans.
To the knowledge of the Fund, as of September 30, 1998, no officer or
Trustee of the Fund owned 5% or more of the issued and outstanding shares of
PGI, except Mr. Cogan who then owned approximately 14% of such shares. As of
September 30, 1998, the Trustees and officers of the Fund owned, in the
aggregate, less than 1% of the outstanding securities of the Fund. As of
September 30, 1998, Merrill Lynch Pierce Fenner & Smith For the Sole Benefit of
its Customers, Mutual Fund Administration, 4800 Deer Lake Drive East 3rd FL,
Jacksonville, FL 32246-6484 owned of record 11.5% (549,807.356 shares) of the
outstanding Class B shares of the Fund and 8.82% (118,851.207 shares) of the
outstanding Class C shares of the Fund.
Compensation of Officers and Trustees
The Fund pays no salaries or compensation to any of its officers. The
Fund pays an annual trustee's fee to each Trustee who is not affiliated with
PMC, PGI, PFD or PSC consisting of two components: (a) a base fee of $750 and
(b) a variable fee, calculated on the basis of average net assets of the Fund.
In addition, the Fund pays a per meeting fee of $150 to each Trustee who is not
affiliated with PMC, PGI, PFD or PSC and pays an annual trustee's fee of $750
plus expenses to each Trustee affiliated with PMC, PGI, PFD or PSC. The Fund
also pays an annual committee participation fee to Trustees who serve as members
of committees established to act on behalf of one or more of the Pioneer mutual
funds. Committee fees are allocated to the Fund on the basis of the Fund's
average net assets. Each Trustee who is a member of the Audit Committee for the
Pioneer mutual funds will receive an annual fee equal to 10% of the aggregate
annual trustee's fee, except the Committee Chairperson who receives an annual
fee equal to 20% of the aggregate annual trustee's fee. Members of the Pricing
Committee for the Pioneer mutual funds, as well as any other committee which
renders material functional services to the Boards of Trustees for the Pioneer
mutual funds, such as the Year 2000 Committee, International Transfer Agent
Issues Committee and Disinterested Trustees Committee), receive an annual fee
equal to 5% of the aggregate annual trustee's fee, except the Committee
Chairperson who receives an annual fee equal to 10% of the aggregate annual
trustee's fee. Any such fees paid to Trustees affiliated with PMC. PGI, PFD or
PSC are reimbursed to the Fund under its management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
Pension or
Retirement Total
Benefits Compensation
Aggregate Accrued as from Fund and
Compensation Part of Pioneer Family
Name of Trustee from Fund * Fund Expenses of Funds**
John F. Cogan, Jr. $ 500 $0 $12,000
Mary K.Bush + $1852 $0 $30,000
Richard H. Egdahl, M.D. $1,851 $0 $62,000
Margaret B.W. Graham $1,859 $0 $60,000
John W. Kendrick $1,752 $0 $55,800
Margeurite A. Piret $2,140 $0 $80,000
David D. Tripple $ 500 $0 $12,000
Stephen K. West $1,949 $0 $63,800
John Winthrop $2,079 $0 $69,000
- --
Total $14,482 $0 $444,600
======= == ========
* For the fiscal year ended June 30, 1998
** For the calendar year ended December 31, 1997
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston,
Massachusetts, to act as its investment adviser. The term of the contract is one
year, but it is renewable annually after such date by the vote of a majority of
the Board of Trustees of the Fund (including a majority of the Board of Trustees
who are not parties to the contract or interested persons of any such parties)
cast in person at a meeting called for the purpose of voting on such renewal.
This contract terminates if assigned and may be terminated without penalty by
either party by vote of its Board of Directors or Trustees or by vote of a
majority of outstanding voting securities and the giving of sixty days' written
notice. Pursuant to the management contract, PMC will not be liable for any
error of judgment or mistake of law or for any loss sustained by reason of the
adoption of any investment policy or the purchase, sale or retention of any
securities on the recommendation of PMC. PMC, however, is not protected against
liability by reason of wilful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the respective management contract.
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee at the rate of 0.50% per annum of the Fund's
average daily net assets. The fee is normally computed daily and paid monthly.
During its 1998, 1997, and 1996 fiscal years, the Fund paid or owed total
management fees to PMC of approximately $696,789, $596,770, and $588,432
respectively.
4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund has entered into an underwriting agreement with PFD. The
underwriting agreement will continue from year to year if annually approved by
the Trustees. The underwriting agreement provides that PFD will bear expenses
for the distribution of the Fund's shares, except for expenses incurred by PFD
for which it is reimbursed or compensated by the Fund under the distribution
plans discussed below.
PFD bears all expenses it incurs in providing services under the
underwriting agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal and state securities
laws. The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the underwriting agreement, PFD will use its best efforts in rendering
services to the Fund.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act with respect to Class A, Class B and Class C shares (the
"Class A Plan," the "Class B Plan" and the "Class C Plan") (together, the
"Plans").
Class A Plan
Pursuant to the Class A Plan the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of the Fund's Class A shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued on a fiscal year basis and may not exceed, with respect
to Class A shares, the annual rate of 0.25% of the Fund's average annual net
assets attributable to Class A.
Class B Plan
The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee equal on an annual basis
to 0.75% of the Fund's average daily net assets attributable to Class B shares
and will pay PFD a service fee equal to 0.25% of the Fund's average daily net
assets attributable to Class B shares (which PFD will in turn pay to securities
dealers which enter into a sales agreement with PFD at a rate of up to 0.25% of
the Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be in consideration of personal services and/or
account maintenance services rendered by the dealer with respect to Class B
shares. PFD will advance to dealers the first-year service fee at a rate equal
to 0.25% of the amount invested. As compensation therefor, 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 thirteenth month following purchase.
Dealers may from time to time be required to meet certain other 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.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution- related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all CDSC's attributable to Class B shares. (See
"Distribution Plans" in the Prospectus.) When a broker-dealer sells Class B
shares and elects, with PFD's approval, to waive its right to receive the
commission normally paid at the time of the sale, PFD may cause all or a portion
of the distribution fees described above to be paid to the broker-dealer.
The Fund's Class B Plan and underwriting agreement have been amended
effective September 30, 1998 to permit PFD to sell its right to receive
distribution fees under the Plan and CDSCs to third parties. PFD enters into
such transactions to finance the payment of commissions to brokers at the time
of sale and other distribution-related expenses. In connection with such
amendments, the Fund has agreed that the distribution fee will not be terminated
or modified (including a modification by change in the rules relating to the
conversion of Class B shares into Class A shares) with respect to Class B shares
(a) issued prior to the date of any termination or modification or (b)
attributable to Class B shares issued through one or a series of exchanges of
shares of another investment company for which PFD acts as principal underwriter
which were initially issued prior to the date of such termination or
modification or (c) issued as a dividend or distribution upon Class B shares
initially issued or attributable to Class B shares issued prior to the date of
any such termination or modification except:
(i) to the extent required by a change in the 1940
Act, the rules or regulations under the Act, the
Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), or an order of
any court or governmental agency, in each case
enacted, issued or promulgated after September 30,
1998;
(ii) in connection with a Complete Termination (as
defined in the Plan); or
(iii) on a basis, determined by the Board of Trustees
acting in good faith, so long as from and after the
effective date of such modification or termination:
neither the Fund, the adviser nor certain affiliates
pays, directly or indirectly, a fee to any person for
the provision of personal and account maintenance
services (as such terms are used in the Conduct Rules
of the NASD) to the holder of Class B shares of the
Fund and the termination or modification of the
distribution fee applies with equal effect to all
Class B shares outstanding from time to time.
The Class B Plan also provides that PFD shall be deemed to have
performed all services required to be performed in order to be entitled to
receive the distribution fee, if any, payable with respect to Class B shares
sold through PFD upon the settlement date of the sale of such Class B share or
in the case of Class B shares issued through one or a series of exchanges of
shares of another investment company for which PFD acts as principal underwriter
or issued as a dividend or distribution upon Class B shares, on the settlement
date of the first sale on a commission basis of a Class B share from which such
Class B share was derived.
In the amendments to the underwriting agreement, the Fund agreed that
subsequent to the issuance of a Class B share, it would not take any action to
waive or change any CDSC (including a change in the rules applicable to
conversion of Class B shares into another class) in respect of such Class B
shares, except (i) as provided in the Fund's prospectus or statement of
additional information in effect on September 30, 1998, or (ii) as required by a
change in the 1940 Act and the rules and regulations thereunder, the Conduct
Rules of the NASD or any order of any court or governmental agency enacted,
issued or promulgated after September 30, 1998.
Class C Plan
The Class C Plan provides that a Fund will pay PFD, as the
Fund's distributor for its Class C shares, a distribution fee accrued daily and
paid quarterly, equal on an annual basis to 0.75% of the Fund's average daily
net assets attributable to Class C shares and will pay PFD a service fee equal
to 0.25% of the Fund's average daily net assets attributable to Class C shares.
PFD will in turn pay to securities dealers which enter into a sales agreement
with PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the current value of the amount invested and
additional compensation at a rate of up to 0.75% of the average net asset value
with respect to such shares. Dealers may from time to time be required to meet
certain other criteria in order to receive service fees. PFD or its affiliates
are entitled to retain all service fees payable under the Class C 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.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
General
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plan and the purpose for which such expenditures were made. In
the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom had or
have any direct or indirect financial interest in the operation of the Plans),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
its current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the class affected thereby, and material amendments of the Plans
must also be approved by the Trustees in the manner described above. A Plan may
be terminated at any time, without payment of any penalty, by vote of the
majority of the Trustees who are not interested persons of the Fund and have no
direct or indirect financial interest in the operations of the Plan, or by a
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the respective class of the Fund. A Plan will automatically terminate in
the event of its assignment (as defined in the 1940 Act).
During the fiscal year ended June 30,1998, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan, and Class C
Plan respectively, as follows: $267,315, $248,383 and $75,697. The distribution
fees were paid by the Fund to PFD in reimbursement of expenses related to
servicing of shareholder accounts and to compensating dealers and sales
personnel.
Upon redemption, certain Class A shares may be subject to a 1% CDSC,
Class B shares are subject to a CDSC at a rate declining from a maximum of 4% of
the lower of the cost or market value of the shares and Class C shares are
subject to a 1% CDSC. During the fiscal year ended June 30, 1998, CDSCs, in the
amount of $81,811 were paid to PFD.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts 02109, to act as shareholder servicing agent and transfer agent
for the Fund. This contract may be terminated without penalty by either party
upon 90 days' written notice.
Under the terms of its contract with the Fund, PSC services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of Fund shares; (ii) distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to routine shareholder inquiries.
PSC receives an annual fee of $30.00 for each Class A, Class B and
Class C shareholder account from the Fund as compensation for the services
described above. PSC is also reimbursed by the Fund for its out-of-pocket
expenditures. The annual fee is set at an amount determined by vote of a
majority of the Fund's Trustees (including a majority of the Trustees who are
not parties to the contract with PSC or interested persons of any such parties)
to be comparable to fees for such services being paid by other investment
companies. The Fund may compensate entities which have agreed to provide certain
sub-accounting services, such as specific transaction processing and
recordkeeping services. Any such payments by the Fund would be in lieu of the
per account fee which would otherwise be paid by the Fund to PSC.
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the custodian (the "Custodian") of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Fund's investments.
The Custodian does not determine the investment policies of the Fund or
decide which securities the Fund will buy or sell. The Fund may invest in
securities, including repurchase agreements, issued by the Custodian and may
deal with the Custodian as principal in securities transactions. Portfolio
securities may be deposited into the Federal Reserve-Treasury Department Book
Entry System or the Depository Trust Company.
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, serves as the
principal underwriter for the Fund. During the Fund's 1998, 1997 and 1996 fiscal
years, net underwriting commissions earned by PFD in connection with its
offering of Fund shares were approximately $38,000, $33,000 and $39,000,
respectively. Commissions reallowed to dealers by PFD in those three years were
approximately $305,000, $219,000 and $281,000, respectively. See "Underwriting
Agreement and Distribution Plan" above for a description of the terms of the
Underwriting Agreement with PFD.
The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with an acquisition of portfolio
securities.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110,
are the Fund's independent public accountants, providing audit services, tax
return review, and assistance and consultation with respect to the preparation
of filings with the SEC.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of the Fund by PMC pursuant to authority contained in the management
contract. Securities purchased and sold on behalf of the Fund normally will be
traded in the over-the counter market on a net basis (i.e. without commission)
through dealers acting for their own account and not as brokers or otherwise
through transactions directly with the issuer of the instrument. Some securities
are purchased and sold on an exchange or in over-the-counter transactions
conducted on an agency basis involving a commission. The primary consideration
in placing portfolio security transactions is execution at the most favorable
prices. Additionally, in selecting brokers or dealers, PMC will consider various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the dealer; the dealer's execution services rendered on a
continuing basis; the reasonableness of any dealer spreads; and the dealer's
sale of shares of the Fund or other Pioneer mutual funds.
<PAGE>
PMC may select dealers which provide brokerage and/or research services
to the Fund and/or other investment companies or accounts managed by PMC.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended, the Fund may pay commissions to such broker-dealers in an amount
greater than the amount another firm might charge as compensation for such
services if PMC determines in good faith that the amount of the commissions
charged by a broker-dealer is reasonable in relation to the services provided by
such broker-dealer. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or the purchasers or sellers of securities;
providing stock quotation services; furnishing analyses, electronic information
services, manuals and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, performance of accounts,
comparative fund statistics and credit rating service information; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). PMC maintains a listing of broker-dealers who provide
such services on a regular basis. However, because it is anticipated that many
transactions on behalf of the Fund and other investment companies managed by PMC
are placed with broker-dealers (including broker-dealers on the listing) without
regard to the furnishing of such services, it is not possible to estimate the
proportion of such transactions directed to such broker- dealers solely because
such services were provided. Management believes that no exact dollar value can
be calculated for such services.
The research received from dealers may be useful to PMC in rendering
investment management services to the Fund and to other investment companies or
accounts managed by PMC, although not all of such research may be useful to the
Fund and conversely, such information provided by brokers or dealers who have
executed transaction orders on behalf of such other PMC clients may be useful to
PMC in carrying out its obligations to the Fund. The receipt of such research
has not reduced PMC's normal independent research activities; however, it
enables PMC to avoid the additional expenses which might otherwise be incurred
if it were to attempt to develop comparable information through its own staff.
In circumstances where two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the Fund as well as shares of other investment companies or accounts
managed by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
In addition to the Fund, PMC acts as investment adviser to other
Pioneer mutual funds and certain private accounts with investment objectives
similar to the Fund's. As such, securities frequently meet the investment
objectives of the Fund, such other mutual funds and such private accounts. In
such cases, the decision to recommend a purchase for one fund or account rather
than another is based on a number of factors. The determining factors in most
cases are the amount of securities of the issuer then outstanding, the value of
those securities and the market for them. Other factors considered in the
investment recommendations include other investments which each fund or account
presently has in a particular industry or country and the availability of
investment funds in each fund or account.
It is possible that, at times, identical securities will be held by
more than one fund and/or account. However, positions in the same issue may vary
and the length of time that any fund or account may choose to hold its
investment in the same issue may likewise vary. To the extent that the Fund,
another mutual fund in the Pioneer group or a private account managed by PMC
seeks to acquire the same security at about the same time, the Fund may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Fund may not be able
to obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if PMC decides to sell on behalf of another
account the same portfolio security at the same time. On the other hand, if the
same securities are bought or sold at the same time by more than one account,
the resulting participation in volume transactions could produce better
executions for the Fund or other account. In the event that more than one
account purchases or sells the same security on a given date, the purchases and
sales will normally be made as nearly as practicable on a pro rata basis in
proportion to the amounts desired to be purchased or sold by each.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Code, for qualification as a regulated investment company. These requirements
relate to the sources of the Fund's income, the diversification of its assets
and the distribution of its income to shareholders. If the Fund meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from interest, payments with respect to securities loans, gains from the
sale or other disposition of securities or foreign currencies, or other income
derived with respect to its business of investing in such securities or
currencies (the "90% income test").and satisfy certain annual distribution and
quarterly diversification requirements. For purposes of the 90% income test,
income the Fund earns from equity interests in certain entities that are not
treated as corporations (e.g., are treated as partnerships or trusts) for U.S.
tax purposes will generally have the same character for the Fund as in the hands
of such entities; consequently, the Fund may be required to limit its equity
investments in such entities that earn fee income, rental income, or other
nonqualifying income.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss ("net
capital gain"), if any, whether received in cash or reinvested in additional
shares, are taxable to the Fund's shareholders as long-term capital gains for
federal income tax purposes without regard to the length of time shares of the
Fund have been held.
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally causes
such gains and losses to be treated as ordinary income and losses and may affect
the amount, timing and character of distributions to shareholders. Under future
regulations, any transactions in foreign currency that are not directly related
to the Fund's investment in securities may need to be limited in order to enable
the Fund to satisfy the 90% income test. If the net foreign exchange loss for a
year were to exceed the Fund's investment company taxable income (computed
without regard to such loss), the resulting overall ordinary loss for such year
would not be deductible by the Fund or its shareholders in future years.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if the Fund
elects to include market discount in income currently), the Fund must accrue
income on such investments for each taxable year, which generally will be prior
to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward
a net capital loss for any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders. At June 30, 1998, the Fund had aggregate capital loss
carryforwards of approximately $4,559,000, which will expire between 1999 and
2006 if not utilized.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio. Consequently, subsequent distributions on these shares from
such appreciation may be taxable to such investor even if the net asset value of
the investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the tax treatment of any gains or losses
recognized in such transactions. Any loss realized by a shareholder upon the
redemption, exchange or other disposition of shares with a tax holding period of
six months or less will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain with respect to
such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment in the Fund or another
mutual fund at net asset value pursuant to the reinvestment privilege, the sales
charge paid on such shares is not included in their tax basis under the Code,
and (2) in the case of an exchange, all or a portion of the sales charge paid on
such shares is not included in their tax basis under the Code, to the extent a
sales charge that would otherwise apply to the shares received is reduced
pursuant to the exchange privilege. In either case, the portion of the sales
charge not included in the tax basis of the shares redeemed or surrendered in an
exchange is included in the tax basis of the shares acquired in the reinvestment
or exchange. Losses on redemptions or other dispositions of shares may be
disallowed under "wash sale" rules in the event of other investments in the Fund
(including those made pursuant to reinvestment of dividends and/or capital gain
distributions) within a period of 61 days beginning 30 days before and ending 30
days after a redemption or other disposition of shares. In such a case, the
disallowed portion of any loss would be included in the federal tax basis of the
shares acquired in the other investments.
The Fund's dividends and distributions will not qualify for any
dividends-received deduction that might otherwise be available for certain
dividends received by shareholders that are corporations.
The Fund may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest and capital gains, with respect
to its investments in those countries. Tax conventions between certain countries
and the U.S. may reduce or eliminate such taxes in some cases. The Fund does not
expect to satisfy the requirements for passing through to its shareholders their
pro rata shares of qualified foreign taxes paid by the Fund, with the result
that shareholders will not include such taxes in their gross incomes and will
not be entitled to a tax deduction or credit for such taxes on their own tax
returns.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
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 intangible property taxes, the
value of its assets is attributable to) certain U.S. Government obligations,
provided in some states that certain thresholds for holdings of such obligations
and/or reporting requirements are satisfied. The Fund will not seek to satisfy
any threshold or reporting requirements that may apply in particular taxing
jurisdictions, although the Fund may in its sole discretion provide relevant
information to shareholders.
Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. The Fund may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous underreporting of interest or
dividend income.
If, as anticipated, the Fund continues to qualify as a regulated
investment company under the Code, it will not be required to pay any
Massachusetts income, corporate excise or franchise taxes.
The description of certain federal tax provisions 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. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Declaration of Trust permits its Board of Trustees to authorize the
issuance of an unlimited number of full and fractional shares of beneficial
interest (without par value) which may be divided into such separate series as
the Trustees may establish. Currently, the Fund consists of only one series. The
Trustees may, however, establish additional series of shares, and may divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Fund. The Declaration of
Trust further authorizes the Trustees to classify or reclassify any series of
the shares into one or more classes. Pursuant thereto, the Trustees have
authorized the issuance of three classes of shares of the Fund, Class A shares,
Class B shares and Class C shares. Each share of a class of the Fund represents
an equal proportionate interest in the assets of the Fund allocable to that
class. Upon liquidation of the Fund, shareholders of each class are entitled to
share pro rata in the Fund's net assets allocable to such class available for
distribution to shareholders. The Fund reserves the right to create and issue
additional series or classes of shares, in which case the shares of each class
of a series would participate equally in the earnings, dividends and assets
allocable to that class of the particular series.
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have under certain circumstances the right to remove one or more
Trustees. The shares of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect the Fund in substantially the same manner. As to
matters affecting a single class, shares of such class will vote separately. No
amendment that adversely affects the rights of shareholders may be made to the
Fund's Declaration of Trust without the affirmative vote of a majority of the
Fund's shares. Shares have no preemptive or conversion rights except that under
certain circumstances Class B shares may convert to Class A shares. Shares are
fully paid and non-assessable by the Fund, except as set forth below. See
"Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Fund's operations are governed
by its Declaration of Trust dated December 7, 1993, a copy of which is on file
with the office of the Secretary of State of The Commonwealth of Massachusetts.
Shareholders of a Massachusetts business trust may, under certain circumstances,
be held personally liable for the obligations of the trust. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Fund or any series of the Fund and provides that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Fund or its Trustees. Moreover, the Declaration
of Trust provides for the indemnification out of Fund property of any
shareholders held personally liable for any obligations of the Fund or any
series of the Fund. The Declaration of Trust also provides that the Fund shall,
upon request, assume the defense of any claim made against any shareholder for
any act or obligation of the Fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss beyond his or her investment
because of shareholder liability would be limited to circumstances in which the
Fund itself will be unable to meet its obligations. In light of the nature of
the Fund's business and the nature and amount of its assets, the possibility of
the Fund's liabilities exceeding its assets, and therefore a shareholder's risk
of personal liability, is remote.
The Declaration of Trust further provides that the Fund shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Fund. The Declaration of Trust does not authorize the Fund to indemnify
any Trustee or officer against any liability to which he or she would otherwise
be subject by reason of or for willful misfeasance, bad faith, gross negligence
or reckless disregard of such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading (currently 4:00 p.m., Eastern time) on each
day on which the Exchange is open for trading. As of the date of this Statement
of Additional Information, the Exchange is open for trading every weekday except
for the following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share of each class
of the Fund is also determined on any other day in which the level of trading in
its portfolio securities is sufficiently high so that the current net asset
value per share might be materially affected by changes in the value of its
portfolio securities. The net asset value per share of the Fund is not
determined on any day in which no purchase orders in good order for the shares
of the Fund are received and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to a class, less the
Fund's liabilities attributable to that class, and dividing the result by the
number of outstanding shares of the class. The Board of Trustees has directed
that the fair market value of the Fund's assets should be determined as follows.
Ordinarily, investments in debt securities are valued on the basis of
information furnished by a pricing service which utilizes primarily a matrix
system (which reflects such factors as security prices, yields, maturities and
ratings), supplemented by dealer and exchange quotations, to recommend
valuations for normal institutional-sized trading units of debt securities. In
addition, the Board has instructed advisory personnel not to rely exclusively on
this pricing service if the fair market value of certain securities may be more
accurately determined on the basis of information available from other sources.
Temporary cash investments are valued at cost, which approximates market value.
The maximum offering price per Class A share is determined by adding
the maximum sales charge to the net asset value per Class A share. Class B and
Class C shares are offered at net asset value without the imposition of an
initial sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Fund having a total value
of not less than $10,000. Class B accounts must meet the minimum initial
investment requirement prior to establishing a SWP. Withdrawals from Class B and
Class C share accounts are limited to 10% of the value of the account at the
time the SWP is implemented. Periodic payments of $50 or more will deposited
periodically directly into a bank account designated by the applicant, or will
be sent to the applicant, or any person designated by the applicant. Designation
of a third party to receive payments subsequent to opening an account must be
accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the SWP account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the SWP account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the Plan account. Share redemptions are taxable transactions, and
in addition the amounts received by a shareholder cannot be considered as an
actual yield or income on his or her investment because part of such payments
may be a return of his or her investment.
The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the Plan have been
redeemed.
15. LETTER OF INTENT (Class A only)
A Letter of Intent ("LOI") may be established by completing the LOI
section of the Account Application. When you sign the Account Application, you
agree to irrevocably appoint PSC your attorney-in-fact to surrender for
redemption any or all shares held in escrow with full power of substitution. An
LOI is not a binding obligation upon the investor to purchase, or the Fund to
sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the LOI and are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
to effect the lower sales charge. Any difference in the sales charge resulting
from such recomputation will be either delivered to you in cash or invested in
additional shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount
specified under the LOI, you must remit to PFD any difference between the sales
charge on the amount actually purchased and the amount originally specified in
the LOI section of the Account Application. When the difference is paid, the
shares held in escrow will be deposited to your account. If you do not pay the
difference in sales charge within 20 days after written request from PFD or your
dealer, PSC, after receiving instructions from PFD, will redeem the appropriate
number of shares held in escrow to realize the difference and release any
excess. See "How to Buy Fund Shares - Letter of Intent" in the Prospectus for
more information.
16. INVESTMENT RESULTS
The Fund's yield quotations and average annual total return quotations
as they may appear in the Prospectus, this Statement of Additional Information
or in advertising and sales literature are calculated by standard methods
prescribed by the SEC.
Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Fund may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to other relevant indices. For example, the Fund may compare a
class's yield and/or total return to the Shearson Lehman Hutton Government
Index, U.S. Government bond rates, or other comparable indices or investment
vehicles.
In addition, the performance of the classes of the Fund may be compared
to alternative investment or savings vehicles and/or to indices or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as Barron's, Business Week, Consumers Digest, Consumer Reports, Financial
World, Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, New York Times, Personal Investor, Smart Money, USA
Today, U.S. News and World Report, The Wall Street Journal, and Worth may also
be cited (if the Fund is listed in such publications) or used for comparison, as
well as performance listings and rankings from various other sources including
CDA/Weisenberger Investment Companies Service, Donoghue's Mutual Fund Almanac,
Investment Company Data, Inc., Ibbotson Associates, Johnson's Charts, Kanon
Bloch Carre & Co., Lipper Analytical Services, Micropal, Inc., Morningstar,
Inc., Schabacker Investment Management and Towers Data Systems, Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements, in sales
literature or in reports to Fund shareholders.
One of the primary methods used to measure the performance of a class
of the Fund is "total return." Total return will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
class of the Fund, over any period up to the lifetime of that class. Total
return calculations will usually assume the reinvestment of all dividends and
capital gains distributions and will be expressed as a percentage increase or
decrease from an initial value for the entire period or for one or more
specified periods within the entire period. Total return percentages for periods
of less than one year will usually be annualized; total return percentages for
periods longer than one year may be accompanied by total return percentages for
each year within the period and/or by the average annual compounded total return
for the period. The income and capital components of a given return may be
separated and portrayed in a variety of ways in order to illustrate their
relative significance. Performance may also be portrayed in terms of cash or
investment values, without percentages. Past performance cannot guarantee any
particular future result.
In representing investment results of a class, the Fund may also
include references to certain financial planning concepts, including (a) an
investor's need to evaluate his or her financial assets and obligations to
determine how much to invest; (b) the need to analyze the objectives of various
investments to determine where to invest; and (c) the need to analyze his or her
time frame for future capital needs to determine how long to invest. The
investor controls these three factors, all of which affect the use of
investments in building assets.
Standardized Yield Quotations
Yield quotations for Class A, Class B and Class C shares are computed
by dividing the net investment income per share attributable to a class during a
base period of 30 days, or one month, by the maximum offering price per share of
the class on the last day of such base period in accordance with the following
formula:
a-b 6
YIELD = 2[ ( ----- +1) -1]
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the
last day of the period
For purposes of calculating interest earned on debt obligations as provided in
item "a" above:
(i) The yield to maturity of each obligation held by the Fund is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.
With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the Fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the Fund may elect (i) to
amortize the discount or premium on a remaining security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the discount or premium
on a remaining security.
For purposes of computing yield, interest income is recognized by
accruing 1/360 of the stated interest rate of each obligation in the Fund's
portfolio each day that the obligation is in the portfolio. Expenses of a class
accrued during any base period, if any, pursuant to the respective Distribution
Plan are included among the expenses accrued during the base period.
The Fund's yield for the 30 days ended June 30, 1998, computed in
accordance with the above formula, was 4.96% for Class A shares, 4.38% for
Class B shares and 4.49% for Class C shares.
Standardized Average Annual Total Return Quotations
The average annual total return quotations for a class of shares is
computed by finding the average annual compounded rate of return that would
cause a hypothetical investment in the class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of
$1000, less the maximum sales load
of $45 for Class A shares or the
deduction of the CDSC on Class B or
Class C shares at the end of the
period
T = average annual total return
n = number of years
ERV = ending redeemable value
of the hypothetical $1000
initial payment made at the
beginning of the designated
period (or fractional
portion thereof)
For purposes of the above computation, it is assumed that all dividends
and distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the Fund's
mean account size.
The total returns for each Class of shares of the Fund as of June 30, 1998, are
as follows:
Average Annual Total Return (%)
One Year Five Years Ten Years Since Inception*
Class A Shares 5.06 5.21 7.87 8.86
Class B Shares 5.21 N/A N/A 6.26
Class C Shares 9.12 N/A N/A 4.94
* Inception was October 31, 1978 for Class A shares and April 4, 1994 for Class
B shares. Class C Shares were first offered January 31, 1996.
<PAGE>
Automated Information Line
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's money market fund; and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with SEC mandated standard formulas
outlined earlier in this section.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance and include the maximum applicable sales charge. A shareholder's
actual yield and total return will vary with changing market conditions. The
value of Class A, Class B and Class C shares (except for Pioneer Cash Reserves
Fund , which seeks to maintain a stable $1.00 share price) will also vary, and
may be worth more or less at redemption than their original cost.
17. FINANCIAL STATEMENTS
The Fund's Annual Report, filed with the SEC on August 25, 1998
(Accession No. 0000276776-98-000006), is incorporated by reference into this
Statement of Additional Information. The financial statements in the Fund's
Annual Report, including the financial highlights, for the period ended June 30,
1998, included or incorporated by reference into the Prospectus and this
Statement of Additional Information, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to the
financial statements, and are included in reliance upon the authority of Arthur
Andersen LLP as experts in accounting and auditing in giving their report.
<PAGE>
APPENDIX A
DESCRIPTION OF SHORT-TERM DEBT AND CORPORATE BOND RATINGS1
MOODY'S INVESTORS SERVICE ("MOODY'S") SHORT-TERM PRIME RATING SYSTEM
- - TAXABLE DEBT AND DEPOSITS GLOBALLY
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries. High rates of
return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection. Broad margins in earnings coverage of fixed
financial charges and high internal cash generation. Well-established
access to a range of financial markets and assured sources of alternate
liquidity.
Prime-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits. Such branch
obligations are rated at the lower of the bank's rating or Moody's Sovereign
Rating for Bank Deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
MOODY'S CORPORATE BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
STANDARD & POOR'S RATINGS GROUP ("STANDARD & POOR'S") SHORT-TERM ISSUE CREDIT
RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
STANDARD & POOR'S CORPORATE BOND RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only in a
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
- -----------------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year-end.
<PAGE>
APPENDIX B
PERFORMANCE STATISTICS
Pioneer Bond Fund A
<TABLE>
<S> <C> <C> <C> <C> <C>
Initial Sales Charge Shares Purchased Net Asset Value Initial Net
Date Investment Offering Price Included Per Share Asset Value
6/30/87 $10,000 $9.65 4.50% 1036.269 $9.22 $9,550
</TABLE>
Dividends and Capital Gains Reinvested
Value of Shares
From Cap. Gains From Dividends
Date From Investment Reinvested Reinvested Total Value
6/30/88 $9,368 $0 $871 $10,239
6/30/89 $9,513 $0 $1,869 $11,382
6/30/90 $9,243 $0 $2,848 $12,091
6/30/91 $9,316 $0 $4,000 $13,316
6/30/92 $9,710 $0 $5,341 $15,051
6/30/93 $10,166 $0 $6,792 $16,958
6/30/94 $9,368 $0 $7,376 $16,744
6/30/95 $9,690 $0 $8,978 $18,668
6/30/96 $9,409 $0 $10,008 $19,417
6/30/97 $9,399 $0 $11,395 $20,794
6/30/98 $9,710 $0 $13,172 $22,882
<PAGE>
Pioneer Bond Fund B
<TABLE>
<S> <C> <C> <C> <C> <C>
Initial Sales Charge Shares Purchased Net Asset Value Initial Net
Date Investment Offering Price Included Per Share Asset Value
4/30/94 $10,000 $9.21 0.00% 1085.776 $9.21 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
Value of Shares
From Cap. Gains From Dividends
Date From Investment Reinvested Reinvested Total Value
6/30/94 $9,794 $0 $102 $9,896
6/30/95 $10,109 $0 $833 $10,942
6/30/96 $9,794 $0 $1,492 $11,286
6/30/97 $9,804 $0 $2,186 $11,990
6/30/98 $10,130 $0 $2,965 $13,095
Value of shares if redeemed $12,895
<PAGE>
Pioneer Bond Fund C
<TABLE>
<S> <C> <C> <C> <C> <C>
Initial Sales Charge Shares Purchased Net Asset Value Initial Net
Date Investment Offering Price Included Per Share Asset Value
1/31/96 $10,000 $9.54 0.00% 1048.218 $9.54 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
Value of Shares
From Cap. Gains From Dividends
Date From Investment Reinvested Reinvested Total Value
6/30/96 $9,455 $0 $245 $9,700
6/30/97 $9,455 $0 $839 $10,294
6/30/98 $9,759 $0 $1,474 $11,233
Value of shares if redeemed $11,233
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The Growth Index contains stocks
with higher price-to-book ratios, and the Value Index contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The Merrill Lynch Micro-Cap Index represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
These indices are in US dollar terms with gross dividends reinvested. MSCI All
Country indices represent both the developed and the emerging markets for a
particular region. These indices are unmanaged. The free indices exclude shares
which are not readily purchased by non-local investors. MSCI's international
indices are based on the share prices of approximately 1,700 companies listed on
stock exchanges in the 22 countries that make up the MSCI World Index. MSCI's
emerging market indices are comprised of approximately 1000 stocks from 26
countries.
Countries in the MSCI EAFE Index are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI Emerging Markets Free Index are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
MSCI All Country (AC) Asia Free ex Japan: This index is made up of the following
12 countries: China Free, Hong Kong, India, Indonesia Free, Korea @50%, Malaysia
Free, Pakistan, Philippines Free, Singapore Free, Sri Lanka, Taiwan @50%, and
Thailand Free.
MSCI All Country (AC) Asia Pacific Free ex Japan: This index is made up of the
following 14 countries: Australia, China Free, Hong Kong, India, Indonesia Free,
Korea @50%, Malaysia Free, New Zealand, Pakistan, Philippines Free, Singapore
Free, Sri Lanka, Taiwan @50%, and Thailand Free.
6-MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds with at
least 10 years to maturity. If a bond is downgraded during a particular month,
its return for the month is included in the index before removing the bond from
future portfolios.
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W., Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. Treasury Bill Index, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")
EQUITY REIT INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The Russell 3000(R) Index (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The Russell 2500TM Index measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The Russell 2000(R) Index
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The Russell 1000(R) Index (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The Russell MidcapTM
Index measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical Services,
Inc. and PGI
<PAGE>
<TABLE>
<C>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA BARRA Merrill Lynch
500 Industrial Stock U.S. 500 500 Micro-Cap
Average Index Inflation Growth Value Index
- ----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA 500 BARRA Merrill Lynch
500 Industrial Stock U.S. Growth 500 Micro-Cap
Average Index Inflation Value Index
- ----------------------------------------------------------------------------------------------------------------------
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
<PAGE>
<TABLE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
Long- Intermediate- MSCI Long-
Term Term U.S. EAFE 6- Term U.S. U.S.
U.S. Gov't Government (Net of Month Corporate T-Bill
Bonds Bonds Taxes) CDs Bonds (30-Day)
- ------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
Long- Intermediate- MSCI Long-
Term Term U.S. EAFE 6- Term U.S. U.S.
U.S. Gov't Government (Net of Month Corporate T-Bill
Bonds Bonds Taxes) CDs Bonds (30-Day)
- ------------------------------------------------------------------------------------------------------
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
NAREIT Lipper MSCI
Equity Russell Wilshire Balanced Emerging Bank
REIT 2000 Real Estate S&P Fund Markets Savings
Index Index Securities 400 Index Free Index Account
- -----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
NAREIT Lipper MSCI
Equity Russell Wilshire Balanced Emerging Bank
REIT 2000 Real Estate S&P Fund Markets Savings
Index Index Securities 400 Index Free Index Account
- -----------------------------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.49 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C>
MSCI All Country (AC) MSCI All Country
Asia Free ex Japan (AC) Asia Pacific
Free ex Japan
- ------------------------------------------------------------
Dec 1925 N/A N/A
Dec 1926 N/A N/A
Dec 1927 N/A N/A
Dec 1928 N/A N/A
Dec 1929 N/A N/A
Dec 1930 N/A N/A
Dec 1931 N/A N/A
Dec 1932 N/A N/A
Dec 1933 N/A N/A
Dec 1934 N/A N/A
Dec 1935 N/A N/A
Dec 1936 N/A N/A
Dec 1937 N/A N/A
Dec 1938 N/A N/A
Dec 1939 N/A N/A
Dec 1940 N/A N/A
Dec 1941 N/A N/A
Dec 1942 N/A N/A
Dec 1943 N/A N/A
Dec 1944 N/A N/A
Dec 1945 N/A N/A
Dec 1946 N/A N/A
Dec 1947 N/A N/A
Dec 1948 N/A N/A
Dec 1949 N/A N/A
Dec 1950 N/A N/A
Dec 1951 N/A N/A
Dec 1952 N/A N/A
Dec 1953 N/A N/A
Dec 1954 N/A N/A
Dec 1955 N/A N/A
Dec 1956 N/A N/A
Dec 1957 N/A N/A
Dec 1958 N/A N/A
Dec 1959 N/A N/A
Dec 1960 N/A N/A
Dec 1961 N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C>
MSCI All Country (AC) MSCI All Country
Asia Free ex Japan (AC) Asia Pacific
Free ex Japan
- ------------------------------------------------------------
Dec 1962 N/A N/A
Dec 1963 N/A N/A
Dec 1964 N/A N/A
Dec 1965 N/A N/A
Dec 1966 N/A N/A
Dec 1967 N/A N/A
Dec 1968 N/A N/A
Dec 1969 N/A N/A
Dec 1970 N/A N/A
Dec 1971 N/A N/A
Dec 1972 N/A N/A
Dec 1973 N/A N/A
Dec 1974 N/A N/A
Dec 1975 N/A N/A
Dec 1976 N/A N/A
Dec 1977 N/A N/A
Dec 1978 N/A N/A
Dec 1979 N/A N/A
Dec 1980 N/A N/A
Dec 1981 N/A N/A
Dec 1982 N/A N/A
Dec 1983 N/A N/A
Dec 1984 N/A N/A
Dec 1985 N/A N/A
Dec 1986 N/A N/A
Dec 1987 N/A N/A
Dec 1988 30.00 30.45
Dec 1989 32.13 21.43
Dec 1990 -6.54 -11.86
Dec 1991 30.98 32.40
Dec 1992 21.81 9.88
Dec 1993 103.39 84.94
Dec 1994 -16.94 -12.59
Dec 1995 4.00 10.00
Dec 1996 10.05 8.08
Dec 1997 -40.31 -34.20
Source: Lipper Analytical Services. Inc
</TABLE>
<PAGE>
APPENDIX C
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest and most experienced
money managers in the United States.
As of December 31, 1997, PMC employed a professional investment staff
of 58, with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
- --------
PIONEER BOND FUND
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the
fiscal year ended June 30, 1998 are included in Part
A of the Registration Statement and the financial
statements of the Registrant are incorporated by
reference into Part B of the Registration Statement
from the 1998 Annual Report to Shareholders for the
year ended June 30, 1998 (filed electronically on
August 25, 1998 file no. 811-02864; accession number
0000276776-98-000006).
(b) Exhibits:
1. Amended and Restated Declaration of Trust**
1.1. Establishment and Designation of Classes**
2. Amended and Restated By-Laws**
3. None
4. Specimen Stock Certificate**
5. Management Contract between Registrant
and Pioneering Management Corporation**
6.1. Form of Underwriting Agreement***
6.2. Form of Dealer Sales Agreement**
7. None
8. Custodian Agreement with Brown Brothers
Harriman & Co.**
9. Investment Company Service Agreement*
10. Opinion of Counsel**
11. Consent of Arthur Andersen LLP
12. None
13. None
14. None
15. Class A Rule 12b-1 Distribution Plan**
15.1. Form of Class B Rule 12b-1
Distribution Plan***
15.2. Class C Rule 12b-1 Distribution Plan*
16. Description of Average Annual Total Return
and Yield Calculation**
17. Financial Data Schedules***
18. Rule 18f-3 Plan*
19. Powers of Attorney**
19.1 Power of Attorney for Mary K. Bush***
* Incorporated by reference from the exhibits filed by the Registrant with
Post-Effective Amendment No. 24 to its Registration Statement on Form N-1A (file
No. 2-62436)(the "Registration Statement") filed with the Securities and
Exchange Commission on August 30, 1996 (accession number 0000950146-96-001526).
** Incorporated by reference from the exhibits filed by the Registrant with
Post-Effective Amendment No. 23 to the Registration Statement (file No. 2-62436)
filed with the Securities and Exchange Commission on October 27, 1995 (accession
number 0000276776-95-000016).
*** Filed herewith.
Item 25. Persons Controlled By or Under Common Control With Registrant
No person is controlled by the Registrant. A common control relationship
could exist from a management perspective because the Chairman and President of
the Registrant owns approximately 14% of the outstanding shares of The Pioneer
Group, Inc. (PGI), the parent company of the Registrant's investment adviser,
and certain Trustees or officers of the Registrant (i) hold similar positions
with other investment companies advised by PGI and (ii) are directors or
officers of PGI and/or its direct or indirect subsidiaries. The following lists
all U.S. and the principal non-U.S. subsidiaries of PGI and those registered
investment companies with a common or similar Board of Trustees advised by PGI.
OWNED BY PERCENT STATE/COUNTRY OF
COMPANY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
C-2
<PAGE>
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Investment
Fund JSC, S.A. (First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
Registered investment companies that are parties to management contracts with
PMC:
BUSINESS
FUND TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer Indo-Asia DE
Pioneer Capital Growth Fund DE
Pioneer Equity-Income Fund DE
Pioneer Gold Shares DE
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Independence Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
C-3
<PAGE>
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
Item 26. Number of Holders of Securities
The following table sets forth the approximate number of recordholders
of each class of securities of the Registrant as of September 30, 1997:
Class A Class B Class C
Number of Record Holders: 5,194 1,331 322
Item 27. Indemnification
Except for the Amended and Restated Declaration of Trust dated December
7, 1993 establishing the Registrant as a Trust under Massachusetts law, there is
no contract, arrangement or statute under which any director, officer,
underwriter or affiliated person of the Registrant is insured or indemnified.
The Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability of which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of Pioneering Management Corporation. The following sections of
such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
C-5
<PAGE>
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principle business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts 02109; contact the Treasurer.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 from which the specified information
is incorporated by reference, unless such person currently holds securities of
the Registrant and otherwise has received a copy of such report, in which case
the Registrant shall state in the Prospectus that it will furnish, without
charge, a copy of such report on request, and the name, address and telephone
number of the person to whom such a request should be directed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this post-effective amendment no. 26 (the
"Amendment") to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused the Amendment to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts, on the 26th day of October, 1998.
PIONEER BOND FUND
By:/s/John F. Cogan, Jr
John F. Cogan, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 26 to the Registration Statement of Pioneer Bond Fund (File No.
2-62436) has been signed below by the following persons in the capacities and on
the dates indicated:
<PAGE>
Title and Signature Date
Principal Executive Officer: )
)
)
John F. Cogan, Jr.* )
- ------------------------------
John F. Cogan, Jr., President )
)
)
Principal Financial and )
Accounting Officer: )
)
)
William H. Keough* )
William H. Keough, Treasurer )
)
)
Trustees: )
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
- ---------
*By /s/John F. Cogan, Jr. October 26, 1998
----------------------
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
6.1 Form of Underwriting Agreement
11. Consent of Arthur Andersen LLP
15.2 Form of Class B 12b-1 Distribution Plan
17. Financial Data Schedules (filed as Exhibit 27)
19.1 Power of Attorney for Mary K. Bush
FORM OF AMENDED AND RESTATED UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT, dated this 10th day of July, 1997 and
amended and restated as of the 30th day of September 1998, by and between
Pioneer Bond Fund, a Massachusetts business trust ("Trust"), and Pioneer Funds
Distributor, Inc., a Massachusetts corporation (the "Underwriter")
WITNESSETH
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and has filed a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") for the purpose of registering shares of beneficial interest for
public offering under the Securities Act of 1933, as amended;
WHEREAS, the Underwriter engages in the purchase and sale of securities
both as a broker and a dealer and is registered as a broker-dealer with the
Commission and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD");
WHEREAS, the parties hereto deem it mutually advantageous that the
Underwriter should act as Principal Underwriter, as defined in the 1940 Act, for
the sale to the public of the shares of beneficial interest of the securities
portfolio of each series of the Trust which the Trustees may establish from time
to time (individually, a "Portfolio" and collectively, the "Portfolios"); and
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Trust and the Underwriter do hereby agree as follows:
1. The Trust hereby grants to the Underwriter the right and option to purchase
shares of beneficial interest of each class of each Portfolio of the Trust (the
"Shares") for sale to investors either directly or indirectly through other
broker-dealers. The Underwriter is not required to purchase any specified number
of Shares, but will purchase from the Trust only a sufficient number of Shares
as may be necessary to fill unconditional orders received from time to time by
the Underwriter from investors and dealers.
2. The Underwriter shall offer Shares to the public at an offering price based
upon the net asset value of the Shares, to be calculated for each class of
shares as described in the Registration Statement, including the Prospectus,
filed with the Commission and in effect at the time of the offering, plus sales
charges as approved by the Underwriter and the Trustees of the Trust and as
further outlined in the Trust's Prospectus. The offering price shall be subject
to any provisions set forth in the Prospectus from time to time with respect
thereto, including, without limitation, rights of accumulation, letters of
intent, exchangeability of shares, reinstatement privileges, net asset value
purchases by certain persons and reinvestments of dividends and capital gain
distributions.
3. In the case of all Shares sold to investors through other broker-dealers, a
portion of applicable sales charges will be reallowed to such broker-dealers who
are members of the NASD or, in the case of certain sales by banks or certain
sales to foreign nationals, to brokers or dealers exempt from registration with
the Commission. The concession reallowed to broker-dealers shall be set forth in
a written sales agreement and shall be generally the same for broker-dealers
providing comparable levels of sales and service.
4. This Agreement shall terminate on any anniversary hereof if its terms and
renewal have not been approved by a majority vote of the Trustees of the Trust
voting in person, including a majority of its Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Underwriting Agreement (the "Qualified Trustees"), at a
meeting of Trustees called for the purpose of voting on such approval. This
Agreement may also be terminated at any time, without payment of any penalty, by
the Trust or 60 days' written notice to the Underwriter, or by the Underwriter
upon similar notice to the Trust. This Agreement may also be terminated by a
party upon five (5) days' written notice to the other party in the event that
the Commission has issued an order or obtained an injunction or other court
order suspending effectiveness of the Registration Statement covering the Shares
of the Trust. Finally, this Agreement may also be terminated by the Trust upon
five (5) days' written notice to the Underwriter provided either of the
following events has occurred: (i) the NASD has expelled the Underwriter or
suspended its membership in that organization; or (ii) the qualification,
registration, license or right of the Underwriter to sell Shares in a particular
state has been suspended or cancelled in a state in which sales of the Shares
during the most recent 12-month period exceeded 10% of all Shares held by the
Underwriter during such period.
5. The compensation for the services of the Underwriter as a principal
underwriter under this Agreement shall be:
With respect to Class A Shares (i) that part of the sales charge which
is retained by the Underwriter after allowance of discounts to dealers
as set forth, if required, in the Registration Statement, including the
Prospectus, filed with the Commission and in effect at the time of the
offering, as amended, and (ii) those amounts payable to the Underwriter
as reimbursement of expenses pursuant to any distribution plan which
may be in effect.
With respect to Class B Shares (i) the Underwriter's Allocable Portion
(as defined in Section 9) of the Distribution Fee, if any, payable from
time to time to the Underwriter under the Trust's Class B Distribution
Plan and (ii) the contingent deferred sales charge payable with respect
to Class B Shares sold through the Underwriter as set forth in the
Registration Statement, including the Prospectus, filed with the
Commission and in effect at the time of the sale of such Class B
Shares.
With respect to Class C Shares (i) the Distribution Fee, if any,
payable from time to time to the Underwriter under the Trust's Class C
Distribution Plan and (ii) the contingent deferred sales charge payable
with respect to Class C Shares sold through the Underwriter as set
forth in the Registration Statement, including the Prospectus, filed
with the Commission and in effect at the time of the sale of such Class
C Shares.
With respect to Class Y Shares, the Underwriter shall not be entitled
to any compensation.
With respect to any future class of shares, the Underwriter shall be
entitled to such consideration as the Trust and the Underwriter shall
agree at the time such class of Shares is established.
Notwithstanding anything to the contrary herein, subsequent to the issuance of a
Class B Share the Trust agrees not take any action to waive or change any
contingent deferred sales charge (including, without limitation, by change in
the rules applicable to conversion of Class B Shares into another class) in
respect of such Class B Shares, except (i) as provided in the Trust's Prospectus
or Statement of Additional Information in effect on September 30, 1998, or (ii)
as required by a change in the 1940 Act and the rules and regulations
thereunder, the Conduct Rules of the NASD or any order of any court or
governmental agency enacted, issued or promulgated after September 30, 1998.
Neither the termination of the Underwriter's role as principal underwriter of
the Class B Shares nor the termination of this Agreement nor the termination or
modification of the Class B Distribution Plan shall terminate the Underwriter's
right to the contingent deferred sales charge with respect to Class B Shares
sold through said Underwriter or Class B Shares issued through one or a series
of exchanges of shares of another investment company for which the Underwriter
acts as principal underwriter, in each case with respect to Class B Shares or
their predecessors initially issued prior to such termination or modification
("Pre-Amendment Class B Shares"). Except as provided in the preceding sentences
and notwithstanding any other provisions of the Agreement or the Class B
Distribution Plan, the Underwriter's entitlement to its Allocable Portion of the
contingent deferred sales charges payable in respect of the Pre-Amendment Class
B Shares shall be absolute and unconditional and shall not be subject to
dispute, offset, counterclaim or any defense whatsoever, at law or equity,
including, without limitation, any of the foregoing based on the insolvency or
bankruptcy of such Underwriter.
6. Notwithstanding anything to the contrary set forth in the Distribution Plan
or this Agreement, the Trust agrees to comply with respect to Pre-Amendment
Shares with the provision of Sections 1(b), (d), (g) and (h) and Section 4 and
Section 6 of the Trust's Amended and Restated Class B Distribution Plan as
thought such provision were set forth in this Agreement.
7. Nothing contained herein shall relieve the Trust of any obligation under its
management contract or any other contract with any affiliate of the Underwriter.
8. Notwithstanding anything to the contrary set forth in the Class B
Distribution Plan or this Agreement the Trust acknowledges that the Underwriter
may assign, sell or pledge (collectively, "Transfer") its rights to Distribution
Fees and contingent deferred sales charges with respect to Class B Shares. Upon
receipt of notice of such Transfer, the Trust shall pay to the assignee,
purchaser or pledgee (collectively with their subsequent transferees,
"Transferees"), as third party beneficiaries, such portion of the Distribution
Fees and contingent deferred sales charges payable to the Underwriter as
provided in written instructions (the "Allocation Instructions") from the
Underwriter to the Trust and shall pay the balance, if any, to the Underwriter.
In the absence of Allocation Instructions, the Trust shall have no obligations
to a Transferee.
9. Payments of the Distribution Fee and contingent deferred sales charges with
respect to Class B Shares shall be allocated between the Underwriter (or its
Transferee) and such co- or successor principal underwriter (each an "Allocable
Portion"), as provided in the Allocation Procedures attached hereto.
10. The parties to this Agreement acknowledge and agree that all liabilities
arising hereunder, whether direct or indirect, of any nature whatsoever,
including without limitation, liabilities arising in connection with any
agreement of the Trustor its Trustees as set forth herein to indemnify any party
to this Agreement or any other person, if any, shall be satisfied out of the
assets of the Trust and that no Trustee, officer or holder of shares shall be
personally liable for any of the foregoing liabilities. The Trust's Agreement
and Declaration of Trust describes in detail the respective responsibilities and
limitations on liability of the Trustees, officers, and holders of Shares.
10. This Agreement shall automatically terminate in the event of its assignment
(as that term is defined in the 1940 Act).
11. In the event of any dispute between the parties, this Agreement shall be
construed according to the laws of The Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers and their seals to be hereto
affixed as of the day and year first above written.
ATTEST: PIONEER BOND FUND
By:
Joseph P. Barri John F. Cogan, Jr.
Secretary President
ATTEST: PIONEER FUNDS DISTRIBUTOR, INC.
By:
Joseph P. Barri
Clerk President
Consent of Independent Public Accountants
To the Shareholders and Trustees of
Pioneer Bond Fund:
As independent public accountants, we hereby consent to the use of our report on
Pioneer Bond Fund dated August 7, 1998 (and to all references to our Firm)
included in or made a part of Pioneer Bond Fund's Post-Effective Amendment No.
26 and Amendment No. 25 to Registration Statement File Nos. 2-62436 and
811-02864, respectively.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 23, 1998
AMENDED AND RESTATED CLASS B SHARES DISTRIBUTION PLAN
[NAME OF FUND]
CLASS B SHARES DISTRIBUTION PLAN, dated as of __________ __, 199_ and
amended and restated as of September 30, 1998, of Pioneer
________________________, a ____________ business trust (the "Trust")
WITNESSETH
WHEREAS, the Trust is engaged in business as an open-end[,
diversified,] management investment company and is registered under the
Investment Company Act of 1940, as amended (collectively with the rules and
regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Trust intends to distribute shares of beneficial interest
(the "Class B Shares") of the Trust in accordance with Rule 12b-1 promulgated by
the Securities and Exchange Commission under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Class B Shares distribution plan (the "Class B Plan") as a
plan of distribution pursuant to such Rule;
WHEREAS, the Trust desires that Pioneer Funds Distributor, Inc., a
Massachusetts corporation ("PFD") or such other persons as may be appointed
principal underwriter from time to time, provide certain distribution services
for the Trust's Class B Shares in connection with the Class B Plan (PFD and any
successor principal underwriter of the Trust's shares being referred to as an
"Underwriter");
WHEREAS, the Trust has entered into an underwriting agreement (in a
form approved by the Trust's Board of Trustees in a manner specified in Rule
12b-1) with the Underwriter, whereby the Underwriter provides facilities and
personnel and renders services to the Trust in connection with the offering and
distribution of Class B Shares (the "Underwriting Agreement");
WHEREAS, the Trust also recognizes and agrees that (a) the Underwriter
may retain the services of firms or individuals to act as dealers or wholesalers
(collectively, the "Dealers") of the Class B Shares in connection with the
offering of Class B Shares, (b) the Underwriter may compensate any Dealer that
sells Class B Shares in the manner and at the rate or rates to be set forth in
an agreement between the Underwriter and such Dealer and (c) the Underwriter may
make such payments to the Dealers for distribution services out of the fee paid
to the Underwriter hereunder, any deferred sales charges imposed by the
Underwriter in connection with the repurchase of Class B Shares, its profits or
any other source available to it;
<PAGE>
WHEREAS, the Trust recognizes and agrees that the Underwriter may
impose certain deferred sales charges in connection with the repurchase of Class
B Shares by the Trust, and the Underwriter may retain (or receive from the
Trust, as the case may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Class B Plan, has evaluated such
information as it deemed necessary to an informed determination whether this
Class B Plan should be adopted and implemented and has considered such pertinent
factors as it deemed necessary to form the basis for a decision to use assets of
the Trust for such purposes, and has determined that there is a reasonable
likelihood that the adoption and implementation of this Class B Plan will
benefit the Trust and its Class B shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Class B Plan for the Trust as a plan of distribution of Class B Shares in
accordance with Rule 12b-1, on the following terms and conditions:
1. (a) The Trust is authorized to compensate the Underwriter for
(1) distribution services and (2) personal and account
maintenance services performed and expenses incurred by the
Underwriter in connection with the Trust's Class B Shares.
Such compensation shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of
Trustees may determine.
(b) The amount of compensation payable to the
Underwriter during any one year for distribution services with
respect to Class B Shares shall be its Allocable Portion (as
defined in Section 14 below) of .75% of the Trust's average
daily net assets attributable to Class B Shares for such year
(the "Distribution Fee"). Notwithstanding anything to the
contrary set forth in this Distribution Plan or any
Underwriting Agreement, the Distribution Fee shall not be
terminated or modified (including a modification by change in
the rules relating to the conversion of Class B Shares into
Class A Shares of the Trust) with respect to Class B Shares
(or the assets of the Trust attributable to such Class B
Shares) either (x) issued prior to the date of any termination
or modification or (y) attributable to Class B Shares issued
through one or a series of exchanges of shares of another
investment company for which the Underwriter acts as principal
underwriter which were initially issued prior to the date of
such termination or modification or (z) issued as a dividend
or distribution upon Class B Shares initially issued or
attributable to Class B Shares issued prior to the date of any
such termination or modification (the "Pre-Amendment Class B
Shares") except:
(i) to the extent required by a change in the
Investment Company 1940 Act, the rules or regulations
under the Act, the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD"),
or an order of any court or governmental agency, in
each case enacted, issued or promulgated after
September 30, 1998,
(ii) in connection with a "Complete Termination" of
this Plan. For purposes of this Plan, a "Complete
Termination" shall have occurred if: (x) this Plan
and the distribution plan for Class B Shares of any
successor trust or fund or any trust or fund
acquiring substantially all of the assets of the
Trust (collectively, the "Affected Funds") is
terminated with respect to all Class B Shares of the
Trust and each Affected Fund then outstanding or
subsequently issued, (y) the payment by the Trust of
Distribution Fees with respect to all Class B Shares
of the Trust and each Affected Fund is terminated and
(z) neither the Trust nor any Affected Fund
establishes concurrently with or subsequent to such
termination of this Plan another class of shares
which has substantially similar characteristics to
the current Class B Shares of the Trust, including
the manner of payment and amount of contingent
deferred sales charge paid directly or indirectly by
the holders of such shares (all of such classes of
shares "Class B Shares"), or
(iii) on a basis, determined by the Board of
Trustees, including a majority of the Qualified
Trustees (as hereinafter defined), acting in good
faith, so long as from and after the effective date
of such modification or termination: (x) neither (1)
the Trust, (2) any Affected Fund nor (3) the
investment advisor or any other sponsor entity (or
their affiliates) of the Trust or any Affected Fund
pay, directly or indirectly, a fee, a trailer fee, or
expense reimbursement to any person for the provision
of personal and account maintenance services (as such
terms is used in the Conduct Rules of the NASD) to
the holder of Class B Shares of the Trust or any
Affected Fund (but the forgoing shall not prevent
payments for transfer agency or subaccounting
services), and (y) the termination or modification of
the Distribution Fee applies with equal effect to
both Pre-Amendment Class B Shares and Post-Amendment
Class B Shares (as defined in Section 7) outstanding
from time to time of the Trust and all Affected
Funds.
(c) Distribution services and expenses for which an
Underwriter may be compensated pursuant to this Plan include,
without limitation: compensation to and expenses (including
allocable overhead, travel and telephone expenses) of (i)
Dealers, brokers and other dealers who are members of the NASD
or their officers, sales representatives and employees, (ii)
the Underwriter and any of its affiliates and any of their
respective officers, sales representatives and employees,
(iii) banks and their officers, sales representatives and
employees, who engage in or support distribution of the
Trust's Class B Shares; printing of reports and prospectuses
for other than existing shareholders; and preparation,
printing and distribution of sales literature and advertising
materials.
(d) The Underwriter shall be deemed to have performed
all services required to be performed in order to be entitled
to receive its Allocable Portion of the Distribution Fee, if
any, payable with respect to Class B Shares sold through such
Underwriter upon the settlement date of the sale of such Class
B Shares or in the case of Class B Shares issued through one
or a series of exchanges of shares of another investment
company for which the Underwriter acts as principal
underwriter or issued as a dividend or distribution upon Class
B Shares, on the settlement date of the first sale on a
commission basis of a Class B Share from which such Class B
share was derived. The Trust's obligation to pay an
Underwriter its Allocable Portion of the Distribution Fees
payable in respect of the Class B Shares shall be absolute and
unconditional and shall not be subject to dispute, offset,
counterclaim or any defense whatsoever, at law or equity,
including, without limitation, any of the foregoing based on
the insolvency or bankruptcy of such Underwriter. The
foregoing provisions of this Section 1(d) shall not limit the
rights of the Trust to modify or terminate payments under this
Class B Plan as provided in Section 1(b) with respect to
Pre-Amendment Class B Shares or Section 7 with respect to
Post-Amendment Class B Shares.
(e) The amount of compensation paid during any one
year for personal and account maintenance services and
expenses (the "Service Fee") shall be .25% of the Trust's
average daily net assets attributable to Class B Shares for
such year. As partial consideration for personal services
and/or account maintenance services provided by the
Underwriter to the Class B Shares, the Underwriter shall be
entitled to be paid any fees payable under this clause (e)
with respect to Class B Shares for which no dealer of record
exists, where less than all consideration has been paid to a
dealer of record or where qualification standards have not
been met.
(f) Personal and account maintenance services for
which the Underwriter or any of its affiliates, banks or
Dealers may be compensated pursuant to this Plan include,
without limitation: payments made to or on account of the
Underwriter or any of its affiliates, banks, other brokers and
dealers who are members of the NASD, or their officers, sales
representatives and employees, who respond to inquiries of,
and furnish assistance to, shareholders regarding their
ownership of Class B Shares or their accounts or who provide
similar services not otherwise provided by or on behalf of the
Trust.
(g) The Underwriter may impose certain deferred sales
charges in connection with the repurchase of Class B Shares by
the Trust and the Underwriter may retain (or receive from the
Trust as the case may be) all such deferred sales charges.
(h) The Trust has agreed in the Underwriting
Agreement to certain restrictions on the Trust's ability to
modify or waive certain terms of the Trust's Class B Shares or
the contingent deferred sales charge with respect to
Pre-Amendment Class B Shares.
(i) Appropriate adjustments to payments made pursuant
to clauses (b) and (d) of this paragraph 1 shall be made
whenever necessary to ensure that no payment is made by the
Trust in excess of the applicable maximum cap imposed on asset
based, front-end and deferred sales charges by Section 2830(d)
the Conduct Rules of the NASD.
2. The Trust understands that agreements between the Underwriter and
Dealers may provide for payment of fees to Dealers in connection with the sale
of Class B Shares and the provision of services to shareholders of the Trust.
Nothing in this Class B Plan shall be construed as requiring the Trust to make
any payment to any Dealer or to have any obligations to any Dealer in connection
with services as a dealer of the Class B Shares. The Underwriter shall agree and
undertake that any agreement entered into between the Underwriter and any Dealer
shall provide that such Dealer shall look solely to the Underwriter for
compensation for its services thereunder and that in no event shall such Dealer
seek any payment from the Trust.
3. Notwithstanding anything to the contrary in this Distribution Plan
or any Underwriting Agreement, the Underwriter may assign, sell or pledge
(collectively, "Transfer") its rights to its Allocable Portion of any
Distribution Fees under this Plan. Upon receipt of notice of such Transfer, the
Trust shall pay to the assignee, purchaser or pledgee (collectively with their
subsequent transferees, "Transferees"), as third-party beneficiaries, such
portion of the Distribution Fees payable to the Underwriter as provided in
written instructions (the "Allocation Instructions") from the Underwriter and
said Transferee to the Trust. In the absence of Allocation Instructions, the
Trust shall have no obligations to a Transferee.
4. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its [Agreement and] Declaration of Trust, as it may
be amended or restated from time to time, or By-Laws or any applicable statutory
or regulatory requirement to which it is subject or by which it is bound, or to
relieve or deprive the Trust's Board of Trustees of the responsibility for and
control of the conduct of the affairs of the Trust; it being understood that
actions taken pursuant to Section 1(b) shall not be considered such an action
described above.
5. This Class B Plan shall become effective upon approval by (i) a
"majority of the outstanding voting securities" of Class B of the Trust, (ii) a
vote of the Board of Trustees, and (iii) a vote of a majority of the Trustees
who are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Class B Plan or in any agreements
related to the Class B Plan (the "Qualified Trustees"), such votes with respect
to (ii) and (iii) above to be cast in person at a meeting called for the purpose
of voting on this Class B Plan.
6. All of the terms of this Distribution Plan, as amended and restated
as of September 30, 1998, are intended to apply in respect of all Pre-Amendment
Class B Shares and to the Distribution Fees payable in respect of any thereof.
This Class B Plan will remain in effect indefinitely, provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Class B Plan shall expire on the
annual anniversary of the adoption of this Plan following the last such
approval.
7. Subject to the limitation set forth in Section 1(b) with respect to
Pre-Amendment Class B shares, this Class B Plan may be amended at any time by
the Board of Trustees with respect to Class B Shares (and the assets
attributable to such Class B Shares) which are not Pre-Amendment Class B Shares
("Post-Amendment Class B Shares"); PROVIDED that this Class B Plan may not be
amended to increase materially the limitations on the annual percentage of
average net assets which may be expended hereunder without the approval of
holders of a "majority of the outstanding voting securities" of Class B of the
Trust and may not be materially amended in any case without a vote of a majority
of both the Trustees and the Qualified Trustees. This Class B Plan may be
terminated at any time, subject to Section 1(b), by a vote of a majority of the
Qualified Trustees or by a vote of the holders of a "majority of the outstanding
voting securities" of Class B of the Trust.
8. The Trust and the Underwriter shall provide to the Trust's Board of
Trustees, and the Board of Trustees shall review, at least quarterly, a written
report of the amounts expended under this Class B Plan and the purposes for
which such expenditures were made.
9. While this Class B Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
10. For the purposes of this Class B Plan, the terms "interested
persons," "majority of the outstanding voting securities" and "specifically
approved at least annually" are used as defined in the 1940 Act.
11. The Trust shall preserve copies of this Class B Plan, and each
agreement related hereto and each report referred to in Paragraph 7 hereof
(collectively, the "Records"), for a period of not less than six (6) years from
the end of the fiscal year in which such Records were made and, for a period of
two (2) years, each of such Records shall be kept in an easily accessible place.
12. This Class B Plan shall be construed in accordance with the laws of
The Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
13. If any provision of this Class B Plan shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Class B
Plan shall not be affected thereby.
14. Payments under this Class B Plan shall be allocated between PFD and
any successor Underwriter or co-Underwriter (each an Underwriter's Allocable
Portion) as provided in the Allocation Procedures appended hereto.
[Allocation Procedures]
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PIONEER BOND FUND CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 144337900
<INVESTMENTS-AT-VALUE> 150971968
<RECEIVABLES> 3723652
<ASSETS-OTHER> 568
<OTHER-ITEMS-ASSETS> 721
<TOTAL-ASSETS> 154696909
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 968375
<TOTAL-LIABILITIES> 968375
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 151800225
<SHARES-COMMON-STOCK> 12202078
<SHARES-COMMON-PRIOR> 10841529
<ACCUMULATED-NII-CURRENT> 15047
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 4720806
<ACCUM-APPREC-OR-DEPREC> 6634068
<NET-ASSETS> 153728534
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10473251
<OTHER-INCOME> 0
<EXPENSES-NET> 1886710
<NET-INVESTMENT-INCOME> 8586541
<REALIZED-GAINS-CURRENT> (27677)
<APPREC-INCREASE-CURRENT> 4226062
<NET-CHANGE-FROM-OPS> 12784926
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6776551
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4618197
<NUMBER-OF-SHARES-REDEEMED> 3811048
<SHARES-REINVESTED> 553400
<NET-CHANGE-IN-ASSETS> 30726201
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 4684384
<GROSS-ADVISORY-FEES> 696789
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1894886
<AVERAGE-NET-ASSETS> 107015265
<PER-SHARE-NAV-BEGIN> 9.07
<PER-SHARE-NII> .59
<PER-SHARE-GAIN-APPREC> .30
<PER-SHARE-DIVIDEND> .59
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.37
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PIONEER BOND FUND CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 144337900
<INVESTMENTS-AT-VALUE> 150971968
<RECEIVABLES> 3723652
<ASSETS-OTHER> 568
<OTHER-ITEMS-ASSETS> 721
<TOTAL-ASSETS> 154696909
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 968375
<TOTAL-LIABILITIES> 968375
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 151800225
<SHARES-COMMON-STOCK> 3311042
<SHARES-COMMON-PRIOR> 2226405
<ACCUMULATED-NII-CURRENT> 15047
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 4720806
<ACCUM-APPREC-OR-DEPREC> 6634068
<NET-ASSETS> 153728534
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10473251
<OTHER-INCOME> 0
<EXPENSES-NET> 1886710
<NET-INVESTMENT-INCOME> 8586541
<REALIZED-GAINS-CURRENT> (27677)
<APPREC-INCREASE-CURRENT> 4226062
<NET-CHANGE-FROM-OPS> 12784926
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1379864
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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